Country Analysis exercise SEZs design, Implemetation and M&E Workshop Malaysia Country Analysis exercise SEZs design, Implemetation and M&E Workshop

Rationale and Justification for Setting Up SEZs Enhancing inclusiveness towards equitable society - To address regional imbalances in terms of economic development and income gap

Type of SEZs Regional Economic Corridors Industrial Parks Free Trade Zone (FTZ) and Free Industrial Zone (FIZ) Reason for adoption Subject to the needs of the proposed SEZ - attracting FDI - creating employment - poverty eradication

Location of Regional Economic Corridors (RECs) Northern Corridor Economic Region (NCER) Iskandar Malaysia (IM) Sabah Development Corridor (SDC) East Coast Economic Corridor (ECER) Sarawak Corridor of Renewable Energy (SCORE) The map shows the location of 5 growth corridors that have been identified to be developed and achieved its specific objective: Iskandar Malaysia at South Johor consist of Johor Bahru District and part of Kulai and Pasir Gudang district is to be developed into world-class metropolis and attracting investments in new industry clusters such as private higher education & healthcare. NCER covers states in the northern region– Perlis, Kedah, Pulau Pinang & Northern Perak (Includes Hulu Perak, Kerian, Kuala Kangsar & Larut-Matang-Selama) was earmarked as Malaysia’s zone for commercial agriculture, agro-based & high-tech industries. ECER covers 3 states in the east coast region Pahang, Kelantan, Terengganu & district of Mersing in Johor focus on downstream industries based on petrochemicals, agriculture & tourism. SDC covers whole state of Sabah focus on improved infrastructure to develop the agro based sector & tourism. SCORE Covers central region of Sarawak with 5 growth nodes identified to fast-forward development in this area will focus in energy-intensive industries such as metal, aluminum and alloy industries. 4

Regional Economic Corridors (RECs) Northern Corridor Economic Region (NCER) Key Thrust Areas: Agriculture, Manufacturing, Tourism, Logistics and Enablers Iskandar Malaysia The Core sectors: Electrical & Electronics; Petrochemical, Oil & Gas; Food & Agro processing; Logistics; and Tourism. The Emerging sectors: Healthcare; Education; Creative; and Financial & Business Services. Sarawak Corridor of Renewable Energy (SCORE) 2 1 Industries: aluminium, glass industries, oil-based industry, steel, palm oil, fishing and aquaculture, livestock, timber-based industries, marine and tourism. Sabah Development Corridor (SDC) 3 5 Key focus areas: agriculture, tourism, logistics and manufacturing; oil, gas and energy; higher education, and palm oil The Iskandar Development Region (IDR) is a Malaysian Special Economic Zone established in 2006. The zone covers 2,217 square kilometers and includes the Senai Airport and the ports of Tanjong Pelepas and Pasir Gudang. The IDR is administered by Iskandar Development Region Authority (IDRA), a Malaysian Federal Government statutory body. Value-added and knowledge intensive industries are a key target of the IDR. Six service based sectors are targeted for exemptions: I. Creative industries II. Educational services III. Financial advisory and consulting services IV. Healthcare services V. Logistic services VI. Tourism related activities Incentives provided: Exemption from Foreign Investment Committee rules Freedoms relating to foreign employment Exemption from corporate income tax for a period of 10 years from commencement of activities Exemptions from withholding tax on royalty and technical fee payment to nonresidents for a period of 10 years from commencement of activities Skilled foreign workers are exempt from tax on car purchases Like Shenzen, the IDR has a unique geographical location which makes it highly suited to rapid growth, located just 50 minutes drive from Singapore’s Changi International Airport, and positioned on international sea lines of communication. Just as Shenzen was heavily reliant on investment from Hong Kong, the IDR has been heavily reliant on investment from Singapore. The Wall Street Journal reported that as Singapore runs out of land to expand, it is joining forces to develop IDR into Singapore's new hinterland, with space for multinational companies, industry and housing. So far more than 3,500 Singaporean businesses have set up in Iskandar in the past six years. Over 70 per cent of businesses established have been small and medium sized enterprises. 4 East Coast Economic Region (ECER) Five key economic clusters: Manufacturing, Oil, Gas & Petrochemicals, Tourism, Agriculture and Human Capital Development

Other policy features Tax incentives Facilitation grant Low carbon society Smart city Freedom to source Foreign Knowledge Worker

SEZs Implementation 1. Regulator Managed by respective Economic Corridor Authority (ECAs): IRDA, NCIA, ECERDC, RECODA, SEDIA 2. Developers It varies from corridor to corridor by authorities, GLC or private companies 3. Operators It varies from corridor to corridor by authorities, GLC or private companies

Implementation issues Lack of coordination between Federal, State and Local Council Political intervention Land acquisitions Limitation of budget and resources

Monitoring and Evaluation of SEZs Yes monitoring and evaluation is done Lack of coordination of data between Federal and Regional Authorities Yes statistics are generated via Annual report and publicly available

Success factors Quality and dedicated staff Each region focuses on certain sectors based on their competitive advantages Continuous engagement with the local stakeholders Federal Government provide funding for key infrastucture

Critical Challenges Land acquisition Political intervention Lack of skilled workers

Recommendations Skills training institute run by the industries Reduce red tape for government approval Centralized repository for key statistical data