24th October, 2012 MIDA’s Functions in The Promotion of The Manufacturing and Services Sectors in Malaysia

“Malaysian Investment Development Authority” CONTENT OUTLINE : Functions Performance Policies Incentives Development Corridors “Malaysian Investment Development Authority”

MILESTONES The principal Malaysian Government agency responsible for the promotion and coordination of industrial development in the country First point of contact for investors who intend to set up projects in the manufacturing and services sectors in Malaysia 2011 : Rebrand as Malaysian Investment Development Authority 27 March 2004 : Government Mandated MIDA to Promote Investments in the Services Sector Established in 1967 under Act of Parliament, 1965

FUNCTIONS OF MIDA Promotion Evaluation Planning Follow-up / Monitoring Foreign Direct Investment Domestic Investment Cross Border Investment Business matching through E-Connect Manufacturing Services Manufacturing licenses Tax incentives Expatriate posts Duty exemption OHQ, RDC, IPC and R&D status Evaluation Planning Planning for industrial development Recommend policies and strategies on industrial promotion and development Formulation of strategies, programmes and initiatives for international economic cooperation Assist companies in the implementation and operation of their projects Facilitate exchange & co-ordination among institutions engaged in or connected with industrial development Advisory Services Follow-up / Monitoring

MIDA WORLDWIDE NETWORK Stockholm London Frankfurt Munich San Jose Chicago Boston Paris Milan Tokyo Seoul New York Los Angeles Osaka Shanghai Houston Dubai Guangzhou Taipei Mumbai Bangkok Kuala Lumpur Malaysia Singapore Johannesburg Sydney 24 Overseas Centres

MIDA’S STATE OFFICES MIDA HEADQUARTERS ALOR SETAR KOTA BHARU KOTA KINABALU KUALA TERENGGANU PENANG IPOH KUANTAN MIDA HEADQUARTERS SEREMBAN MELAKA JOHOR BAHRU KUCHING

MALAYSIAN ECONOMY

MALAYSIA’S KEY ECONOMIC INDICATORS Updated by 1018 MALAYSIA’S KEY ECONOMIC INDICATORS 2009 2010 2011 2012 Real GDP (%) - 1.7 7.2 5.1 5.0 ~ 5.5 Inflation (%) 0.6 1.7 2.1 2.4 (Jan – Feb) Per Capita Income (US$) 6,764 8,140 9,508 10,134f Unemployment (%) 3.7 3.2 3.1 (Julai) Trade Surplus (US$ bil) 33.6 34.2 39.3 2.9 (Jan) International Reserves (US$ bil) 96.7 106.5 133.6 135.* Retained Imports Equivalent (months) 9.7 8.5 9.4* * As at 30th March 2012 Source: Central Bank of Malaysia/Department of Statistics Malaysia/MATRADE 8

GDP BY INDUSTRIAL ORIGIN Sector GDP Contribution (%) 1970 1990 2009 2010 2011 Agriculture 33.6 19.3 7.9 7.8 7.7 Mining 7.2 9.8 10.5 8.8 Construction 3.8 3.4 3.1 3.0 Manufacturing 12.8 26.5 24.2 25.2 25.1 Services 42.6 42.1 53.2 54.2 Source : Economic Reports/Bank Negara Annual Report, Malaysia 11/12

PERFORMANCE OF THE MANUFACTURING & SERVICES SECTORS

TOTAL APPROVED MANUFACTURING PROJECTS (2008 – 2011) Year No. of Projects No. of Employment Proposed Investment (US$ billion) Domestic Foreign Total 2009 766 64,330 3.0 6.5 9.5 2010 910 97,319 5.9 9.4 15.3 2011 846 100,533 6.9 10.8 17.7 2012 (Jul) 469 46,137 4.4 8.8 Source: MIDA

APPROVED PROJECTS BY MAJOR COUNTRIES JANUARY – DECEMBER 2011 US$ Million

Foreign Investment (US$ million) APPROVED MANUFACTURING PROJECTS BY MAJOR INDUSTRIES, JANUARY – DECEMBER 2011 Industry / Products Number of Projects Foreign Investment (US$ million) Electronics & Electrical 90 5,900.2 Basic Metal 22 1,131.7 Chemicals & Chemical 36 1,016.0 Food Manufacturing 28 810.1 Non-Metallic Mineral 13 461.8 Transport Equipment 40 336.4 Petroleum (Incl. Petrochemicals) 11 305.5 Fabricated Metal 30 253.8 Scientific & Measuring Equipment 5 112.4 Paper, Printing & Publishing 100.5 Source: MIDA

APPROVED REGIONAL ESTABLISHMENT JANUARY – DECEMBER 2011 Type of Establishment No. of Approvals Investment (US$ million) Operational Headquarters (OHQ) 18 38.8 International Procurement Centre (IPC) 6 22.2 Regional Distribution Centres (RDC) 1 3.2 Representatives Offices (RE) 55 7.5 Regional Offices (RO) 32 7.7 Total 112 79.4 Source: MIDA

INVESTMENT POLICIES Guidelines on Manufacturing Licence Policy on Equity Ownership

INVESTMENT POLICIES Guidelines on Manufacturing License The Industrial Coordination Act 1975 (ICA) requires manufacturing companies with shareholders’ funds of RM2.5 million and above or engaging 75 or more full-time employees to apply for manufacturing license.

INVESTMENT POLICIES Foreign Equity Repatriation of Funds

INCENTIVES FOR THE MANUFACTURING SECTOR

MAJOR INCENTIVES PROVIDED Pioneer Status (PS) : Income Tax Exemption of 70 % or 100 % for 5 or 10 years Investment Tax Allowance (ITA) 60 % or 100 % on qualifying capital expenditure for 5 or 10 years Incentives Exemption from Import Duty on Raw Materials / Components Exemption from Import Duty & Sales Tax on Machinery & Equipment

CURRENT FOCUS IN THE MANUFACTURING SECTOR High technology, capital intensive & knowledge driven industries: Industries manufacturing intermediate goods: Alternative Energy Sources Biotechnology Advanced materials Advanced electronics Optics and photonics Petrochemicals Pharmaceuticals Medical devices ICT Aerospace Machinery & equipment Components & parts Moulds and dies Resourced-based industries: Food & Agro based Value-added products from natural resources

INCENTIVES FOR THE SERVICES SECTOR

SERVICES SECTOR OPERATIONAL HEADQUARTERS (OHQ) INTERNATIONAL PROCUREMENT CENTRE (IPC) REGIONAL DISTRIBUTION CENTRE (RDC) Full tax exemption for 10 years REPRESENTATIVE OFFICE (RE) REGIONAL OFFICE (RO) RE or RO status given for a period of 5 years INTEGRATED LOGISTICS SERVICES (ILS) INTEGRATED MARKET SUPPORT SERVICES (IMSS) INCENTIVES FOR INTEGRATED CENTRAL UTILITY FACILITIES (CUF) Eligible for PS or ITA

Targeted Services SERVICES SECTOR Regional Establishments Business and professional services Logistics ICT services Offshore and outsourcing activities Distributive trade Education and training Healthcare Tourism

CORRIDOR OF DEVELOPMENT IN MALAYSIA NCER : NORTHERN CORRIDOR ECONOMIC REGION Focus on: Modern Agriculture Manufacturing & Design Tourism Logistics Education & Health SDC : SABAH DEVELOPMENT CORRIDOR Focus on: Agro-based Industry Tourism Logistics Manufacturing ECER : EAST COAST ECONOMIC REGION Focus on: Tourism Oil & Gas Manufacturing Agriculture Education SCORE: SARAWAK CORRIDOR OF RENEWABLE ENERGY Focus on: Resource Based Industry Energy Tourism IRDA : ISKANDAR MALAYSIA To be a hub for the services sector: Creative Industry Education Healthcare Financial Services Tourism and Logistics Industries Electrical & Electronics Services 24

WHY MALAYSIA ? Political & Economic Stability Pro-business Government Liberal Investment Policies Transparent Policies Policy of Welcome Sound Banking System Well Developed Infrastructure Harmonious Industrial Relations Trainable & Educated Labour Force Quality of Life Good Track Record

THANK YOU Please visit us at www.mida.gov.my investmalaysia@mida.gov.my