MR. N. SANGARAN

1
Malaysian Industrial Development Authority
MR. N. SANGARAN DIRECTOR MACHINERY AND
ENGINEERING SUPPORTING INDUSTRIES DIVISION
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY
(MIDA)
2

MIDA

• Established in 1967 under Act of Parliament,
  1965
• The principal Malaysian Government agency
  responsible for the promotion and coordination of
  industrial development and services sector in the
  country
• First point of contact for investors who intend
  to set up projects in the manufacturing and
  services sector in Malaysia
• On 27 March 2004, the Government mandated MIDA to
  promote investments in the services sector.

www.mida.gov.my
3
PROMOTION

• Foreign Direct Investment
• Domestic Investment
• Cross Border Investment

• Business matching through
• Enterprise Connect
• Manufacturing Services

EVALUATION
RESEARCH PLANNING

• Manufacturing licenses
• Tax incentives including for RD, Hotel
  Tourism, Training Manufacturing related
  services
• Expatriate posts
• Duty exemption
• RDC, IPC and RD status

• Planning for Industrial Development
• Recommend policies and strategies on industrial
  promotion and development
• Formulation of strategies, programmes and
  initiatives for international economic
  cooperation

FOLLOW-UP/MONITORING

• 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

www.mida.gov.my
4
MIDAS GLOBAL NETWORK
www.mida.gov.my
5
MIDAS NEW OVERSEAS OFFICES 1. DALIAN
2. BANGKOK 3. JAKARTA
4. HO CHI MINH CITY
5. JOHANNESBURG 6. HOUSTON
7 . MUNICH
6
Malaysian Economy First Quarter 2008

• GDP Growth 7.1
• Per Capita Income EUR
  5,242 (2007)
• Inflation 2.6
• Unemployment 3.6
• Trade Surplus EUR 6.6 billion
• International Reserves EUR 97.6 billion
  (31 July 08)
• Manufactured Exports to Total Exports 69.3
  

Malaysia is the 19th, largest trading nation in
the world
Source Central Bank of Malaysia/Malaysia
Department of Statistic 07/08
1 USD 0.78 EUR
7
MALAYSIAS GROSS DOMESTIC PRODUCT FIRST QUARTER
2008

1 USD 0.78 EUR
8
PERFORMANCE

• Of the Manufacturing Services Sector

9
Total Approved Manufacturing Projects
(2006 Aug
2008)
10
TOP FIVE FOREIGN INVESTMENTS IN MALAYSIA JANUARY
AUG 2008
Note Italy No. Of Projects 2
Total Investment Euro 14.1million
11
Projects in Operation With Italy Participation by
Industry, As at 2007
Source MIDA
12
MALAYSIAS COMPETITIVENESS RANKINGS

• 19th MOST COMPETITIVE ECONOMY IN THE WORLD
• World Competitiveness Yearbook 2008, IMD
• 14th PREFERRED DESTINATION FOR FDI UNCTAD 2007
• TOP 3 ATTRACTIVE LOCATION FOR OFFSHORING
  OUTSOURCING SERVICES
• A.T. Kearneys- Annual Global Services Location
  Index (In 2005, 2006 and 2007)
• 13th RANK GLOBALLY FOR CAPITAL ACCESS
• Milken Institute, USA- Capital Access Index
  (CAI) 2007
• 5th CHEAPEST CITY IN THE WORLD FOR RENT OF PRIME
  OFFICE SPACE 11th CHEAPEST FOR PRIME INDUSTRIAL
  SPACE
• King Sturge, UK- Global Industrial And Office
  Rents Survey 2007

www.mida.gov.my
13
Malaysian Industrial Development Authority
Strategies, Policies Incentives for
the Manufacturing Sector
14
THEME
Malaysia Towards Global Competitiveness
15
Current Focus on the Manufacturing Sector

• High technology, capital intensive knowledge
  driven industries

• Industries manufacturingintermediate goods

• Machinery equipment
• Components parts
• Moulds and dies

• Biotechnology
• Advanced electronics
• Optics and photonics
• Wireless technology
• Display technology (TFT, LCD, Plasma parts)
• Petrochemical
• Pharmaceutical
• Medical devices
• ICT

• Resourced-based industries

• Food ( Halal Hub )
• Value-added products from oil palm biomass
  (particle board, MDF board, animal feed)

• Upgrading of other sectors in particular
  factory automation

16
TARGETED SERVICES (IMP3)

• Business and professional services
• Logistics
• ICT services
• Distributive trade
• Education and training
• Construction
• Health
• Tourism

17
Liberal Investment Policy

• Equity Guidelines

100 foreign equity ownership is allowed,
irrespective of the level of exports

• Guidelines on Repatriation of Profits

No restriction is imposed on the repatriation
of profits for foreign companies investing in
Malaysia

• Governments Delivery System

Special project officers in MIDA to
hand-hold and assist Investors in obtaining all
necessary approvals until they are operational

• Liberal Approval for Expatriates

• Key post permanent
• Time post 5 to 10 years

18
INVESTMENT INCENTIVES
www.mida.gov.my
19

• Pioneer Status (PS)
• Income tax exemption, ranging from 70 to
  100
• of statutory income for a period of 5 to 10
  years.
• Investment Tax Allowance (ITA)
• ITA of 60 to 100 on qualifying capital
  expenditure
• incurred for a period of 5 to 10 years.

• Reinvestment Allowance (RA)
• RA of 60 on qualifying capital
  expenditure

www.mida.gov.my
20
Import Duty and Sales Tax Exemptions

• Raw Materials/Components
• Machinery and Equipment

www.mida.gov.my
21
MACHINERY AND EQUIPMENT SECTOR
Malaysian Industrial Development Authority
22
Approved Projects in ME Industry
23
IMPORTS MACHINERY EQUIPMENT
24
EXPORTS MACHINERY EQUIPMENT
25
MAJOR MACHINERY EQUIPMENT MANUFACTURED IN
MALAYSIA

• Assembly test equipment for electronic industry
• Factory automation equipment
• Natural rubber/latex/palm oil processing
  machinery and equipment
• Filling/wrapping/strapping machine
• Concrete mixers asphalt batching plants
• Cranes, lifts elevators
• Refrigeration plants/cold room equipment
• Power/hydraulic presses shearing bending
  machines
• Plant/packaged air-conditioners cooling towers
• Welding machine
• Pressure vessels industrial boilers
• Blowers fans
• Vibratory road rollers, C-frame for tractors,
  buckets arms for excavators, hydraulic
  cylinders, bushes pins
• Dehumidifiers compressors
• Production equipment for oil and gas industry

26
DEVELOPMENT OBJECTIVES AND STRATEGIES FOR THE M
E INDUSTRY OF MALAYSIA

• To Promote Malaysia as
• 1) The regional production hub for the high
  technology and specialized machinery and
  equipment
•    
• The main distribution centre in the region for
  all types of machinery and equipment
• The centre for maintenance related services,
  refurbishment, reconditioning and upgrading of
  high technology and specialized machinery and
  equipment
• Note To provide total solution for machinery,
  automation and engineering services

27
MALAYSIAS COMPETITIVE EDGE
Lower cost compared to industrialised countries
High skilled knowledge workforce
Standard ME for Niche Market Specialised
Custom Made ME
High Technology
High quality
Engineering design capabilities
RD capabilities
28

• Machine tools
• Plastic injection machines
• Plastic extrusion machines
• Material handling equipment
• Robotics and factory automation equipment
• Specialised/process machinery or equipment for
  specific industry
• Packaging machinery
• Parts and components of the above machines and
  equipment

TARGETED MACHINERY EQUIPMENT
29
SPECIAL INCENTIVES FOR TARGETED MACHINERY
EQUIPMENT

• Pioneer Status with tax exemption of 100 of
  statutory income for a period of 10 years
  
• OR
• Investment Tax Allowance of 100 of qualifying
  capital expenditure incurred within 5 years which
  can be offset against 100 of statutory income
  annually until fully utilised

30
MACHINE TOOLS

• Metal Cutting Machineries
• Machining Centers
• Milling Machines
• Lathe machines
• Grinding Machines
• EDM (Die sinking/wire cut)

• Metalworking/shaping Machineries
• Press brakes
• Guillotines
• Hydraulics power presses
• Turret punches
• Forging machines

• Imports were mainly from Japan, Taiwan,
  Singapore, Germany, USA, Switzerland.
• Emphasis is on high technology, NC and CNC
  machines.
• Leading companies in operation are Aida,
  Hydra-Link, Li Chin (S.E.A), Sunfluid
  Engineering, Technology Park Malaysia.

31
PLASTIC INJECTION MACHINES
Targeted machines used for precision plastic
injection moulding of plastic products, parts and
components.

• Imports were mainly from Japan, Taiwan, Germany,
  China, Singapore
• Although one company has recently been given
  approval, currently there are no manufacturers of
  plastic injection machines in Malaysia

32
PLASTIC EXTRUSION MACHINES
Targeted machines used for precision plastic
extrusion products, parts and components.

• Imports were mainly from Germany, Taiwan, Japan,
  Italy, Korea, USA.
• Currently there are 3 manufacturers of plastic
  extrusion machinery in Malaysia

33
MATERIAL HANDLING EQUIPMENT
ME in this category include those involved in
the movement, handling, storage and retrieval of
materials such as most types of cranes,
conveyance equipment, auto storage/retrieval
systems and material handling equipment for
manufacturing processes.

• Currently there are about 20 manufacturers of
  material handling equipment in Malaysia
• Leading companies in this industry are Favelle
  Favco (a top ten world leading manufacturer of
  tower cranes), Impsa, Exellift, MHE-Demag Cheng
  Hua Engineering.

34
PACKAGING MACHINERY
Targeted ME in this category include bottling
machinery, food and confectionary packing
machinery, wrapping and shrink wrapping machines,
sorting and grading machines, filling and sealing
machinery

• Currently there are about 5 manufacturers of
  various packaging machinery in Malaysia.
• Imports were mainly from Germany, Italy, Japan,
  USA, Taiwan

35
SPECIALISED/PROCESS MACHINERY OR EQUIPMENT FOR
SPECIFIC INDUSTRY

• Targeted ME in this category are machinery and
  equipment specifically designed for use in any
  particular industry or process.
• Industries targeted include food and beverage,
  woodworking, pulp and paper, agricultural,
  automotive, medical, biotechnology, oil and gas
  processing, petrochemical, pharmaceutical,
  printing.

(EUR million)

• Very high priority category ME for
  investment promotion

36

• There are more than 200 companies operating
  within automation equipment cluster in Malaysia
  manufacturing automation equipment, parts,
  component modules and providing related
  services.
• Malaysias capabilities in this industry is
  increasingly being recognised globally where
  Malaysia is the leading manufacturer of
  automation equipment for the EE industry in the
  South East Asian region.
• Major local companies such as Genetec, Vitrox,
  Kobay Technology, Pentamaster and Upeca.

Automation Equipment Industry in Malaysia
37

• Types of automation equipment produced are for
  the
• PCB Inspection
• Semiconductor Processing
• Hard Disk Drive Industry
• Apart from developing new automation process for
  the above, Malaysian companies have also invested
  into the production of automation equipment for
  other industries such as
• Medical
• Automotive

Automation Equipment Industry in Malaysia
38

• Penang Automation Cluster (PAC)
• PAC is a Penang-based automation cluster, which
  comes under the umbrella of investPenang with
  members more than 60 companies.
• A collaborative platform to leverage on members
  core competencies in automation to jointly
  develop high technology products for the global
  market.
• FMM-Automation Tehnology Group (FMM-ATIG)
• FMM-ATIG is a group under the Federation of
  Malaysian Manufacturers to further promote and
  enhance the development of the automation
  equipment industry in Malaysia with members more
  than 50 companies.

39
MAJOR ITALIAN COMPANIES IN OPERATIONS IN MALAYSIA
IN MACHINERY ENGINEERING
40
MAJOR FOREIGN COMPANIES INOPERATIONS IN MALAYSIA
41
(No Transcript)
42
(No Transcript)
43
(No Transcript)
44
(No Transcript)
45
(No Transcript)
46
(No Transcript)
47
(No Transcript)
48
(No Transcript)
49
(No Transcript)
50
(No Transcript)
51
(No Transcript)
52
MALAYSIAS ENGINEERING SUPPORTING INDUSTRY
Malaysian Industrial Development Authority
53
POSITION OF THE ENGINEERING SUPPORTING INDUSTRY
SECTOR

• Significant role in the economys structural
  transformation to a fully industrialized nation
  by year 2020
• Complements the machinery and equipment
  manufacturing industry by supplying parts,
  components and services
• Gearing towards meeting global outsourcing
  requirements in terms of technology, quality and
  on-time delivery
• The engineering supporting companies are gearing
  towards becoming total solution providers or
  pooling their resources to offer integrated
  services
• Companies are specializing more and more towards
  low volume, high mix, high value-added parts,
  modules and components.

54
MALAYSIAN TOTAL SOLUTION PROVIDERS

• Among Malaysian Total Solution Providers are -
• Alpha Master Sdn. Bhd.
• Atasmi Precision Machinist Sdn. Bhd.
• UWC Holdings Sdn. Bhd.
• Lypometal Sdn. Bhd.
• Kobay Technology Sdn. Bhd.
• Kein Hing International Bhd.
• These companies are capable of providing total
  solutions to the advanced requirements of high
  value-added and high technology industries such
  as the high end EE, automotive, medical
  equipment and devices, machinery manufacturing,
  scientific laboratory equipment and aerospace
  industries.

55
SOURCING CAPABILITIES IN MALAYSIA
gt
STRENGTHS

• Suppliers show overall good quality of execution
• And strong willingness to deliver
• Able to supply the high volume, low mix demand
  for the electrical electronics,
  telecommunications and automotive industries.
• Capabilities to supply low volume, high mix niche
  products for the medical, machinery equipment,
  oil gas and aerospace industry
• MIDA offers very favourable environment with both
  financial incentives and operational support

56
AFTA A Potential Market
57
AFTA
Benefits of locating in Malaysia

• Integrated domestic ASEAN market of more than 567
  million people with total GDP of EUR 830 billion.

• ASEAN FTA 2010
• All tariffs in ASEAN eliminated
• ASEAN
• - Economic Community 2015
• - Allow free flow of goods, services and
• investments, labour and freer flow of capital

1 USD 0.78 EUR
58
Why Malaysia ?

• Political Economic Stability
• Pro-business Government
• Liberal Investment Policies
• Transparent Policies
• Policy of Welcome
• Well Developed Infrastructure
• Harmonious Industrial Relations
• Trainable Educated Labour Force
• Quality of Life
• Good Track Record

59
Malaysian Industrial Development Authority
THANK YOU
http//www.mida.gov.my