POLICY DIALOGUE ON INDUSTRIAL DEVELOPMENTETHIOPIA

Malaysian Investment Development Authority (MIDA)
16 January 2013

Content Focus
MALAYSIA’S ECONOMY
FUNCTIONS OF MIDA
INDUSTRIAL DEVELOPMENTINVESTMENT PERFORMANCEINVESTMENT OPPORTUNITIESINVESTMENT POLICIES AND INCENTIVESINVESTMENT PROMOTIONINDUSTRIAL PARKS
IMPLEMENTATION OF PROJECTSMALAYSIA’S RANKING

MALAYSIA’SECONOMYMalaysia – Strategic Gateway to Regional Markets
Malaysia is strategically located in the very heart of Southeast Asia.

Malaysia’s Key Economic Indicators
20102011p2012

Real GDP (%) Growth

7.2

5.1

5.2 (Q3)

Inflation (%)

1.7

3.2

1.3

Per Capita Income (US$)

8,140

9,508

10,134

Unemployment (%)

3.3

3.1

3.2

International Reserves (US$ bil)

106.5

138.3

138.6*

Retained Imports Equivalent (months)

8.5

9.6

9.2*

Source: Central Bank of Malaysia/Department of Statistics Malaysia/MATRADE

GDP By Industrial Origin

GDP Contribution (%)
Sector
1970

1990

2000

2010

2011

Agriculture

33.6

19.3

8.8

7.3

7.3

Mining

7.2

9.8

6.7

7.0

6.3

Construction

3.8

3.4

3.4

3.3

3.2

Manufacturing

12.8

26.532.6

27.6

27.5

Services

42.6

42.1

53.0

57.7

58.6

Source : Economic Reports/Bank Negara Annual Report, Malaysia 2011/2012

FUNCTIONSOF MIDAMITI’s Agencies

Malaysia Automotive Institute

Malaysian Investment
Development Authority

Malaysia External Trade
Development Corporation

Small and Medium Enterprise
Corporation Malaysia

Halal Industry Development
Corporation
Ministry of International
Trade and Industry

Malaysian Industrial
Development Finance

Malaysia Productivity Corporation

MIDA
Malaysian Industrial Development Authority - Established in 1967 under
Act of Parliament, 1965

The principal Malaysian
Government agency
responsible for thepromotion ofinvestments andcoordination ofindustrial developmentin the country

First point of contact forinvestors who intend toset up projects in themanufacturing andservices sectors inMalaysia

On 27 March 2004, the Government mandated MIDA to promote
investments in the services sector
2011 : Restructuring and rebranding of MIDA - Malaysian Investment
Development Authority

MIDA ORGANISATION CHART
Total Staff Strength
2012: 884

Approved Budget 2012:
US$52.9 million

Functions of MIDA
Promotion

Foreign Direct Investment
Domestic Investment
Business matching through E-Connect
Manufacturing Services

Evaluation

Manufacturing licenses
Tax incentives
Expatriate posts
Duty exemption
OHQ, RDC, IPC and R&D status

Planning

 Planning for industrial development
 Recommend policies and strategies on industrial
promotion and development
 Formulation of strategies, programmes andinitiatives 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

Services Provided by MIDA

FREE OF CHARGE

Services (Initial Stage)•••••

Briefing with MIDA HQ
Meetings with State Authorities
Business matching with Malaysian companies
Visit to companies/suppliers
Visit to potential locations

Evaluating & Granting Approval••••

Manufacturing License
Tax Incentives
Expatriate Posts
Import Duty Exemptions

Project Implementation Stage•

Handhold and assist investor until project is implemented

MIDA “One-Stop Centre”
Based outside of MIDA

Based In MIDA

• Department of Occupational• Immigration Department

Safety and Health• Ministry of Finance• Ministry of Health• Ministry of Tourism• Ministry of Human Resource• Ministry of Higher Education• Multimedia Development Corp. (MDeC)• Construction Industry Development
Board of Malaysia (CIDB)• Royal Malaysian Customs• Department of Environment• Tenaga Nasional Berhad (Electricity)• Telekom Malaysia Berhad (Telecom)• Labour Department

MIDA’s Global Network

Stockholm

San Jose

ChicagoLos Angeles
HoustonBoston
New York

LondonParisFrankfurt
MunichMilanTokyo
Seoul
Osaka
Shanghai
Guangzhou
Dubai
TaipeiMumbaiBangkok
Singapore

Johannesburg
Sydney24 Overseas Centres

INDUSTRIAL
DEVELOPMENTLate 1950’s and the 1960’s

Development Issues• Unemployment rose to more than 8%• Dependency on export commodities i.e. rubberand tin• Narrow economic base

Late 1950’s and the 1960’sStrategies• Promotion of Import Substitution Industries:–––––

Food, beverages & tobacco industries
Printing & publishing industries
Building materials industries
Chemicals & plastic industries
Consumer products• Tax Incentives• Provision of infrastructure (industrial estates, power andtelecommunications facilities)• Establishment of MIDA, 1967

1970’sDevelopment Issues• Unemployment still high• Development of industries constrained by small
domestic market•••••••

Lack of domestic capital

Export of manufactured products limited
Export market outlets/expertise limited
Lack of managerial expertise
Lack of technology
Uneven distribution of wealth
Identification of race with economic functions

1970’sStrategies• Manufacturing considered as strategic sector for achievement of
the New Economic Policy (NEP) objectives of poverty redresal
and restructuring of society• Efforts to promote industrial development intensified• Emphasis on job creation• Promotion of electronic and other labour-intensive industries• Push for foreign direct investment
 Attractive tax incentives under the Investment Incentives Act, 1968
 Establishment of FTZs in 1972 and LMWs in 1974
 Introduction of Industrial Coordination Act, 1975 (ICA) - 100% foreign
equity ownership allowed for projects exporting 80% or more

1980’sDevelopment Issues• Global recession (1985 – 1987)• Increase in unemployment• Narrow manufacturing base• Lack of processing of local resources for export i.e.
rubber, palm oil, timber, cocoa• Deepening of industrial sector

1980’sStrategies• Widen and deepen industrial base
– Export and resource based industries– Development of selective heavy industries, e.g. motorvehicles, steel and cement• Introduction of Promotion of Investments Act, 1986
• Launching of First Industrial Master Plan, 1986-1995

1990’sDevelopment Issues• Industrial transition in increasingly complex global tradeand investment environment• No longer competitive in labour intensive industries• Labour shortages, both skilled and unskilled• Low level of R&D activity• Bottlenecks in support infrastructure• Lack of industry linkages• Lack of indigenous technology and marketing capability

1990’sStrategies•

Promotion of:–High technology industries–Capital intensive industries–Skill intensive industries–

Services based industries–

R&D activities• Accelerate the development of indigenous technology• Development of supporting industries

…cont.

1990’s• Launching of Second Industrial Master Plan (IMP2), 1996-2005–

Manufacturing Plus Plus Orientation–

Cluster Based Industrial Development• Liberalisation of equity policy (100% foreign equity ownershipallowed irrespective of the level of exports)• Human resource development• Development of SMIs - Establishment of Small and Medium
Enterprise Corporation Malaysia (SME Corp. Malaysia)• Establishment of technology parks

2000 onwardsStrategies• Third Industrial Master Plan, 2006-2020• Promotion of Services Sector• Economic Corridors• Economic Transformation Programme (ETP)• National Key Economic Areas (NKEAs)

Malaysia’s Economic Development Journey
Innovation, ETP &High Income

2010

Technology
Intensive

1990s

Export-Oriented &Labour-Intensive

1980s
1970s

1960s
ImportSubstitution

Resource-Based &Heavy Industries

2000
Economic Corridors& Services

INVESTMENTPERFORMANCEMalaysia Continues to Attract High Levels ofGlobal FDI Inflows for the Period Jan-June 2012
Balance of Payment (BOP)

11,811
9,459
7,785

4,371
1,626

Source: DOSM

Approved Investments in the Economy for Jan-June 2012 Has
Reached More than Half (43.5%) of Total Investments in 2011
Approved Investments

49.9

48.0
44.2
35.9

33.8

34.1
28.2

Source: MIDA and Other Ministries/Agencies

Approved Investments in the Economy By
Foreign and Domestic Investments
Manufacturing
SectorDomestic
Investments(US$42.7 billion)

Services and Primary
SectorDomestic
Investments(US$128.5billion)

2006 – June 2012

77%
40%

60%
23%

ForeignInvestments(US$63.8 billion)
Source: MIDA and Other Ministries/Agencies

ForeignInvestments(US$39 billion)Direct Investments Abroad (DIA)
Broadly consistent trend over theyears

Direct Investments Abroad (DIA)
DIA undertaken by a wide range of Malaysiancompanies

INVESTMENTOPPORTUNITIESInvestment Opportunities in the Manufacturing Sector
Electronics & Electrical

Aerospace• High-technology based products using • Maintenance, Repair and Overhaul(MRO)
wireless and convergence technology•Aerospace Manufacturing• Mobile application• Solar wafer / cells / modules

Machinery & Equipment• Semiconductors• Automated equipment for semiconductor,
solar, medical & automotive industries• Process machinery for food & beverages andoil & gas

Petrochemical• Alpha-olefins & fatty alcohols,
propylene oxide & caprolactam • Packaging machinery• Renewable & biodegradablematerials

Investment Opportunities in the Manufacturing SectorServices• Regional Establishments• Shared services outsourcing• Data Centre• Healthcare• Logistics• Tourism• Education• Environmental Management

INVESTMENTPOLICIES AND
INCENTIVESEquity Policy

Foreign Equity

Manufacturing
44 Services
Sub-Sectors liberalisedMajor Incentives

Pioneer Status
Income tax exemption ranging
from 70% or 100% for a periodof 5 or 10 years

Investment Tax Allowance
60% or 100% on qualifying
capital expenditure for 5 years

Incentives
Reinvestment Allowance
60% on qualifying capital
expenditure for 15
consecutive years

Import Duty & Sales Tax
Exemption
For raw materials/components
and Machinery and Equipment

INDUSTRIAL PARKS

Industrial Parks
Policy formulation on establishment of specialised
technology parks for certain promoted indutsries (e.g. Kulim
and Senai Hi-Tech Park)

Funding for upgrading of existing industrial parks

Promotion of industrial parks - To identify and encourage
specific potential investors to invest

INVESTMENTPROMOTION

Malaysia adopts a targeted approach in attracting FDI
MIDA undertakes various promotional programmes and activities to promote
and attract foreign investments into the manufacturing and services sectors.

Trade and Investment Missions
Roundtable Meetings and Mini Seminars
Specific Project Missions
International Seminars/Forums/Dialogues with foreignchambers, Industry Leaders Programme
Advertisement and Advertorials

International Exhibitions

The Government promotes domestic investments andnurture Malaysian companies to become global players
players

Various initiatives have been undertaken by MIDA to further spur thedomestic investments
Domestic Investment Seminars
Specific Industry Seminars

Roundtable Meetings
Visits and Dialogues

Familiarisation Programmes
Local Exhibitions

IMPLEMENTATIONOF PROJECTSHandholding Activities
MIDA has a dedicated Industry Support Division to undertake thefollowing handholding activities:

Handhold and assist investors in obtaining all necessary
approvals for projects within the stipulated time frame.

One-stop agency at the state levels

Coordinate activities of MIDA state offices

MALAYSIA’SRANKINGMalaysia’s Ranking in the World
Malaysia Remain an Attractive Investment Location
World Bank
Doing Business 2013 Report
Malaysia ranked 12th most business-friendly country
Malaysia is ranked ahead of other highly regarded economies suchas Sweden (13th), Taiwan (16th), Germany (20th), Japan (24th) andSwitzerland (28th)
Malaysia is first in terms of ease of getting credit

Malaysia is fourth in the world for protecting investors
Malaysia ranked among the top 10 economic reformers in the APEC
regionMalaysia’s Ranking in the World
World Economic Forum
Global Competitiveness Report 2012-2013
Malaysia was ranked at 25th position among 144 countries
surveyed
Malaysia is in the top 20 per cent of the most competitive
countries globally
Malaysia has been upgraded to the transition towards
innovation-driven stage from efficiency-driven

Malaysia maintained its 2nd position in ASEAN after Singapore
and 8th in Asia Pacific ahead of other ASEAN, China and India

Thank You
for your kind attention