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TRANSCRIPT
1 Incentives for IBS
26 March 2019 at Wisma REHDA Kelana Jaya
IBS Conference
Vision The best partner to investors distinguished by the integrity and professionalism of its people
CONTENTS
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PHASES OF INDUSTRIAL DEVELOPMENT INVESTMENT POLICY IBS INCENTIVES MIDA PROFILE &
INVESTMENT PERFORMANCE
Phases of Industrial
Development
Malaysia’s Economic Development Journey
Import Substitution
Export Oriented & Labour Intensive
Resource-based & heavy industries
Technology Intensive
Economic Corridors & Services
Innovation, ETP & High Income
SECTOR GDP CONTRIBUTION (%)
1970 2018
Agriculture 33.6 7.3
Mining 7.2 7.9
Construction 3.8 4.5
Manufacturing 12.8 23.6
Services 42.6 55.3
Malaysia has successfully transformed from a predominantly agriculture-based economy in the 1970s, to a more diversified economic structure.
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Source : Department of Statistic Malaysia, BNM 1960s
1970s
1980s
1990s
2000s
2010s
2018 Digital Economy, Industry 4.0 & E-Commerce
5
Tun Dr. Mahathir Mohamad launched the National Policy on Industry 4.0, known as
Dig
Digital transformation of the
manufacturing sector
Malaysia as strategic partner for smart
manufacturing, primary destination for high-
technology industries
Enhanced productivity, job creation and
high-skilled talent pool
Industry4WRD
31 OCTOBER 2018
DIGITALISING CONSTRUCTION VS DIGITAL MANUFACTURING
Source : Frost & Sullivan
Industrie 4.0
(2011)
Industry Value
Chain Initiative
(2015) Smart Manufacturing
Leadership Coalition
(2012)
Made in
China 2025
(2015)
Make in India
(2014)
Future of
Manufacturing
(2015)
Innovation in
Manufacturing 3.0
(2014)
Factories of
the Future
(2013)
Many countries, Different Names, Similar Goals Source : IDC, Frost & Sullivan
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USA
European
Union (EU)
India China
Germany South
Korea
Japan
Singapore
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Enhance Global Competitiveness
Strengthen growth and productivity of
manufacturing industry
Create new generation jobs and reduce dependency on
foreign labours
Sustaining high levels of Foreign and Domestic
Investments
Industry 4.0 Policy Framework
Autonomous robots
Augmented Reality
Cloud computing
System integration
Simulation
Additive
manufacturing
Internet of Things
Big data and analytics
Cyber Security
Artificial Intelligence
Industry 4.0 Key Technologies
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Targeted Technology Drivers
MoU MIDA – CIDB Areas of Co-Operation
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“manufacturing activity” means - making, altering,
blending, ornamenting, finishing or otherwise
treating or adapting any article or substance with
a view to its use, sale, transport, delivery or disposal
and includes the assembly of parts and ship
repairing
but shall not include any activity normally associated
with retail or wholesale trade
- LAWS OF MALAYSIA Act 156, INDUSTRIAL CO-ORDINATION ACT 1975
INDUSTRIAL CO-ORDINATION ACT 1975,
LAW OF MALAYSIA, ACT 156
3. (1) No person shall engage in any manufacturing activity
unless he is issued a licence in respect of such
manufacturing activity.
(2) Any person who fails to comply with subsection is
guilty of an offence and is liable on conviction to a fine not exceeding RM2,000 or to a term of
imprisonment not exceeding 6 months and to a
further fine not exceeding RM1,000 for every day
during which such default continues.
Licence required for manufacturing activity
ICA JA1/ ICA JA2 : Manufacturing Licence
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A company with shareholders’ funds of RM2.5 million and
above or employing 75 or more full-time paid employees to
obtain a Manufacturing Licence.
• "Shareholders' funds" - a company's paid-up
capital, reserves, balance of share premium account
and balance of profit and loss appropriation account
• "Full-time paid employees" - persons working in
the establishment for at least six hours a day and at
least 20 days a month for 12 months during the year
and who receive a salary.
Forms can be downloaded from:
http://www.mida.gov.my/home/forms-&-guidelines-for-manufacturing-sector/posts/
A company with shareholders’
funds below RM2.5 million or
employing less than 75 full-
time paid employees to obtain
an exempted company status
ICA 10 – Exempted Company
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Forms can be downloaded from:
http://www.mida.gov.my/home/forms-&-guidelines-for-manufacturing-sector/posts/
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Intellectual Property Protection
Malaysia’s IP laws are in
conformance with
international standards
- Member of the World
Intellectual Property
Protection Organisation
(WIPO)
- Signatory of the Paris
Convention and Berne
Convention which govern IP
rights
- Signatory of the Agreement
on Trade-Related Aspects
of IP Rights (TRIPS) under
the WTO
Business Friendly Policies
Investment Guarantee Agreements (IGAs)
Malaysia has signed IGAs with more than 60 countries
Investment Policies
Equity Ownership
Foreigners are allowed
to hold 100% equity
ownership in the
manufacturing and
selected services
sectors
Repatriation of
Income
Freedom to
repatriate capital,
interest, dividends
and profits. No
restrictions
IBS Policy Implementation
Circular from Ministry of Housing & Local Government dated 10 January 2018
*50,000 sqm Gross Floor Area
70 IBS Score
50 IBS Score
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IBS INCENTIVES
6 TYPES OF IBS SYSTEM
Precast Concrete
Formwork System
Steel Framing System
BlockworksSystem
Timber Framing System
Innovative System
Modular PPVC Prefab Bathroom
60% or 100% on
qualifying
capital
expenditure for 5
years
60% on qualifying
capital
expenditure for 15
consecutive years
For raw
materials /
components and
machinery and
equipment
Income tax
exemption
ranging from 70%
or 100% for a
period of 5 or 10
years
Import Duty
Exemption Reinvestment
Allowance Investment Tax
Allowance Pioneer
Status
Major Tax Incentives
Less
Developed
Area
Expatriate Post
column
beam,
slab,
wall
roof truss
1. PARTIAL (70%)
-at least three (3)
2. FULL (100%)
-Four (4) and above 5 b
asic
IBS c
om
po
ne
nts
Industrialised Building System (IBS)
Section 127, Income Tax 1967
(10 Sept 2015 - 31 Dec 2020)
Mandatory Conditions for IBS Incentive
Wall Panel
Column
Beam
Roof Truss
IBS COMPONENTS
Slab
Technology, usage of local raw materials, investment and economic benefit to Malaysia Company must obtain IBS
certification from CIDB within
two (2) years after the project
has commenced production
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The Automation Capital Allowance was introduced to encourage swift adoption of automation among
manufacturing companies in undertaking innovative and productive activities. It is divided into two (2)
categories, namely;
For IBS companies - Automation CA of 200% will be provided on the first RM2 million
expenditure incurred within 5 years of assessment from 2015 to 2020; and
For high labour-intensive industries (rubber products, plastics, wood, furniture and textiles), an
Automation CA of 200% will be provided on the first RM4 million expenditure incurred within 5
years of assessment from 2015 to 2020
151 Applications
Approved as at 8 March 2019
3 IBS companies
Existing company -At least 36 months in operation
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Automation Capital Allowance (ACA)
Domestic Investment Strategic Fund (DISF)
Domestic Investment Strategic Fund (DISF) provides matching
grants (1:1) for expenditures incurred for the upgrading the
company’s technological capabilities to be more competitive
internationally, move-up the company’s value chain and enable
the company to be active participants in the global ecosystem.
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DISF Grant
Digital Transformation Acceleration Programme
(DTAP) Grant (MIDA and MDEC)
A matching grant, with the objective of assisting companies to leverage on Digital Transformation Lab’s (DTL) expertise and assistance in addressing pain points or exploit opportunities in the digital space, while adopting emerging digital technologies.
Increased Productivity Reduced Dependency on Foreign Labour
New Sources of Growth / Business Models
DTL • Delloite • Digital/McKinsey • Rainmaking • Roland Berger • Bosch
Malaysian companies are still lagging behind in adopting digital technologies due to: • The perception that it seems fast-paced
and complex; • Budget limitations as digital adoption may
not be part of their overall strategy; and • Shortage of digital professionals.
• The Soft Loan Scheme for Automation & Modernisation (SLSAM) was launched in
February 2017
• The SLSAM assists manufacturing companies to:
o modernise and automate manufacturing process
o upgrade production capability and capacity
o minimize dependence on labor-intensive activities and foreign labour
o diversify into higher value added activities
o rationalize and streamline operations including through merger and acquisitions
• The fund for this Scheme is channeled by the Government of Malaysia via MITI to
MIDF for the implementation of the Scheme
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PERFORMANCE
MIDA PROFILE
• Foreign Direct Investment
• Domestic Investment
• Manufacturing & Selected Services
• Manufacturing Licenses
• Tax Incentives
• Expatriate Posts
• Duty Exemption
• Principal Hub & selected services
• Assist companies in the implementation & operation of their projects
• Facilitate exchange & coordination among institutions engage in or connected with
industrial development
• Advisory Services
• Planning for industrial development
• Recommend policies & strategies on industrial promotion and
development
• Formulation of strategies, programmes and initiatives for
international economic cooperation
Core functions
The principal Malaysian
Government agency responsible
for the promotion of investments
and coordination of industrial
development and selected
services sectors in the country
Established in 1967 under Act of
Parliament, 1965.
FIRST POINT OF CONTACT
1. PROMOTION
3. POST INVESTMENT
5. PLANNING
• Licensing & Incentive Compliance and
Monitoring
• Determination of effective date of incentives
• Issuance of Pioneer Certificate
4. MONITORING
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2. EVALUATION
• New York • San Jose • Chicago
• London • Stockholm • Munich • Frankfurt • Milan • Paris
• Tokyo • Osaka
Sydney Singapore
Mumbai
Dubai
12 state offices
20 overseas offices and 12 state offices
• Beijing • Guangzhou • Shanghai • Taiwan
Seoul
Truly International
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One Stop Centre
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Immigration
Department
Royal Malaysian
Customs
Telekom Malaysia
Berhad
Labour
Department MIDA as a One
Stop Centre
Based in MIDA
Based Outside MIDA
MALAYSIA INVESTMENT PERFORMANCE REPORT 2018
TOTAL APPROVED INVESTMENTS IN 2018
RM201.7 bil
2017: RM200.6 bil
4,887 projects
2017: 5,608 projects
129,780 2017: 139,511
RM201.7
billion DDI RM121.1 bil (60.1%)
FDI RM80.5 bil (39.9%)
2017: RM54.4 bil (27.1%)
2017: RM146.2 bil (72.9%)
Source: MIDA
0.5%
12.9%
7.0%
48%
17.1%
Jan – June : RM86.1 bil July – Dec : RM115.6 bil
MALAYSIA INVESTMENT PERFORMANCE REPORT 2018
Approved investments increased by 37.2% year-on-year, supported by a number of capital intensive projects.
APPROVED INVESTMENTS IN THE MANUFACTURING SECTOR IN 2018
RM87.4 bil*
2017: RM63.7 bil
721 projects
2017: 687 projects
Jan – Apr : RM16.2 bil May – Dec : RM71.2 bil
2017: 56,431
RM87.4 billion
DDI RM29.4 bil (33.6%)
FDI RM58.0 bil (66.4%)
Manufacturing
No. of approved projects increased by 4.9% and employment increased by 5.1%.
2017: RM21.6 bil
(33.8%)
2017: RM42.1bil (66.2%)
Source: MIDA
5.1%
37.2%
4.9%
169.3%
30.3%
59,294
MALAYSIA INVESTMENT PERFORMANCE REPORT 2018
Manufacturing
INVESTMENTS BY COUNTRIES
Source: MIDA
19.7
9.0 8.3
4.1 3.2 2.8
2.5 1.8 1.3 0.9
China Indonesia Netherlands Japan USA BVI Korea,Rep. Singapore Hong Kong Panama
RM
billio
n
China, Indonesia, the Netherlands, Japan and the USA were the largest contributors accounting for 76.4% of total foreign investments approved
MALAYSIA INVESTMENT PERFORMANCE REPORT 2018
The lion’s share came from the petroleum products (including petrochemicals) industry.
(14%)
(9%)
(10%)
(8%)
Manufacturing
INVESTMENTS BY INDUSTRY
32.9
13.1
11.2
5.4
5.0
4.6
2.4
2.4
1.9
8.5
Petroleum Products (inc. Petrochemicals)
Basic Metal Products
Electrical & Electronic Products
Paper, Printing & Publishing
Chemical & Chemical Products
Rubber Products
Non-Metallic Mineral Products
Machinery & Equipment
Transport Equipment
Natural Gas
Others
2018 RM87.4 bil.
16.7
9.7
4.1 7.7
2.2
4.8
9.3
7.5
0.2
0.3
1.2
RM billion
2017 RM63.7 bil.
Source: MIDA
39 IBS projects RM2.44 Bil 45 IBS projects
RM7.65 Bil
Market Access
• 3rd largest market in the world with 622 million people (behind only China and India)
• Already zero tariffs for 99% of products • Attracts 11% of global FDI
INDIA
PAKISTAN CHINA KOREA
JAPAN
AUSTRALIA
NEW ZEALAND
CHILE
TURKEY
ASEAN
13 Free Trade Agreements
MARKET 2.7 Billion Population
Most attractive investment destination (Baseline Profitability Index (BPI) 2015)
Most competitive economy in overall performance (IMD's World Competitiveness Yearbook 2018)
Manufacturing Value Added (Bloomberg Innovation Index 2017) Global offshoring destination
(A.T. Kearney Global Services Location Index™ 2016)
Protecting investors (World Bank Doing Business 2017 Report)
The Most Developed Islam Economy (Thomson Reuters November. 2017)
Dominant position in Islamic
Finance Development Indicator
(ICD- Thomson Reuters)
Most attractive emerging market in the World (Bloomberg 2018)
“Destination of the Year” (International Medical Travel Journal (IMTJ) 2017)
KL – Most visited city in the World (Euromonitor International 2017)
Best countries to invest (BAV Consulting and the Wharton School of the University of Pennsylvania. 2017)
Doing Business Report
2019
(Ease of doing
business)
World Bank
Malaysia‘s Ranking
Ms Najihah Abas
Director
Building Technology & Lifestyle
Division
MIDA Sentral
No. 5 Jalan Stesen Sentral 5
KL Sentral
50470 Kuala Lumpur
Tel: 603 – 2267 3633
Fax: 603 – 2274 7970
Email: najihah @mida.gov.my
www.mida.gov.my
Malaysia is a vibrant economy. Talk to MIDA and discover how Malaysia can be your Profit Centre in Asia
For more information, please visit www.mida.gov.my or email to [email protected]
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Contact
us URL https://www.facebook.com/OfficialMIDA
URL : https://twitter.com/OfficialMIDA