DOING BUSINESS WITH
MALAYSIA
PRESENTATION - SCOPE
2
• MALAYSIA – MAP & KEY INDICATORS
• BASIC ECONOMIC DATA
• WHY MALAYSIA?
• ASEAN ECONOMIC COMMUNITY (AEC)
RUSSIA - MALAYSIA
Malaysia: Geographically diverse
Key Indicators (2014)
5
• Land Area - 330,252 sq km
• Administrative Capital - PUTRAJAYA
• Commercial Capital - KUALA LUMPUR
• Population (2014f) - 30.1 million
• Real GDP (%) - 5.0 – 5.5
• Inflation (%) - 2.0 – 3.0
Key Indicators
6
• Per capita Income - US$ 10,898
• Unemployment (%) - 3.1
• International Reserves (Dec.2014) - US$ 116 bil.
• Retained Imports - 48 months
• Growth projection - 4.7% (2015)
Source: Economic data (www.epu.gov.my)
Additional Info
7
• Business language - English
• Currency - Ringgit Malaysia(RM)
US$ 1.00 = RM 3.68
• Time Difference - 5 hours (summer)
• Internet domain - .my
• Visa exemption for Russian citizen
International Rankings
8
World Bank: 18th Ease of Doing Business (2015)
20th Ease of Doing Business (2014)
Merchandise Trade
- 25th Leading Global Exporter (World Bank 2013)
- 24th Leading Global Importer (World Bank 2013)
A.T. Kearney: 3rd Global Services Location 2014 Index for offshore
destination of choice
Economic Intelligence Unit: 19th among 82 countries as most business
friendly Business Environment Ranking 2014
Source: Min. of Int. Trade & Industry Malaysia
MALAYSIA – RUSSIA BILATERAL TRADE (US$ MILLION)
YearTotal Export
US$
Export Growth(%)
Total Import US$
Import
Growth (%)
Total Trade US$
Total Trade
Growth
(%)
2010 682.6 27.5 413.4 11.1 1,096.0 36.9
2011 889.3 30.3 363.9 - 11.9 1,253.2 14.3
2012 696.4 - 21.7 413.4 13.6 1,109.8 - 11.4
2013 635.6 - 8.7 1,169.9 182.9 1,805.5 62.7
2014 733.5 15.4 2,074.3 77.3 2,807.8 55.5
TOP 5 EXPORTS
TO RUSSIA
TOP 5 IMPORTS
FROM RUSSIA
Electrical & Electronic
products39.0 % Crude Petroleum 64.4 %
Processed Food 10.9 %Chemical & Chemicals
products9.5 %
Machinery, Appliances
& Parts
9.0 %Manufactures of metal 9.0 %
Wood products 6.1 % Petroleum products 7.3 %
Palm oil 5.6 % Paper & Pulp products 1.6 %
MALAYSIA – RUSSIA BILATERAL TRADE (2014)
TOP 10 EXPORTS (4 digit HS code –US$)
TOP 10 IMPORTS (4 digit HS code – US$)
Television receivers 146.5 mil Crude Petroleum 1,336.3 mil
Apparel & Clothings 56.3 mil Petroleum oils 150.7 mil
Electrical instantaneous
water heaters48.5 mil Chemical fertilizers 122.8 mil
Cocoa butter 33.7 mil Coal, briquettes 118.8 mil
Vegetable fats 28.1 mil Unwrought nickel 118.1 mil
BILATERAL TRADE – products (2014)
TOP 10 EXPORTS (4 digit HS code –US$)
TOP 10 IMPORTS (4 digit HS code – US$)
Furniture 23.3 mil Copper wire 37.5 mil
Palm kernel oil 17.4 mil
Mixtures of nitrogen,
phosphorous/potassium
fertilizers
35.9 mil
Margarine 15.4 mil Unwrought aluminium 22.3 mil
Palm oil and its fraction 15.0 milUncoated kraft paper &
paperboard18.2 mil
Ball/roller bearings 13.7 mil Newsprint (rolls/sheets) 13.9 mil
BILATERAL TRADE – products (2014)..cont.
Trade Information
Contact
EMBASSY OF MALAYSIA
Mosfilmovskaya Ulitsa 50
Moscow 117192
Tel: +7499 1471512
+7499 1471514
+7499 1471523Fax: +7495 9379602
Email: [email protected]
Address:
Trade Section (MATRADE)
2nd Floor, R 01-209
Dobrynya Business Center
No.8, 4th Dobryninsky per.
119 049 Moscow
Tel: 8 (495) 933 5626
8 (495) 933 5636
Fax: 8 (495) 933 5646
Email: [email protected]
Why Malaysia
15
Economic Strength
A Dynamic Business Environment
Vibrant Business Development
Supportive Government Policies
Attractive Tax Incentives
Liberal Equity Policy
Developed Financial Facilities
Advancing with Technology
Towards the Economy of Tomorrow
Well-developed Infrastructure
Human Resources
Employment of Expatriates
Harmonious Industrial Relations
Joint-Venture Partners in Malaysia
Quality of Life
Attractive for Foreign Companies
Economic Strength
16
Natural resources - crude oil, natural gas,
tin, timber, palm oil, rubber.
GDP growth - 6.0% (2014)
Gross national savings - 30.9 % of GNI
Per capita income - RM34,123 (USD10,426)
Unemployment rate - 2.9% (p)
Inflation(CPI) - 3.2% (p)
A Dynamic Business Environment
17
Malaysia, strategically located in the heart of South East Asia.
A politically stable country with a well-developed legal
system,
Market-oriented economy and pro-business Government
policies,
Offers investors a dynamic and vibrant business environment
with the ideal prerequisites for growth and profit,
Malaysia's key strengths include well-developed
infrastructure and productive workforce.
Malaysia also provides attractive incentives for investors.
Vibrant Business Development
18
Well-developed financial and banking sector, including the
Labuan International Business and Financial Centre
Wide use of English, especially in business, legal and
accounting practices based on the British system
Large local business community with a long history in
international business links
Large foreign business community in all business sectors
Extensive trade links - country's total trade was valued at
RM1.45 trillion in 2014
Supportive Government Policies
19
Pro-business policies
Responsive government
Liberal investment policies – Avoidance of
Double Taxation Agreement signed in July 1987
Attractive tax and other incentives
Liberal exchange control regime
Intellectual property protection
Supportive Government Policies
20
Major factor that has attracted investors to Malaysia is the
government's commitment to maintain a business environment that
provides companies with the opportunities for growth and profits.
This commitment is seen in the government's constant efforts to
obtain feedback from the business community through channels of
consultation such as regular government-private sector dialogues.
These allow the various business communities to air their views
and to contribute towards the formulation of government policies
which concern them.
Attractive Tax Incentives
21
The corporate tax rate is 25% and the maximum individual tax rate 26%.
Malaysia also offers a wide range of tax incentives for manufacturing projects
under the Promotion of Investments Act 1986 and the Income Tax Act 1967.
The main incentives are:
o Pioneer Status
o Investment Tax Allowance
o Reinvestment Allowance
o Incentives for High Technology Industries
o Incentives for Strategic Projects
o Incentives for the Setting-up of International/ Regional Service-based
Operations
Liberal Equity Policy
22
Since June 2003, foreign investors could hold 100%
of the equity in all investments in new projects, as
well as investments in expansion / diversification
projects by existing companies irrespective of the
level of exports and without excluding any product
or activity.
Developed Financial Facilities
23
Well-developed financial and banking sector.
Financial facilities are available through domestic and foreign commercial banks.
Malaysia is at the forefront in the development of Islamic finance and has a
comprehensive and vibrant Islamic financial system which includes Islamic Banking,
Islamic Capital Market, Takaful and Retakaful, and Islamic Interbank Money Market.
Exporters in Malaysia can also take advantage of the credit facilities, export insurance
cover and guarantees, offered by the Export-Import Bank of Malaysia Berhad (EXIM
Bank).
To complement Malaysia's financial system, the government has established the
Labuan International Business and Financial Centre (Labuan IBFC) on the island of
Labuan.
Companies in Labuan enjoy minimal taxes as well as confidentiality. To-date, more
than 2,700 offshore companies have commenced operations in Labuan. These include
offshore banks, trust companies, and insurance and insurance related companies.
Advancing with Technology
24
Technological advancement has become an integral part
of Malaysia's growth as an industrialised nation.
One of the most technologically developed countries
amongst industrialising nations in the ASEAN region.
Malaysia’s persistent drive to engage modern
technologies is a great advantage to manufacturers in
Malaysia.
Towards the Economy of Tomorrow
25
As a result of perceptive foresight, strategic planning and abundant resources,
Malaysia offers investors a wide spectrum of investment opportunities.
The technologically-inclined economy of Malaysia is proven through the
country's involvement in advanced electronics manufacturing, R&D,
biotechnology, photonics, logistics, design, innovation and a highly automated
manufacturing sector, to name a few.
The Government's objective is also to make Malaysia a hub for other value
chain activities, such as R&D, design and development (D&D), procurement,
logistics, distribution and marketing, business support services and shared
services.
Well-developed Infrastructure
26
Designed to serve the business community; it is one of the best in
Asia.
Telecommunications network served by digital and fibre optic
technology,
Five international airports (all with air-cargo facilities) and seven
international seaports make Malaysia an ideal springboard to the Asia-
Pacific market,
Network of well-maintained highways and railways
Fully developed industrial parks, including free industrial zones,
technology parks and Multimedia Super Corridor (MSC)
Advanced MSC Malaysia Cybercities and Cybercentres
Developed Industrial Parks
27
Industries in Malaysia are mainly located in over 200 industrial
estates or parks and18 Free Industrial Zones (FIZs)
Industrial Parks are fully equipped with infrastructure facilities
such as roads, electricity and water supplies, and
telecommunications
FIZs are export processing zones which have been developed to
cater to the needs of export-oriented industries.
Companies in FIZs are allowed duty free imports of raw
materials, components, parts, machinery and equipment directly
required in the manufacturing process.
Specialised Parks
28
Specialised parks are developed to cater to the needs of
specific industries.
Technology Park Malaysia (TPM) in Kuala Lumpur and Kulim
Hi-Tech Park in Kedah cater to technology-intensive
industries and R&D activities.
TPM is among the world most advanced and comprehensive
centres for R&D for knowledge based industries.
Regional Corridors
Hub for the services sector• Creative Industry;
• Education
• Healthcare
• Logistics
Focus on:
• Resource Based Industry
• Energy
• Tourism
Focus on:
• Agro-based Industry
• Tourism; Logistics
• Manufacturing
Focus on:
• Tourism; Oil & Gas
• Manufacturing
• Agriculture; Education
Focus on:
• Modern Agriculture
• Manufacturing & Design
• Tourism; Logistics
• Education & Health
Human Resources
30
One of Malaysia's greatest assets is her human resources.
The workforce is young, educated and productive, proving to be
one of the best in the region.
Government's emphasis on human resource development
ensures the continuous supply of manpower to meet the needs
of the expanding manufacturing and services sectors.
Comprehensive system of vocational and industrial training,
including advanced skills training
Multilingual workforce speaking two or three languages,
including English
Employment of Expatriates
31
Foreign companies in the manufacturing sector are
allowed to employ expatriates where certain skills are
not available in Malaysia.
A company with foreign paid-up capital of US$2 million
and above will be allowed up to 10 expatriate posts,
including five key posts, that is, posts that are
permanently filled by foreigners.
Harmonious Industrial Relations
32
Industrial relations in the country are harmonious
with minimal trade disputes that result in strikes.
Labour laws safeguard the interests and spell out
the rights and responsibilities of employers and
employees, thus providing a legal framework for
the orderly conduct of industrial relations in the
country.
Joint-Venture Partners in Malaysia
33
Most large Malaysian companies have been involved in
trade and industry for generations, and many have excelled
in international and regional markets.
Foreign investors seeking joint-venture partners in
Malaysia will be able to select from a wide range of
companies to find one that matches their needs.
Malaysia also assists foreign investors in business match-
making to start joint-venture projects or to undertake
contract manufacturing.
Quality of Life
34
Friendly and hospitable Malaysians
Safe and comfortable living environment
Excellent housing, modern amenities, good healthcare and
medical facilities
Excellent educational institutions including international
schools for expatriate children
World-class recreational and sports facilities
Excellent shopping with goods from all over the world
Tropical climate with its uniform temperatures allows light,
comfortable clothing throughout the year.
Malaysian Investment Development Authority (MIDA)
35
Government's principal agency for the promotion of the manufacturing
and services sectors in Malaysia.
Assists companies which intend to invest in the manufacturing and
services sectors facilitate the implementation of their projects.
Wide range of services provided by MIDA include:-
o providing information on the opportunities for investments
o facilitate companies look for joint venture-partners.
Senior representatives from key government agencies are stationed at
MIDA's headquarters in Kuala Lumpur to advise investors on
government policies and procedures.
MIDA evaluates the following applications for projects in
the manufacturing and its related services sectors:
36
Manufacturing licenses
Tax incentives
Expatriate posts
Duty exemptions on raw materials and
components
Duty exemptions on machinery and equipment for
agricultural sector and selected services sector
Attractive for Foreign Companies
37
Conducive business environment has made Malaysia as
one of the world's top investment destinations for offshore
manufacturing operations.
Malaysia has to date attracted more than 5,000 foreign
companies from more than 40 countries to establish their
operations in the country.
Many of them have also expanded and diversified their
operations in the country, reflecting their confidence in
Malaysia as a site for their business ventures.
Alcatel
38
Malaysia is centrally located in South-East Asia and it
possesses an advanced infrastructure, a skilled labour
force, and all the necessary supporting industries.
Malaysia has shown that, even in times of crisis, it is
committed to remain actively pro-business and to provide
a stable environment to transact in.
Malaysia has many natural assets and is culturally very
rich and diverse. It is definitely a pleasant country to live
and work in.
Ericsson
39
Government policies that have been put in place
encourage growth and promote investments in a
stable political climate.
Malaysia has a well-developed infrastructure and
strong industrial linkages with supporting
industries, thus providing an excellent business
environment.
The workforce is educated and productive.
Hitachi
40
Malaysia has well-developed infrastructure in the
country's industrial parks, especially the stable power
supplies and telecommunications facilities; attractive
incentives, and most importantly, a stable government
with a flexible industrial policy.
Majority of Malaysians speak and understand English,
making technology transfer into this country much
easier.
IKEA
41
Malaysia has been chosen for its central geographical
position in Asia and it's well developed logistics network
and port infrastructure.
Malaysia is a stable and reliable business and social
environment which enables us to focus on our long term
expansion goals.
Malaysia's ethnic diversity and well educated workforce
has enabled IKEA to find the suitable manpower to meet
the company's human resource requirements.
Panasonic Industrial
42
Malaysia's multiracial and multilingual workforce that is
fluent in English was a pull factor for us in setting up
operations in the country.
The developed infrastructure and a vibrant business
environment also make it an ideal location to do
business.
Malaysian government's pro-business policies and
attractive incentives have enabled us to provide high
quality products at competitive prices.
Samsung
43
As an investor, we have enjoyed tax incentives, an
efficient and developed infrastructure, and a quality
labour force - factors which have contributed to the
viability of our business in Malaysia.
The high standard of supporting industries here have
also helped us to obtain quality local components,
making Samsung products more competitive in the
global market place.
Sony
44
Malaysia is an excellent place for do business. The Malaysian
government has shown exemplary support through excellent
infrastructure development and a good education system that
allows us to employ a high quality workforce.
There is in existence a large pool of component suppliers in
Malaysia
Malaysia's political and economical stability has been and will
continue to provide and ideal investment climate for us to prosper.
The establishment of business-friendly laws and policies has
helped us to remain at the competitive edge of the local and global
market.
45
Introduction to ASEAN
Established on 8 August 1967 by the Founding Fathers:
Tun Abdul Razak (Malaysia)
Thanat Koman (Thailand)
Narciso Ramos (The Philippines)
Adam Malik (Indonesia)
S. Rajaratnam (Singapore)
46
10 Members of ASEAN
Malaysia
(8 August 1967)
Brunei Darussalam
(7 January 1984)
Indonesia
(8 August 1967)
Viet Nam
(28 July 1995)
Singapore
(8 August 1967)
Lao PDR
(23 July 1997)
The Philippines
(8 August 1967)
Myanmar
(23 July 1997)
Thailand
(8 August 1967)
Cambodia
(16 December 1998)47
Inter-Governmental Organization
48
ASEAN as an inter-governmental organization conferred legal
personality with the adoption of the ASEAN Charter in 2008:
ASEAN Summit
(Supreme Policy-Making Body)
ASEAN Coordinating Council
ASEAN Community Councils
(Political-Security, Economic, Socio-
Cultural)
ASEAN Secretary General assisted by 4 Deputy Secretaries General
and the Committee of Permanent Representatives (CPR).
77 Countries have Accredited Ambassadors to ASEAN.
ASEAN Community 2015
THREE PILLARS POLITICAL-SECURITY PILLAR
Rules-based Community of Shared Values and Norms,Good Governance, Human Rights and Adherence to thePrinciples of Democracy
ECONOMIC PILLAR
Single Market and Production Base, Competitive EconomicRegion, Equitable Economic Region and Linkages to GlobalEconomy
SOCIO-CULTURAL PILLAR
Education and Human Resource Development, Scienceand ICT, Entrepreneurship, Poverty Alleviation, SocialSafety Net, Health, Natural Disasters, Environment,ASEAN’s Cultural Heritage and Regional Identity
49
10 Countries
617 Million Population
ASEAN’s Economic Assets (2012)
4,435,670 Sq Km
US$2.3 trillion GDP
US$3,748 GDP Per Capita
US$2.4 trillion Total Trade
US$110 billion FDI Inflows
50
-10
-5
0
5
10
15
An
nu
al c
han
ge
in r
eal G
DP
%
Developing AsiaASEAN-10World
Advanced economies
Except for in the mid-1980s and late 1990s (Asian Financial Crisis), ASEAN-10’s growthhas exceeded the global average, but below that of the broader Developing Asia, whichhas been powered by China and India.
Source: International Monetary Fund’s (IMF) World Economic Outlook April 2013
ASEAN’s Growing Economy
51
Malaysia’s Strategic Location in Southeast Asia
52
Malaysia’s Trade with ASEAN
ASEAN’s
Global
Trade
Intra
ASEAN
Trade
Malaysia’s
Total
Trade
Malaysia’s
Total Trade
with ASEAN
2012
(US$ bil)
2,388.6 598.2
(25%)
423.9 115.8
(27.3%)
2001
(US$ bil)
320.6 77
(24%)
161.7 38.8
(23.9%)
Source: MATRADE
53
Malaysia’s FDI Flows
Year Malaysian Investment in ASEAN
(US$ Billion)
ASEAN FDI Inflows into Malaysia
(US$ Billion)
2013 5.8 6.2
2012 7.2 7.5
2011 8.3 7.2
2010 7.7 5.0
2009 4.3 4.7
2008 7.8 5.8
Source: BNM
54
55
AEC 2015
OBJECTIVES: Reducing development gap among ASEANMember States (3 tiers of ASEAN nations)
Promoting equitable and sustainableeconomic growth
Enhancing connectivity to establish ahighly integrated ASEAN
56
Stakeholders’ Perspectives on AEC 2015
ASEAN’s economic integration has created
opportunities for businesses in Agriculture,
Mining, Real Estate, Healthcare, Tourism,
Aviation, Education, IT & Telecommunication,
Energy, Banking and Manufacturing.
ASEAN’s pace of economic integration has to
be accelerated to tap on these opportunities.
57
ASEAN Economic Integration
10 ASEAN countries with a Single Duty Free Market
Vibrant Region with Increasing Middle Class Population
Manufacturing and Investment Base to Export Worldwide
Rich in Natural Resources and Human Capital
Indicators (2012) Malaysia ASEAN
Market Size 30 million 617 million
Total Trade US$424 billion US$2.4 trillion
GDP US$305 billion US$2.3 trillion
GDP Growth 5.1% 5.7%58
Single Duty Free Integrated Market
Elimination of Duties
ASEAN-6
99.65% duties eliminated
(1 January 2010)
CLMV
93% duties eliminated
(1 January 2015; 7% by 2018)
Non-Tariff Barriers (NTBs) – A Frequent Complaint
ASEAN Economic Ministers have made reducing NTBs as priority towards
AEC 2015. A systematic approach taken to address NTBs – 6 pilot cases
identified; 2 have been resolved. More cases will be identified through a
compliance review mechanism.59
Liberalization of Services Sector
Business ServicesEducational Services
Tourism and Travel Related Services
Communication Services
Environmental Services
Recreational, Cultural and Sporting Services
Construction and Related Engineering Services
Financial Services Transport Services
Distribution ServicesHealth Related and Social Services
Other Services
12 Broad Sectors 128 Sub-Sectors
60
New Regional Economic Architecture
AFTA ACFTA AKFTA AJCEP AIFTA AANZFTA
ASEAN’s other
external economic
partners
61
Connected to trading partners through Preferential Trading
Agreements – Market size of 3.5 billion – 48% of world
population (7.3 billion)
Benefits of AEC
62
63
What Would be Achieved in 2015
Single Market – Substantial Elimination of Import Duties on Goods
Substantial Liberalization of Services Sub-Sectors
Comprehensive, Open and Transparent Investment Regime
Improved Logistical Connectivity, Encompassing Transport, Facilitation in
Movement of Goods and Open Skies
Trade Facilitation through Improved Customs Clearance Procedures and ASEAN
Single Window
Implementation of Self-Certification Scheme for Preferential Trade
Enhanced Cooperation in the Areas of Consumer Protection, IPR and Competition
Policy
Creation of Highly Integrated ASEAN
Vision for Post-2015 Economic Integration
64
Post-2015 ASEAN Economic Vision
Possible Areas/Measures for ASEAN to Focus on:
Addressing structural and regulatory barriers and instituting greater
trade facilitative measure;
Promoting investment in the services sector by streamlining domestic
regulations and removing impediments;
Promoting new and improving infrastructure facilities;
Enhancing financial services liberalization;
Promoting the adoption of new technologies to ensure sustainable
development;
Adopting a regional comprehensive IPR and competition policies; and
Strengthening human resource development and enhancing greater
mobility among skilled workers in the region.65
Challenges for AEC
66
ASEAN still continue to face many
challenges which must be overcome
through deeper integration.
Examples of the challenges are…
Challenges for AEC
Tariff and Non-Tariff Barriers and Local Protectionism
Inconsistent Regulations and Policies Across ASEAN
Weak Infrastructure Links Among ASEAN Nations
Diverse Levels of Market Maturity
Restrictions on Foreign Investment and Labour
Shortages of the Right Types of Workers
Cultural Diversity Across ASEAN67
TERIMA KASIH
SPASIBA