2. Positioning Malaysia as Total Manufacturing Solutions€¦ · malaysia : the global outsourcing...

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MALAYSIA : THE GLOBAL OUTSOURCING HUB FOR HIGH

TECHNOLOGY MANUFACTURING

N. Sangaran

Director

Machinery and Engineering Supporting Industries Division

MIDA

19 June 2012

CONTENT OUTLINE

Investment Trends

Outsourcing Opportunities

2 Malaysia: Your Premier Investment Destination

Malaysian Economy

About MIDA

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About MIDA

4

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

Established in 1967 under Act of Parliament, 1965

2011 : Rebrand as Malaysian Investment Development Authority

27 March 2004 : Government Mandated MIDA to Promote

Investments in the Services Sector

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FUNCTION 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

� 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

MIDA “ONE STOP CENTRE”


Ba

sed

In M

IDA

Immigration Department

Royal Malaysian Customs

Department of Environment

Tenaga Nasional Berhad

Telekom Malaysia Berhad

Labour Department

Ba

sed

Ou

tsid

e M

IDA

Department of Occupational

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

of Malaysia (CIDB)

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24 Overseas Centre24 Overseas Centre

San Jose

Los AngelesNew York

Boston

Stockholm

Frankfurt

MunichMilan

Paris

London

Dubai

Mumbai

GuangzhouTaipei

Shanghai

SeoulOsaka

Tokyo

Sydney

Chicago

Houston

Bangkok

Singapore

Johannesburg

MIDA WORLDWIDE NETWORK

8

Malaysian Economy

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MALAYSIA’ S KEY ECONOMIC INDICATORS

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

2010 2011p 2012f

Real GDP (%) Growth 7.2 5.1 4.0-5.0

Inflation (%) 1.7 3.2 2.5-3.0

Per Capita Income (US$) 8,140 9,508 10,134

Unemployment (%) 3.2 3.1 3.2

Trade Surplus (US$ bil) 34.2 46.7 48.6

International Reserves (US$ bil) 106.5 132.3 136.1

Retained Imports Equivalent (months) 8.5 9.6 -

Investment Trends

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INVESTMENT IN THE APPROVED MANUFACTURING PROJECTS,

2008 – APRIL 2012


Source: MIDA

YearNo. of

Projects

No. of

Employment

Proposed Investment

(RM billion)

Domestic Foreign Total

2008 919 101,173 16.7 46.1 62.8

2009 766 64,330 10.5 22.1 32.6

2010 910 97,319 18.1 29.1 47.2

2011 846 100,533 21.9 34.2 56.1

Jan – April

2012268 29,918 10.1 7.8 17.9

TOTAL 3,709 393,273 77.3 139.3 216.6

APPROVED REGIONAL ESTABLISHMENT

JANUARY – DECEMBER 2011

Source: MIDA


Type of EstablishmentNo. of

Approvals

Investment

(RM million)

Operational Headquarters (OHQ) 18 163

International Procurement Centre (IPC) 6 70.5

Regional Distribution Centres (RDC) 1 10

Representatives Offices (RE) 55 23.9

Regional Offices (RO) 32 24.4

Total 112 291.8

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PROMOTED ACTIVITIES IN THE MANUFACTURING SECTOR


High technology, capital intensive &

knowledge driven industries:

Industries manufacturing

intermediate goods:

• Machinery & equipment

• Components & parts

• Moulds and dies

Resourced-based industries:

• Alternative Energy Sources

• Biotechnology

• Advanced materials

• Advanced electronics

• Optics and photonics

• Petrochemicals

• Pharmaceuticals

• Medical devices

• ICT

• Aerospace

• Food

• Value-added products from

natural resources

Outsourcing

Opportunities

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Global

Outsourcing

Manufacturing Solution Providers

Value

Added

Value

Added

and

R&D

OUTSOURCING TREND

Solution ProvidersIntegrators and

Assemblers

Component

SuppliersP

rese

nt


STRATEGIC REASONS FOR OUTSOURCING


Reducing cost and improving economics

Focus on core function

Access to specialised services and diverse technologies

Enhance risk management

Gain a competitive advantage through faster delivery times

Level the playing field

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OPPORTUNITIES FOR CROSS-BORDER NEMs

Source : UNCTAD report on Non-Equity Modes of

International Production and Development

Key figures of cross-border Non-Equity Modes, selected industries, 2010

Estimated NEM-related worldwide

Sales Value added Employment

Employment in

developing

economies

USD billion USD billion million million

Contract Manufacturing – selected technology/ capital intensive industries

Electronics 230 - 240 20 - 25 1.4 - 1.7 1.3 - 1.5

Automotive components 200 - 220 60 - 70 1.1 - 1.4 0.3 - 0.4

Pharmaceuticals 20 - 30 5 - 10 0.1 - 0.2 0.05 - 0.1


GLOBAL MARKET SHARE

Source : Datamonitor

Global Market Sales Forecast for 2013

(USD billion)

Aerospace & Defense 273

Machinery 184.7

Semiconductor 90.6

Oil & Gas Equipment &

Services

82.2

Health Care Medical

Equipment

51.2

25 – 30% is

estimated for

outsourcing

of

components

and services

Measurement of NEM activity is difficult, given the lack of national and international statistics

that cover NEM-specific transactions.

Source : UNCTAD

Global NEM Investment

Value (USD billion)

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Little initiative in R&D and D&D by SMEsLittle initiative in R&D and D&D by SMEs

Reluctance of SMEs to venture out into the Reluctance of SMEs to venture out into the

global marketglobal market

Fragmented industry Fragmented industry -- Little cooperation Little cooperation

among supporting companies to collaborate among supporting companies to collaborate

for common opportunitiesfor common opportunities

Financially not strongFinancially not strong

Consistent quality

On-time delivery

Cost competitive for

high technology

products

English literacy

WE

AK

NE

SS

ES

WE

AK

NE

SS

ES

WE

AK

NE

SS

ES

WE

AK

NE

SS

ESS

TR

EN

GT

HS

Lack of mid level technical expertiseLack of mid level technical expertise

Lack of high end component manufacturing Lack of high end component manufacturing

& high end supporting companies& high end supporting companies

Strong government support

Foreign exchange

Material cost

India and China

Global economic downturn

TH

RE

AT

S

MALAYSIA’S SOURCING CAPABILITIES


Cluster/ IndustrySpecialized

E&E/ Semiconductor/ Solar

Process/ Products/ Components Wafering Front-End Back-End

Integrators/ Assemblers • Stoppani • Pac Tech

• UMS (CVD)

• SRM Integration

• BesiApac

• Ismeca

• ASM

• Greatech

• Creden

• Genetec

• AGS Automation

Supporting

services

Tooling/ Maintenance • Kiswire , Tokyo Rope • Hoya, Entegris

Engineering solutions

for high precision modules & fabrication

• UPECA, Kobay, Lypometal, Atasmi, etc.

Surface engineering • AKN, Dipsol, Metek Kitamura, etc.

Infrastructure & Shared facilities • Technology Park Malaysia (TPM)

• Kulim Hi-Tech Park (KHTP)

• Zurah Industrial Park (ZIP)

Research & Training • Standard and Industrial Research

Institute of Malaysia (SIRIM)

• Penang Skills Development Centre

• Malaysia - France, British, Spanish,

Japan, German Institute

• Advanced Technology Technical Centre


M&E INDUSTRY CLUSTER

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Cluster/

Industry

Specialized

Oil & Gas Factory Automation

Process/

Products/

Components

Exploration and

Production

Process

Equipment/

Fabricated Parts

Robotic/

mechatronic

devices

Vision

Inspection

Material

handling

Integrators/

Assemblers

• FMC

• Halliburton

• Aker

• Cameron

• Asiaflex

• Schlumberger

• KNM

• MMHE

• Sime

Sembawang

• Tepat Teknik

• Kencana HL

• Dialog

• Hittech

• Ixmation

• Frencken

• ViTrox

• AFA

• Pentamaster

• AT Engineering

• Cheng Hua

• Alliance

Contract Mfg

• KEU Control

• GSE-M

Technology

Supporting

services

Machining

• UMS

• Kobay Tech

• Upeca

Forging

• ………

-

Metal structures

• U-Metal

Engineering

• CLT Engineering

Tooling fabrication

• Indah Tool Automation

• AT Precision Tooling

Infrastructure &

Shared Facilities

• Technology Park Malaysia (TPM)



Research &

Training

• Standard and Industrial Research Institute of

Malaysia (SIRIM)


• Malaysia - France, British, Spanish, Japan,

German Institute




Cluster/

IndustryMetalworking Power Generating General

Integrators/ Assemblers • AIDA

• TPM

• Sunfluid

• Eonmetall

• Hydralink

• Li Chin (S.E.A)

• Noorisba

• Turboservices

• …………(renewable

energy)

• Favelle Favco

• IMPSA

• MHE-Demag

• Dunham Bush

Supporting

servicesCasting HICOM Diecasting, ZincAlu, Sumber Terang, Nostalgia

Heat

TreatmentMicromagna Engineering, Yeh Chang, Oriental, Umetoku

Forging Billion Fortune, MKF, Unique Forging, Kentzu

Infrastructure • Technology Park Malaysia (TPM)



Research & Training • Standard and Industrial Research

Institute of Malaysia (SIRIM)


• Malaysia - France, British, Spanish,

Japan, German Institute




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Cluster/

IndustryAerospace Solar Medical Devices

R&D, Design • ACM

• IAC

• Spirit

• CTRM

• Strand

• SME

Aerospace

• Bosch

• Qcells

• AUO Sunpower

• Panasonic

• SERI

• HBE

Grating

• St. Jude

• SBI

• Symmetry

• BBraun

• OSA

• Granulab

• Straits

Othopaedics

Parts

Manufacturing

& Assembly

• Honeywell

• SAM

• IAC

• Spirit

Aerosystems

• CTRM

• SME

• Upeca

• ACM

• First Solar

• AUO Sunpower

• Solar TIF

• MSR

• PVHitec

• Helios

Photovoltaic

• Raniden

Solar

• St. Jude

• Aesculap

• Jabil

• Avalon

• Stryker

• Delphax

• Osa

• Straits

Orthopaedic

Supporting

services

• Innopeak

• Hampshire

• Strand

• Aerotech

• Edag

• GT

• IAC

• All Metal

Services

• Stoppani

• UMS

• Balda

• Huber Suhner

• Pentamaster

• STR

• Dsem

• Iretex

• Polytool

• Synergy Health

• Isotron

• Steripack

• Sirim

Maintenance,

Repair &

Overhaul (MRO)

• SAE

• Agusta Westland

• Malaysia Airlines

• SME Aviation

• KLAS

• Airod

• CTRM

• ATSC

Materials • Tokuyama

• MEMC

• Imex Semicon

• Bosch

• TDK

• Rohm

• Sandvik

• Accellent

• Tyco

• Heraeus

• Zapp

Policies &

Regulations

• National Aerospace Blueprint • Feed-in-Tariff • Green

Technology

Master Plan

• Medical Devices Act 2011

MALAYSIAN INDUSTRY CLUSTERS


• Consistent quality of production

and on-time delivery

• Lower cost for high technology

products

• High volume, low mix demand

for the electrical & electronics,

telecommunications and

automotive industries

• Low volume, high mix niche

products for the medical,

machinery & equipment, oil &

gas and aerospace industry

• IP protection, laws and

regulations

• Financial incentives and

operational support

Competitive Edge

• Engineering supporting industry

(more than 1,000 cos.)

• Metal fabrication (well

established)

• Semiconductor/ electronics

components

• Silicon wafer, Wafer fab, IC

packaging and testing, IC design

house, PCB, PCBA, LED, Other

passive components (about 380

cos.)

• Plastic components (480 cos.)

• Rubber components (180 cos.)

Sourcing Capabilities

• Design centres

• Technical facilities

• Specialized colleges

• Research institutions

Infrastructure


MALAYSIA – YOUR MANUFACTURING SOLUTION

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D&D/ R&DRaw material components

sourcing

Modules/ parts

production

Sub/ final assembly

QC Delivery

Outsourcing

Manufacturing of modules, Manufacturing of modules, components & parts

Manufacturing related Manufacturing related services

Individual components/ services

Integrated services/ total solution

- Product conception to serial production

- Manage the entire process including logistics, warehousing, packaging, testing

and certification


Outsourcing Supply Chain Management

MALAYSIA : THE GLOBAL OUTSOURCING HUB FOR HIGH TECH

MANUFACTURING

MALAYSIA : THE GLOBAL OUTSOURCING HUB FOR HIGH TECH

MANUFACTURING

Customers

Speedy response

Managing the Entire Supply Chain

Manufacturing

Solution Providers

R&DElectronic Engineering

Mechanic Engineering

Software Engineering

Continuous Prod. Improvement

Project Management

Prototyping

Interface and Hardware Design

Quality Management

TQMISOSix Sigma SPCKaizen

ServicesIPCRDCLogisticsWarehousingValue AnalysisCost ReductionsSupply Chain ManagementRegulatory ServicesCertification Services

ProductionElectronics

Plastics

Metalworks

Engineering Supporting

Box Builds

High Level Assembly

Finishing + Testing

Packaging


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Enhance local R&D and technology

development

Strengthen and complete industry

clusters

Manufacturing Solution Providers

Human Capital Development

Malaysia :

Global NEM Hub

WAY FORWARD



MALAYSIA : THE GLOBAL OUTSOURCING HUB FOR MANUFACTURING -

WAY FORWARD

� Malaysia’s Potential− Capabilities are recognised internationally

− Diverse range of precision activities

− Good network of engineering supporting industries capable of meeting

OEMs requirements

� Target Industries− Malaysia is currently a major outsourcing destination for MNCs in the

E&E, automotive, machinery manufacturing and oil& gas industries

− Growth and future targets include the aerospace, medical, defense and

photovoltaic industries

� Total Solution Providers− Providing integrated services from product conception to serial

production and manage the entire processes including logistics,

packaging, testing and certification

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� Promotional Tools− Websites to enhance business communication system and promote

capabilities

− Promotional missions and participations in international exhibitions

− Promotion of high technology and high end industries to locate to Malaysia

� Technology− Keeping abreast with new/ latest technology and ability to advise OEMs on

product development

� Human Resource Availability− Increase MSC level 3, 4 & 5 graduates

− Re-training existing technical staff

� Institutional Support for Research and Product Innovations− Continuous support and assistance for R&D and D&D of products and

processes

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MALAYSIA : THE GLOBAL OUTSOURCING HUB FOR MANUFACTURING -

WAY FORWARD

Malaysia: Your Premier Investment Destination

RECENT POSITIVE DEVELOPMENTS


3rd Attractive Location For Outsourcing Destinations – A.T. Kearney Global Services Location Index 2011

4th For Investor Protection – World Economic Forum 2012, Global Competitiveness Report

10th For FDI Confidence Index 2012 – A.T Kearney

18th For Ease Of Doing Business – World Bank’s Doing Business 2012 Report

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• 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

• Excellent Track Record

WHY MALAYSIA?



MIDA as a One Stop Agency :a) Approval of projects

b) After-care services

Under the National Committee on

Investment (NCI)

Evaluation of applications for:

4 Manufacturing licence

4 Tax incentives

4 Import duty exemptions on raw

materials, components and

machinery

4 Expatriate posts/work permits

4 Regional establishments such as

Operational Headquarters,

International Procurement Centres,

etc.

FACILITATION OF INVESTMENT

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Thank You.Please visit us at:

www.mida.gov.my

[email protected]

2. Positioning Malaysia as Total Manufacturing Solutions€¦ · malaysia : the global outsourcing...

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