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Transcript of Annual Report 2012: Malaysian Investment Development Authority (MIDA).
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2012MALAYSIAINVESTMENT PERFORMANCEI n v e s t m e n t f o r T r a n s f o r m a t i o n
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Contents
6 A Word rom MIDARaising Malaysias prole as an investment
destination
10 Malaysia on the World StageOvercoming a subdued global investment
environment
20 The Year in BrieMIDA and its partners create a record-breaking
year of investments and employment
40 New Opportunities or GrowthCreating new value in the manufacturing and
primary sectors.
114 The Way ForwardThe services sector continues to support the
countrys economy.
136 The Transormation Continues
Challenges and opportunities in the year ahead
142 Appendices
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Reports by sector
Manuacturing
Electrical and electronic products 53Transportation 58
Automotive 60
Aerospace 63Shipbuilding and ship repairing 63
Machinery and equipment 64Engineering support 70Basic metal products 72Fabricated metal products 76Textiles and textile products 78Medical devices 80Agriculture 85Food processing 86Oil palm products 87
Palm oil and palm kernel oil 88Oleochemicals and their
derivatives 89
Palm biomass 90Pharmaceuticals 92Chemical products 93Biotechnology 97Petroleum and petrochemical
products 98Plastics 100Rubber 102Wood and wood products
and urniture 104Non-metallic mineral products 108Paper, printing and publishing 112
Primary
Agriculture 113Mining 113Plantation and commodities 113
Services
Regional establishments 117Operational
Headquarters (OHQs) 118
International ProcurementCentres (IPCs) 121
Regional DistributionCentres (RDCs) 122
Regional/RepresentativeOfces (REs/ROs) 123
Global operation hubs 123Support services 128
Renewable energy 128Energy efciency and
energyconservation 130Research and development 130Integrated logistics
services (ILS) 131
MSC Status companies 131Real estate (housing)132Utilities 132Hotels and tourism 132Transport 132Telecommunications 133Distributive trade 133Financial services 134Education services 134Health services 134
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Partners
East Coast Economic Region (ECER) 28Northern Corridor Economic Region (NCER) 30Collaborative Research in Engineering, Science and Technology (CREST) 30Iskandar Malaysia 31Sarawak Corridor o Renewable Energy (SCORE) 32Sabah Development Corridor (SDC) 34Multimedia Development Corporation (MDeC) 35Halal Industry Development Corporation (HDC) 37InvestKL 38TalentCorp 38BiotechCorp 38
Box articles
Domestic investment initiatives 26Major ecosystems in the E&E industry 56The M&E industry in Malaysia 67The engineering supporting industry in Malaysia 71Initiatives to urther enhance the iron and steel ecosystem 75
Malaysias potential as a centre o pharmaceutical R&D94
The wood-based industry products ecosystem 106Malaysia: An ideal business ecosystem or regional and logistics operations 126
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List of graphs
FDI inows to ASEAN, 2011 (US$ bil) 15FDI inows by economies, 2006 - 2011 (US$ bil) 16FDI outows by economies, 2006 - 2011 (US$ bil) 17Total investments approved in the Malaysian economy, 2012 25Total committed investments in the ECER, 2012 (RM bil) 29
Total cumulative committed investments in Iskandar Malaysia as at November 2012 (RM bil)32
Strategic thrusts o Digital Malaysia 37Three strategic thrusts o Talent Corp 39Sources o investments in projects approved, 2012 and 2011 43Investments and employment in projects approved, 2007 - 2012 44Investments in new projects by industry, 2012 and 2011 (RM mil) 45Investments in expansion/diversication projects by industry, 2012 and 2011 (RM mil) 46Major sources o oreign investments in projects approved, 2012 48Value o investments rom Japan by major industry, 2012 (RM mil) 49Investments in approved projects by location, 2012 50Investments in projects approved by major industry, 2012 and 2011 51Domestic investments in projects approved by major industry, 2012 51Foreign investments in projects approved by major industry, 2012 51Status o implementation o manuacturing projects approved, 2008 - 2012 52
Structure o the E&E industry 54Approved investments in the E&E sector, 2012 (RM mil) 58Approved investments in the transport equipment industry by sub-sector, 2012 (RM mil) 60Overview o the M&E industry 66Investments in projects approved in the M&E industry by sub-sector, 2012 (RM mil) 68Investments in projects approved in engineering supporting industry by sub-sector, 2012 (RM mil) 70The basic metal products industry 72The abricated metal products industry 76Textiles and textile products ecosystem 79Investments in projects approved in the textiles and textile products industry by sub-sector, 2012 (RM mil) 80Approved investments in the ood processing sector, 2012 (RM mil) 87Petroleum and the petrochemical industry 100Investments in projects approved in the plastics products industry by sub-sector, 2012 101Approved investments in the rubber industry by sub-sector, 2012 (RM mil) 103
Approved investments in the wood-based industry by sub-sector, 2012 (RM mil) 104Advanced ceramics ecosystem 109Approved investments in the non-metallic mineral products industry by sub-sector, 2012 (RM mil) 110Number o regional establishments approved as at 31 December 2012 118IPC projects approved, as at 31 December 2012 121Investments in distributive trade, 2012 (RM mil) 133
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List of tables
Top eight industries by investment 45Top industries with export-oriented projects 46States with the largest number o implemented projects during 2008-2012 53Notable projects approved in 2012 electronic components 59Notable projects approved in 2012 consumer electronics 59
Notable projects approved in 2012 industrial electronics59
Notable projects approved in 2012 electrical 59Motor vehicles sales in major ASEAN economies 62Industry involvement in the aerospace sub-sector 63Notable projects approved in 2012 engineering supporting industry 71Notable projects approved in 2012 basic metals 72Notable projects approved in 2012 abricated metal products 76Notable projects approved in 2012 palm oil and palm kernel oil 89Notable projects approved in 2012 oleochemicals 89Notable projects approved in 2012 pharmaceuticals 93Major products o the chemical industry manuactured in Malaysia 96Investments in the chemical industry, 2012 96Notable projects approved in 2012 biotechnology 97Regional headquarter projects approved, 2012 117
New OHQs approved, 2012119New IPCs approved, 2012 121New RDCs approved, 2012 123New REs/ROs approved, 2012 123Approved investments in support services, 2012 128Notable projects approved in 2012 renewable energy 129Notable projects approved in 2012 energy efciency and conservation 129Investments in education services, 2012 134
Appendices
Approved manuacturing projects, 2012 and 2011 144New manuacturing projects approved by size o capital investment, 2012 and 2011 144Approved manuacturing projects by industry, 2012 and 2011 145Approved manuacturing projects with investments o RM100 million and above, 2012 146Approved new and expansion/diversication manuacturing projects by industry, 2012 and 2011 147Approved manuacturing projects with Malaysian majority ownership by industry, 2012 and 2011 148Approved projects in the engineering supporting industry by sub-sector, 2012 149Approved projects in electrical & electronics industry by sub-sector, 2012 149Manuacturing projects approved with oreign participation by source, 2012 and 2011 150Approved manuacturing projects by state, 2012 and 2011 151
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These are
exciting times
or Malaysia.
Despite uncertain global economic conditions,
the country attracted RM162.4 billion in direct
investments in 2012, more than any other year.
In the process, we also created 182,841 newjobs an outstanding achievement considering
the glum state o the worlds economy.
What is innitely more important than these
numbers, however, is the quality o these
investments and jobs.
Prosper the investor
Much o 2012s investments were in new and
emerging technologies, particularly within the
aerospace, semiconductors, solar, machinery
and equipment, biotechnology, petroleum
and petrochemical products and medical
devices industries as well as the services sector.
Investors are looking to Malaysia to provide the
right environment or their enterprises in theseindustries to prosper.
This remarkable achievement was made
possible by the Governments new strategies
to attract quality investments in targeted
sectors. Strategic partnerships with the
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HighlightsIn 2012, Malaysia:
Attracted the highest amount o
direct investments ever recorded:RM162.4 billion
Created 182,841jobs more thanany other year
Enhanced the domesticinvestmentlandscape
Made strong progress in thedevelopment o industries or newand emerging technologies
Strengthened the ecosystemso existing industries such as
semiconductors, LEDs, solar andM&E.
Bolstered the countrys reputationas a global and regional hub ormanuacturing and services
Balanced the development o thecountrys fve economic corridors
countrys economic development agencies has
supported MIDAs eort in raising Malaysias
prole as an ideal place or high-value added
business. Over the past ew years, MIDA and
its partners have concentrated their eorts
on strengthening Malaysias ecosystems or
investors both domestic and oreign. Malaysia
has now gained an enviable reputation as a
global and regional hub or manuacturing
and services, attracting investments thatwill accelerate the countrys shit to high
value-added, high technology, knowledge-
intensive and innovation-based industries.
MIDAs ecosystem approach to developing
investments is an important part o this
ensuring this success.
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8 INVESTMENT FOR TRANSFORMATION
Ater spending more than our decadespromoting and coordinating industrial
development, the Malaysian Industrial
Development Authority (MIDA) received a new
name and a wider scope o responsibility in
2011. With the launch o the New Economic
Model, the agency was renamed the Malaysian
Investment Development Authority and
given a key role in spearheading the national
investment agenda to drive the goals o the
Economic Transormation Programme (ETP).
Just as MIDA has been reshaped or its new
mission, Malaysias investment environment is
also being reshaped to attract the right types
o investments. The results o 2012 indicate
that the country is making good progress
towards meeting this goal. Shits in investment
underscore the role o the services sector as
a new dimension in the Malaysian economy.
We are also attracting more high value-added
and knowledge-based activities in new and
emerging industries such as biotechnology,
aerospace and advanced electronics.
Investments also continued to ow into
the primary sector, with most o the inows
directed into oil and gas exploration projects.
Clearly, Malaysia is moving up the value chain.
Evolving investments
Malaysia continues to be a competitive
destination or oreign multinational
corporations seeking an educated workorce,
sound inrastructure and business-riendly
political climate. Nonetheless, the uture o the
country is also dependent on the growth o
domestic direct investments. It is heartening
to note that domestic investment inows
increased substantially by almost our times
the FDIs achieved in 2012, a sure sign o
the condence local businesses have in the
countrys ability to prosper its investors.
MIDA will play an important role in
encouraging and mobilising domestic direct
investments by identiying opportunities,
providing support and enhancing incentives
or Malaysian-owned companies. These
strategies will help the country make the
quantum leap required in realising the
national investment agenda: to attract quality
investments.
It is crucial that we lock arms to build uponthe success o 2012. We must oster business
ecosystems that are conducive to investors,
domestic or oreign. MIDA must deliver on its
promise: Malaysia as the Prot Centre o Asia.
These are exciting times or Malaysia indeed.
Malaysias investment
environment is being
reshaped to attract
the right kinds of
investments
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MALAYSIA
Investment Perormance 20129
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12 INVESTMENT FOR TRANSFORMATION
While the
externaleconomic
environment
continued to be
challenging, the Malaysian
economy maintained its
growth in 2012. Real Gross
Domestic Product (GDP)
grew 5.6 per cent in 2012.
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MALAYSIA
Investment Perormance 201213
From the supply side, all sectors registeredpositive growth in 2012. The main contributors
to overall growth were the services,
manuacturing, and mining and quarrying
sectors1.
The services sector was responsible or the
largest share o Malaysias GDP. In 2012, the
sector contributed 54.6 per cent to the
countrys GDP and recorded a growth rate o
6.4 per cent in value added. Employment in
the services sector was estimated at 6.7 million
persons or 53.5 per cent o total employment
in 20122.
Productivity o the services sector is expected
to grow more than our per cent in 20123, led
by communications (5.7%), wholesale and
retail trade (4.9%) and the other services (5.6%)
sub-sectors.
The manuacturing sector remained resilient,
contributing 24.9 per cent to GDP in 2012.
The value-added o the manuacturing
sector expanded by 4.8 per cent during the
year. Total exports o manuactured products
decreased by 0.1 per cent to RM470.4 billion
in 2012 compared with RM471 billion in 2011.
Nonetheless, these exports accounted or 67
per cent o Malaysias total exports or the year.Employment in the manuacturing sector was
estimated at 3.6 million persons, or 28.9 per
cent o total employment in 20124.
The perormance o the manuacturing sector
is reected in the expansion o the sectors
industrial output (as measured by the industrial
production index), sales value and productivity.
In 2012, the production index and sales value
o the sector expanded by 5 per cent and 5.5
per cent respectively compared to the year
beore. Productivity in the manuacturing
sector, as measured by sales value per
employee, grew 4.4 per cent or the period o
January to October 20125.
The primary sector continues to be an
important part o Malaysias economy. In 2012,
Manufacturing
remained resilient in
2012, contributing
24.9 per cent to
GDP, while the
value-added of thesector went up by
4.8 per cent.
4Economic Report 2012/2013, Ministry o Finance,Malaysia.
5Malaysia Productivity Corporation.
1Department o Statistics.
2Economic Report 2012/2013, Ministry o Finance,Malaysia
3Malaysia Productivity Corporation.
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14 INVESTMENT FOR TRANSFORMATION
the agriculture sector contributed 7.3 per centto the countrys GDP, a growth o 0.8 per cent
rom 2011. The agriculture sector employed
an estimated 1.4 million persons, representing
11.1 per cent o total employment in 20126.
The mining and quarrying sector contributed8.4 per cent to the countrys GDP in 2012,
growing 1.4 per cent during the year.
Employment in this sector during this period
was estimated at 41,100 persons7.
A global challengeA subdued investment environment challengesbusinesses and governments worldwide
Global investment is picking up,
but remains constrained by
macroeconomic and nancial conditions.
Foreign direct investment (FDI) ows continued
to recover ollowing the impact o the global
nancial and economic crisis o 2008-2009. This
recovery continued in spite o the on-going
European sovereign debt crisis.
Global oreign direct investment (FDI)1 inows
in 2011 increased by 16 per cent to US$1.52
trillion rom US$1.31 trillion in 2010, according
to the World Investment Report 2012 by the
United Nations Conerence on Trade and
Development (UNCTAD).
In 2011, developed countries widened their
lead in FDI inows. Flows to developed
countries increased by 21 per cent, to US$748billion. In the developing countries, FDI
increased by 11 per cent to reach a record
US$684 billion. In the transition economies, FDI
increased by 25 per cent to US$92 billion. Taken
together, developing and transition economies
accounted or more than hal o global FDI.
Global FDI inflows
in 2011 increased
by 16 per cent to
US$1.52 trillion
across all three
groups of economies
developed,
developing
and transition
economies.
6Economic Report 2012/2013, Ministry o Finance,Malaysia.
7Economic Report 2012/2013, Ministry o Finance,Malaysia.
1FDI is dened by UNCTAD as an international investmentmade with the objective o a lasting interest by a residententity in one economy in an entity resident in anothereconomy. It comprises equity capital, reinvested earningsand inter-company debt transactions and is largelybased on national balance o payment statistics.
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Lao PDR (0.4%)
Myanmar (0.7%)
Cambodia (0.8%)
Brunei (1%)
The Philippines (1.1%)
Vietnam (6.4%)
Thailand (8.2%)
Malaysia (10.3%)
Indonesia (16.2%)
Singapore (54.9%)
MalaysiaUS$11.9b
BruneiUS$1.2b
VietnamUS$7.4b
The PhilippinesUS$1.3b
Graph 1 FDI inows to ASEAN, 2011 (US$ bil)
MALAYSIA
Investment Perormance 201215
The United States o America (USA) maintained
its position as the largest recipient o FDI
inows (US$226 billion) in 2011, ollowed by
the Peoples Republic o China (US$123 billion),
Belgium (US$89 billion) and Hong Kong (US$83
billion).
In the developing regions o East Asia andSoutheast Asia, FDI inows achieved new
records in 2012. Total inows amounted to
US$336 billion, accounting or 22 per cent o
global inows. Southeast Asia alone recorded
inows o US$117 billion, a 26 per cent
increase rom the previous year. While East Asia
achieved inows o US$219 billion, Southeast
Asia experienced aster FDI growth.
Among the economies o the Association
o Southeast Asian Nations (ASEAN), Brunei
Darussalam, Indonesia, Malaysia and Singapore
all saw a signicant increase in FDI inows.
Malaysia was the third largest recipient in FDIows among ASEAN countries in 2011 ater
Singapore and Indonesia.
FDI inows to Malaysia rose rom US$9.1 billion
in 2010 to US$11.9 billion in 2011, an increase
o 30.8 per cent. FDI inows into Singapore
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0
500
1000
1500
2000
World
Developed
Developing
Graph 2 FDI inows by economies, 2006 - 2011 (US$ bil)
16 INVESTMENT FOR TRANSFORMATION
registered a strong growth rom US$48.6 billion
in 2010 to US$64 billion in 2011, representing
an increase o 31.7 per cent. Indonesia
experienced a 37.9 per cent increase o FDI,
rom US$13.7 billion in 2010 to US$18.9 billion
in 2011. Growth in ASEAN countries was driven
mainly by robust domestic demand and strong
expansion in private sector activities.
Reecting the trend or FDI inows, global FDI
outows rose by 17 per cent rom US$1.45
trillion in 2010 to US$1.69 trillion in 2011. This
level remains below the peak o US$2.2 trillion
in 2007. The rise was primarily due to growth
o outward FDI rom developed countries.
Outward FDI rom developed economies grew
by 25 per cent rom US$0.99 trillion in 2010
to US$1.24 trillion in 2011, while FDI rom the
transition economies rose by 19 per cent.
Each o the three major developed-economy
investor blocs the European Union (EU),North America and Japan had its own
contributing actors leading to this increase.
Outward FDI rom the United States reached
a record o US$397 billion, driven by a record
level o reinvested earnings (82 per cent o
total FDI outows) which was in part the result
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0
500
1000
1500
2000
2500
DevelopedDeveloping
World
Developing Asia
Graph 3 FDI outows by economies, 2006 - 2011 (US$ bil)
MALAYSIA
Investment Perormance 201217
o transnational corporations (TNCs) building
on their oreign cash holdings. Japan re-
emerged as the worlds second largest investor,
with an appreciating yen that improved the
purchasing power o Japanese TNCs. Japan saw
a doubling o FDI outows, with net mergers
and acquisitions (M&As) purchases in North
America and Europe rising 132 per cent. In theEU, the increase in FDI outows was driven by
cross-border M&As.
In the developing worlds economies, outward
FDI ell slightly by our per cent to US$380
billion in 2011. As a result, the share o
developing and transition economies in global
FDI outows declined rom 32 per cent in 2010
to 27 per cent in 2011.
In 2011, total FDI outows rom East Asia and
Southeast Asia ell slightly by 1.2 per cent to
US$239 billion. FDI outows rom East Asia
dropped by nine per cent to US$180 billion,while outows rom Southeast Asia rose 36
per cent to US$59 billion. The main sources
o FDI outows rom the East and Southeast
Asia were Hong Kong (US$81.6 billion), the
Peoples Republic o China (US$65.1 billion) and
Singapore (US$25.2 billion).
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18 INVESTMENT FOR TRANSFORMATION
In Southeast Asia, Singapore was the largestsource o FDI outows in 2011 with US$25.2
billion, ollowed by Malaysia with US$15.2billion and Thailand with US$10.6 billion.
Better days aheadThe world economy is expected to make a hesitant but gradual recovery over the next two years
I
n the World investment report 2012,
UNCTAD projects that FDI ows will
continue to improve ollowing the
challenges o the 20082009 crisis but will
remain constrained by global macroeconomic
and nancial conditions. In 2012, FDI ows are
expected to reach between US$1.5 trillion and
US$1.7 trillion, with a midpoint at about US$1.6
trillion.
Ater a marked slowdown in 2011, global
economic growth is likely to remain moderate
in 2012. Most regions, especially developed
economies, are expected to expand at a pace
below potential and with subdued growth.
Sluggish import demand rom developed
economies is also weighing on trade growth,
which is projected to slow urther. Oil prices
rose in 2011 and are projected to remain
relatively elevated in 2012 and 2013, compared
with the levels o 2010.
There are risks o urther deterioration in the
global outlook. The euro-zone crisis remains
the biggest threat to the world economy, but a
continued rise in global energy prices may also
stie growth. These challenges must be aced
by all countries, including Malaysia.
Based on UNCTADs Global Investment
Trends Monitor dated 23 January 2013,
global FDI ows declined by 18 per cent to
an estimated US$1.3 trillion, down rom a
revised US$1.6 trillion in 2011, as signicant
investor uncertainty continues to hamper theFDI recovery. This uncertainty is driven by a
weakening macroeconomic environment
with lower growth rates or GDP, trade, capital
ormation and employment. Additional risk
actors in the policy environment are also
contributing to uncertainty: the Eurozone
Moderate growth inthe global economy
is expected in 2012,
with most regions,
especially developed
economies,
expanding at asubdued rate.
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MALAYSIA
Investment Perormance 201219
crisis, the United States scal cli, changes o
government in a number o major economies
in 2012, and broad-based policy changes with
implications or FDI.
In 2012, FDI ows in developed countries
ell drastically to values last seen almost ten
years ago. The majority o EU countries saw
signicant drops in FDI ows with the total all
amounting to some US$150 billion while the
United States FDI ows ell by US$80 billion.
During 2012, or the rst time ever, FDI ows
to developing economies exceeded those
to developed countries, by some US$130
billion. FDI ows to developing economies
remained resilient in 2012, reaching US$680
billion, declining only three per cent. Flows
to developing Asia lost some momentum,
although they remained at historically high
levels.
Moving orward, UNCTAD projected that FDI
inows could rise moderately to US$1.4 trill ion
in 2013 and US$1.6 trillion in 2014 as the global
economy is expected to make a hesitant and
uneven recovery over the coming two years.
GDP growth, gross xed capital ormation andtrade are projected to rise gradually, both at
the global level and especially in developing
countries. Such a slight improvement in
macroeconomic conditions could prompt
transnational companies (TNCs) to undertake
new investments.
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22 INVESTMENT FOR TRANSFORMATION
The Economic
TransormationProgramme
(ETP) has set a target
to transorm Malaysia
into a high-income nation
by 2020 with a Gross
National Income (GNI) target
o RM1.7 trillion by 2020. For
this to happen, the country
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MALAYSIA
Investment Perormance 201223
needs to attract total investments o RM1.4trillion during the period o 2011-2020, with
92 per cent (RM1.3 trillion) coming rom the
private sector and the balance o 8 per cent
(RM108 billion) rom the public sector. O the
private sectors portion o RM1.3 trillion, 73 per
cent (RM953 billion) will come rom Domestic
Direct Investments (DDI), while 27 per cent
(RM358 billion) is to be contributed by Foreign
Direct Investments (FDI).
In the shorter term, the 10th Malaysia Plan
(10MP) calls or private sector investment
to grow at 10.9 per cent per annum, or
RM148 billion worth o private investments per
year.
The ETP, which is supported by the 10MP and
the New Economic Model (NEM), will provide
clear platorms in the orm o wide-ranging
investments through its entry-point projects
(EPPs) and business opportunities across the
economy. These platorms will enable both the
manuacturing and services sectors to take on
a greater role in generating growth over the
next eight years.
In 2012, realised private investments
(measured in terms o Gross Fixed Capital
Formation GFCF) totalled RM139.5 billion,an increase o 24.8 per cent as compared to
RM111.8 billion in 2011. As a result o Malaysias
solid investment perormance, the country
exceeded the private investments target o
RM127.9 billion or 2012 by 9.1 per cent.
Malaysias cost-competitive location advantage
attracted quality projects with signicant levels
o investments. In 2012, total investments
approved in the Malaysian economy amounted
to RM162.4 billion, the highest ever recorded.
This constitutes investments approved in the
manuacturing, services and primary sectors.
Investments were approved in 6,442 projects
and are expected to generate 182,841 job
opportunities.
The total investments approved exceeded
the average annual investment target o
RM148 billion set under the 10MP by 9.7 percent. This signicant achievement indicates
that Malaysia is on track to become a high-
income economy driven by high-technology,
knowledge-based and capital-intensive
industries.
As a result ofMalaysias solid
investment
performance, the
country exceeded
the private
investments target
of RM127.9 billion
for 2012 by 9.1 per
cent.
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24 INVESTMENT FOR TRANSFORMATION
O the total investments approved,RM127.6 billion (78%) were contributed by DDI
and RM34.8 billion (22%) came rom FDI. The
higher DDI perormance gures suggest that
Malaysian investors responded avourably to
the Governments call to invest more within
the country, as highlighted under the ETP and
10MP.
Another positive indicator can be seen in the
investments approved in the National Key
Economic Areas (NKEAs), which amounted
to RM66.1 billion or 40 per cent o total
investments. There were also signicant
investments in projects approved within the
Non-NKEAs which amounted to RM96.3 billion.
A total o 5,536 projects were approved in
the services sector in 2012 with investments
amounting to RM117.6 billion. O the total
investments, DDI amounted to RM105.4 billion
and FDI totalled RM12.2 billion. The projects
approved during this period are expected
to create 103,180 job opportunities. Within
the services sector, the real estate sub-sector
continued to be the leading contributor with
RM58.8 billion worth o investments approved
ollowed by the utility (RM12.6 billion),
hotel and tourism (RM8.9 billion), transport
(RM6.8 billion) and telecommunications(RM6.6 billion) sub-sectors. To ensure the
growth o the services sector, one o the
Governments measures includes progressive
liberalisation. This step enhances the
competitiveness o the sector and contributes
signicantly to the ETP.
The decline or stagnation in global FDI inows
as well as the increasingly competitive global
environment posed challenges or Malaysia
in 2012. Despite the challenging situation,
Malaysia was still able to attract a considerable
amount o investments into the manuacturing
sector. In 2012, a total o 804 manuacturing
projects were approved, involving investments
o RM41 billion. Foreign investments amounted
to RM20.8 billion and accounted or 50.7 per
cent o the total investments. The balance
o RM20.2 billion or 49.3 per cent were
investments rom domestic sources.
The primary sector accounted or RM3.8 billiono approved investments in 2012. Foreign
investments in the primary sector amounted
to RM1.8 billion (47%) while domestic
investments made up RM2 billion (53%).
The mining sub-sector leads the other sub-
sectors with approved investments reaching
The higher
DDI figure of
RM127.6 billion
indicates a
positive response
from Malaysian
investors to theGovernments call
for investment.
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Total investments: RM162.4 billion
Services (RM117.6 billion) 5,536 projects approved
Foreign: RM12.2 billion
Domestic: RM105.4 billion
Manufacturing (RM41 billion) 804 projects approved
Foreign: RM20.8 billion
Domestic: RM20.2 billion
Primary (RM3.8 billion) 102 projects approved
Foreign: RM1.8 billion
Domestic: RM2 billion
Graph 4 Total investments approved in the Malaysian economy, 2012
MALAYSIA
Investment Perormance 201225
RM2.7 billion in 18 projects. The rest o theprimary sector is made up o the plantation
and commodities sub-sector with investments
amounting to RM548.7 million, as well as
the agriculture sub-sector which registered
investments totalling RM507.8 million.
To ensure that Malaysia keeps its costcompetitive edge in attracting investments
in the services, manuacturing and primary
sectors, the Government continuously reviews
and ne-tunes its business policies to make
Malaysia more attractive as a business location.
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26 INVESTMENT FOR TRANSFORMATION
Homespun heroesInvestments rom domestic sources drive the national investment agenda.
While inows o FDI are crucial or the
continued development o the economy,
the role o domestic investments is not to
be underestimated. The New Economic
Model (NEM), Economic Transormation
Programme (ETP) and the 10th Malaysia
Plan (10MP), 2011-2015 have identied
the importance o domestic investments
in assuming a leading role in the growth
o the economy. The ETP has targeted
domestic investments at reaching 73 per
cent o overall investments.
Malaysias continued competitiveness
is dependent on strengthening the
manuacturing and services sectors and
accelerating the shit to high value-added
and innovation-based industries. This
transormation will not be possible without
stronger domestic investments in new
growth areas, together with inows o a
new breed o FDIs. To help Malaysia make
the leap required in national investment to
drive the transormation o the economy,several new strategies have been chosen:
1. Creating Malaysian conglomerates by
identiying potential companies to
provide necessary support
2. Harnessing and leveraging on
outsourcing opportunities created by
MNCs operating in Malaysia
3. Enhancing the current incentive
schemes, to assist Malaysian-owned
companies to scale-up
4. Intensiying technology acquisition by
Malaysian-owned companies
5. Providing support to Malaysian-
owned companies or complying to
international standards/certications
in targeted industries such as
aerospace, medical devices and solar
6. Encourage small Malaysian service
providers to merge into larger entities.
To urther promote the development o
domestic investments, the government
announced several measures in 2012, in
line with the above mentioned strategies.
These measures will urther spur domestic
investment and assist Malaysia in achieving
the transormation o the domestic
investment landscape.
Box article 1 Domestic investment initiatives
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MALAYSIA
Investment Perormance 201227
Domestic Investment Strategic Fund
A Domestic Investment Strategic Fund
o RM1 billion, to be managed by MIDA,
was established to harness and leverage
on outsourcing opportunities created
by MNCs operating in Malaysia, intensiy
technology acquisition by Malaysian-
owned companies, and enable Malaysia-
owned companies to obtain international
standards/certications in strategic
industries. This will accelerate the shit
towards high value-added innovation-
based industries.
Incentives for Acquiring Foreign
Companies for High Technology
This incentive was re-introduced to enable
Malaysian-owned companies to acquire
state-o-the-art technologies through
a leaprogging approach to move up
the value chain or to diversiy into new
areas. Under this initiative, a locally-
owned company in the manuacturing
or services sector that acquires a oreign-
owned company abroad will be eligible
or an incentive in the orm o an annual
deduction o 20 per cent o the acquisition
cost or ve years.
Companies in Production Eligible to
Apply for Incentives
Malaysian-owned manuacturing or
services companies already in operation or
a year or less and undertaking promoted
products/activities under the Promotion
o Investments Act, 1986 are now eligible
to apply or tax incentives. This exibility is
aimed at acilitating new investments by
Malaysian-owned companies.
Incentives for Small Scale Companies
Tax incentives were enhanced or small
scale Malaysian-owned companies
eligible to apply or tax incentives under
the Promotion o Investments Act, 1986.
The shareholders unds threshold was
increased rom RM500,000 to less than
RM2.5 million.
Incentives for Small Malaysian Service
Providers to Merge Into Larger Entities
Special incentives were introduced
or mergers o small service providers,
including a at tax rate o 20 per cent
on all taxable income or a period o ve
years (eective rom the date o merger)
and stamp duty exemption on the merger
document. These incentives are aimed at
building up the competitiveness o the
smaller entities. Sectors eligible or this
incentive include proessional services
(accounting and taxation services,
specialised medical and dental practices,architectural services and engineering
services), courier services, technical and
vocational secondary education services
(generic and special needs) and skill
training services.
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28 INVESTMENT FOR TRANSFORMATION
Partners in attracting investmentsRegional economic corridors and agencies lock arms to develop attractions or investment in
Malaysia
as one of the key agencies
tasked with transorming the economy
under the New Economic Model
(NEM) and the Economic Transormation
Plan (ETP), MIDA has adopted a new strategic
business approach to its operations. As the
execution agency or the nations investment
agenda, MIDA is looking at generating
quality investments in new and emerging
technologies which are necessary to become
a high income nation. MIDA is also looking at
ways to rebrand Malaysias image as a centre
or high technology and global activities.
To this end, MIDA has outlined new
investments strategies including leveraging
on an ecosystem approach in promoting
investments and developing targeted
industries, meeting the human resources needs
o investors and transorming the domestic
investment landscape. To meet the national
investments agenda, MIDA has been tasked
with enhancing coordination and cohesion
among the various agencies in the country
on matters related to investment promotion.As the countrys central investment agency,
MIDA has been continuously engaging and
collaborating with regional corridors and
other agencies as well as the private sector
to develop new and sustained sources o
competitiveness or the country.
ECER
creates new
opportunities
the east coast
Economic Region (ECER)
accounted or RM12 billion
in committed investments
in 2012, 20 per cent more
than its target o RM10 billion. Approximately
75 per cent o these investments came rom
domestic sources while the rest originated
rom oreign investors.
Since the implementation o the ECER Master
Plan in 2007, the region has attracted total
investments o RM37 billion and created 30,000
jobs or the region. The ECER has resulted in
a cumulative investment o RM18.7 billion in
Terengganu, creating 10,600 jobs, while Pahang
has attracted RM11.1 billion and created 14,590
jobs. Kelantan realised an investment inow o
RM5.6 billion and saw 4,600 jobs created, whilethe district o Mersing received RM1.6 billion
with 210 jobs created.
Among the highlights o 2012 are a project
by South Koreas CJ CheilJedang Corporation
(CJ) and Frances Arkema, which are investing
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Among other applications,
polyimide lm is widely used in
the production o fexed printed
circuit boards.
MALAYSIA
Investment Perormance 201229
RM2 billion to develop the worldsrst integrated bio-methionine and
thiochemicals plant in Kertih Biopolymer
Park (KBP). In Pahangs Gebeng Industrial
Estate, the Kaneka Group o Japan
recently invested RM287.3 million
or a polyimide lm production plant
through its subsidiary, Kaneka Apical
(M) Sdn Bhd. Another investor, Tioxide
(M) Sdn Bhd, a subsidiary o Huntsman
Tioxide Limited has invested RM275
million to upgrade production acilities at
its titanium dioxide pigment plant at the
Kemaman Heavy Industrial Park.
Another key development in ECER or the year
is the establishment o the Malaysia-China
Kuantan Industrial Park (MCKIP), a bilateral
project which is expected to strengthen the
bilateral trade and economic ties between
the two countries. MCKIP is the rst bilateral
project to be accorded national-level status
and is projected to attract RM7.5 billion worth
o domestic and oreign investments, as well as
create 5,500 jobs by 2020.
To attract potential investors to ECER, the
Federal Government has invested some
RM3 billion in inrastructure development
in the region over the past three years tosupport private sector investments. Kuantan
Port is being expanded to a deep water
port capable o handling vessels o up
to 200,000 DWT by 2015, and the
Government has also invested in
human capital development
The ECER has
attracted total
investments of
RM37 billion and
created 30,000
jobs since 2007.
Tourism3.2 (26.7%)
Logistics4.5 (37.5%)
Agriculture1 (8.3%)
Property1.3 (10.8%)
Manufacturing2 (16.7%)
Graph 5 Total committed investments in the ECER, 2012 (RM bil)
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30 INVESTMENT FOR TRANSFORMATION
programmes such as empower to boost theacademic achievement and employability o
ECER locals. Agropolitan projects are also being
rolled out across the region to eradicate rural
poverty.
NCER enters a new phase
o development
meanWhile, the
year 2012 marked
the end o Phase I
or the Northern
Corridor Economic Region (NCER) and saw a
record investment value o RM12.3 billion in
manuacturing, services and primary sectors,
representing an increase o 24 per cent rom
the previous year. The NCER has attracted a
total o RM29.7 billion in investments since its
inception in 2008 and created a total o 42,602
new jobs and business opportunities during
Phase I.
In addition to establishing strategic
partnerships with various agencies, the
Northern Corridor Implementation Authority
(NCIA) acilitated the establishment o the rst
local LED accreditation and testing centre inMalaysia in the Koridor Utara Biotech Centre
to encourage agropreneur development.
The agency also expanded the aquaculture
ecosystem and spearheaded human capital
development programmes in the region.
Private sector participation in rural areas
increased signicantly in 2012, with a total
o RM736.1 million invested over the period
compared with RM255.6 million in the previous
year. Most o these investments were in the
agriculture sector.
The Northern Corridor Implementation
Authority (NCIA) also joined in a tripartite
collaboration between the private sector,
academia and the Government to establish
CREST (Collaborative Research in Engineering,
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MALAYSIA
Investment Perormance 201231
Science and Technology). To boost R&D in the
E&E industry, a total worth o RM14.2 million
in grants was awarded or R&D projects in
2012. O the stated amount, RM5.6 million
was unded by CREST while industry players
partaking in the R&D projects contributed the
remaining RM8.6 million.
CREST and its ounding members were among
the key contributors in developing a three-
year Talent Roadmap or E&E. The Roadmap
is a sector-wide plan to attract, nurture
industry-ready talents and grow the E&E
expert talent pool. In addition, CREST creates
awareness about career opportunities in E&E
at career airs, local universities and outreach
programmes located in the UK, Australia,
the USA and Taiwan. CREST also supports
Talent Development through the FasTrack
programme and the development o a Talent
Repository or mapping competencies andmatching students to available positions in the
industry.
CREST also drives innovation and
commercialisation in the industry through
symposiums or promoting partnerships
between local companies, academicinstitutions and global technology partners.
Iskandar Malaysia grows
rom strength to strength
guided by the
Iskandar Regional
Development Authority
(IRDA), Iskandar Malaysia
has recorded total cumulative committed
investments o RM105.1 billion in various
sectors as o November 2012, with 42 per cent
o these investments having been realised. O
the total cumulative committed investments,
64 per cent (RM67.7 billion) are domestic
investments while 36 per cent (RM37.4 billion)
are rom oreign investors.
The creative, healthcare, nancial services and
logistics sub-sectors are set to be a magnet
or new investments between 2013 and 2015.
Iskandar Malaysia is also aiming at increasing
tourist interest during this period with on-
going additions to LEGOLAND Malaysia, Johor
Premium Outlets and Puteri Harbour to name
a ew.
The Government has committed RM7.3 billion
in Iskandar Malaysia so ar under the 9th
and 10th Malaysia Plan periods to attract
investments and improve living standards.
Since the initiative was rst announced, the
ratio o private sector versus public sector
The NCER saw
record total
investments of
RM12.3 billion
in 2012.
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Manufacturing33.9 (32.3%)
Others4.2 (4%)
Creative0.4 (0.4%)
Education1.6 (1.5%)
Healthcare1.6 (1.5%)
Tourism2.1 (2%)
Port/Logistics3.7 (3.5%)
Petrochemical/Logistics5.7 (5.4%)
Government7.3 (6.9%)
Utilities9.5 (9%)
Properties35.1 (33.4%)
Graph 6 Total cumulative committed investments in Iskandar Malaysia as at November 2012 (RM bil)
32 INVESTMENT FOR TRANSFORMATION
investments has increased rom 1:1 in 2006
to 13:1 in 2012. The growth o investments
in Iskandar Malaysia also generated an
increase in economic activities along with
urther demand or employees rom Johor. An
estimated 154,000 new jobs were created in
the manuacturing and service sectors rom
2006 to 2012.
Signicant outcomes in 2012 that could
boost investor interest include new highway
and bus transportation improvements, the
on-going Johor Bahru Transormation
Programme, training and placement o over
1,200 employees o catalytic projects, the on-
going development o tourist attractions and
continuing social and community development
initiatives.
Energetic developments at
SCORE
the saraWak
Corridor o
Renewable Energy
(SCORE)s role in
accelerating the
States economic growth is supported by
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The waer business is dependentupon a steady supply o
polycrystalline silicon.
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34 INVESTMENT FOR TRANSFORMATION
its advantage in energy resources. Theseabundant resources comprise 20,000 MW o
hydropower potential, 1.46 billion tonnes
o coal and 40.9 trillion square cubic eet o
natural gas.
SCORE is expected to trigger spin-o eects
or both downstream and upstream industries
as well as provide considerable business and
high value employment opportunities to the
local populace. With an area o more than 8,000
hectares, Samalaju Industrial Park (SIP) is being
aggressively developed as one o the growth
nodes o SCORE.
The primary advantages o SIP in attracting
investment are competitively priced energy
supply rom Bakun Hydroelectric Power (HEP)
and other sources, an abundant water supply,
the availability o land, scal and non-scal
incentives and inrastructure support.
To date, 11 companies with total investments
o RM21.2 billion have been approved at SIP.
The rst oreign investor, Tokuyama Malaysia
Sdn Bhd, will begin producing polycrystalline
silicon at SIP in June 2013. This rst phase will
create 500 job opportunities, while another
500 jobs will be created in Phase 2 during the
second quarter o 2014. Press Metal Berhad,the rst local company to invest in SCORE,
has one aluminium smelting plant in Mukah
and a second plant operating in SIP. Three
more companies, Pertama Ferroalloys Sdn
Bhd, OM Materials (Sarawak) Sdn Bhd and Asia
Advanced Materials Sdn Bhd are presentlycarrying out their site preparatory works.
SDC gets ready or the
global stage
the sabah economic development and
Investment Authority (SEDIA) is the one-stop
authority driving the Sabah Development
Corridor (SDC) to attract investments in key
ocus areas. In 2012, the SDC continued to
gain eminence as an attractive investment
destination.
Since the launch o SDC in January 2008 up
until the end o 2012, a total o RM114 billion
worth o investments have been planned
and committed to Sabah. Approximately
RM1.1 billion has been disbursed to SEDIA rom
the RM1.4 billion allocated under the Ninth
and Tenth Malaysian Plans to help drive the
SDCs objectives. The Ministry o Finance has
also approved a tax incentive package to help
SEDIA attract global investors to Sabahs shores.
The key projects in the SDC include the
834-hectare Kenginau Integrated Livestock
Centre, the Sabah Oil & Gas Terminal and
Kimanis Power Plant. A geothermal power
plant in Tawau accounted or RM500 million
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The Integrated LobsterAquaculture Park in Semporna is
expected to generate RM3 billion
in annual sales by 2030.
MALAYSIA
Investment Perormance 201235
o investment in 2012, while the PalmOil Industrial Cluster in Lahad Datu
attracted two biomass industry
players. Overall, states palm oil
sector is expected to generate
RM22.4 billion in investments
by the year 2020. Meanwhile,
the Integrated Lobster
Aquaculture Park in
Semporna involves
RM2 billion in investments and is expected
to generate RM3 billion in annual sales by
2030.
Agencies or changeGovernment institutions ocus on the countrys key growth areas.
Multimedia Development Corporation
In 2012, the economic slowdown in the
Eurozone and delayed growth in the United
States created challenges or the MalaysianICT industry, as 22 per cent o the countrys
exports o ICT are targeted at these markets.
However, the impact on Malaysias exports
was cushioned by Malaysias growing trade
ties with Asia and other emerging markets.
Indonesia, Vietnam, China and other ASEAN
countries accounted or nearly 58 per cent o
the countrys total ICT exports.
These actors are driving the transormation o
the ICT ecosystem, as laid out in Multimedia
Development Corporations Digital Malaysia
programme. With this programme, MDeC is
enabling the greater adoption o ICT and
ostering a more conducive ecosystem or
home-grown innovations. MDeC is also
ocusing on important ICT trends such asmobile computing, cloud computing and the
stacking model or ICT companies.
Founded on three strategic thrusts (see
Graph 7), Digital Malaysia aims to advance the
country towards a developed digital economy
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Mega datacentres will eature
prominently in Malaysias
uture as cloud computing gains
popularity.
36 INVESTMENT FOR TRANSFORMATION
by 2020. This will be accomplished by creating
an ecosystem that promotes the pervasive use
o ICT in all aspects o the economy.
Digital Malaysia is aimed at increasing
Malaysias ICT contribution to the countrys GNI
rom the current 9.8 per cent to 17 per cent
or RM294 billion by the year 2020, creating
160,000 high-value jobs in the process. The rst
eight Digital Malaysia projects were rolled out
in July 2012 with the remaining 17 projects tobe announced in stages rom 2013 onwards.
MSC Malaysia also continued to grow. With
the addition o Jaya 33 in 2012, Malaysia
currently has 25 MSC Malaysia Cybercities and
Cybercentres or ostering home-grown ICT
ecosystems and attracting quality investments
in the sector.
In addition, the EPPs in the ICT sector made
several achievements o note in 2012, including
adding 2,210 new jobs and over RM318
million in export revenue in the rst quarter
o 2012 alone. Under EPP2 (Building Globally-
competitive outsourcers), IBM will invest
RM1 billion over the next six years to build a
new IT Global Delivery Centre in Cyberjaya,creating up to 3,000 new high-skill jobs. In
2012, Frost & Sullivan also made a commitment
to invest RM595.2 million in a global acility
in the Iskandar region, which will create 830
high-value jobs. EPP3 (Positioning Malaysia as
a World-Class Data Centre Hub) succeeded in
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MALAYSIA
Investment Perormance 201237
urther catalysing growth in the data centre
business, bringing in over RM320 million in
2011. It is on target to achieve the RM400
million revenue target set out or 2012.
Halal Industry Development Corporation
The Halal Industry
Development
Corporation (HDC)
coordinates the overalldevelopment o the
national halal industry
with the goal o
making Malaysia the
Global Halal Hub and
elevating halal as the standard o choice. To
date, 22 Halal Parks have been developed
around the country , and the HALMAS status
has been awarded to 12 Halal Parks. During
the period 2009 - 2012, these HALMAS Halal
Parks attracted investments valued at RM
7.2 billion rom the USA, Australia and Japan
among other countries. A total o 101 projects
are in operation, providing employment
opportunities or 4,967 people.
In 2012, 6 HALMAS Halal Parks attractedinvestments valued at RM1 billion. Among the
16 projects approved were multinationals and
SMEs producing halal processed ood, halal
ingredients and halal pharmaceuticals. The
largest investments involved were YPJ Palm
International Sdn. Bhd. (RM150 million), Inno-
FROM... ...TO
Low Knowledge-AddHigh Knowledge-
Add
Consumption
Centric Production Centric
Supply Focused Demand Focused
Graph 7 Strategic thrusts o Digital Malaysia
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38 INVESTMENT FOR TRANSFORMATION
Wangsa Oils & Fats Sdn. Bhd. (RM150 million),Evyap Sabun Malaysia Sdn. Bhd. (RM350
million) and Musim Mastika Oil & Fats (M) Sdn.
Bhd. (RM250 million).
InvestKL
InvestKL provides
comprehensive
support services to
attract multinational
corporations (MNCs) to
the Greater Kuala Lumpur/Klang Valley (GKL/
KV) NKEA. During 2012, InvestKL succeeded
in attracting committed investments o
RM1.1 billion rom 11 MNCs. These investments
will create more than 12,000 new jobs and are
expected to generate GNI o RM1.6 billion.
O the 11 MNCs, our will establish their
Operational Headquarters/ Regional Control
Towers in GKL/KL, one will use GKL/KV or
global trading or agriculture commodities, ve
will set up centres o excellence and one will
establish retail business in the region. Notable
companies include Darden Restaurant Inc, the
worlds largest ull service restaurant company
and ServiceSource, a global leader in recurring
revenue management.
TalentCorp
To drive initiatives
towards improving the
countrys talent pool
or the Economic Transormation Programme
(ETP), TalentCorp directs its eorts along threestrategic thrusts: Optimise Malaysian Talent,
Attract and Facilitate Global Talent, and Build
Networks o Top Talent.
To date, TalentCorp has organised Attract
and Facilitate Global Talent outreach events
across 20 countries supported by Virtual
Career Fairs (VCFs). TalentCorp also manages
the Returning Expert Programme (REP), which
has approved more than 1,600 applications
rom January 2011 to 31 December 2012. To
enable top oreign talents to contribute in the
longer term in Malaysia, TalentCorp, together
with the Ministry o Home Aairs (MoHA) and
the Immigration Department oversees the
Residence Pass-Talent (RP-T). Over 1,000 RP-T
applications have been approved since the
initiatives introduction in April 2011 up to 31
December 2012.
The strategic thrust to Build Networks o
Top Talent ocuses on bringing together the
best Malaysian talent abroad and selected
companies in Malaysia or the exchange
o knowledge, ideas and exploration o
partnership opportunities. This is done through
talent ambassadors as well as workshops.
BiotechCorp
BiotechCorp is the lead
development agency
or the biotech industry
in Malaysia and acts as
a central contact point
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OPTIMISE MALAYSIAN
TALENT
Career Awareness
(career fairs, roadshows)
Enhancing School to Work
Transition (Structured
Internship Programme)
Upskilling Programmes
(FasTrack)
Scholarship
Management
ATTRACT AND
FACILITATE GLOBAL TALENT
Returning ExpertProgramme
Pass-Talent (RP-T)
International Outreach and
Engagement sessions
(Virtual Career Fairs)
BUILD NETWORKS OF
TOP TALENT
Malaysian Talent
Ambassadors
Workshops
Graph 8 Three strategic thrusts o Talent Corp
MALAYSIA
Investment Perormance 201239
providing support, acilitation and advisory
services or biotech and lie sciences companies
in the country. One o the many initiatives
driven by BiotechCorp is the commitment to
advance the bio-chemical sector and to secure
a targeted RM4 billion worth o investments
in the industrial biotechnology sector by 2013
to drive the Commercialisation Phase o the
National Biotechnology Policy (NBP).
Since its establishment in 2005, BiotechCorphas acilitated the development o 215
BioNexus-status companies in Malaysia with
total approved investments o RM2.6 billion.
BioNexus-status companies qualiy or scal
incentives, grants and guarantees administered
by BiotechCorp.
BiotechCorp and East Coast Economic Region
Development Council (ECERDC) have been
actively engaging several global industry
biotechnology players especially rom the USA,
Europe, Korea and Japan to set-up their bio-
based chemical manuacturing acility in Kertih
Biopolymer Park. BiotechCorp and ECERDC
have successully secured a RM2 billion
investment rom a joint-venture between
Koreas CJ CheilJedang and Frances Arkema to
develop the worlds rst bio-methionine acilityin Kertih Biopolymer Park. The biorenery
is slated to be ully operational by 2014 and
will utilise renewable energy rom biomass.
The total project is expected to generate a
cumulative GNI o RM 20.4 billion by 2020 and
produce 2,500 green jobs or Malaysia.
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The countrys
manuacturingsector is going
through a period o
transormation and
restructuring. As low value-
added assembly becomes
less important, industry
players are expected to
reduce their investments
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Domestic investments
Foreign investments
20112012
Graph 9 Sources o investments in projects approved, 2012 and 2011
MALAYSIA
Investment Perormance 201243
into low-value sectors and increase their
activities in new high value-added activities
that will open up new opportunities or
growth. The creation o these new business
ecosystems will support the market or high-
skill employment and spur the development o
a high-income economy.
The trend o investments approved in 2012
conrms that Malaysia continues to be an
attractive investment destination. Despite
intense competition or investment, most sub-
sectors registered an increase in investmentsexcept or E&E, basic metal products and non-
metallic mineral products.
Investment trends in 2012 were also strongly
inuenced by global economic uncertainties
exacerbated by the sovereign debt crisis in
Europe, and the stalled US economy. Malaysia
attracted a total o 804 manuacturing projects
worth RM41 billion in approved investments
in 2012 compared with RM56.1 bill ion or 846
manuacturing projects in 2011. Almost 50 per
cent o this total (RM20.2 billion) were domestic
investments with the rest being high quality
oreign direct investments (RM20.8 billion).
Resilience in the ace o
uncertainty
malaysias erstWhile manufacturing
sector remained resilient as a whole due to
its strong, diversied base across multiple
industries. The country attracted signicant
new investments amounting to RM26.8 billion
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Domestic investments
Foreign investments
Employment
Graph 10 Investments and employment
in projects approved, 2007 - 2012
44 INVESTMENT FOR TRANSFORMATION
(473 projects) or 65.4 per cent o total
investments approved.
Existing companies in Malaysia continuedto expand and diversiy their operations,
reecting their continued condence in the
countrys investment environment. A total o
331 expansion/diversication projects with
investments amounting to RM14.2 billion were
approved in 2012.
Capital-intensive projects
malaysia has adopted a more focused
and targeted approach in attracting quality
investments in new growth areas withinemerging technologies, high value-added
industries, high technology, capital-intensive
and knowledge-intensive industries.
Based on the measurement o capital
investment per employee (CIPE) ratio o
The CIPE ratio
of manufacturing
projects has risen
consistently since it
was first recorded in
1990.
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20112012
Petroleum5,812 (22%)
E&E
11,234 (34%)Basic Metal7, 308 (22%)Transport
5,605 (21%)
Rubber Products993 (4%)
Machinery1,303 (5%)
E&E2,546 (9%)Chemicals
2,678 (10%)
Basic Metal3,262 (12%)
Others3,754 (14%)
Wood882 (3%)
Fabricatedmetal1,098 (3%)
Transport2,034 (6%)
Others1,972 (6%)Non-metallic
2,319 (7%)
Food2,796 (8%)
Chemicals3,453 (11%)
Scientific &MeasuringEquipment884 (3%)
Graph 11 Investments in new projects by industry, 2012 and 2011 (RM mil)
MALAYSIA
Investment Perormance 201245
projects approved, capital intensity in
2012 stood at RM535,715. The CIPE ratio o
manuacturing projects has risen consistently
since it was rst recorded in 1990, reecting a
general trend towards more capital-intensive,
high value-added and high technology
projects. In 2012, the industry with the
highest CIPE ratio was petroleum products
including petrochemicals (RM4,738,958),
ollowed by chemicals and chemical products
(RM2,349,438) and scientic and measuring
equipment (RM1,134,442).
In 2012, a total o seven projects with
investments o at least RM1 billion or more
were approved with total investments oRM13.5 billion. In comparison, there were 11
projects which recorded investments o at
least RM1 billion or more in 2011 with total
investments amounting to RM22.2 billion.
There were also 73 approved projects which
recorded investments o at least RM100
million or more, bringing in a combined total
o RM29.2 billion or 71 per cent o the total
investments approved.
All these projects will have substantialmultiplier eects on the manuacturing sector
and the economy, including orward-and-
backward linkages eects, the development
o supporting industries, the transer o
new technologies and R&D, the creation o
high income employment opportunities,
Industry Value of
projects (rM bIl)
Transport equipment RM7.8 billion
Chemicals & chemical products RM6.4 billion
Petroleum products includingpetrochemicals
RM6 billion
E&E products RM4 billion
Basic metal products RM3.8 billion
Food manuacturing RM3.4 billion
Machinery & equipment RM1.9 billion
Rubber products RM1.4 billion
Table 1 Top eight industries by investment
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46 INVESTMENT FOR TRANSFORMATION
local sourcing, skills development, and thegeneration o oreign exchange earnings.
Together, the top eight industries by
investment accounted or RM34.7 billion or
85 per cent o total investments approved. All
these industries registered higher levels o
investments in 2012 compared with 2011, with
the exception o E&E, basic metal products and
ood manuacturing. The top eight industries
by investment are listed in Table 1.
Export-oriented projects
malaysia oWes its favourable
investment environment to a myriad o
actors including the availability o excellent
inrastructure, telecommunication services,
nancial and banking services, supportingindustries as well as a skilled and trainable
work orce. In 2012, a total o 239 projects were
approved involving investments o RM15.2
billion proposed to export at least 80 per cent
o their output. The top industries with export-
oriented projects are listed in Table 2.
2011
2012
Chemicals3,759(26%)
E&E8,828 (38%)Transport
3,944 (17%)
Food2,639 (19%)
Plastic Products505 (3%)
Machinery548 (4%)
Basic Metal531 (4%)
Fabricated Metal687 (5%)E&E
1,441 (10%)
Others1,930 (14%)
Transport2,175 (15%)
Rubber432 (2%)
Machinery384 (2%)
Chemicals1,497 (7%)
Food898 (4%)
Others1,842 (8%)
Petroleum
2,557 (11%)
Basic Metal2,608 (11%)
Graph 12 Investments in expansion/diversication projects by industry, 2012 and 2011 (RM mil)
Industry Value of
projects
(rM bIl)
nuMber of
projects
Petroleum productsincluding petrochemicals
5 6
Transport equipment 2.1 13
E&E products 1.6 52
Chemicals & chemicalproducts
1.2 11
Rubber products 1.1 8
Table 2 Top industries with export-oriented projects
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MALAYSIA
Investment Perormance 201247
A changing workorceBetter jobs means better lives or everyone.
the projects approved in 2012 are
expected to create employment
opportunities or 76,631 people, o
which 23 per cent are in the managerial,
technical and supervisory (MTS) category
(17,422 ) while the other 51 per cent are in the
category o skilled workers (38,931). Most o
the employment opportunities created are
in the E&E sector (18,163 jobs) ollowed by
transport equipment (11,669 jobs) and ood
manuacturing (7,062 jobs).
The Government continues to grant approvals
or expatriate posts to Malaysian as well
as oreign-owned companies, particularly
or managerial and technical posts. This
practice will acilitate technology transer and
complement the local pool o managerial and
technical talent. A total o 2,023 expatriate
posts were approved in 2012.
Domestic investors take
centre stage
malaysias continued competitiveness
is dependent on strengthening the
manuacturing and services sectors and
accelerating the countrys shit towards high
value-added, high technology, knowledge-
intensive and innovation-based industries.
Given the current global economic climate and
increasing competition or global FDIs, it is vital
that domestic investments take centre stage
in driving Malaysias economic transormation.
The country is on track to achieve this
transormation, as the share o domestic
investments approved in 2012 rose rom 39 per
cent in 2011 to 49.3 per cent in 2012.
Becoming a magnet or
oreign capital
malaysia has adopted a more focused
and targeted approach in attracting quality
oreign investments in recent years. These
quality investments do not always maniest
as high levels o capital investments but can
have signicant multiplier eects throughout
the economy. The quality investments being
sought include investments in high technology
projects, knowledge-intensive industries, high
value-added industries and R&D activities.
Malaysia remains a competitive destinationor FDI in the region and continued to attract
encouraging levels o oreign investments in
the manuacturing sector. Foreign investments
in approved manuacturing projects amounted
to RM20.8 billion in 2012, o which RM12.6
billion (60.6%) was in new projects while the
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48 INVESTMENT FOR TRANSFORMATION
remaining RM8.2 billion (39.4%) was in projectsinvolving the expansion or diversication o
existing operations.
The major sources o oreign investments in
2012 were Japan (RM2.8 billion), Saudi Arabia
(RM2.6 billion), Singapore (RM2.2 billion), the
Peoples Republic o China (RM2 billion) and
the Republic o Korea (RM1.6 billion). These ve
countries jointly accounted or 53.8 per cent o
total oreign investments approved during the
period (see Graph 13).
Japans investments in Malaysia in 2012
amounted to RM2.8 billion in 62 approved
projects (see Graph 14). The countrys largest
investment came rom a new project to
manuacture passenger cars, SUVs, 4x4s and
light truck eco tyres with an investment oRM891.9 million. In addition, investments or a
new project or the manuacture o polyimide
lm amounted to RM287.8 million while
investments or an expansion project or the
manuacture and assembly o cars amounted
to RM262.7 million.
Saudi Arabia was the second largest source
o oreign investments in 2012 with RM2.6
billion in two approved projects. The large
investments rom Saudi Arabia were primarily
contributed by an expansion/diversication
project with investments o RM2.6 billion or
the manuacture o polycrystalline silicon,
sodium hydroxide (caustic soda) chlorine,
hydrogen, hydrochloric acid, silicon tri-chloride
and other chemicals.
Graph 13 Major sources o oreign investments in projects approved, 2012
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Transport equipment
456.2 (18%)
Plastic products
430.3 (17%)
E&E products
344.8 (13%)
Paper, printing and
publishing
193 (7%)
Fabricated metalproducts
169.2 (38%)
Rubber products
984.8 (38%)
Graph 14 Value o investments rom Japan by major industry, 2012 (RM mil)
MALAYSIA
Investment Perormance 201249
Diversiying localinvestment destinations
in terms of value, selangor received
the largest amount in approved investments
in the manuacturing sector in 2012 (RM11.7
billion) ollowed by Johor (RM5.5 billion),
Sabah (RM5 billion), Sarawak (RM4.7 billion)
and Negeri Sembilan (RM2.7 billion). These
ve states contributed 72 per cent o the totalinvestments approved in the country in 2012.
In terms o the number o projects approved,
three states proved most popular among
investors, attracting a total o 69 per cent
o the total projects approved: Selangor
(252 projects), Johor (184 projects) and Pulau
Pinang (115 projects).
Most o Selangors investments were
contributed by a wide range o industries
including transport equipment (RM5 billion),
E&E products (RM1.6 billion) and ood
manuacturing (RM1.2 billion). One major
project approved in Selangor includes a
new wholly Malaysian-owned project with
investments o RM2 billion to manuacture andassemble trucks, buses and commercial vehicle
engines.
Johor registered the second highest level
o investments at RM5.5 billion, including a
new RM577 million oreign-owned project
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Graph 15 Investments in approved
projects by location, 2012
50 INVESTMENT FOR TRANSFORMATION
to manuacture drug substances, insulin,analogues and drug products. Other
investments in Johor were concentrated in
the chemicals and chemical products sub-
sector (RM869.9 million), E&E (RM809.3 million),
ood manuacturing (RM697.6 million) and
abricated metal products (RM500.6 million)
industries.
Sabah attracted investments
amounting to RM5 billion
mainly due to a new RM4.5
billion Malaysian-owned project
to manuacture ammonia
and granular urea. Other
investments in the state were
in chemicals and chemical
products (RM254.2 million),
ood manuacturing
(RM132.8 million)
and machinery & equipment (RM44.3 million)industries.
Implementation o
approved manuacturing
projects
a total of 4,245 manufacturing
projects were approved during the period
rom 2008 to 2012. O these, 3,213 projects
were implemented, with 3,005 projects in
production as at 31 December 2012 and 208
projects at the stage o actory construction
and machinery installation. O the 3,005
projects in production, 776 projects had
commenced production in 2012. Total capital
investment o the 3,213 projects that were
implemented amounted to RM147.2 billion.
In addition, 76 projects with investments o
RM18.2 billion had acquired sites or actories,
while 783 projects (RM52.7 billion) were in
the active planning stage. When these 859
projects are realised, total investments o
these projects which were in various stages o
implementation will amount to RM70.9 billion.
Selangor has the largest number oimplemented projects, ollowed by
Johor, Pulau Pinang, Perak,
Kedah and Negeri
Sembilan.
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MALAYSIA
Investment Perormance 201251
Where does the money go?Graph 16 Investments in projects approved by major industry, 2012 and 2011
Graph 17 Domestic investments in projects approved by major industry, 2012
Graph 18 Foreign investments in projects approved by major industry, 2012
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Production
3,005 (70.8%)
Active planning
783 (18.4%)
Machinery installation and
factory construction
208 (4.9%)
Not implemented
173 (4.1%)
Site acquired
76 (1.8%)
Graph 19 Status o implementation o manuacturing projects approved, 2008 - 2012
52 INVESTMENT FOR TRANSFORMATION
Major projects implemented during the periodrom 2008 to 2012 covered a broad range o
industries: E&E products, basic metal products,
chemical and chemical products, transport
equipment, and ood manuacturing.
The Government continues to undertake
various measures and initiatives at ederal
and state levels to acilitate investors in the
implementation o approved projects. These
measures included the setting up o State
Investment Centres (SICs), Advisory Services
Centre (ASC), Customer Service Centre (CSC),
and Immigration Unit Oce in MIDA. In
addition, MIDA appointed Special Project
Ocers (SPOs) or hands-on assistance,
introduced online application or submission
o application orms, and provided automatic
issuance o Manuacturing Licences. SpecialTask Force to Facilitate Business (PEMUDAH)
also introduced improvements to enhance
transparency and strengthen processes.
MIDA also continues to manage and monitor
projects under the Upgrading o Basic
Inrastructure Program o Existing Industrial
Areas with the goal o assisting the state
government in upgrading and improving basic
inrastructure in existing industrial estates.
In 2012, a total o 53 companies downsized
their operations, resulting in the retrenchment
o 9,194 workers. In addition, 22 companies
ceased operations altogether, resulting in
the loss o 1,969 jobs. The main reasons cited
or these closures included poor market
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MALAYSIA
Investment Perormance 201253
conditions, increased costs and companynancial problems.
These closures were more than countered
by the creation o 79,807 job opportunities
rom the 776 projects which commenced
production in 2012. These projects will provide
alternative employment opportunities or the
11,163 workers who were retrenched during
the same period.
Electrical and electronic productsCreating new opportunities in an established industry
the sharp rise in investments in
high value-add sector such as medical
devices, biotechnology and the services
sector is osetting the gradual decline o
investments into labour-intensive industries.
As Malaysia moves towards becoming a high
income nation, its share o investments in
high value-added activities and knowledge
industries will rise while investments in
lower-value activities such as assembly and
basic manuacturing will all. This is a strong
indicator o the countrys economic prosperity
as it comes to be measured by the health and
wealth o the community rather than its GDP.
Today, MNCs in the E&E sector are
concentrating on expanding their R&D
capabilities in Malaysia, creating higher
income jobs rom higher value-added
activities. Malaysian companies are ollowing
suit and are developing their competencies
in research, design and development to
support the MNC activities. A total o 112 E&E
projects with investments o RM3.9 billion
were approved in 2012, most o which came
rom oreign investors (RM3.2 billion or 82.1%)
A total of 112
E&E projects with
investments ofRM3.9 billion were
approved in 2012,
most of which
came from foreign
investors.
state Value of
projects
nuMber of
projects
Selangor RM30.9 billion 1,091
Johor RM24.5 billion 659
Pulau Pinang RM27.4 billion 448
Perak RM5.4 billion 169
Kedah RM6.3 billion 153
Negeri Sembilan RM10.4 billion 144
Table 3 States with the largest number o implementedprojects during 2008-2012
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while domestic investments made up the rest
(RM734.6 million or 17.9%). The major sources
o oreign investments were the USA (industrial
electronics and consumer electronics), Japan
(electronic components and electrical
products) and Canada (electronic components).
In 2012, a total o 31 projects were approvedin the electronic components sub-sector with
investments o RM1 billion, while a total o
eight projects were approved in the consumer
electronics sub-sector with investments o
RM768.7 million. The industrial electronics
sub-sector attracted a total o 18 projects with
approved investments o RM325.3 million.
In the electrical sub-sector, investments
in 2012 amounted to RM1.8 billion with 55
projects contributing 46.1 per cent o the total
approved investments in the E&E industry.
The sub-sector was driven largely by oreignapproved investments o RM1.3 billion
(72.2%). The sub-sector encompasses three
segments industrial goods, consumer goods
and electrical components and the approved
projects are expected to generate 4,463
employment opportunities.
SECTORS EXAMPLES OF PRODUCTSSUB-SECTORS
Graph 20 Structure o the E&E industry
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MALAYSIA
Investment Perormance 201255
MNCs in the E&E sector areconcentrating on expanding their
R&D capabilities in Malaysia,
creating higher income jobs rom
higher value-added activities.
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The E&E ecosystemThe E&E industry in Malaysia is ocused on deepening and strengthening the three major
ecosystems o semiconductors, solar and LED technologies.
Semiconductors
Over the past ew years, the E&E industry
has been supported by strong demand
in PCs, mobile phones and TVs. However,
mobility and connectivity trends are
changing the way people use these devices
on a global scale. The increased popularity
o using tablets and smartphones
has impacted the perormance o the
Malaysian semiconductor industry which
mostly serves the PC segment o the
market.
Future demands in communica