Engineering 2006

8/14/2019 Engineering 2006

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Malaysia’s engineering supporting industry whichprogressed in tandem with the country’s rise as aglobal player in manufacturing, currently consists ofthe following distinct sub-sectors:-

• Mould and Die• Machining

• Metal Casting

• Metal Stamping

• Heat Treatment

• Surface Treatment/Finishing

• Metal Fabrication

Having evolved from the servicing of equipment for

the resource and agro-based industries in the ‘60sand ‘70s to playing a key supporting role during thenation’s rapid economic progress in the ’80s and‘90s, the industry is now positioning itself in thedirection of an enhanced role in the next phase ofMalaysia’s economic evolution. This scenario willenable potential investors to favorably considerMalaysia as an outsource destination.

In addition, the country’s as well as the region’sfast growing automotive and electrical & electronicssectors; attractive fiscal and non-fiscal incentives;the country’s ideal geographic location; a vibranteconomy; a stable Government and local-

developed infrastructure, when taken togetherequals one attractive proposition.

In Support of GrowthOpportunities

1 Malaysia’s Engineering Supporting Industry



Robust Engineering Supporting Industry

Malaysia is an ideal destination for multinationalcorporations (MNC) looking for outsourcing orinvestment opportunities in the engineering supportingindustry.

• A Vital Link

Malaysia is linked to a vibrant manufacturing sector,particularly in the electrical & electronics, computer& computer peripherals; automotive & aerospace;telecommunications and machinery manufacturingsectors. As an outsource destination, we offer aseamless link to these industries with vastopportunities for structural and economic growth.

• Outstanding International Presence

Our engineering supporting industry has earned astrong international recognition for its world-classmanufacturing standards. With the long-standingpresence of various MNCs within the country, wepossess the expertise and experience to be able tosupply products and services that are globallycompetitive in quality, value and delivery time.

• Ideal Location

The ASEAN countries, with a combined populationof over 500 million and a collective GDP of US$750billion, is a market with infinite potential growth. Ourlocation is not only an ideal base to gain entry intothe ASEAN markets but is also appealing tocompanies with high value and low-cost strategieslooking to outsource effectively.

• A Choice Environment

Malaysia possesses the ideal environment forforeign investors and companies looking for

outsourcing partners: political stability; strongeconomic fundamentals; well-developedinfrastructure; English language proficiency; skilledand productive workforce and quality of life.

Incentives for Growth

Malaysia has a corporate tax rate of 28% for both localand foreign-owned companies. A wide range of taxincentives are available to manufacturing companies inMalaysia.

1. Incentives for Manufacturing Companies

• Pioneer Status – income tax exemption of 70%to 100% on statutory income for 5 years, or

• Investment Tax Allowance of 60% to 100% onqualifying capital expenditure incurred within 5years

• Reinvestment Allowance of 60% on qualifyingcapital expenditure for 15 years.

2. Incentives for High Technology companies

Incentives for High Technology companiesventuring into the design, development andmanufacturing of high technology intermediateengineering products and services.

• Pioneer Status – income tax exemption of 100%on statutory income for 5 years, or

• Investment Tax Allowance of 60% on qualifyingcapital expenditure incurred within 5 years to beoffset against 100% of statutory income.

Malaysia’s Engineering Supporting Industry 2



Malaysia’s mould and die industry is recognised asthe leading engineering supporting industry in thecountry. Over the last three decades, the mould & dieindustry has experienced rapid growth in tandemwith the overall growth of the manufacturing sector.The increasing incorporation of locallymanufactured parts and components hassignificantly fuelled the demand for moulds anddies. Malaysian companies have the capability tomanufacture most types of moulds, dies andtoolings to complement the manufacturing sectors.

The value of imports of moulds and diesamounted to RM1.31 billion in 2004. Imports weremainly from Japan, Taiwan, Germany, Singapore,China, United Kingdom, USA and South Korea.These imports were mainly very high precision andcomplex toolings, for which opportunities exist fornew manufacturing ventures. Malaysia also exportsmoulds and dies, which has shown an increasingtrend over the last five years.

The Government has initiated the setting up of theMould & Die Design Centre to provide additionalboost to the development of the local mould & dieindustry. The Centre will provide R&D, design,technical consultancy, training and facilities rentalservices to the local mould & die industry andmanufacturing sector in general.

Mould and Die

Industry

Companies operating in Malaysia

The mould and die industry comprises about 400companies involved in the manufacture of most typesof moulds, dies and tooling to complement the needsof the E&E, plastics, telecommunication, automotive,machinery, rubber and other industries. Foreigncompanies that have established operations inMalaysia include A-FOSS Zeno (Japan), Meiki(Japan), Fuji Dies Kogyo (Japan), TylonManufacturing (Japan) and FICO Asia (Netherlands).Prominent Malaysian companies include LKTPrecision Engineering, Sum Hing Engineering Works,

Topla Engineering (a Japanese-Malaysian jointventure), D-R Engineering, Sun Tong Seng Mould-Tech, H&L High Tech, HH Precision Mould andDynamic Mould.

Opportunities for the Mould and Die Industry

• The scope for the further development of themould and die industry in Malaysia remains brightconsidering the high annual market demand andsignificant imports of moulds and dies.

• Export opportunities to the ASEAN region isexpected to increase significantly with the ASEAN

Free Trade Area (AFTA) which came into force inJanuary 2003.

• Opportunities and a large market potential exist for:-- high precision moulds and dies for E&E

industries- large moulds and dies for the automotive and

plastic industries.

• High technology incentives for companiesventuring into the design, development andmanufacturing of trim & form dies, semiconductorcavity/encapsulation moulds, suspension tooling

for hard disk drive parts, progressive tooling forlead frames and fibre optic connector tooling,advanced toolings and equipment for theproduction of precision components, moulds,tools and dies for the automotive industry.




Machining

IndustryMalaysia’s machining industry is a total solutions provider to all themachining needs of the country, with most companies attaining highlevels of technological capabilities and using state-of-the-art CNCmachine tools in their operations.

The machining industry in Malaysia can be classified into twocategories:

• Companies which provide machining services to otherindustries on a jobbing basis.

• Companies which produce precision machined parts such as

jigs & fixtures, turned parts, shafts, pins, bushes and othermachined components.

Most of the specialised machining companies possess state-of-the-art CNC machining centers and provide integrated machiningsolutions (including sub-assemblies), working to machiningtolerances as low as 1 to 5 microns with turning diameters rangingfrom 1 to 550 mm. A number of companies have diversified into thedesign and manufacture of automation systems and equipment,particularly for semiconductor, electrical & electronics industries.

Companies Operating in Malaysia

There are about 170 companies in operation, providingmachined parts and components and machiningservices. Catering to a number of multinationals in thedomestic and direct export markets in the USA, Japan,Singapore, UK and France are prominent Malaysiancompanies like Upeca Engineering, Eng Hardware

Engineering, Paradigm Precision Components, TNHMetal Engineering, PSO Precision Machinist andEdaran Precision Industries. Foreign companies thathave established operations in Malaysia include Synturn(S’pore), Swissmatic Precision Engineering (S’pore),Kenseisha (Japan), Kobe Precision Technology (Japan),Ohta Precision (Japan), Naito Asia (Japan) and KurodaPrecision Industries (Japan).

Opportunities for the machining Industry

It is envisaged that the expansion of Malaysia’saerospace parts and components manufacturing

industries will lead to the increased demand for machinedparts and components as well as machining services.




The industry is divided into four main areas: -• Foundries• Die casting• Magnesium Injection Moulding (Thixomoulding©)• Investment casting

1. Foundry

The foundry industry in Malaysia over the last 50 yearshas attained a significant level of technologicalexpertise in servicing the traditional industries ofrubber, tin and palm oil. Working with the localengineering companies, the foundries have developedtheir capabilities to re-engineer and adapt componentsand sub-assemblies for imported machinery to suitlocal conditions. Some of the more advancedfoundries today have automated casting facilities and

are producing castings to international standards forexport.


These include prominent Malaysian companies likeMMC Metal Industries, Yoonsteel, Hicom Engineering,Lestari Casting and a foreign-owned company,Metalock Castings (S’pore).

2. Die Casting

The die-casting industry in Malaysia is fast developingas a major component supply source, supporting themanufacture of computer, electrical appliances,automotive components and hardware products. Thelocal companies have developed and acquiredadequate know-how and production capabilities inproducing die-cast components of very high qualitysuch as computer disc drive components, die-castparts for the domestic electrical appliances industryand the electronics industry.


These companies are mainly foreign or joint-venturessuch as Hiroshige (Japan), Wincast PrecisionEngineering (S’pore), Dynacast SPM (UnitedKingdom), MMI Precision Manufacturing (S’pore),MELCOM, Asahi Kosei (Japan), Kawamura (Japan),Keseisha (Japan), Nakazawa Die Casting (Japan),PDCI (S’pore), Jomon Technology (S’pore), SanshoGiken (Japan) and Swanmet (S’pore).

3. Magnesium Injection Moulding

(Thixomoulding©)

Malaysia is one of the few countries in the world whichhas this facility. Magnesium injection moulding, whichis a revolutionary semi-solid process for high speed

injection moulding of net-shapemagnesium alloy parts, isregarded as the most advanced wayof fabricating high quality, highstrength, high complexity and light weight

magnesium alloy parts and components toprecision tolerances. Parts and components presentlymanufactured in Malaysia are for aesthetic, structuraland functional uses for the electronics,telecommunication and automotive industries.

AB Technology is a local company which through itsintense R&D, has successfully integratedthixomoulding© into a one-stop process centre formagnesium alloy parts and components.

4. Investment Casting

Investment casting is a relatively new industry inMalaysia, mainly supplying components of accuratedimensional tolerances and complex shapes, normallyused in the aerospace, automotive and machineryindustries. There are four companies presentlyproducing precision investment casting mainly for theexport market. They are Rigel Metalcraft (Taiwan),Swanmet (S’pore) and Malaysian-owned companiesNostalgia Investment Casting and MMI Precision.

Opportunities for the Die Casting and Investment

Casting

With the further development of the local automotiveindustry and increased demand for automobile partsand motorcycle die-cast parts, there will be greaterdemand for die-cast components especially inmagnesium alloy die-casting. Trends also indicate anincrease in demand for die-castings for the computerand computer peripheral industry. This is expected tostimulate growth in the industry.

Investment casting is fast becoming a basicengineering supporting industry. It is expected that

more established foundrieswould be seekingtechnology and joint-venturepartners todiversify intothis field.


Metal

CastingIndustry



The metal stamping industry is a well-establishedindustry in Malaysia, supplying stamped/pressedparts to a wide range of industries, including theelectrical & electronics, automotive, industrialmachinery and equipment, precision measuring and

testing equipment. The industry has developedsignificantly, in capacity and technical capabilities,to serve the various market needs of multinationalcorporations such as Matsushita, Sony, Hitachi,Toshiba, Dell, Yamaha, Thomson, Philips andHewlett Packard.

The industry is now heading towards advancedtechnologies and the provision of total solutionsincluding prototypes, moulds and dies and sub-assembled components. The steady increase in the

demand for electrical and electronic products andautomotive components will continue to spearheadthe growth in the metal stamping industry inMalaysia.


There are over 300 companies engaged in metalstamping activities as technological advances and asteady increase in demand continue to drive theneed for expansion within the industry. ProminentMalaysian companies include Cybron TLManufacturing, Kris Components, Kein HingIndustry, Wong Engineering and NH MetalStamping.

Opportunities for the Metal Stamping Industry

The industry is expanding and developing towardshigh speed stamping, fine blanking and into themanufacture of higher precision and miniaturisedparts. New projects are also encouraged in theless developed states of the Eastern Corridor of

Peninsular Malaysia, Sabah and Sarawak.


Metal StampingIndustry



The heat treatment industry is expected to grow intandem with the development of the major industryclusters of machinery and equipment, moulds and dies,

iron and steel secondary products and automotivecomponents. This industry offers services such ascontinuous mesh-belt heat treatment; vacuum hardening;carburizing; carbonitriding; nitriding; nitro-carburizing;annealing; normalizing; and tempering for a diverse rangeof metal products.

Heat treatment services for high carbon steel and alloysteel products such as moulds and dies, critical parts forbearings and automotive components are the latestadditions to the list of products already serviced which

include bolts, nuts, shafts, gears, pins and springs.Companies Operating in Malaysia

Most of the companies in operation providing heattreatment services are joint ventures with foreigncompanies who supply both capital and technical know-how support. Prominent companies in this industry includeMalaysian owned companies such as Upsilon HeatTreatment Services, Belton Oriental Heat Treatment,ProHeat Treatment Precision and foreign ownedcompanies such as Tohken (Japan), Umetoku (Japan) and

Yeh Chang Heat Treatment (Taiwan).

Opportunities for the Heat Treatment Industry

Expansion activities in the mould and die, as well as themachinery and equipment manufacturing industries, andproduction of downstream products of iron and steel,secondary products, automotive parts and componentmanufacturing offer good prospects for the growth of theheat treatment service industry. Investments in newventures with state-of-the-art facilities that are also

environmentally friendly are encouraged especially thoseincorporating the latest vacuum carburizing and vacuumhardening technology.

7 Malaysia’s Engineering Supporting Industry Malaysia’s Engineering Supporting Industry 8

Industry

HeatTreatment



The industry has the capability and capacity to cater for most of the requirements of themanufacturing industry. These include a variety of plating operations such as batch andcontinuous electroplating; precision electroplating; electroless plating; phosphating;passivation; anodizing; chromating; electroplating for the semiconductor industry includingintegrated circuits and lead frames; sinter plating and physical vapour deposition.

Malaysia is now focusing its efforts in establishing more modern plating plants with cutting-edge equipment and technology, while upgrading current facilities to complement thecountry’s heightened industrial efforts and environmental concerns. There is an increasingdemand for surface treatment services from the electrical and electronics, automotive,aerospace and machinery components industries, thus opening up vast opportunities fornew ventures in this area.


There are about 40 companies in operation in this industrywhich include Malaysian owned companies such as AKNTechnology, Ampmas and Metal Polishing Industries and foreignowned companies such as Mitek Kitamura (Japan), DipsolChemicals (Japan), Ueda Plating (Japan), and Jiwei Industries

(Taiwan). Most of these companies are presently servicing theneeds of notable MNCs.

Opportunities for the Metal Surface Treatment/

Finishing Industry

The industry is now focusing on establishing modern platingplants with the state-of-the-art equipment and technology forhigh precision surface treatment and coating for the electricaland electronics and aerospace industries. These will also haveto address the environmental concerns linked to the industry.

Surface Treatment / Finishing Industry




Metal fabrication activities in which Malaysiancompanies have developed world-class capabilitiescan be classified into four categories; namelyfabrication for the offshore/onshore oil and gasindustry; building and civil construction fabrication;fabrication of processing and manufacturing plantsand industrial machinery and equipment structuresand component fabrication.

Local companies undertake fabrication for theoffshore/onshore oil & gas industry which includesfabrication works for the offshore oil drilling platformrequirements such as jackets, production modules,platform decks, accommodation modules, line-pipe &spool and related industrial onshore activities such aspetroleum refineries, petrochemical plants andstorage facilities.

In the building and civil construction fabricationcategory local companies fabricate steelsuperstructures for high-rise buildings, bridges,flyovers, transmission towers and other infrastructuralfacilities such as ports and airports.

In the processing and manufacturing plant fabrication,companies undertake turnkey projects to build, installand commission processing plants in the country.

As for the industrial machinery & equipment

structures and components fabrication category,many companies have the capability to supply theneeds of the local machinery & equipmentmanufacturing industry.

The metal fabrication industry in Malaysia isconsidered a fairly established industry. Inthe building and construction industry manylocal fabrication companies have begun tosource for jobs outside Malaysia. As a result,several local fabricators have gained

international recognition in this industry.


Leading Malaysian companies which areserving this sector include Malaysia Shipyardand Engineering, Shin EversendaiEngineering, Nam Fatt Fabricators, WongHeng Engineering, KKB Engineering andKNM Process Systems.


Metal FabricationIndustry



Malaysia has much to offer to companies searching fora strategic and cost effective engineering supportingoutsourcing destination. With its ideal location in theheart of Southeast Asia, a mature and stable economybacked by an integrated infrastructure, it is of littlesurprise that foreign interest has been growing. There

is also the added benefit of government-backedinvestment incentives.

The key to considering Malaysia as the region’sengineering supporting outsourcing hub of choice isthe concept of value and quality. Foreign firms havechosen to remain in Malaysia and many more arelooking for joint ventures or seeking to bring businessto the country simply because they enjoy promisingrates of return. Malaysia makes for an extremelycompetitive destination for regional outsourcing of

engineering supporting services and the nation looksforward to welcoming future investors.


Not To Be MissedAn Opportunity



ASIA - PACIFICAUSTRALIA

Director

Malaysian Industrial Development Authority

Level 3, MAS Building

16 Spring Street

Sydney NSW 2000, Australia

Tel: (612) 9251 1933Fax: (612) 9251 4333

E-mail: [email protected]

JAPAN

Director


4th Floor, Aoyama 246 Building

5-6-26, Minami-Aoyama, Minato-Ku

Tokyo 107-0062, Japan

Tel: (816) 3409 3680/3681

Fax: (813) 3409 3460


Website: www.midajapan.or.jp

Director


3rd Floor, Takahashi Building

5-9-3, Nishi-Tenma, Kita-ku

Osaka 530-0047, Japan

Tel: (816) 6313 3121/3221

Fax: (816) 6313 3321


KOREA, REPUBLIC OF

Counsellor (Investment)

Embassy of Malaysia

(Investment Section)

17th Floor, SC First Bank Building

100, Gongpyung-Dong, Jongro-Gu

Seoul 110-702

Republic of Korea

Tel: (822) 733 6130/6131

Fax: (822) 733 6132


PEOPLE’S REPUBLIC OF CHINA

Consul (Investment)

Consulate General of Malaysia(Investment Section)

Unit 807-809, Level 8

Shanghai Kerry Centre,

No.1515, Nanjing Road (West)

Shanghai 200040

People’s Republic of China

Tel: (8621) 6289 4547/

(8621) 5298 6335

Fax: (8621) 6279 4009


TAIWAN

Director (Investment)Malaysian Friendship & Trade Centre

8th Floor, San Ho Plastics Building

102, Tun Hua North Road,Taipei

Taiwan

Tel: (8862) 2713 2626

Fax: (8862) 2514 7581


EUROPEFRANCE

Director


42, Avenue Kleber

75116 Paris

France

Tel: (331) 4727 3689/6696Fax: (331) 4755 6375


GERMANY, FEDERAL REPUBLIC OF

Director


6th Floor, Rolex Haus

Dompropst-ketzer Str.1-9

50667 Cologne

Federal Republic of Germany

Tel: (49221) 124 008/ 009

Fax: (49221) 136 198


ITALY

Consul (Investment)

Consulate of Malaysia


4th Floor, Via Vittor Pisani,31

20124 Milan

Italy

Tel: (3902) 6698 4614/ 4647

Fax: (3902) 6698 4749


SWEDEN

Economic Counsellor

Embassy of Malaysia

Karlavagen 37

P.O. Box 26503

S-10041 Stockholm

Sweden

Tel: (468) 791 7690/ 7942

Fax: (468) 791 8761


UNITED KINGDOM

DirectorMalaysian Industrial Development Authority

17 Curzon Street

London W1J 5HR

United Kingdom

Tel: 44 (20) 7493 0616

Fax: 44 (20) 7493 8804


NORTH AMERICAUNITED STATES OF AMERICA

Consul (Investment)

Consulate General of Malaysia


550, South Hope Street, Suite 400

Los Angeles, California 90071

United States of America Tel: (1213) 955 9183

Fax: (1213) 955 9878


Director


226, Airport Parkway

Suite 480, San Jose

CA 95110

United States of America

Tel: (1408) 392 0617/8

Fax: (1408) 392 0619


Director


John Hancock Centre, Suite 1515

875, North Michigan Avenue

Chicago, Illinois 60611


Tel: (1312) 787 4532

Fax: (1312) 787 4769


Consul (Investment)

Consulate General of Malaysia


313 East, 43rd New York

New York 10017


Tel: (1212) 687 2491

Fax: (1212) 490 8450


Director


2, Oliver Street, Suite 1107

Boston, MA 02109United States of America

Tel: (1617) 338 1128/ 338 1129

Fax: (1617) 338 6667


April 2006


Block 4, Plaza Sentral, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur, Malaysia.

Tel: (603) 2267 3633 Fax: (603) 2274 7970

E-mail: [email protected] Website: http://www.mida.gov.my

Engineering 2006

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