Agriculture in ASEAN An Engine of growth In Farming and Agro-Technology hubs

Minister Counsellor Ms. Nina Hvid Talvela

1 INTRODUCTION TO ASEAN

Agenda

2 WHAT CAN THE TRADE COUNCIL DO FOR YOU

3

5 UPCOMING EVENTS

4

THE AGRICULTURAL SECTOR IN MALAYSIA

FINANCING OPPORTUNITIES

Southeast Asia

ASEAN - One of the fastest growing regions

GDP Growth %

Second fastest

growth market

after China

today

ASEAN

5% in 2017

Steady

growth

The world’s 5th

biggest

economy

2018

-10

-5

0

5

10

15

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

ASEAN

Oceania

United States

China

European Union

Growing Wealth in ASEAN leads to new Demands

2% 2% 3% 3% 4% 6% 9% 18%

65%

95% $60.000

Cambodia Myanmar Laos Vietnam Philippines Indonesia Thailand Malaysia Brunei Singapore Denmark

GDP per Capita % of DK

610 mio. citizens with a total GDP on 2.3 trillion US$ GDP per capita is growing rapidly in Singapore, Malaysia, Vietnam, Thailand and Indonesia. Increasing demand for foreign quality products and local food supply

Increase Trade

Growing Middle Class

Innovation

The middle class in Southeast Asia is doubling to 163 million households

Urbanization and increased consumption leads to boom in detail Trade,

Integration in leads to increased trade and growth – Both regional and international

Continous rising wages in China leads to more investments in Southeast Asia

Southeast Asia 2030 plan

Source: McKinsey Global Institute

It is necessary for Southeast Asia to improve productivity through technology and equipment

Danish Export to ASEAN

Consumption of Meat in Asia

Source: Euromonitor

Increase of consumption with the rise of household incomes Malaysia is the country in Asia after Hong Kong, that consumes the most meat per capita. Alongside China, Malaysia consumes relatively more meat than expected considering the average household income.

Meat Production in ASEAN

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2010 2011 2012 2013

ASEAN Meat Production 2010-2013

Beef Pork Poultry15000

15500

16000

16500

17000

17500

18000

2010 2011 2012 2013

Total Meat Production ASEAN in thousand metric ton

Danish companies benefitting from malaysia

• Danish Farm Concept

• Arla Foods

• BM Silo

• SKOV A/S

By The Royal Danish Embassy in Hanoi, June 2016

VIETNAM

Vietnam at a glance Population: ~92 million (2015) - 50% of which is below 30 years Capital: Hanoi (7.1 million) Biggest city: HCMC (7.98 million) Area: 330,972 km2 (~8 x Denmark; 43,000 km2) Language: Vietnamese GDP pr. capita: USD $2,050 (2015) GDP growth: 6.7 % (2015e)

Vietnam’s economy at a glance

Vietnam’s economy has experienced strong growth and an expanding middle class.

the economic growth is expected to remain among the highest in the world.

0

500

1000

1500

2000

2000 2002 2004 2006 2008 2010 2012 2014

GDP per capita (current US$)

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

2010 2011 2012 2013 2014 2015e 2016f 2017f 2018f 2019f 2020f

GDP growth, %

Vietnamese Agricultural Sector

Employs 47% of workforce

Main commodity is rice - 2nd is pig meat.

Enourmeous challenges within food safety

The Vietnamese Ministry of Agriculture and Rural Development has set the following targets in its 2020 strategy: A tenfold increase of livestock population Production of 5.5 million tons of meat by 2020

Per capita meat consumption is expected to reach 56 kg per year

Manufacture 19.2 million tons of animal feed

Opportunities for Danish companies

Supply of high quality and safe food products

equipment/know-how for – dairy/meat/fish processing – pig/cattle/ aquaculture productction – potato production and potato/seed processing – hygiene control and testing

Activities

Strategic Sector Cooperation on food safety management being established Growth Advisor at the Embassy

Malaysia

Malaysia’s Economy

Population:

Capital:

GDP:

GDP per capita:

Inflation:

Comptetion:

Ease of Doing Business:

30 millioner

Kuala Lumpur

327 billion US$

9.767 US$

2.1% (2015)

18.

18.

Real GDP Growth and Per Capita GDP: 2009-2015

Malaysia is the third largest economy in ASEAN

Food consumption in Malaysia

The increased disposable income in Malaysian families are causing changes in consumer behaviour The Malaysian expenditure on food has risen from 800 to 1000 billion since 2009

Per Capita Annual Disposable Income, Spending and Saving Ration

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

Meat Consumption in Malaysia

Beef (Mill. Ton)

Pork (Mill. Ton)

Poultry Meat ('000Mil. Ton)

Value-chain deliveries in Malaysia For Danish Companies

Management

Education and Training

Genetics Nutrition Stable Design

Heating & Ventilation

Abattoir Manure Food

Processing

Malaysia – Food Production Hub

One of the objectives of the Third Industrial Master Plan (IMP3) 2006-2020 is to make Malaysia the “Global Halal Hub” for both production and trade in halal products and services. This market has already created interest among other food producing countries, including both Muslim and non- Muslim countries.

Large focus on

• PFA – Pig farming areas

• Dairy production

• Upgrading machineries, feedmills etc

Product demand on halal

Convenience products Ingredients, additives and functionals

Dairy products

Animal products, cattle and poultry

Animal bi-products

Cosmetics and personal care

3 bil. in EU

30% muslims in 2025

Rapidly increasing

consumption

The muslim economy:

Food deficit

2300 bil. US$

Opportunities in halal production

1 INTRODUCTION TO ASEAN

Agenda

2 WHAT CAN THE TRADE COUNCIL DO FOR YOU

3

5 UPCOMING MARKET STUDY TOURS

4

THE AGRICULTURAL SECTOR IN MALAYSIA

FINANCING OPPORTUNITIES

Case Story: Poultry Production 17 – 18 February 2016

Terengganu

TD Poultry

Danish Delegation

Aumada

Linco Baader

Sanovo

Skov

Xergi

Danish Minister of Food and Environments visit to Malaysia

Forum

Case Story: Pork Production February – March 2016

Penang

Kuala Lumpur (Rawang)

Sarawak

Melaka

Visit

Pig Farms

Abbatoirs

Events

Forums

Case Story: Dairy Production January 2017

Johor

Sabah

Kedah

Visiting

Anchor Companies

Events

Corporate Farming Seminar

Forums

Global Growth

Global Public Affairs

Innovation

Invest in Danmark

Trade Councils services are tailor-made to your needs

Access and growth

on export markets

Understand and

handle risk,

corruption, private/

public stakeholders

and CSR.

Attract foreign

companies to

leading Danish

clusters

Finance and

expertise from

leading innovative

clusters

What do we do?

Proposal

Report Market Study

Visit Next Step

Contract Market Assessment

Partner Search B2B Meetings

Site Visits Contract Agreement

Timeline 0 Year 1 Month 1-3 Months 3-6 Months 6 Months

1 INTRODUCTION TO ASEAN

Agenda

2 WHAT CAN THE TRADE COUNCIL DO FOR YOU

3

5 UPCOMING EVENTS

4

THE AGRICULTURAL SECTOR IN MALAYSIA

FINANCING OPPORTUNITIES

Poultry market

• The Malaysian population is

expected to reach 38.5 million in

2040.

• With a constant chicken

consumption of 40 kg/person, that

would require around 1.5 million

tonnes of chicken.

• However with increasing wealth,

chicken consumption is expected

to grow.

• Currently, Malaysia produce 1.4

million tonnes.

0

200.000

400.000

600.000

800.000

1.000.000

1.200.000

1.400.000

1.600.000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Poultry Meat Consumption (Million Tonnes)

Source: Jabatan Perkhidmatan Veterinar & Department of Statistics Malaysia

Poultry Market

• Poultry meat represents 74% of

total meat consumption

• More focus on:

- resource efficiency

- responsible livestock farming

systems

- healthy livestock and people

- knowledge exchange towards

innovation.

Poultry Market

The Proces:

1. Grandparent Farms

2. Parent stock rearing farms

3. Day old broiler chicken

• The broiler grower industry

consists of 2,403 farms in

Peninsular Malaysia,

• Sarawak and Sabah consists of

412 and 157 farms,

respectively

Pork Market • 40% of the Malaysian of the

population consumes pork.

• Annual consumption for Pork

consumers is at 20 kgs per

annum

• Average farms is about 2500

head, with about 150 sows.

• 80% of production happens in

Peninsular Malaysia (especially

Penang, Perak, Selangor,

Malacca, Johor)

Pork market

• Malaysia is largely self-sufficient

(?) …

• Production accounting for 97% of

domestic consumption – tightly

controlled imports

• The government of Malaysia has

an official policy of creating “pig farming areas,”

0

50000

100000

150000

200000

250000

300000

2005200620072008200920102011201220132014

Pork Consumption 2005-2014 (Million Tonnes)

Source: Jabatan Perkhidmatan Veterinar & Department of Statistics Malaysia

Pork market

• A decline in small-scale producers

has created opportunities for

expansion among the larger

established farms.

• Some of those larger farms are

investing in more modern production

facilities with better management

systems.

• Malaysia relies almost exclusively on

external supplies

170000

180000

190000

200000

210000

220000

230000

240000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Output of Pork production (Million Tonnes

Dairy Market

0

200

400

600

800

1000

1200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Milk Consumption (Million Litres)

0

20

40

60

80

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Output of Milk Production (Million Litres)

The dairy sector in terms of milk production has faced an increase in activity. Output level of 56.59 million litres in 2008 to 75.27 million litres in 2014. Fresh milk output level rise from 20 million litres in the 1970s – more than 75 in 2010s.

Dairy Market

Unequal distribution of activity within Malaysia with Peninsular Malaysia (80 percent of milk output) The majority of the activity is taking place in Peninsular Malaysia, which has grown by 15 million litres in the period 2008 to 2014.

Main areas in Malaysia for opportunities in dairy production are in Johor, Sabah and Kedah.

Dairy Market

• The cattle farming and processing are encouraged by the Government for meat and milk production to meet the domestic requirement as well as for export.

• Opportunities include help to upgrade genetic level of dairy cattle and setting up new dairy cattle breeder and multiplier farms

Dairy Market

• Milk products experience a strong

demand

• In 2014 the consumption of milk

accounted for 566.59 million litres

while the domestic consumption

level accounted for only 65

million litres reaching a self-

sufficiency level of Malaysia at

12.9%.

Embassy Pig Market Access in Malaysia Kuala Lumpur Area

Additive Asia, Agritech Enterprise, Ah Ohn Farm, Bestmeat, Boon Seng Poultry Farming, BP Farming, CEVA

Animal Health, Chau Yang Farm, Chiap Hup Agriculture, Danberg, Deluxe Agriculture, Dindings Farms, E&Y

Farming, Elanco Animal Health, Fijiliam Enterprise, Glenco, Hai Soon Heng, Hipra, Landyork Farming, Lim

Teong Heng Farm, Lim Wah Poo Farm, Low Yong Seng Farm, Rhone Ma, Tai Jong Farm, Tarfu Services,

Terati Agriculture, Ung Ah Kee & Sons, Weely Farm, Wing Hin Agricultural Farm, Yenher Agro

Penang Area

Agritech Enterprise, AKT, Danberg, Dunding Farm, Elanco Malaysia, Fortress Home, Freach Malaysia,

Goh Brothers Farming, K.B. Wong & Brothers, Hai Soon Heng, Lean Chin Farming, Lee Boon Seen Farm,

Liang Kee, Lim Keang Seng Enterprise, Lon Kuang Lu, Sheng Li Farm, SM Livestock, Sungsi Buluh Farm,

Taivet Trading, Thong Huat Farm, Tongshah, Xing Chang Farm

Sarawak

Green Harvest Farm, Farmrite, Heng Feng Industry, Habitat Ressources, Green Breeder, Chian Kefer Farm,

Chian Nyan Farm,Lai Ngit Sen, Farasfuld, Kim Huat Farm, Dream Makers, Pong Seng Farm, Sin Hyan Jin

farm, Jee Chai Farm, Fook Ping, EDS Kensultut, Fui Fatt, Voon Sin Heo, Heo, Kitoone Siong Jan, Tun Fa

Brothers, VR Tradings, Shaun Ang Farm, Sin Yin Yunm Fui Shin Farm, Chai Mai Yaw Farm, Han Joon Farm,

Fortune Trading & Farming, Gold Coin, Asiapac Biotech, Hock Guam Agriculture, Shung Shic Farm

1 INTRODUCTION TO ASEAN

Agenda

2 WHAT CAN THE TRADE COUNCIL DO FOR YOU

3

5 UPCOMING MARKET STUDY TOURS

4

THE AGRICULTURAL SECTOR IN MALAYSIA

FINANCING OPPORTUNITIES

Danish Agribusiness Fund (DAF)

WHY AGRIBUSINESS?

• Denmark is leading within agribusiness

– Agribusiness is 2nd largest export sector

– The industry employs 140,000 people

– Danish agribusiness is leading in

efficient and sustainable use of

resources

• The sector is prioritised by Danish

Government’s “Vækstplan”

Based on Denmark’s strong position within agribusiness IFU will launch Danish Agribusiness Fund I (DAF) during 2015. The government and IFU are planning to commit DKK 300m.

Source: Landbrug & Fødevarer

DAF WILL OPERATE IN EMERGING MARKETS (DAC COUNTRIES)

INVESTMENT STRATEGY

• Share capital and loan(1)

• Investments in the amount of DKK 10m - DKK

100m

• Value creation through active participation in all

stages of investments’ life cycle leveraging IFU’s

extensive emerging market experience

• DAF will be an active minority investor and is

expected to take seat at boards

• Involving Danish investors or suppliers (”Danish

interest”)

• Reducing risk through portfolio across geographic

regions and sectors

(1) Debt will be considered if the project offers a reasonable return and risk relation, and if debt is required in order to achieve the desired equity participation.

- Farm projects (crop farming, animal husbandry)

- Aqua culture (fish farming)

- Cleaning, drying and storage of farm produce

- Food processing

- Food packaging and logistics

- Whole sale and distribution of food

- Processing of offal and by- products from farms and food industries

WHAT MAY BE PART OF A PROJECT IN THE AGRICULTURAL VALUE CHAIN? “FROM FARM TO FORK”

Projects in the early stages of the agricultural value chain

Projects in the later stages of the agricultural value chain

- Manufacturing of farm machinery and equipment

- Manufacturing of machinery and equipment for food

processing industries

- Production of animal feed, vitamins and other feed ingredients

Projects in the supporting industries

EKF offers various finance- and Insurance

opportunities for Danish companies investing abroad

Types of services:

• Working Capital Guarantee

• Capital Expenditure Guarantee

• L/C Guarantee

• Bond Guarantee

• Loans to your customers

Read about all the opportunities on www.ekf.dk

EKF – Danmarks Eksportkredit

Facilitator of Foreign Investment

The Trade Council can help get you funding.

• Foreign Investment

• Private Investment

• Equity Funds

• Foreign Capital Funds

• IG Islamic Bank

1 INTRODUCTION TO ASEAN

Agenda

2 WHAT CAN THE TRADE COUNCIL DO FOR YOU

3

5 UPCOMING MARKET STUDY VISITS

4

THE AGRICULTURAL SECTOR IN MALAYSIA

FINANCING OPPORTUNITIES

Dairy Production Market Study Visit • When

– January 2017

• Key Dairy Hubs

– Johor

– Sabah

– Kedah

• Visit programme

– 9 days

– Forums on Dairy production from farm to fork

– Site visits to potential B2B partners

– Meetings with governmental authorities

– Investment opportunities

Poultry Production Market Study Visit • When

– Spring 2017

• Key areas

– Melaka

– Kuala Terengganu

• Visit programme

– 4 days

– Forums on poultry production from farm to fork

– Site visits to potential B2B partners

– Meeting with DVS

Summary • Individual incoming company visits to Malaysia

• Pipeline 2016 – 2017

• Malaysian Minister visit to Denmark

• Political activitites

• Agromek 2016

Thank you Contact us:

Minister Counsellor Nina Hvid Talvela

nintal@um.dk +60 12 652 2659

Commercial Advisor Jaime Yong

jaiyon@um.dk +60 12 211 2012

Website: www.malaysia.um.dk

Facebook: Embassy of Denmark in Malaysia

Twitter: DKAMBinMalaysia

The Danish Embassy in Kuala Lumpur 22nd Floor, Sunway Tower 86 Jalan Ampang 50450 Kuala Lumpur +60 3 2032 2001