BIOMASS INDUSTRY

NETWORKING SEMINAR -

Funding & Business Development

Opportunities

INCENTIVES & INVESTMENT

OPPORTUNITIES IN

THE BIOMASS SECTOR By:

Azlina Hamdan Malaysian Investment Development Authority

(MIDA)

Content Outline

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MIDA in Brief

Performance in the Manufacturing & Biomass

Sector

Incentives & Investment Opportunities in the

Biomass Sector

Economic Transformation Programme (ETP)

Domestic Investment Strategic Fund

Foreign Direct Investment Domestic Investment Manufacturing Services

Manufacturing licenses Tax incentives Expatriate posts Duty exemption OHQ, RDC, IPC and R&D status

Evaluation

Follow-up / Monitoring

Planning

Planning for industrial development Recommend policies and strategies on industrial promotion and development Formulation of strategies, programmes and initiatives for international economic cooperation

Assist companies in the implementation and operation of their

projects Facilitate exchange & co-ordination among institutions engaged

in or connected with industrial development Advisory Services

FUNCTIONS OF MIDA

Promotion

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Based In MIDA

• Immigration Department

• Royal Malaysian Customs

• Department of Environment

• Tenaga Nasional Berhad

• Telekom Malaysia Berhad

• Labour Department

Based Outside of MIDA

• Department of Occupational Safety and Health

• Ministry of Finance

• Ministry of Health

• Ministry of Tourism

• Ministry of Human Resource

• Ministry of Higher Education

• Multimedia Development Corp. (MDeC)

• Construction Industry Development Board of Malaysia (CIDB)

MIDA “ONE STOP CENTRE”

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Functions of Advisory Services

Based In/Outside MIDA

• Advise and assist investors on matters relating to tax, labour, immigration, customs, utilities, occupational, safety and health, and environment

• Coordinate applications for approval and other matters under the purview of the relevant ministries and departments

MIDA “ONE STOP CENTRE”

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ALOR SETAR

KOTA BHARU

IPOH

KOTA KINABALU

KUCHING

JOHOR BAHRU

KUANTAN

SEREMBAN

MIDA

HEADQUARTERS

MELAKA

PENANG

KUALA TERENGGANU

MIDA’S STATE OFFICES

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San Jose

Los Angeles New

York

Boston

Stockholm

Frankfurt

Munich

Milan Paris

London

Dubai

Mumbai

Guangzhou

Taipei

Shanghai

Seoul

Osaka

Tokyo

Sydney

24 Overseas Centres

Chicago

Houston

Singapore

Bangkok

Johannesburg

MIDA WORLDWIDE NETWORK

Electronics & Electrical Industries :

Machinery & Equipment:

• High-technology based products using wireless and convergence technology

• Mobile application

• Solar wafer / cells / modules

• Semiconductors • Automated equipment for semiconductor, solar, medical & automotive industries

• Process machinery for food & beverages and oil & gas

• Packaging machinery

INVESTMENT OPPORTUNITIES IN THE MANUFACTURING SECTOR

Petrochemical Industry :

• Alpha-olefins & fatty alcohols, propylene oxide & caprolactam

• Renewable & biodegradable materials

Aerospace Industry : • Maintenance, Repair and Overhaul (MRO)

•Aerospace Manufacturing

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Food Processsing Industry :

• Processed meat & seafood • Beverages, food ingredients, dairy

products & confectionary

Resourced-based industries :

• Food & Agro based • Value-added products from natural resources

Palm Oil Industry :

• Oleochemicals • Palm-based nutraceuticals,

constituents of palm oil/palm kernel oil & palm biomass

• Palm-based food products – specialty animal fat replacer, mayonnaise & salad dressing

INVESTMENT OPPORTUNITIES IN THE MANUFACTURING SECTOR

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Regional Establishments

Operational Headquarters (OHQ) International Procurement Centre (IPC) Regional Distribution Centre (RDC)

Logistics

Integrated Logistics Services Cold Chain Facilities

Tourism

Hotel Tourist project Recreational camp Convention centre

TARGETED SERVICES SECTORS

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Environmental Management

Energy conservation/efficiency

Energy generation, using renewable energy sources

Storage, treatment and disposal of hazardous waste

Recycling of agricultural waste and agricultural by- products

Business Services

Shared services outsourcing

Research & Development (R&D)

ICT Services

Market Support Services

Film & Video Production & Post Production

TARGETED SERVICES SECTORS

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Education

Technical, Vocational & Science Training Healthcare Travel (Medical Tourism)

Private hospitals

TARGETED SERVICES SECTORS

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Performance of the Manufacturing Sectors Total Approved Manufacturing Projects

( 2011 – Sept 2012)

Year

Number

of Projects

Approved Investments (RM Billion)

Domestic Foreign Total

2011

846 21.9 34.1 56.0

Jan - Sept 2012

582 15.8 16.1 31.9

TOTAL

1428 37.7 50.2 87.9

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Year

Number

of Projects

Approved Investments (RM Billion)

Domestic Foreign Total

2011

48 0.42 0.02 0.45

Jan - Aug 2012

21 1.15 0.23 1.38

TOTAL

78 1.57 0.26 1.83

Performance of the Biomass Sectors Total Approved Investments – Biomass Projects

( 2011 – August 2012)

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POLICIES, INCENTIVES & INVESTMENT OPPORTUNITIES IN THE BIOMASS SECTOR

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Guidelines on Manufacturing Licence

• The Industrial Coordination Act, 1975 (ICA) requires manufacturing companies with shareholders’ funds of RM2.5 million and above or engaging 75 or more full-time employees to apply for a manufacturing licence.

Fast Track Approval for Manufacturing Licence

• Approval of manufacturing licence is given within two (2) days for non-sensitive industries.

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Equity Guidelines

• 100 % foreign equity ownership is allowed, irrespective of level of exports

Guideline on Repatriation of Profits

• No restriction imposed on foreign companies investing in Malaysia with regard to: – Repatriation of Capital – Interests – Profits – Dividends

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Incentives for the Manufacturing Sector

• General Promoted Products / Activities

• Small – scale Companies

• High Technology Projects

• Strategic Projects

• Specific Incentives for Selected Industries

Major Biomass Industry in Malaysia:

• Oil Palm Biomass

• Agricultural By-Products/Waste

• Energy Generation from Biomass

BIOMASS INDUSTRY IN MALAYSIA

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Estimation of 80 million tonnes of fibrous biomass (dry weight) yearly from plantation and processing activities.

Shredded and left to biodegrade in the fields i.e. EFB, stems, saps, fronds, etc.

Potential Business Opportunities: Wood-based products such as Plywood, Palm Flooring, Furniture and Furniture Parts, Pellet, Biofuel, Briquettes, Pulp & Paper Biotechnology processing such as Biofuels, Biochemical, Biopolymers, Biopharmaceuticals, etc. Energy Generation from Biomass sources. Agricultural By-Products Waste such as sawdust, rice husk, coconut fibre, sugar cane, palm oil mills, etc.

OIL PALM BIOMASS

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MAJOR INCENTIVES FOR BIOMASS PRODUCTS & RENEWABLE ENERGY

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Pioneer Status (PS) – Tax exemption on statutory income of 70% to 100% for a period of 5 to 10 years.

Investment Tax Allowance (ITA) – 60% to 100% on the qualifying capital expenditure incurred for a period of 5 years to be utilised against 70% to 100% of the statutory income for each year of assessment.

Reinvestment Allowance (RA) – 60% on the qualifying capital expenditure incurred for a period of 15 years; commencing from the 1st year the reinvestment is made.

EXEMPTION ON IMPORT DUTY ON RAW MATERIALS / COMPONENTS

Raw materials / components which attract import duty can be considered for exemption, provided:

Raw materials / components are NOT produced locally; or

Locally produced raw materials / components are not of acceptable quality and price.

Exemption from Import Duty and Sales Tax on Machinery & Equipment

Machinery & Equipment which attract import duty and/or sales tax can be considered for exemption.

For Machinery & Equipment produced locally, sales tax exemption will be given.

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5 INCENTIVES Announced:

• Domestic Investment Strategic Fund • Incentives for Acquiring a Foreign Company for

High Technology • Incentives for Small Scale Companies • Incentives for Companies in Production (Desirous Issue) • Incentives for Merger Among Malaysian

Services Providers

DOMESTIC DIRECT INVESTMENT (DDI) INITIATIVES

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Domestic Investment Strategic Fund 1

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Domestic Investment Strategic Fund of RM1 billion

Domestic Investment Strategic Fund

To accelerate the shift of Malaysian-owned companies in targeted industries to high value-added, high technology, knowledge-intensive and innovation-based industries

Objectives

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The fund aims to:

• Harness and leverage on outsourcing opportunities created by MNCs operating

in Malaysia

• Intensify technology acquisition by Malaysian-owned companies

• Enable Malaysian-owned companies to obtain international standards/

certifications in strategic industries

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Domestic Investment Strategic Fund

The fund does not offer an outright grant and is contingent on the investments of the applicants

Mechanism

To be granted on a negotiable basis based on the request of the companies and the merits of each case

Provided under the Customised Incentive Scheme, Section 127, Income Tax Act 1967

Matching grants (1:1) on reimbursable basis

Domestic Investment Strategic Fund

The fund will provide matching grants to cater for expenditures incurred for the following activities:

• Training of Malaysians

• R&D activities carried out in Malaysia

• Obtaining international standards/certification

• Licensing or purchase of new/high technology

• Modernisation and upgrading of facilities and tools to undertake

manufacturing or services activities for Multinational Corporations (MNCs)

and Malaysian conglomerates (outsourcing activities)

Scope of the Fund

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Domestic Investment Strategic Fund

New and existing companies in the manufacturing and services sectors with Malaysian equity ownership of at least 60%

Eligibility Criteria

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Incorporated under the Companies Act, 1965

Companies producing promoted products/engaged in promoted activities in the following priority sectors:

• Aerospace

• Medical Devices

• Pharmaceuticals

• Advanced Electronics

• Machinery and Equipment

• Renewable Energy

• Services including design, R&D, testing,

quality and standard certification,

engineering services, technical and skills

training and logistics service providers (3PL)

• Other industries, on a case by case basis

Domestic Investment Strategic Fund

Effective Date of Application

Applications received on or after 3 July 2012 are eligible to be considered for this incentive

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Thank You