BUSINESS AND INVESTMENT OPPORTUNITIES IN THE MACHINERY & EQUIPMENT, SUPPORTING ENGINEERING AND MEDICAL DEVICES SECTORS IN MALAYSIA

Table of Contents

Malaysia and Italy: Key Economic Data Malaysia’s Visibility Malaysia’s Economic Development Journey Malaysian Economy Malaysia Investment Performance Investment From Italy Malaysian Machinery & Equipment Industry Malaysian Medical Devices Industry Malaysia – Strategic Gateway To Asia International Competitiveness Rankings Why Malaysia? MIDA’s Functions

Malaysia and Italy: Key Economic Data

Malaysia Italy

Land Area 320,252km² 301,340km²

Capital Kuala Lumpur Rome

Population 29.5 million 61.5 million

GDP US$278.67 billion US$1.83 trillion

GDP Per capita US$10,466 US$30,100

Source: World Factbook

Malaysia’s Visibility

Multiracial, multicultural and multilingual Malaysians living in harmony

Ranked 68th in FORTUNE Global 500®, with revenue over US$97 billion

39 % of world’s palm oil production and 44% of world’s exports

Malaysia is the largest supplier of examination and surgical gloves - 50% of the global demand

Diversity Petronas Palm Oil

Gloves Silicon Valley of Malaysia

High-tech manufacturing hub

Islamic Banking

Over 30 years of experience and world leader in Islamic banking with a strong legal and regulatory Framework

The Malaysia’s Economic Development Journey

Source : Economic Reports/Bank Negara Annual Report, Malaysia 11/12

1960s

1970s

1980s

1990s 2000

Import Substitution

Export-Oriented & Labour-Intensive

Resource-Based & Heavy Industries

Economic Corridors & Services

Technology Intensive

Innovation, ETP & High Income

2011

National Key Economic Areas (NKEAs)

NKEAs selected which can

materially impact economic growth

Greater KL

Agriculture

Palm oil

Comms Content Infrastructure

Education

Electrical & electronics

Oil, gas & energy

Tourism Wholesale and retail

Financial services

Business services

Healthcare

Malaysian Economy

MALAYSIA’S KEY ECONOMIC INDICATORS

Source: Central Bank of Malaysia/Department of Statistics Malaysia/MATRADE * As at 29th March 2013

2010 2011 2012

Real GDP (%) Growth 7.2 5.1 5.6

Inflation (%) 1.7 3.2 1.2

GNI Per Capita (USD) 8,100 9,700 9,970

Unemployment (%) 3.3 3.1 3.3

International Reserves (USD bil) 106.5 138.3 139.7*

Retained Imports Equivalent (months) 8.5 9.6 9.7*

GDP BY INDUSTRIAL ORIGIN

Source : Economic Reports/Bank Negara Annual Report, Malaysia 11/12

Sector GDP Contribution (%)

1970 1990 2000 2010 2011 2012

Agriculture 33.6 19.3 8.8 7.3 7.3 7.3

Mining 7.2 9.8 6.7 7.0 6.3 8.4

Construction 3.8 3.4 3.4 3.3 3.2 3.3

Manufacturing 12.8 26.5 32.6 27.6 27.5 24.9

Services 42.6 42.1 53.0 57.7 58.6 54.5

Malaysia Investment Performance

Total Investment Approved 2012

USD 53.1 BILLION

182,841 JOBS

6,442 PROJECTS

Total Investment Approved By Sectors In 2012

USD 53.1 billion

Manufacturing 25.2%

Primary 2.4%

Services 72.4%

No. Country Investment

(USD billion)

1. Japan 22.0

2. USA 18.9

3. Singapore 8.0

4. Germany 6.2

5. Taiwan 5.3

6. Netherlands 4.6

7. South Korea 4.0

8. United Kingdom 1.8

9. Hong Kong 1.6

10. India 1.1

Source: MIDA

REALISED INVESTMENTS IN MANUFACTURING SECTOR

BY MAJOR COUNTRIES AS AT 31 DEC.2011

REALISED INVESTMENTS IN MANUFACTURING SECTOR BY MAJOR COUNTRIES AS AT 31 DEC 2012

REALISED INVESTMENT IN THE MANUFACTURING SECTOR BY MAJOR SECTORS, AS AT 2012

E&E30%

Petroleum11%

Basic Metal10%

Chemicals8%

Non-Metallic5%

Transport 6%

Food4%

Natural Gas4%

Fab. Metal4%

M&E3%

Others15%

Total Investment

US$ 156.1 bil

Total Foreign Investment

US$ 86.9 bil

Total Projects 18,148 Source: Malaysian Investment Development Authority

Investments from Italy

Source: Malaysian Industrial Development Authority (MIDA)

APPROVED PROJECTS & INVESTMENT IN THE MANUFACTURING SECTOR WITH ITALIAN PARTICIPATION

Year No. Potential

Employment

Total Investment

(US$ million)

1980 - 2000 79 7,981 174.95

2005 2 114 10.92

2006 9 610 61.93

2007 4 310 15.76

2008 2 302 20.44

2009 2 17 13.21

2010 3 247 9.58

2011 4 64 27.32

2012 3 76 7.50

TOTAL 108 9,721 341.61

Source: Malaysian Industrial Development Authority (MIDA)

APPROVED PROJECTS & INVESTMENT IN THE MANUFACTURING SECTOR WITH ITALIAN PARTICIPATION BY INDUSTRY, 1980 – 2012

114.84

53.0534.59

33.32

31.03

20.1919.02

8.165.79

Investment (US$ Million)Rubber Products

Machinery & Equipment

Chemical & ChemicalProducts

Fabricated Metal products

Non-Metallic MineralProducts

Electronics & Electrical

Wood & Wood Products

Plastic Products

Leather & Leather Products

APPROVED REGIONAL ESTABLISHMENT WITH USA PARTICIPATION, 2006 - 2011

Source: Malaysian Industrial Development Authority (MIDA)

APPROVED REGIONAL ESTABLISHMENT WITH ITALIAN PARTICIPATION, 2006 – 2012

Type of Establishment No. of Approvals

Regional Offices (RO) 6

Representatives Offices (RE) 2

Operational Headquarters (OHQ) -

International Procurement Centre (IPC) -

Regional Distribution Center (RDC) 1

TOTAL 9

MAJOR ITALIAN MANUFACTURING COMPANIES OPERATING IN MALAYSIA

MALAYSIA’S GLOBAL TRADE PERFORMANCE

2010

362.5 bil

2011

414.7 bil

2012

430.7 bil

Source: Malaysia External Trade Development Corporation, MATRADE

Total Trade from 2010 – 2012(USD)

TRADE PERFORMANCE

2012(USD)

Exports 230.9 bil

Imports 199.8 bil

Total Trade 430.7 bil

%Total Trade to GDP

154.5%

MALAYSIA MAJOR TRADING PARTNERS, 2012

Country Value

(US $ Billion)

Percentage

(%)

ASEAN 117.8 27.3

China 59.41 13.8

Japan 47.8 11.0

EU 42.0 9.8

USA 19.9 4.6

Source: Malaysia External Trade Development Corporation, MATRADE

Investment Policies & Incentives

Industries manufacturing intermediate goods:

Resourced-based industries:

• Alternative Energy Sources

• Biotechnology

• Advanced materials

• Advanced electronics

• Optics and photonics

• Petrochemicals

• Pharmaceuticals

• Medical devices

• ICT

• Aerospace

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

• Machinery & equipment • Components & parts • Moulds and dies

High technology, capital intensive & knowledge driven industries:

PROMOTED ACTIVITIES IN THE MANUFACTURING SECTOR

PROMOTED ACTIVITIES IN THE SERVICES SECTOR

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

PROMOTED ACTIVITIES IN THE SERVICES SECTOR

Repatriation of Funds

Foreign Equity

Liberal Expatriate Post Approvals

INVESTMENT POLICIES

Pioneer Status

Income tax exemption ranging from 70% to 100% for a period

of 5 to 10 years

Investment Tax Allowance

60% to 100% on qualifying capital expenditure for 5 years

Reinvestment Allowance

60% on qualifying capital expenditure for 15 consecutive years

Import Duty & Sales Tax Exemption

For raw materials/components and Machinery and Equipment

Incentives

MAJOR INCENTIVES PROVIDED

MILESTONES

Machinery and Equipment Sector

Machinery & Equipment and Advanced Engineering

Industry Snapshot – Malaysia (2012)

Production RM32.6 billion*

Exports RM 25.2 billion#

Imports RM52.9 billion# Companies

M&E (1073) , ESI (1004)

2,077

Employees 133,859

* Source from Frost and Sullivan at 2008 with consideration of 5% growth # Matrade

M&E

ESI

Sectors

Manufacturing, Services,

Agriculture, Mining,

Construction

1. Specialised / Process M&E 2. Metal Working M&E 3. General M&E, Modules &

Components 4. Power Generating

1. Mould & Die 2. Forging 3. Machining 4. Surface Engineering 5. Stamping 6. Heat Treatment 7. Casting

4 main categories

Activities/services

MALAYSIA’S ENERGY VISION COMPANIES IN PRODUCTION M&E AS AT 2012

Specialised/ process M&E,

425

Metal Working M&E; 27

Power Generating; 51

General M&E; 528

M&E

MALAYSIA’S ENERGY VISION MAJOR M&E MANUFACTURED IN MALAYSIA

1. Assembly & test equipment for electronic industry

2. Production equipment for oil and gas industry

3. Natural rubber/latex/palm oil processing machinery and equipment

4. Factory automation equipment

5. Vibratory road rollers, C-frame for tractors, buckets & arms for excavators,

hydraulic cylinders, bushes & pins

6. Filling/wrapping/strapping machine

7. Concrete mixers & asphalt batching plants

8. Cranes, lifts & escalators

9. Refrigeration plants/cold room equipment

10. Plant/packaged air-conditioners & cooling towers

11. Pressure vessels & industrial boilers

12. Blowers & fans

13. Dehumidifiers & compressors

14. Power/hydraulic presses & shearing & bending machines

15. Welding machine

Oil & Gas Eco-System

Wellhead FPSO SpecialisedM&E

: Exotic Materials, Forging (1), Machining (10) & Surface Engineering (3)

Exploration Appraisal Production Fabrication MRO Abandonm

ent Stages/ Cycle

Jacket Process Module

Topside

– UM, USM, UPM, UKM, UTM, UTP , GMI, NCMTT, ADTECH, INSTEP, Free zone Supply Base

Surveying (Land and Sea Seismic

Equipment)

X-mas Tree,

Umbilical Flexible pipes

Valves

M&E for Services Pigging

Turbo M&E

MNCs with presence in

Mlaysia

Drilling

Down-hole tools

ROV

Research, Training &

Infra

Supporting Services

Solar Alert

Clients PSCs (Production Sharing Contract)

E&E Industry Cluster (Semiconductor processes)

Wafer Processing Wafer Fabrication

Cleanroom Class 1 to 100

TPM, Kulim High Tech, Sirim, PSDC, UTM, USM, UM

Total engineering solutions for high precision – Frencken , Kobay , UMS Group

Automatic Test Equipment (ATE) ,

Back-end processing

Epitaxial Deposition Etching Equipment

PVD, CVD Laser Lithography

Crystal Growth

Slicing & Polishng

Wafer Testing

& Dicing

Assembly &

Packaging (Back-end)

Process

Equipment

Companies

Supporting Services/ Facilities

Research, Training &

Infra

Furnace Crystal Puller

Diamond Wire Saw

Edge Grinding Wafer Polisher

Back-end processes

Photolithography

Etching & Metallisation

Clients

Silterra X-Fab Infineon On Semiconductor Fuji Electric MEMC Tech Intel Infineon Linear Tech. Carsem Unisem ASE Freescale Semiconductor NXP Texas Instrument

Consumables Implants &

Surgical Instruments Healthcare

Equipment

Supporting Infrastructure

Sterilization Certification Packaging Testing Industry

Group

Education

Training Regulatory

Products Medical Gloves, Contraceptives,

Catheters, woundcare,

Opthalmology, IVD, SUD

Pacemakers, Orthopedics,

Surgical instruments

Electronic Modules

Life Science Instruments

Electrodes, Hospital beds

UKM

Bio

compatibility

Lab

UM, USM

UKM

Medical

Device

Act 2012

33

Clients

Source : AMMI

Medical Devices Eco-System

Machinery/

ESI

Companies

Engineering Supporting Industries

Hi Tech M&E

Customized M&E

Targeted Sectors

• Oil & Gas • Semiconductor

Processing • Food & Beverage • Agricultural • Plastic Processing

• Robotics & Automation

• Metalworking Machinery

• Packaging Machinery

• Material Handling Equipment

• Forging • Casting • Machining • Surface Engineering • Heat Treatment • Stamping • Mould, tool & die

INVESTMENT OPPORTUNITIES IN M&E & ESI

SPECIAL INCENTIVES FOR M&E

Incentive Quantum Criteria:-

− Targeted Machinery & Equipment

− Level of Investment

− Level of Technology and R&D

− Transfer of Technology

− Spin off/ Outsourcing

Pioneer Status

• Up to 10 years full income tax exemption

Investment Tax Allowance

• Up to 100% of qualifying capex incurred within 5 years for income tax exemption

MILESTONES

MEDICAL DEVICE INDUSTRY IN MALAYSIA

MALAYSIA’S ENERGY VISION Medical Device Companies in Operation

Total: 190 companies in Malaysia (manufacturing, distribution, sales) Source : AMMI

MALAYSIA’S ENERGY VISION Major Foreign Medical Device Companies in Malaysia

MALAYSIA’S ENERGY VISION Medical Device Industry Ecosystem

Consumables Implants &

Surgical Instruments Healthcare Equipment

Technology Latex/ Plastic

Metal Machining Electronics Furniture

Certification Packaging Testing Industry Group

Education Training Regulatory

Products

Companies

Medical Gloves, Contraceptives,

Catheters, woundcare,

Opthalmology, IVD, SUD

Pacemakers, Orthopedics,

Surgical instruments

Electronic Modules

Life Science Instruments

Electrodes, Hospital beds

Sterilization

Supporting Infrastructure

Machinery & Engineering Supporting Industry

Electronic Manufacturing

Services

Medical Compounds

Clinical Research Center

MALAYSIA’S ENERGY VISION

Business Opportunities: Malaysia as a Medical Device Hub in Asia

MEDICAL

DEVICES

Electromedical

equipment

Cardiovascular

devices

Orthopaedic

devices

In-vitro

diagnostic

products

Wound care

products

Contract

Manufacturing

Research/Design

& Development

Engineering Supporting Services

MALAYSIA – YOUR MANUFACTURING SOLUTION PROVIDER MALAYSIAN ENGINEERING SUPPORTING CAPABILITIES

Sectors Background Capability Opportunities

1. Mould & Die Established since

1970s

About 400 industry

players

Precision specifications

by international

semiconductor industry

requirements

End-user industry :

Automotive, E&E

High precision mould

and dies for E&E

industry

Large moulds (>10MT)

for automotive and

plastic industries

2. Metal

Casting

About 70 foundries Mass production high-

pressure and low-

pressure die casting

End-user industry :

Automotive,

telecommunication

Large component casting

Custom-made

sandcasting

3. Machining About 170 industry

players

Precision up to 1µ and

size up to 2 mtr

End-user industry :

Semiconductor, E&E,

aerospace, oil & gas

Multi axis/ ultra precision

free form machining

Laser machining

Ceramic grinding

MALAYSIA – YOUR MANUFACTURING SOLUTION PROVIDER MALAYSIAN ENGINEERING SUPPORTING CAPABILITIES

Sectors Background Capability Opportunities

4. Metal Stamping About 300 industry

players

Precision tolerances

less than 1m, presses

capacity up to 600 tons

End-user industry : E&E,

automotive

Established

5. Surface

Engineering

40 industry players

80% are foreign-

owned or joint-

ventures

Electroplating,

Phosphating, Anodizing

End-user industry :

semiconductor, E&E and

automotive

Services for the oil &

gas, aerospace,

biomedical,

optoelectronics and

photonics industries

6. Heat Treatment 20 industry players Carburizing, nitriding,

vacuum handling,

quenching, annealing,

normalizing, tempering

End-user industry :

Automotive, shipyard,

cement, aluminium

extrusion

Services for the

aerospace, military,

medical, oil and marine

industries

MALAYSIA – YOUR MANUFACTURING SOLUTION PROVIDER MALAYSIAN ENGINEERING SUPPORTING CAPABILITIES

Sectors Background Capability Opportunities

7. Forging 7 industry players Mostly small parts (less

than 10MT)

Open, drop, press, roll

and cold forging

End-user industry :

Automotive, E&E

Large forgings for the

oil & gas industry

8. Metal

Fabrication

Well established

Over 2,000 industry

players

Simple household items

to steel structure for

skyscrapers and

offshore oil drilling

platform

Electron beam/ laser

welding

• Consistent quality of production and on-time delivery

• Lower cost for high technology products

• High volume, low mix demand for the electrical & electronics, telecommunications and automotive industries

• Low volume, high mix niche products for the medical, machinery & equipment, oil & gas and aerospace industry

• IP protection, laws and regulations

• Financial incentives and operational support

Competitive Edge

• Engineering supporting industry (more than 1,000 cos.)

• Metal fabrication (well established)

• Semiconductor/ electronics components

• Silicon wafer, Wafer fab, IC packaging and testing, IC design house, PCB, PCBA, LED, Other passive components (about 380 cos.)

• Plastic components (480 cos.)

• Rubber components (180 cos.)

Sourcing Capabilities

• Design centres

• Technical facilities

• Specialized colleges

• Research institutions

Infrastructure

MALAYSIA – YOUR MANUFACTURING SOLUTION PROVIDER MALAYSIA – YOUR MANUFACTURING SOLUTION PROVIDER

Why Malaysia ?

• Political & Economic Stability

• Pro-business Government

• Liberal Investment Policies

• Transparent Policies

• Policy of Welcome

• Sound Banking System

• Well Developed Infrastructure

• Harmonious Industrial Relations

• Trainable & Educated Labour Force

• Quality of Life

• Excellent Track Record

WHY MALAYSIA?

MALAYSIA AND ASEAN MALAYSIA & ASEAN

Malaysia is strategically located in the very heart of Southeast Asia; between India and China:

Foreign companies based in Malaysia can enjoy preferential market access via Free Trade Agreements concluded by Malaysia:

Potential market of 600 million

Combined GDP of USD2.3 trillion, as of 2012

Already zero tariffs for 99% of products

ASEAN Economic Community and Single market by 2015

PREFERENTIAL MARKET ACCESS

ASEAN

Potential market of 2.7 billion

Tariff reduction and

elimination mostly by 2016

REGIONAL / BILATERAL FTAS

China Chile Korea Japan India Australia New Zealand

Strategic location: Malaysia is a gateway to other markets with

preferential access through Free Trade Agreements (FTAs)

Potential market of 1.08 billion

ON-GOING FTA NEGOTIATIONS

TPP EU Turkey

GATEWAY TO ASEAN AND ASIAN ECONOMIES

INTELECTUAL PROPERTY PROTECTION IN MALAYSIA INTELECTUAL PROPERTY PROTECTION IN MALAYSIA

Malaysia:

• Member of the World Intellectual Property Organisation (WIPO)

• Signatory to the Paris Convention and Berne Convention

• Signatory to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) signed under the auspices of the World Trade Organization (WTO)

• Intellectual property laws are in conformance with international standards and have been reviewed by the TRIPs Council periodically

• Removal of Malaysia from IP violations ‘watch list’- United States Trade Representative (USTR) ‘Special 301 Report’ on IP Rights

Establishment of Intellectual Property Court in Malaysia: to remove Malaysia from

the IP international watch list;

to reduce backlog of intellectual property (“IP”) cases;

to provide better remedies to the owners of the IP rights and to

eradicate IP infringement

INTELECTUAL PROPERTY PROTECTION IN MALAYSIA INTELECTUAL PROPERTY PROTECTION IN MALAYSIA

Intellectual Property Protection in Malaysia Comprises of:

Industrial designs - Industrial Designs Act 1996 and Industrial Designs Regulations 1999

Copyright - The Copyright Act 1987

Layout designs of integrated circuits - Layout Designs of Integrated Circuits Act 2000

Geographical indications - Geographical Indications Act 2000

Patents - Patents Act 1983 and the Patents Regulations 1986

Trademarks - Trade Marks Act 1976 and the Trade Marks Regulations 1997

RECENT POSITIVE DEVELOPMENTS Malaysia’s Ranking in the World Malaysia Remain an Attractive Investment Location

Malaysia ranked 12th most business-friendly country

Malaysia is ranked ahead of other highly regarded economies such as Sweden (13th), Taiwan (16th), Germany (20th), Japan (24th) and Switzerland (28th)

Malaysia is first in terms of ease of getting credit

Malaysia is fourth in the world for protecting investors

Malaysia ranked among the top 10 economic reformers in the APEC region

World Bank Doing Business 2013 Report