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Government Facilitation for the Iron

and Steel Industry

Introduction of MIDA

Investment Performance

Investment Policies & Guidelines

Status of Ferroalloys Industry

Free Trade Agreements

Slides Outlines

Introduction of MIDA

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Who Are We?1st point of contact forinvestors who intend toset up projects in themanufacturing andservices sectors inMalaysia

Malaysian Investment Development Authority, Established

in 1967 under Act of Parliament, 1965

The principal Malaysian Governmentagency responsible for the promotionof investments and coordination ofindustrial development.

• Foreign Direct Investment

• Domestic Investment

• Manufacturing & Selected Services

• Assist companies in the

implementation & operation of their projects

• Facilitate exchange & coordination

among institutions engage in or connected

with industrial development

• Advisory Services

• Manufacturing Licenses

• Tax Incentives

• Expatriate Posts

• Duty Exemption

• Principal Hub & selected services

• Planning for industrial development

• Recommend policies & strategies on

industrial promotion and development

• Formulation of strategies, programmes and

initiatives for international economic

cooperation

Functions of MIDA

Investment Performance

Import Substitution

Export Oriented & Labour Intensive

Resource-based & heavy industries

Technology Intensive

Economic Corridors & Services

Innovation, ETP & High Income

Phases of Industrial Development

SECTOR GDP CONTRIBUTION (%)

1970 2016

Agriculture 33.6 8.1

Mining 7.2 8.8

Construction 3.8 4.5

Manufacturing 12.8 23.0

Services 42.6 54.2

Malaysia has successfully transformedfrom a predominantly agriculture-basedeconomy in the 1970s, to a morediversified economic structure.

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Source : Department of Statistic Malaysia, BNM

1960s

1970s

1980s

1990s

2000s

2010s

2050

Digital Economy, Industry 4.0 & E-Commerce

US$22.9 bil.

Employment opportunities

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1,116

Projects Approved

68,433

US$1 : RM4.00

Project Employment Investment(US$ Mil.)

Manufacturing 687 56,421 15,921.2

Services 428 11,979 27,870.7

Primary 1 33 5.4

FDI

DDIDDIUS$13.7bil.

60%

FDIUS$9.2 bil.

40%

Total Approved Investment in 2017

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Approved Projects By Major Countries, 2017 (Manufacturing)

“China, Switzerland, Singapore, the Netherlands and Germany were the main sources of FDI,

contributing more than half of total foreign investments approved”

USD 611

USD 964

USD 379USD 508 USD 576

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Approved Projects By Industry, 2017 (Manufacturing)

Status of the Ferroalloys Industry

Iron & Steel Industry Snapshot

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Imports : 9.13 million MT

Exports: 1.06 million MT

Crude Steel Production : 2.76 million MT

Implemented Projects: 2,611

832 Basic Metals, 1,779 Metal Fabrication

Employment : 196,311

*Figure as at 2016

Realised Projects For Basic Metals and Fabricated Metal Products

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NUMBER OF PROJECTS EMPLOYMENT CREATED

TOTAL INVESTMENT FOREIGN INVESTMENT

832

121,184 75,127

USD 19.4 Bil

1,779

Fabricated Metals

Basic Metals

USD 8.9 Bil

USD 7.5 BilUSD 4.2 Bil

Projects Implemented for Ferroalloys Industry as at 2017

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Samalaju, SarawakTotal Investment : USD 980 million

Jobs created : 2,641

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Ferroalloys Ecosystem (Ferrous)Steel Making

(EAF / IF)

UPSTREAM

Raw MaterialIron Making

(Blast Furnace, BOF)Long Products

Pellets, Iron Ore, Ingots, Scrap, Ferro

Alloy

DRI, HBI / Pig Iron Molten Steel(In house used) Billets Slabs

Flat Products

Blooms

Companies In

Production

▪ OM Materials SB

▪ Sakura Ferroalloys SB

▪ PertamaFerroalloys SB

▪ Elkem Carbon Malaysia SB

▪ Alliance Steel (M) SB

▪ Eastern Steel SB(will resume production by Oct 2018)

▪ Established Metal Industries SB

▪ Ann JooIntegrated SB

▪ Malaysia Steel Works SB

▪ Amsteel Mill SB▪ Antara Steel

Mills SB▪ Ann Joo

Integrated SB▪ King Hong Steel▪ Southern Steel

Berhad

▪ Malaysia Steel Works SB

▪ Southern Steel Bhd▪ Amsteel Mills SB▪ Leader Steel SB▪ Unimekar Industries SB▪ Antara Steel SB

▪ Eastern Steel SB(will resume production by

Oct 2018)

NIL

Investment Policies & Guidelines

Employment of Expatriates

• Key posts (posts that are permanently filledby foreigners)

• Term posts (posts that are filled byforeigners for a period of 1-5 years)

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Intellectual Property Protection

Malaysia’s IP laws are in conformance

with international standards- Member of the World Intellectual Property Protection

Organisation (WIPO)

- Signatory of the Paris Convention and Berne

Convention which govern IP rights

- Signatory of the Agreement on Trade-Related Aspects of

IP Rights (TRIPS) under the WTO

Business Friendly Policies

Investment Guarantee Agreements (IGAs)

Malaysia has signed IGAs with more than 60 countries

Investment Policies

Equity Ownership

Foreigners are allowed to hold 100% equityowneship in the manufacturing and selectedservices sectors

Repatriation of Income

Freedom to repatriate capital, interest, dividendsand profits. No restrictions

Manufacturing Licence Application

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A company with shareholders’ funds of RM2.5 million and above

or employing 75 or more full-time paid employees to obtain a

Manufacturing Licence.

• "Shareholders' funds" as the aggregate amount of acompany's paid-up capital, reserves, balance of sharepremium account and balance of profit and lossappropriation account

• "Full-time paid employees" as all persons normallyworking in the establishment for at least six hours a dayand at least 20 days a month for 12 months during theyear and who receive a salary.

Forms can be downloaded from:

http://www.mida.gov.my/home/forms-&-guidelines-for-manufacturing-sector/posts/

Additional criteria:• Cost of investment per employee (CIPE) at least RM140,000: AND• Malaysian manpower must at least 80% of total manpower: AND• Value added at least 40% or managerial, technical & supervisory at least 25%

18https://incentives.mida.gov.my/Incentives/Modules/Public/IncentiveList.aspx

Investment Tax Allowance

60% or 100% on qualifying capital

expenditure for 5 years

Reinvestment Allowance

60% on qualifying capital expenditure for

15 consecutive years

Import Duty Exemption

For raw materials / components and

machinery and equipment

Pioneer Status

Income tax exemption of 70% or 100% for

a period of 5 or 10 years

Major Incentives

Targeted Subsectors/Activities

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List of promoted products/activities under the Promotion of Investment Act (PIA) 1986:Manufacture of Iron and Steel❑Blooms or slabs of steel❑Shapes or sections of steel of height more than 200 mm❑Plates, sheets, coils, hoops or strips of steel:

- Hot rolled- Cold rolled/cold reduced

❑Seamless steel pipes

❑Ferromanganese, silicon manganese or ferrosilicon❑Electrolytic galvanized steel sheet in coil

Manufacture of Non Ferrous Metal and their products❑Primary ingots, billets, or slabs of non-ferrous metals other than tin metals❑Bars, rods, shapes or sections of non-ferrous metals except EC copper rods❑Plates, sheets, coils, hoops or strips of non-ferrous metals❑Pipes or tubes of non-ferrous metals❑Aluminium composite panel

Free Trade Agreement

Malaysia

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MALAYSIA IS CONNECTED TO THE WORLD THROUGH FTA’s

MALAYSIA IS THE STRATEGIC GATEWAY TO KEY MARKETS LEVERAGING ON FTAs

ASEAN1. ASEAN Free Trade Area (1992)2. ASEAN-China (2004)3. ASEAN-Korea (2006)4. ASEAN-Japan (2008)5. ASEAN-India (2009)6. ASEAN-Australia-New Zealand (2009)

BILATERAL1. Japan (2005)2. Pakistan (2007)3. New Zealand (2009)4. Chile (2010)5. India (2011)6. Australia (2012)7. Turkey (1.8.2015)

Malaysia has implemented 13 FTAs:

Malaysia is still negotiating RegionalComprehensive Economic Partnership(RCEP), Malaysia-EU, Malaysia-EFTA andASEAN-Hong Kong.

• Market size: 2.7 billion people • Tariff reduction and elimination: 2016

• Implemented AFTA in 2010

• 7th largest economy in the world –combined GDP USD2.4 trillion

• 3rd largest market in the world -population over 633 million people in2015 and estimated to 717 million in2030.

• Intra-ASEAN trade is 24% of total globaltrade of USD2.51 trillion in 2013

• Total FDI inflows of USD122 billion in2013 with intra-ASEAN investmentsalone contributing 17%

• 97.3% of products traded in the regionwill be duty-free

• ASEAN Economic Community 2015,integrated market & production base –freer flow of goods, services,investments, skilled labour and capital

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ASEAN Economic Community and Single Market - 2015

Air ConnectivitySingapore:45 minutes (90x daily)

Jakarta:2 hours (32x daily)

Bangkok:2 hours (34x daily)

Hanoi & Ho Chi Minh:2 hours (18x daily)

Manila:2.5 hours (12x daily)

Phnom Penh & Siem Reap:2 hours (6x daily)

Brunei:2 hours (5x daily)

Yangon:3.5 hours (3x daily) ASEAN:633 million

market, 8.8% of world’s population

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Most attractive investment destination(Baseline Profitability Index (BPI) 2015)

Most competitive economy in overall performance (IMD's World Competitiveness Yearbook 2017)

Manufacturing Value Added(Bloomberg Innovation Index 2017)

Global offshoring destination(A.T. Kearney Global Services Location Index™ 2016)

Protecting investors(World Bank Doing Business 2017 Report)

Best countries to invest(BAV Consulting and the Wharton School of the University of Pennsylvania.2017)

Dominant position in Islamic Finance Development Indicator(ICD- Thomson Reuters)

RANKING

Why Malaysia?

Harmonious Industrial Relations

Quality of Life Good Track Record

STRATEGIC LOCATION

Banking System

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Liberal Investment Policies

Well Developed Infrastructure/

Connectivity

Pro-businessGovernment

Political and Economic Stability

Young, Trainable and Educated Labour Force

An Unsurpassed Lifestyle

Home to Tropical Paradise

We Embrace Multiculturalism

IP Protection

Excellent Facilities -Convention and

Conferences

English speaking languageLiberal Business

Environment

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Business Information Centre (BIC)

Contact us

URL : https://www.facebook.com/OfficialMIDA

URL : https://twitter.com/OfficialMIDA

URL : https://instagram.com/OfficialMIDA

URL : https://youtube.com/OfficialMIDA

Opening hours:Mon - Fri 8.30 a.m. - 5.00 p.m.

Be With Us On Mobile:

www.mida.gov.my

MALAYSIA… Your Profit Centre in Asia

Thank you

Malaysia is a vibrant economy. Talk to MIDA and discover how Malaysia can be your Profit Centre in Asia

For more information, please visit www.mida.gov.my or email to investmalaysia@mida.gov.my26

MALAYSIA… Your Profit Centre in Asia

THANK YOU