INVESTMENT INVESTMENT

OPPORTUNITIES IN THE OPPORTUNITIES IN THE

ELECTRICAL AND ELECTRICAL AND

ELECTRONICS ELECTRONICS INDUSTRY IN INDUSTRY IN

MALAYSIAMALAYSIA

7 November 2012 7 November 2012

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

OUTLINE

Malaysia’s Economic Performance

Performance Of The Manufacturing & Services Sectors

Electronics Industry In Malaysia

Latest Economic Development

Investment Policy

Incentives for the Manufacturing Sector

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Why Malaysia?

Facilities

MALAYSIA’S ECONOMIC PERFORMANCE

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

South Korea-Malaysia

Key Economic Data 2011

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

South Korea Malaysia

Land Area (sq km) 99,392 sq km 330,252 sq km

Capital Seoul Kuala Lumpur

Population 48.7 mil 29 mil

GDP US$ 316. 59 bil US$ 192.8 bil.

GDP Growth (2011) 3.9 % 5.1 %

GDP Per Capita US$ 23,749 US$ 9,508

Total Trade US$ 1,079. bil. US$ 414.7 bil.

GDP BY INDUSTRIAL ORIGIN

Sector GDP Contribution (%)

1970 1990 2000 2009 2011

Agriculture 33.6 19.3 8.8 7.7 7.3

Mining 7.2 9.8 6.7 7.7 6.3

Construction 3.8 3.4 3.4 3.3 3.2

Manufacturing 12.8 26.5 32.6 26.6 27.5

Services 42.6 42.1 53.0 57.6 58.6

Source : Economic Reports/Bank Negara Annual Report, Malaysia 10/11

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

MIDA as a One Stop Agency : a) Advisory & consultancy b) Approval of projects c) After- care services

Under the National Committee on Investment (NCI)

Evaluation of applications for:

• Manufacturing licence • Tax incentives

• Import duty exemptions on raw materials, components and machinery

• Expatriate posts/work permits • Regional establishments such as

Operational Headquarters, International Procurement Centres, etc

FACILITATION OF INVESTMENT FUNCTIONS OF MIDA

PERFORMANCE OF THE

MANUFACTURING &

SERVICES SECTORS

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

OVERALL

INVESTMENTS FROM

REPUBLIC OF KOREA

TOTAL APPROVED MANUFACTURING PROJECTS

(2008 – 2011)

Year No. of

Projects

No. of

Employment

Proposed Investment

(US$ billion)

Domestic Foreign Total

2008 919 101,173 4.8 13.3 18.1

2009 766 64,330 3.0 6.5 9.5

2010 910 97,319 5.9 9.4 15.3

2011 846 100,533 6.9 10.8 17.7

TOTAL 3,441 363,355 20.6 40.0 60.6

Source: MIDA

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

APPROVED MANUFACTURING PROJECTS BY MAJOR

INDUSTRIES (2011)

Source: MIDA

Industry / Products Number of

Projects

Foreign

Investment

(US$ million)

Electronics & Electrical 90 5,900.2

Basic Metal 22 1,131.7

Chemicals & Chemical 36 1,016.0

Food Manufacturing 28 810.1

Non-Metallic Mineral 13 461.8

Transport Equipment 40 336.4

Petroleum (Incl. Petrochemicals) 11 305.5

Fabricated Metal 30 253.8

Scientific & Measuring Equipment 5 112.4

Paper, Printing & Publishing 22 100.5

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

APPROVED REGIONAL ESTABLISHMENT 2011 APPROVED REGIONAL ESTABLISHMENT 2011

Source: MIDA

Type of Establishment No. of

Approvals

Investment

(US$ million)

Operational Headquarters (OHQ) 18 53.3

International Procurement Centre (IPC) 6 23.0

Regional Distribution Centres (RDC) 1 3.3

Representatives Offices (RE) 55 7.8

Regional Offices (RO) 32 8.0

Total 112 95.4

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

I N V E S T M E N T

f r o m R e p u b l i c o f K o r e a

APPROVED PROJECTS BY MAJOR COUNTRIES, 2011

3,186.7

1,019.7

791.5 781.6 684.8 615.5439.9 376.7 318.6 218.5

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

US$ Million

12

APPROVED PROJECTS BY MAJOR

COUNTRIES 2011

13

APPROVED KOREAN INVESTMENTS INTO MALAYSIA 2008 – 2011

1,019.7

63.5 57.12 133.19

APPROVED KOREAN INVESTMENTS INTO

MALAYSIA 2008 – 2011

LATEST ECONOMIC

DEVELOPMENT

VISION 2020 VISION 2020

1 Malaysia

People First,

Performance

Now

April 2009

Preservation And

Enhancement Of Unity In

Diversity

Government

Transformation

Programme (GTP)

6 National Key

Result Areas

(NKRAs)

January 2010

Effective Delivery Of

Government Services

Economic

Transformation

Programme (ETP)

6 Strategic

Reform Initiatives

(SRIs)

March 2010

New Economic Model – A

high income, inclusive and

sustainable nation

10th Malaysia

Plan

Macroeconomic

Growth Targets &

Expenditure

Allocation

June 2010

Smooth Implementation Of

Government’s

Development Programme

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

GOVERNMENT TRANSFORMATION

PROGRAMME (GTP)

National National Key Results Area (NKRAs)Key Results Area (NKRAs)

1. Reducing Crime

2. Fighting Corruption

3. Improving Student Outcomes

4. Raising Living Standards of Low – Income Households

5. Improving Rural Basic Infrastructure

6. Improving Urban Public Transportation

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

High-Income

Sustainability

Target USD 15,000 USD 15,000

GNI per capita by

20202020

Enables all

communities

to benefit

from the

wealth of the

country

Meets present

needs without

compromising

future

generations

Quality

of Life

Inclusiveness

Making Malaysia A Rich Rich CountryCountry,

For EveryoneEveryone & For A Long TimeLong Time

NEW ECONOMIC MODEL NEW ECONOMIC MODEL

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

STRATEGIC REFORM INITIATIVESSTRATEGIC REFORM INITIATIVES

International Standards

& Liberalisation

Human Capital Development

Public Finance

Narrowing Disparities / Bumi SMEs

Government‘s Role in Business

Public Service Delivery

1

2

3

4

5

6

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Greater KL

Wholesale &

Retail Tourism Business

Services

Oil, Gas &

Energy

Electrical &

Electronics

Education

ESTABLISHMENT OF 12 NATIONAL KEY ECONOMIC AREAS

(NKEAs)

Healthcare Palm Oil Comms .Content

Infrastructure

Agriculture Financial

Services

NKEAs selected which can

materially impact economic growth

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

The Electrical & Electronics SectorThe Electrical & Electronics Sector Entry Point ProjectsEntry Point Projects

Semiconductor

• Mature Tech Fabrications

• Advanced Packaging

• IC Design Firms

• Substrates

Solar

• Silicon Producer

• Cell & Wafer Producer

• Modules Producer & Balance of System

LED

• LED Front-end Operations

• Packaging & Equipments

• Local SSL champions

Industrial Electronics

• Test & Instrument

• Wireless Communication

• Automation Equipment

• Transmission & Distribution

• Home Electrical Appliances

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

ELECTRONICS INDUSTRY IN

MALAYSIA

Simple components, semiconductor parts assembly and SKD electrical products

Consumer electronics parts to full assembly

Office & computer equipment (inc. hard disk drive and hard disks)

Higher value-added products/activities

- R&D

- IC & System Design

- Wafer fab,

- Ingot growing

- Low volume, high complexity and high mixed products (e.g: test instrument, medical, aerospace),

- Digital consumer goods (e.g blu-ray player, HDTV-LED flatscreen, e-book)

EVOLUTION OF ELECTRONICS INDUSTRY EVOLUTION OF ELECTRONICS INDUSTRY

2010 2010

1990 1990

1980 1980

1970 1970

Started in 1970’s with 7 companies

Consumer : Clarion and Bosch

Components : AMD, HP, Intel, Litronix and

National Semiconductor

FutureFuture FutureFuture

Fablite

Fabless

Miniaturization

Flexible electronics

Electric Vehicle (EV)

Laser Video Display

Cryogenic

SMART Electronics

-Labour Intensive

- Low Technology Products

- Low value added

-Capital Intensive

- Knowledge Based

- Hi-Tech

- High Value Added

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Semiconductor Ecosystem

Global or

Reg

HQ

R&D,

Design

Mfg (core

components,

device)

Assembly,

Packaging,

Testing

Sales,

Distrib,

Service

Wafer

Fabrication

Wafer

Processing

Semiconductor

players

operating in

Malaysia

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Solar Ecosystem

Solar Wafer/

Cells Solar Modules System Integrator

Major

Solar PV

players

operating

in

Malaysia

Polysilicon /

Ingot

Helios Photovoltaic

Raniden Solar

Helios Photovoltaic

Raniden Solar

Ultimate Machining Solutions Ultimate Machining Solutions

Supporting

Companies

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

LED Ecosystem

SSL

Value chain

Materials,

Substrates Packaging

& testing

Epitaxy,

wafering SSL systems

integration

Wafer

fabs

Process and

Activity Raw materials

(slicing, polishing) Coating of

wafers

Etching of

wafers,

metalization,

lithography

Bonding of

integrated circuits

to substrates,

encapsulation…

Development of SSL

components (e.g.

thermal, optics) and

applications

Companies

In Malaysia

Supporting

Companies

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

MNC’s In The Electronics Industry With MNC’s In The Electronics Industry With

Foreign ParticipationForeign Participation

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

WAFER WAFER

FABRICATIONFABRICATION

SEMICONDUCTORSEMICONDUCTOR

LEDLED

ISO TECHNOLOGY

IC DESIGNIC DESIGN

‘Home Grown Companies’

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Malaysia’s Electronics Clusters Malaysia’s Electronics Clusters

Melaka

Johor

Selangor /

KL

Perak

Negeri

Sembilan

Kedah

Semiconductor Front End

Silterra Hamada Infineon

Semiconductor Back End

AIC Intel Fuji

System / Module / Device

Sharp Fuji Akrion

Applied Materials ASML

KLA Tencor Asyst

Celestica Metex Wong

Equipment

Sharp Onkyo Aviza

Axcelis Intevac Varian

Lam Research QT Tech

Semiconductor Front End

S.E.H. MEMC

Semiconductor Back End

Freescale TI Toshiba

Spansion ChipPack NEC

System / Module / Device

Sensata Flextronic Nichia

ChungHua

Equipment

WD Epson Samsung

Panasonic Sony Flextronics

Hitachi Sharp Onkyo

Canon

Semiconductor Back End

ST Micro ST Memory

System / Module / Device

Seagate Mitsui Mitsutoyo

Nemic-Lamda PCA Tech

Ronnie Hokuden FCI

WD Media Pioneer

Equipment

Brother Celestica Sharp

Flextronics Kenwood Sanyo

Mitsubishi Panasonic Podoyo

Mitsumi Seiko

Semiconductor Back End

Carsem Unisem IDS

System / Module / Device

Murata

Semiconductor Back End

On Semi NXP

System / Module / Device

Alps TDK NHK

Equipment

Samsung Xyratex

Semiconductor Back End

Intel AMD Linear

Spansion Marvell Globetronic

Osram Lumileds Altera

IDT Avago ASE

Fairchild Renesas Sumitomo

System / Module / Device

Seagate Plexus Knowles

Smart Mo Molex Jabil

Sanmina Kontron Flextronic

Amphenol WD Media

Equipment

Dell Solectron VDO

Agilent Sanyo LKT

Inventec Ben-Q Pentamaster

Clarion Bosch Vitrox

Penang

Semiconductor Back End

Infineon

Dominant NS

System / Module / Device

TEAC Qualitek

Muhlbeuer Flextronic

Equipment

Panasonic Cubic

Through its strategic initiatives, the Government has created distinct electronics manufacturing clusters which comprise an “eco-system” of semiconductor and components / equipment manufacturers.

Semiconductor Front End

X-Fab

System / Module / Device

Taiyo Yuden Toko

Sanmina HGST

Sarawak

1. Semiconductor

• Front-end activities

- Polysilicon, Ingots, Silicon wafers

- Wafer fabrication

- IC Design

• Back-end activities

- Assembly and testing of semiconductor devices

• Support Services

- Burn-in testing, Wafer probing and testing, Testing of

Semiconductor, Test board.

• Direct Materials

- Ceramic and Organic Substrates, Bonding Wire, Moulding

compound, Leadframe

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Electronics Industry : Promoted Growth Areas Electronics Industry : Promoted Growth Areas

2. High Brightness Light Emitting Diode (HBLED)

• Front-end activities

– Wafer fabrication

• Back-end activities

– HBLED Assembly and Testing

• Direct Materials

– Semiconductor materials

– Substrates

• Lighting Solutions

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Electronics Industry : Promoted Growth Areas Electronics Industry : Promoted Growth Areas

• Malaysia has achieved some success as a design center for

integrated circuit (IC), with a mix of MNC IC Design centers as well

domestic IC Design firms.

• Currently there are 26 Companies registered as IC Design House in

Malaysia, such as:

• Key Asic

• Marvell

• Qdos Technology

• SYMMID

• Altera Corporation

• BCT Technology

• SiRES Lab

• Emerald Microsystem

• Renesas Semiconductor Design

• MyMs

IC Design HouseIC Design House IC Design HouseIC Design House

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Wafer Fab Wafer Fab

Wafer Fab Wafer Fab

• Pure-play

– Silterra – ASIC devices for communication and networking applications

– X-Fab – ASIC devices for communication and networking applications

– MIMOS – RF and MEMS devices applications

• Integrated Device Manufacturer (IDM) – Infineon Technology Kulim – Power logic devices

(automotive) – Fuji Electric Semiconductor – Power semiconductor

devices for IGBT – OSRAM Opto – LED applications – SCG Industries – automotive and communications

applications

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

INVESTMENT POLICIES

• Guidelines on Manufacturing Licence

• Policy on Equity Ownership

• Policy on Employment of Expatriates

INVESTMENT POLICIES INVESTMENT POLICIES

Guidelines on Manufacturing

License • 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 manufacturing license.

• 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 manufacturing license.

Equity Guidelines

• 100% foreign equity ownership is allowed

• 100% foreign equity ownership is allowed

Repatriation of Profits

• No restriction imposed on foreign companies investing in Malaysia on:-

• - Repatriation of capital

• - Interest

• - Profits

• - Dividends

• No restriction imposed on foreign companies investing in Malaysia on:-

• - Repatriation of capital

• - Interest

• - Profits

• - Dividends

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Companies No. Of Post Eligible Duration

Foreign paid-up capital of

US$2 million and above

Up to 10 posts (including

5 key posts)

• Key post – permanent

• Exec. post – 5 years

• Non-exec. post – 3 years

Foreign paid-up capital of

more than US$200,000 but

less than US$2 million

Up to 5 posts (including

at least 1 key posts)

• Key post – permanent

• Exec. post – 5 years

• Non-exec. Post – 3 years

Guidelines on Employment of Expatriate Personnel

Automatic Approval:

INVESTMENT POLICIES INVESTMENT POLICIES

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

INCENTIVES FOR THE

MANUFACTURING SECTOR

INCENTIVES

INCENTIVES

Pioneer Status

Income tax exemption ranging from 70% or 100%

for a period of 5 or 10 years

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 & Sales Tax Exemption

For raw materials/components and Machinery and Equipment

Incentives

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

High technology, capital intensive &

knowledge driven industries:

Industries manufacturing

intermediate goods: • Machinery & equipment

• Components & parts

• Moulds and dies

Resourced-based industries:

CURRENT FOCUS ON THE MANUFACTURING SECTOR

•• Alternative Energy Sources

• Biotechnology

• Advanced materials

• Advanced electronics

• Optics and photonics

• Petrochemicals

• Pharmaceuticals

• Medical devices

• ICT

• Aerospace

• Food ( Halal Hub )

• Value-added products from

natural resources

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

FACFACL

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

• Industrial Estates

• Utilities

• Telecommunication

• Logistics

Infrastructures

• Training Institution

• Collaboration with Universities and Higher Learning Institutes

Training

• Highly Educated, Skilled, Trainable and Capable Manpower

• Strong Supporting Industries of Semicon Cluster

• Chemical and Heavy Engineering Base

• Materials Supply

Supporting Industries

FACILITIES FACILITIES

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Technology Park

- Kulim Hi-Tech Park, Kedah

- Technology Park Malaysia, Kuala Lumpur

- Selangor Science Park 1, Selangor

- Selangor Science Park 2, Selangor

- Enstek, Negeri Sembilan

- Senai High Technology Park, Iskandar Malaysia

Machinery & Engineering Park

-Zurah Industrial Park, Hulu Selangor

Infrastructure Support

- Licensed Manufacturing Warehouse/ Free Zones

- Airports and Seaports

FACILITIES FACILITIES

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

5 corridors established during the Ninth Plan

Focus on:

• Modern Agriculture

• Manufacturing & Design

• Tourism

• Logistics

• Education & Health Focus on:

• Tourism

• Oil & Gas

• Manufacturing

• Agriculture

• Education

Focus on:

• Resource Based Industry

• Energy

• Tourism

Focus on:

• Agro-based Industry

• Tourism

• Logistics

• Manufacturing

To be a hub for the services sector:

• Creative Industry

• Education

• Healthcare

• Logistics

DEVELOPMENT CORRIDORS

IN MALAYSIA

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

GATEWAY TO ASEAN AND ASIAN ECONOMIES

GATEWAY TO ASEAN AND ASIAN ECONOMIES

TP

P

EU

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

Why Malaysia ?

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y

3rd

Attractive Location For Outsourcing Destinations

– A.T. Kearney Global Services Location Index 2011

10th

For FDI Confidence Index 2012

– A.T Kearney

12th

For Ease of Doing Business

– World Bank’s Doing Business 2012 Report

16th

World’s Most Competitive Economy

– Institute of Management Development (IMD)

2011

MALAYSIA’S INTERNATIONAL RANKINGS

M A L A Y S I A N I N V E S T M E N T D E V E L O P M E N T A U T H O R I T Y