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MALAYSIA AS A GATEWAY TO ASEAN FOR GERMAN COMPANIES
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German & Malaysian Economic Relations History
2
• Germany was one of the first investors to put its trust in
Malaysia from as early as the 1900s
• In fact, it was the second country to sign an Investment
Guarantee Agreement (IGA) with the newly independent
Malaysia in 1960.
• The relationship has only leapt forward in past 60 years as more
and more ‘Mittelstand’ made Malaysia their Southeast Asian or
Asia Pacific base.
• German multinational companies (MNCs) have made their
home since the 1960s
• Today, over 400 companies with 220 production facilities
• MIDAs first overseas office was established in Düsseldorf
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Malaysia’s Economic Development Journey
Import Substitution
Export Oriented & LabourIntensive
Resource-based & heavy industries
Technology Intensive
Economic Corridors & Services
Innovation, ETP & High Income
SECTOR GDP CONTRIBUTION (%)
1970 2017
Agriculture 33.6 8.2
Mining 7.2 8.4
Construction 3.8 4.6
Manufacturing 12.8 23.0
Services 42.6 54.4
Malaysia has successfully transformed from a
predominantly agriculture-based economy in
the 1970s, to a more diversified economic
structure.
3
Source : Department of Statistic Malaysia, BNM
1960s
1970s
1980s
1990s
2000s
2010s
2018 Digital Economy, Industry 4.0 & E-Commerce
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Key Economic Data
4
2012 2013 2014 2015 2016 2017 2018
Real GDP Growth (%) 5.6 4.7 6.0 5.0 4.2 5.8 4.8
Inflation (%) 1.6 2.1 3.2 2.1 2.1 3.8 1.7
GDP (USD bil.) 305.3 313.2 326.9 272.1 246.9 296.2 297.1
Per Capita Income (USD) 9,991 10,265 10,426 9,291 9,096 9,813 9,840
Unemployment (%) 3.0 3.2 2.9 3.3 3.4 3.4 3.3
International Reserves
(USD bil.)139.7 134.9 115.9 95.3 94.5 102 104.4
Source : Ministry of Finance
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Eleventh Malaysia Plan (2016-2020)
2 HIGH GROWTH
SECTORS
3CATALYTIC
SUBSECTORS
Electrical and Electronics
Chemicals
Machinery and Equipment
AerospaceMedical devices
+
5
Three (3) catalytic subsectors namely Chemical, E&E and M&Eindustries; and two (2) subsectors of high potential growth namelyAerospace and Medical Devices have been identified in the 11th MP todrive the growth of the manufacturing sector.
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“Shared Prosperity Vision 2030”
6
• Recently announced blueprint by new government
• Rely less on pure “trickle-down economics” and focus on closing wealth
disparities
• Main points:
1. To restructure the Malaysian economy to be more progressive, knowledge-
based and high-valued with full community participation at all levels.
2. To spur growth to address economic disparities across income groups,
ethnicities, regions and supply chains to protect and empower the
rakyat(people) in ensuring that no one is left behind.
3. To be developed as a united, prosperous and dignified nation,
subsequently becoming an economic centre of Asia.
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Malaysia Budget 2020 key points
7
driving economic growth in the new
economy and digital era
• Making Malaysia the preferred destination for investment
• Accelerating the digital
economy
• Strengthening economic diversity
investing in Malaysians: levelling-up human
capital
• Enhancing Job opportunities for Malaysians
• Modernising the labour
market
• Investing in education and talent
creating a united, inclusive and economic
society
• Inclusive development
• Better health services
• Enhancing transportation ecosystem
• Promoting
Environmental sustainability
revitalising public institutions and
finances
• Commitment to fiscal consolidation
• Strengthening institutions,
governance & integrity
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Overview of Investment &
Trade Performance
8
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9
4,887
ProjectEmploy-
ment
Inv.
(€Bil.)
Manufacturing 721 59,294 18.75
Services 4,103 82,172 22.19
Primary 63 1,648 2.34DDI
129,780
€26.01 bil.
Projects Employment
€43.28bil.(RM201.7 bil)
60.1%
39.9%
FDI€17.27 bil.
€1: RM4.66
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US$ Billion
Approved Investments in the Manufacturing Sector
by Major Countries (2008 – 2018)
0
2
4
6
8
10
12
14
16
Japan
USA
China
Singa
pore
Korea,R
ep.
Neth
erlands
German
y
Austra
lia
Hong Kong
Indonesia
Japan
USA
China
Singapore
Korea,Rep.
Netherlands
Germany
Australia
Hong Kong
Indonesia
10
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Approved Investments in the Manufacturing Sector
by Industry (2008 – 2018)
Electronics &
Electrical
Products
Petroleum
Products (Inc.
Petrochemicals)
Basic Metal
Products
Chemical &
Chemical
Products
Transport
Equipment
Non-Metallic
Mineral Products
Food
Manufacturing
Natural Gas Machinery &
Equipment
(US$ 31 Bil)
(US$ 26 Bil)
(US$ 22 Bil)
(US$ 15 Bil)
(US$ 14 Bil)(US$ 9 Bil)
(US$ 9 Bil)
(US$ 6 Bil)(US$ 5 Bil)
11
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Implemented Projects By Major Countries,
As At 30 June 2018 (Manufacturing)
Japan
USA
Singa
pore
Germ
any
Korea,R
ep.
Neth
erlands
Taiwan
China
Unite
d Kin
gdom
Hong K
ong
26,0 21,7
12,2 9,2 7,8
5,8 5,8 3,9 2,9 2,4
US$ Billion
12
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MANUFACTURING PROJECTS WITH GERMAN
PARTICIPATION IMPLEMENTED AS OF 30 JUNE 2018
USD9.16 Bil437manufacturing
projects
46,864jobs opportunities
Largest investor
13
Chemicals & Chemical Products
Petroleum Products (inc. Petrochemicals
Electronics & Electrical Products
Engineering & Machinery Products
Transport Technology Products
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Malaysia’s Major Trading Partners in 2018
14
Australia
USD 13.6 billion
2.9% share
China
USD 77.72 billion
16.7% share
ASEAN
USD 126.14 billion
27.4% share
USA
USD 38.56 billion
8.3 % shareJapan
USD 32.87 billion
7.1% share
EU
USD 45.49 billion
10.1% share
Exchange Rate: USD1: RM4.0351
GermanyUSD 13.54 Billion
2.9% share
Germany is Malaysia’s
12th biggest trading
partner in 2018
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15
Malaysia-Germany Trade Performance in 2018
Germany was Malaysia’s
12th largest trading partner
13th largest export destination
10th largest import source
Malaysia was Germany’s
35th largest trading partner
41th largest export destination
29th largest import source
Germany is Malaysia’s largest trading partner in Europe
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16
MALAYSIA GERMANY BILATERAL TRADE
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
TOTAL EXPORTS 2.456,8 2.043,7 2.097,2 2.402,8 2.768,7 2.950,9 3.489,8 4.312,6 4.610,9 4.231,8 5.401,5 6.041,1 5.188,7 5.235,5 5.460,7 5.019,3 5.372,7 6.208,9 7.005,0
TOTAL IMPORTS 2.442,5 2.750,4 2.944,1 3.859,5 4.675,7 5.090,5 5.761,5 6.813,6 6.743,8 5.238,8 6.643,4 7.178,4 7.513,6 7.274,4 7.086,9 6.003,1 5.739,2 6.122,4 6.539,1
TRADE BALANCE 14,3 -706,7 -846,9 -1.456, -1.907, -2.139, -2.271, -2.501, -2.132, -1.007, -1.241, -1.137, -2.325, -2.038, -1.626, -983,8 -366,6 86,4 465,9
TOTAL TRADE 4.899,4 4.794,1 5.041,4 6.262,3 7.444,4 8.041,4 9.251,3 11.126, 11.354, 9.470,6 12.044, 13.219, 12.702, 12.509, 12.547, 11.022, 11.111, 12.331, 13.544,
-4.000,0
-2.000,0
0,0
2.000,0
4.000,0
6.000,0
8.000,0
10.000,0
12.000,0
14.000,0
16.000,0
(USD MILLION)
• Surplus
• After 16 years
• Strong export from German companies
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17
MALAYSIA GERMANY BILATERAL TRADE
No Products USD Mil
1 Electrical & electronic products 1,720.5
2 Machinery, Equipment & Parts 1,380.9
3 Transport Equipment 1,144.8
4 Chemicals & chemical products 823.9
5 Optical & Scientific Equipment 440.5
6 Manufactures of Metal 175.1
7 Processed food 109.0
8 Paper & Pulp Products 101.1
9 Other manufactures 100.7
10 Manufactures of Plastics 83.3
No Products USD Mil
1 Electrical & electronic products 4,435.2
2 Optical & Scientific Equipment 665.6
3 Rubber Products 379.3
4 Machinery, Equipment & Parts 296.5
5 Petroleum Products 202.3
6 Transport Equipment 143.1
7 Natural rubber 130.1
8 Other manufactures 128.0
9 Textiles, apparels & footwear 117.7
10 Chemicals & chemical products 99.1
MALAYSIA MAIN IMPORTS FROM GERMANY (2018) MALAYSIA MAIN EXPORTS TO GERMANY (2018)
# Facilitated more than 150 Malaysian
companies in trading and sourcing
technologies
Major international events
• Hannover Messe – Anuga – Medica –
Interpack – Automechanica - K-Fair
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Investment Policies & Incentives
18
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Targeting Quality Investments
19
Advanced Electronics
Specialty Chemicals
Aerospace & MRO
Machinery & Equipment
Biotechnology
Pharmaceuticals
Green Technology
Oil and Gas
Food Technology
Medical Devices
Advanced Materials
Transport Technology
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20
Transportation Technology
Oil and Gas
Medical Devices
Advanced Materials
Biotechnology
Pharmaceuticals
Food TechnologyMachinery &
Equipment
Aerospace & MRO
Specialty Chemicals
Advanced Electronics
Promoted Activities (Manufacturing Sector)
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21
45 Sub Sectors liberalised since 2009
Education & training
Logistics
ICT Services
Hotel
&Tourism
Principal Hub
Offshore &
Outsourcing Activities
Medical Tourism
Services Sector
Green
Technology
R&D
Promoted Activities (Services Sector)
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Prominent Foreign Manufacturing Companies
Over 5,000 companies from more than 50 countries 22
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23
German Companies in Malaysia
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24
Major German Companies
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US$14.3bilInvestments
104,667Employment
839Projects
100Countries
Regional/Global Operations
Regional Distribution Centers /
International Procurement Centers
Global Operations Hubs,
Principal Hubs,
Regional Headquarters
Global Business Services
(MSC & Medini)
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Why Malaysia
26
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1. Location-In the Heart of South East Asia
2.0 hrs
4.0 hrs
6.0 hrs
8.0 hrs
CHINA
INDIA
SOUTH EAST ASIA
ONE OF THE FASTEST
GROWING ECONOMIC
REGIONS IN THE
WORLD
(GDP growth of 5.3% over the last 20 years)
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Malaysia As A Hub For ASEAN
ASEAN Dialogue Partners:• Australia• Canada• China• India• Japan
• Korea• New Zealand• EU• Russia• USA 28
GDP: US$ 2.55 trillion (2016GDP Growth: 4.8% (2016)Per capita: US$ 4,021(2016)
Tourist ArrivalsIntra ASEAN: 46 million
700 MILLION
US$6.7 Trillion
4th largestEconomy by 2030
2030 targetGDP:
109 MILLION (2015)
Population by 2030:
634 MILLIONCurrent Population
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Market Access
• 3rd largest market in the world with 622 million
people (behind only China and India)
• Already zero tariffs for 99% of products
• Attracts 11% of global FDI
INDIA
PAKISTAN CHINA
KOREA
JAPAN
AUSTRALIA
NEW ZEALAND
CHILE
TURKEY
ASEAN
14 Free Trade
Agreements
MARKET
2.7 Billion Population
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Human Capital
Malaysia Truly Asia
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31
Malaysian Engineers - Made in Germany
~ 700 StudentsVarious Technical/ Engineering Fields
From Hamburg to Munich, Cologne to
Dresden
Malaysian Engineers -Made in Germany
2018
Internship/Thesis Writing/Employment Opportunities
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60% or 100% on qualifying
capital expenditure for
5 years
60% on qualifying capital
expenditure for 15 consecutive
years
For raw materials /
components and machinery and equipment
Income tax exemption
ranging from 70% or 100% for a
period of 5 or 10 years
Import Duty Exemption
Reinvestment Allowance
Investment Tax Allowance
PioneerStatus
32
Less Developed Area100% income tax exemption for up to 15 years
Major Tax Incentives
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1st “World’s Best countries to Invest in or Do Business for 2019”(CEOWORLD Magazine)
1st “Most Attractive Emerging Market in Asia”(Bloomberg’s Emerging Market Scorecard 2018)
“Destination of the Year”(International Medical Travel Journal (IMTJ) 2017)
1st
The Most Developed Islam Economy(Thomson Reuters November 2017)
1st
Dominant position in Islamic
Finance Development Indicator
(ICD-Thomson Reuters)
1st
2nd“Ease of Doing Business within ASEAN”(World Bank’s Doing Business Report, 2020)
2nd“Global Competitiveness among ASEAN Countries”(World Economic Forum’s Global Competitiveness Report 2018/2019)
Protecting investors(World Bank Doing Business2017 Report)
3rd
Most attractive emerging market in the World(Bloomberg 2018)
5th
Digital Readiness among Developing Asian Economies(UNCTAD’s Business to Consumer, B2C, E-Commerce Index 2018)
5th
3rdGlobal offshoring destination(A.T. Kearney Global Services Location Index™ 2016)
Most attractive investment destination (Baseline Profitability Index (BPI) 2015)
6th
Manufacturing Value Added(Bloomberg Innovation
Index 2017)
12th
KL – Most visited cityin the World(Euromonitor International 2017)
10th
Global Competitiveness(Global Competitiveness Report (GCR) 2017-2018)
23rd
Most competitiveeconomy in overall performance (IMD's WorldCompetitivenessYearbook 2017)
24th
12th “Ease of Doing Business (Worldwide)”(World Bank’s Doing Business Report, 2020)
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Harmonious Industrial Relations Quality of Life
50 years -Strong Industry Base
STRATEGIC LOCATION
Stable Banking System
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Liberal Investment Policies
Pro-businessGovernment
Political and Economic Stability
Young, Trainable and Educated Labour Force
An Unsurpassed Lifestyle
Home to Tropical ParadiseWe Embrace Multiculturalism
Well Developed Infrastructure/
Connectivity
IP ProtectionExcellent Facilities -
Convention and Conferences
English speaking language
Liberal Business Environment
Capital: Kuala LumpurPopulation: 31.7 Mil.Land Area: 330,399 sq km
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Functions of MIDA
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Who Are We?
1st point of contact for investors who intend to set
up projects in the manufacturing and services
sectors in Malaysia
The principal Malaysian Government agency responsible & mandated for the promotion of investments and coordination of
industrial development and selected services sectors in the
country Established in 1967 under Act of Parliament, 1965.
• Foreign Direct Investment
• Domestic Investment
• Manufacturing &
Selected Services
• Manufacturing Licenses• Tax Incentives
• Expatriate Posts
• Duty Exemption
• Principal Hub &
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
• Planning for industrial development
• Recommend policies &
strategies on industrial
promotion and development
• Formulation of strategies, programmes and initiatives for
international economic
cooperation
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One Stop Centre
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Immigration
Department
Royal Malaysian
Customs
Telekom Malaysia
BerhadLabour
Department
Based in MIDA
Based outside MIDA
MIDA as a One Stop Centre
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• New York
• San Jose
• Chicago
• London
• Stockholm
• Munich
• Frankfurt
• Milan
• Paris• Tokyo
• Osaka
SydneySingapore
Mumbai
Dubai
12 state offices
20 overseas offices
and 12 state offices• Beijing
• Guangzhou
• Shanghai
• Taiwan
Seoul
MIDA is the first point of contact for investors
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MIDA
Munich
MIDA
Frankfurt
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Services Provided by MIDA
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• Briefings
• Data on Industries
• Meetings with European
Companies Operating in
Malaysia
• Visits to Production Facilities &
Service Providers
• Visits to potential locations
• Manufacturing License
• Tax Incentives
• Expatriate Posts
• Import Duty Exemptions
• Representative/Regional Office
• Principal Hub/OHQ
Promotion1. PROMOTION 2. APPROVAL
3. IMPLEMENTATION OF PROJECT
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Steps & Options for Investors
Representative Office
STEP 2
Production Facility
R&D/Competence
Centre
STEP 1Regional
Office
STEP 3 TrainingCentre
Principal Hub/Operational HQ
Regional and global businesses and operations to manage, control, and
support key functions including management of risks, decision making,
strategic business activities, trading, finance, management and human
resource.
Sales Office
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MALAYSIA… Your Profit Centre in Asia and a gateway to Asean
Danke Schön
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Yusri H. Chu
Director – Frankfurt
MIDA Frankfurt
HAT64, Level 9
Bleichstraße 64 -66
Frankfurt
[email protected] Wolters
Investment Officer
Christian Römer
Media Officer
christian.roemer@
mida.gov.my