Investment Incentive For Rubber Industry

Present by Mr. Mohd Rasli Muda

Director, Food Technology & Sustainable Resources Malaysian Investment Development Authority (MIDA)

MREPC REGIONAL SEMINAR

Contents

About MIDA Performance of Manufacturing Sectors Overview of Rubber Industries in Malaysia Investment Policies Quality Investment Incentives Promoted Activities Under PIA, 1986 Domestic Direct Investment (DDI) Initiatives

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Malaysian Investment Development Authority

(MIDA)

Foreign Direct Investment Domestic Investment Business matching through E-Connect 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

Promotion

Function of MIDA

4

One Stop Centre

Based outside of MIDA

• Department of Occupational

Safety and Health

• Ministry of Finance

• Ministry of Health

• Ministry of Tourism

• Ministry of Human Resource

• Multimedia Development Corp. (MDeC)

• Construction Industry Development

Board of Malaysia (CIDB)

• Department of Environment (DOE)

• Ministry of Higher Education

Based In MIDA

• Immigration Department

• Royal Malaysian Customs

• Tenaga Nasional Berhad

• Telekom Malaysia Berhad

• Labour Department

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MIDA Regional & Worldwide Network

Borneo Island

-Kuching -Kota Kinabalu

-12 Regional Offices

-23 Oversea Centers 6

Performance of Manufacturing Sector

Manufacturing Sector

Year No. of projects

No. of employment

Proposed investment (RM Billion)

Domestic Foreign Total

2010 910 97,319 18.1 29.1 47.2

2011 846 100,533 21.9 34.1 56

2012 804 76,631 20.2 20.8 41

Source: MIDA 8

Project Approved By Major Industry As At 2012

Source: MIDA

Industry Number of

Projects Total Investment

(RM million)

Transport Equipment 85 7,800

Chemicals & Chemical Products 73 6,400

Petroleum Products 14 6,000

Electronics & Electrical Products 112 4,000

Basic Metal Products 37 3,800

Food Manufacturing 67 3,400

Machinery Equipment 84 1,850

Rubber Products 20 1,350

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Approved Project for Rubber Industry

Source: MIDA

Year No. of

Projects

Proposed Investment (RM million)

Domestic Foreign Total

2010 17 94.7 47.6 142.3

2011 19 538.3 91.2 629.5

2012 20 132 1,218 1,350

2013 (Jan – Oct)

14 932.8 58.2 991.0

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Overview of Rubber Industry In Malaysia

Rubber Industries In Malaysia

Industrial and General Rubber

Productsucts

Tyres and Tyre-

Related products

Latex Products

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Overview of Rubber Industries In Malaysia

Latex Products

• 125 manufacturers producing gloves, condoms, catheters, latex thread and

others.

• Contribute 81% of the rubber total value of exports

• Condoms, surgical gloves, examination gloves and catheters are classified

as medical gloves

• Malaysia as world’s leading producer and exporter of catheters, latex thread

and natural rubber medical gloves

• Major companies producing latex product

• Top Glove Sdn. Bhd. (Malaysia)

• Hartalega Sdn. Bhd. (Malaysia)

• Supermax Corporation Berhad (Malaysia)

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Overview of Rubber Industries In Malaysia

Tyres and Tyre-related Products

• 120 Companies – 12 tyre producers and remaining companies

produce tyre retreads, inner tubes and other accessories

• Major Tyre producers :

• Continental Sime Tyre AS Sdn. Bhd (Germany)

• Continental Sime Tyre PJ Sdn. Bhd. (Germany)

• Silverstone Berhad (Japan)

• Goodyear Malaysia Berhad (USA)

• Toyo Tyre Manufacturing (M) Sdn. Bhd (Japan)

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Overview of Rubber Industries In Malaysia

Industrial and General Rubber Products

• 184 Companies producing wide range of rubber products :

• Beltings

• Hoses

• Tubings

• Seals and sheeting for automotive

• Electrical & electronics

• Machinery & equipment

• Construction industries

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Overview of Rubber Industries In Malaysia

Note:

*other rubber: Synthetic Rubber, Reclaim Rubber, Waste Rubber , Compound Rubber and Unvulcanised Rubber (HD Code 4002-4006

**Jan – June

Sumber : Jabatan Statistik, Malaysia

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Investment Policies

Foreign Equity

Investment Policies

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Shareholders’ funds of

≥RM2.5 million

Engaging

≥75 full-time

employees

Manufacturing License

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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-

10 years

• Non-exec.post-

5 years

Foreign paid-up capital of more than US$200,000 but less than US$2mil.

Up to 5 posts (including at least 1 key post)

Employment of Expatriate Personnel

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Quality Investment

Quality Investment

Element

- High value added

- High technology

- Knowledge

intensive

- Skills-intensive

High Income Nation by

2020

Strong Multiplier

Effects

Generate

Growth of Domestic

Companies

Cluster Development

Local Sourcing

Strengthening of R&D

Activities

Human Capital Objective

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Incentives

Major Incentives

1. PIONEER STATUS

Income Tax Exemption, 70% from Statutory Income for a period of 5 years

Income Tax Exemption, 100% from Statutory Income for a period of 10 years

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Major Incentives

2. INVESTMENT TAX ALLOWANCE

Allowance of 60% on Qualifying Capital Expenditure (excluding land), incurred for a period of 5 years This allowance can be offset against 70% of the statutory income for each year of assessment.

Allowance of 60% on Qualifying Capital Expenditure (excluding land), incurred for a period of 5 years This allowance can be offset against 100% of the statutory income for each year of assessment.

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Other Incentives

1. Small-Scale

60% Malaysian-owned.

Pioneer Status - 100% tax exemption for 5 years.

Investments Tax Allowance - 60% on Qualifying Capital

Expenditure incurred for a period of 5 years. It can be

offset against 100% of the statutory income for each

year of assessment.

Note: Definition of Small-Scale - Companies incorporated

in Malaysia with shareholders’ fund not exceeding

Rm2.5 million.

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Incentives of Small Scale Companies

Eligibility Criteria:

Malaysian equity ownership:

Companies with shareholders’ fund of up to RM500,000 with at least

60% Malaysian equity

Companies with shareholders’ fund of above RM500,000 and less

than RM2.5 million with 100% Malaysian equity.

Applications must fulfill the following conditions:

Value Added (VA) – 25%

Managerial, Technical and Supervisory Staff (MTS) index – 20%

Not more than 20% of the equity of the applicant company is owned,

whether directly or indirectly controlled, by a holding company

having shareholders’ funds of more than RM2.5 million.

Producing products/engaged in activities listed in the list of promoted

products/activities for small companies or general promoted list.

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Other Incentives

Reinvestment in Resource-Based Industries Another round of Pioneer Status or

Investment Tax Allowance Incentives

51% Malaysian-owned

Reinvestment in Expansion projects in Rubber, Oil Palm and Wood-Based Industries

Product which have export potential

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Promoted Activities Under PIA 1986

List of Promoted Products/Activities (General)

Manufacture of Rubber Products

Tyre for earthmover, agricultural vehicles, industries vehicles, commercial

vehicles, motorcycle and aircraft.

Latex products such as safety or special function gloves.

Dry rubber products such as belting, hoses, pipes, tubings,

rubber profiles, seals, gaskets, washers, packings, rings,

rubber linings, anti vibration, damping and sound

insulations.

Manufacturing Related Services

Enviromnment management – reclaimed rubber

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Promoted Activities Under PIA 1986

Small Scale

Manufacture of rubber Products such as:-

(a) Moulded rubber products

(b) Extruded rubber products

(c) General rubber products

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Indirect Incentives

Import Duty/Sales Tax Exemption on:

-Machinery, Equipment, Spare Parts & Consumables

-Raw Materials & Components

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Domestic Direct Investment Initiatives

Domestic Investment Strategic Fund (DISF)

Domestic Investment Strategic Fund of RM 1 billion

To accelerate the shift of Malaysian-owned companies in

targeted industries to high value-added, high technology,

knowledge-intensive and innovation-based industries

To be granted under the Customized Incentives Scheme on

a negotiable basis based on the request of the companies

and the merits of each case.

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Matching grants (1:1) on reimbursable basis

Eligibility Criteria: Manufacturing and services companies with Malaysian

equity ownership of at least 60%

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

Other industries, on case by case basis

Domestic Investment Strategic Fund (DISF)

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Domestic Investment Strategic Fund (DISF)

Scope of the Fund:

Training of Malaysians

R&D activities carried out in Malaysia

Obtaining international standards / certification

Licensing of purchase of the 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)

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Incentive for Acquiring a Foreign Company for High Technology

Reintroduction of the incentive for acquisition of foreign

companies

Malaysian-owned company acquiring a foreign-owned

company abroad will be eligible for an annual deduction of

20% of the acquisition cost for 5 years.

Purpose of acquisition:

Establishment of a manufacturing facility/company or

services company within Malaysia

Utilisation of the acquired technology in their existing

operations within Malaysia

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Incentive for Acquiring a Foreign Company for High Technology

Eligibility Criteria:

At least 60% Malaysian equity ownership

For public listed company:

At least 60% of its equity is directly owned by Malaysians on

the first day of listing on the stock exchange; and

At least 50% of its equity is directly owned by Malaysians

Acquisition of the foreign technology company must result in

increase of performance or enhancement of technology and

processes of the company’s operation in Malaysia

Definition of High Technology:

New and emerging technologies; or

Relatively new technology for the industry / sector concerned

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THANK YOU

MALAYSIAN INVESTMENT

DEVELOPMENT AUTHORITY

www.mida.gov.my