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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
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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