LAB 4:

MARKETING &

LOGISTICS

MembersMEMBERSSponsor: Dr Jalaluddin Harun Co- Sponsor: Tn Hj. Osman Hj Kasim

Lab Leader: Pn. Noorlaila Mohamed Halip

Facilitator: En. Yunus

SECRETARIATY. Bhg. Datin Hjh. Khalidah YaakubBhgn. Pemb. PerdaganganPn. Normazmin Che AdBhgn. Pemb. PerdaganganCik Erien Noor Md NasirBhgn. Pemb. PerdaganganCik Siti Hawa Arshed, PSHEKEN. Norzam Ujud, MTIB Tawau

Pn. Loke Sim Wah – MTIBEn. Poovendran Villiam –KPPKPn. Penelope Abu Husin –POICPn. Rosalind Lim Mui Ling – Jab. Perhutanan SabahEn. Steven Golono –MID SabahEn. Suhaili Hj. Kasim –Sabah PortEn. Syed Zahirulddin Syed Ali – MATRADE SabahEn. Henry Yuen – STIAEn. Richard Yong - STIA

Sub Lab Leader: Y. Bhg. Tan Sri Majid Khan

Assistant Sub Lab Leader:Y.Bhg. Datuk Richard Bainun @ Rayner

MEMBERSEn. Edmund Wong Hock Vui –MID SabahEn. Mohd Jasmin Julpin –Lembaga Pelabuhan SabahEn. Visualingan VeeraperumalEn. Fredie Sua – Yayasan Bumiputera SabahEn. William Kokou – Dewan Perniagaan & Perindustrian Kadazan DusunEn. Lo Shu Kiong – SSAAEn. Muhammad Naim Saad –MOTEn. Sukhairy Sutan – MOT

• Encourage production of high value added products such as indoor furniture• To identify proper marketing channel• To be more competitive in logistics (sea and overland)

• Percentage of value added products from Sabah• Sea and overland transportation cost

Competitiveness in logistics and marketing of timber productsfrom Sabah

Objective

What should change?

How will success look

like?

What is the deliverables?

MARKETING & LOGISTICS LAB IN SUMMARY

• Sabah to contribute 25% of the RM53 billion export target by 2020 if the state government put a complete ban on the export of logs• To reduce sea and overland transport costs

Labor

Raw Material

Lab on MARKETING & LOGISTIC

Objectives:Encourage production of high value added products such as indoor furnitureTo identify proper marketing channelTo be more competitive in logistics (sea and overland)

Proposals:

Marketing & Logistic

Bumiputera

SUB INITIATIVES STATUS

1 Incentives for company using local

components

N

2 Industrial land at nominal cost E

3 Reduce freight rates for Sabah E

4 An integrated state wide railway system

and upgrading main highways

E

5 National hub for furniture N

6 MTIB to take the lead role in marketing

and trade promotion

E

We identified 15 sub initiatives, 6 were selected

5

To seek government aid to compensate forex losses for

exporting companies using local timber components

Ringgit appreciated against USDVietnam is more competitive as Dong depreciated against USDCompany experiencing losses and closing downEstimated above 40% closureSustain present industry

BIG WIN 1

Incentives for company using local components

Uncertainty in exchange rateBNM to arrest the frequent fluctuation in the exchange ratesand MOF to assist/compensate for forex losses

Arrest the current decline in orders for export earningand closure of companies

To enable companies to do long term planning

6

The State to provide industrial land at nominal cost

Expensive land cost eg: RM 25/sq ft at KKIPUnattractive for new business to startNeed to encourage downstream investment

BIG WIN 2

Lower the land cost eg: RM 9/sq ft at Rasa,Selangor To stop land speculationTo impose a specific timeframe eg:2 years to set up a factoryOne stop centre to assist all administrative matters

More companies for downstream activities coming inMore foreign direct investment (FDI)

More investments in downstream activities

Industrial land at nominal cost

7

To fully liberalize the shipping sector by abolishing the cabotage policy

To reduce shipping cost eg:35% for Sabah commodities To have a competitive edge on par with Peninsular

BIG WIN 3

The government policy on domestic shipping line

More investment coming in and competitive pricing for Sabah products

Reduced freight rates and capture lost market

Reduce freight rates for Sabah

8

To connect major cities on the East, West Coast and interior for transportation of commoditiesTo upgrade main highways for higher axle load transport

Railways to lower the cost of transportation as current land transportation cost is expensive eg: SK-KK RM 100/tonneMaintenance of vehicle is high eg tyre 30% wear off

BIG WIN 4

More efficient transportation systemRoad quality upgraded to withstand heavy loads Two way or more lanes

Efficient and competitive transportation costLower maintenance costInterior will open up for development

Efficient railway and road system

An integrated state wide railway system and upgrading main highways

9

Exhibition centre in MalaysiaAdditional venue to meet international buyers

To attract international buyers for Sabah and Sarawak products

BIG WIN 5

Change of promotion methodEasy access through KL/Iskandar for international buyers

More business opportunities for Sabah to the international market

Permanent showroom cum retail centre in KL/Iskandar

National hub for furniture

10

An active marketing and promotion programme for Sabah

No specific agency to promote timber products in SabahOften Sabah companies are left out from marketing and promotion activities by MTC

QUICK WIN

Marketing activities by MTIB

Increased participation from Sabah based companies in marketing programmes by MTIB Increased export from Sabah

Specialized promotion programmes for Sabah

MTIB to take the lead role in marketing and trade promotion

INITIATIVES

Incentives for company using

local components

MARKETING & LOGISTIC

Provide industrial

land at nominal cost

An integrated railway system and upgrading main roads to

highways

National hub for furniture

Reduce freight rates for Sabah

MTIB to take the lead role in

marketing and trade promotion

MARKETING & LOGISTIC

SUB INITIATIVES IMPAC

T

1 D

1

Incentives for company

using local components

H

2 D

2

Industrial land at nominal

cost

H

3 D

3

Reduce freight rates for

Sabah

H

4 D

4

An integrated state wide

railway system and

upgrading main highways

H

5 D

5

National hub for furniture M

6 D

6

MTIB to take the lead role in marketing and trade

promotion

S

D2

High

HighLow

D1

ImplementationDifficulties

Big Win

D3

D4

D5

D6

Quick Win

Cost

BIG WINS

Incentives for company using local components

D1

Why:Ringgit appreciated against USDVietnam is more competitive as Dong depreciated against USDCompany experiencing losses and closing down

What : To seek government aid to compensate forex losses for exporting companies using local timber components

How:To consult the timber associationsTo identify the relevant fundsTo propose to KPPK/MOF

Who :

BNM, MOF, KPPK, MTIB

When : Within 3 months

BIG WINS

Industrial land at nominal cost

D2

Why:Expensive land cost RM 25/sqft at KKIPUnattractive for new business to start

To encourage downstream investment

What:To provide industrial land at nominal cost

How:To identify the industrial landTo consult the timber associationsTo propose to the state government

Who : State government, KPPK, MTIB, STIA, KPPP, MID

When : 12 months

BIG WINS

Reduce freight rates for Sabah

D3

Why:To reduce shipping cost eg:35% for Sabah commodities To have a competitive edge on par with Peninsular

What:To fully liberalize the shipping sector by abolishing the cabotage policy

How:To discuss with MOT and KPI Sabah for approval

Who : KPI, MOT,KPPK,MTIB, STIA

When : 6 months

BIG WINS

An integrated state wide railway system and upgrading main highways

D4

Why:To attract international buyers for Sabah and Sarawak products

What:To connect major cities on the East, West Coast and interior for transportation of

commoditiesTo upgrade main highways for higher axle load transport

How:To propose to Federal governmentTo build an efficient railway and upgrade road systems

Who : MOT,KPPK, MTIB, KPI Sabah, JKR

When : 3 years

BIG WINS

National hub for furniture

D5

Why:To attract international buyers for Sabah and Sarawak products

What:To build an exhibition centre in MalaysiaProvide an additional venue to meet international buyers

How:To identify the strategic location in IskandarTo seek funds from Federal government

Who :MOF,KPPK, MTIB, EPU, MITI, MATRADE

When : 2 years

QUICK WIN

MTIB to take the lead role in marketing and trade promotion

D6

Why:No specific agency to promote timber products in SabahOften Sabah companies are left out from marketing and promotion activities by MTC

What:To provide an active marketing and promotion programme for Sabah

How:To draw up a specialized promotion programme for SabahTo invite companies in Sabah to participate in the marketing programme

Who : MTIB, MATRADE

When : 3 months

19

CONCERN ISSUES PROPOSAL (1 sub initiative)

1. Appreciation

of Ringgit

against USD

4 issues identified:

Timber and furniture

industry badly hit

Timber manufacturers

mainly uses local

component

Stabilize the exchange

rate

At present rate of RM

3.02/USD, the industry is

losing money

Government should encourage

incentives for company that

earn foreign exchange using

local components

20

CONCERN ISSUES PROPOSAL (6 sub initiatives)

2. Logistics 6 issues identified:

High freight charges

High inland

transportation cost

High transhipment cost

Limited port facilities

Lack of volume to induce

shipment

Remove cabotage

policy

Encourage consolidation of

service providers

Reduced freight rates for Sabah

at par with Peninsular

Provide information on shipping

and shipping services

Federal government should give

additional incentives for

manufacturing of wood products

State government to provide

industrial land at nominal

premium

Federal government to assist and

provide funds to upgrade Sabah

port facilities

21

CONCERN ISSUES PROPOSAL (9 sub initiatives)

3. Marketing 1 issue identified:

-Lack of marketing activities

To set up a permanent national hub in KL for

furniture producers from Sabah and Sarawak to

display their products permanently

Encourage participation in trade fairs

MTIB to take the lead role in marketing and trade

promotion

MTC marketing activities to cover Sabah

associations such as STIA

All timber products to be certified by 2014 (legal

or sustainable)

New markets to be identified such as Eastern

Europe

Vendor (Payung) concept to be initiated-

Suppliers of parts/components

Disseminate market information/educating

industry on marketing

To identify agency to coordinate cargo

consolidation

Implementation

23

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

1-2 Years Workplan (for all sub initiatives)

Initiatives

INCENTIVES FOR COMPANY USING LOCAL COMPONENTS

INDUSTRIAL LAND AT NOMINAL COST

REDUCE FREIGHT RATES FOR SABAH

To consult the timber associationsTo identify the relevant funds

To consult MIDA

To identify the industrial landTo consult the timber associations

To propose to the state government

To discuss with Lembaga Pelabuhan Sabah

To submit proposal to the shipping companies

24

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

1-2 Years Workplan (for all sub initiatives)

Initiatives

AN INTEGRATED STATE WIDE RAILWAY SYSTEM AND UPGRADING MAIN HIGHWAYS

NATIONAL HUB FOR FURNITURE

MTIB TO TAKE THE LEAD ROLE IN MARKETING AND TRADEPROMOTION

To propose to the state government

To build an efficient railway and upgrade road systems

To identify the strategic location in KL/Iskandar

To seek funds from state government

To draw up a specialized promotion programme for SabahTo invite companies in Sabah to participate in the marketing programme

A

N

K

T

H Y

U

OMalaysian Timber Industry Board (MTIB)Level 13-17, Menara PGRM, No. 8 Jalan Pudu Ulu, Cheras, 50728 Kuala Lumpur

www.mtib.gov.my