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www.mida.gov.my
ANNUAL REPORT2010
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY
MISSION STATEMENTPositioning Malaysia for Global Competitiveness
2 • MIDA Annual Report 2010
CONTENTS
MIDA Annual Report 2010 • 3
Board Members 04
Management 06
Chairman’s Message 08
Director General’s Message 10
Chapter 1 12Introduction
Chapter 2 18Performance of the Manufacturing Sector
Chapter 3 26Performance of the Services Sector
Chapter 4 34Foreign Investment Promotion
Chapter 5 42Domestic Investment Promotion
Chapter 6 48Promotion of Cross Border Investments
Chapter 7 52International Relations
Chapter 8 58The Authority
Financial Statements 64
Headquarters, State and Overseas Offices 82
4 • MIDA Annual Report 2010
BOARD MEMBERS
TAN SRI DR.SULAIMAN MAHBOBChairman, MIDA
DATUK JALILAHBABADirector General, MIDA
TAN SRI ABDULRAHMAN MAMATSecretary GeneralMinistry of InternationalTrade and Industry(until 5 December 2010)
TUAN HAJI HASHIMPAIJANPermanent SecretaryMinistry of IndustrialDevelopment, Sabah
DATU LIAW SOONENGPermanent SecretaryMinistry of IndustrialDevelopment, Sarawak
DATUK AHMADKABEER BIN NAGOORExecutive DirectorAKN Technology Berhad
TAN SRI DATUKMUSTAFA MANSURPresidentFederation of MalaysianManufacturers
MIDA Annual Report 2010 • 5
DATO’ SITI HALIMAHISMAILSecretaryTax Analysis Division, Treasury
DATO’ GHAZALI BINDATO’ YUSOFFExecutive ChairmanNusantara TechnologiesSdn. Bhd.
DATUK DR. REBECCAFATIMA STA MARIASecretary GeneralMinistry of InternationalTrade and Industry(from 6 December 2010)
TAN SRI DATO’MUHAMMAD ALI BIN HAJI HASHIMChairmanWaqaf An Nur CorporationBerhad
DATUK NG PENG HAYChairmanWellcall Holdings Berhad
DATO’ AZMAN SHAHDATO’ SERI HARUNPresidentMalaysian EmployersFederation
ZULKIFLY DATO’HAJI ZAKARIAPresidentUMW Oil & Gas
MANAGEMENT
6 • MIDA Annual Report 2010
TAN SRI DR. SULAIMANMAHBOB
Chairman, MIDA
DATUK JALILAH BABADirector General
DATO’ AFIFUDDIN ABDULKADIR
Deputy Director General I
DATO’ WAHAB HAMIDDeputy Director General II
N. PARAMESWARANSenior Director, Services
RADHA MENONSenior Director, Resource Industry
PHANG AH TONGSenior Director, Investment
AZMAN MAHMUDSenior Director,
Non-Resource Industry
WILLIAM HO YUEH WENGDirector, Industry Support Division
(until 13 October 2010)
KANG LAY KIMDirector, Information Management
and Statistics Division
HINDON ABDUL AZIZDirector, Domestic Investment
Promotion Division
PHANG YEW FOOKDirector, Transport Industry Division
(until 19 October 2010)
AZIAN MOHD YUSOFDirector, Business and
Other Services Division
N. SANGARANDirector, Machinery and Engineering
Supporting Industries Division
N. RAJENDRANDirector, Foreign Investment
Promotion, Asia/Oceania Zone(from 14 October 2010)
YEOH HOCK ENGDirector, Chemical Industry Division
INON ABDUL HAMIDDirector, Electronics Industries
Division
SIMON LEE YEW WENGDirector, International Cooperation Division(until 27 Jun 2010)
MANMOHAN SINGHDirector, Strategic Planning Division
CHAI SIEW FOONDirector, Textiles and Non-Metallic
Mineral Industries Division(from 7 September 2010)
Director, Life Sciences Industry Division(until 6 September 2010)
MIDA Annual Report 2010 • 7
TAN PIAK BONGDirector, Logistics and Regional
Operations Division
MATHIALAKAN CHELLIAHDirector, Wood and
Paper Industries Division
K. SUKOMARANDirector, Textiles and Non-Metallic MineralIndustries Division (until 6 September 2010)
Director, Cross Border Investment Division(from 7 September 2010 until 30 November 2010)
CHUA CHEE KIONGDirector, ICT and Electrical
Industries Division (until 27 June 2010)
HOO AH TENGDirector, Foreign Investment
Promotion, Asia/Oceania Zone (until 2 August 2010)
TENG YIT CHANDirector, Communications
and Media Division
WAN HASHIM WAN JUSOHDirector, Foreign InvestmentPromotion, America Zone
AHMAD MAT SINDirector, Corporate
Management Division(until 1 September 2010)
MOHD RASLI MUDADirector, Corporate Management
Division (from 2 September 2010)
JASWANT SINGHDirector, Life Sciences
Industry Division(from 7 September 2010)
TAN CHEE CHAIDirector, Industry Support Division
(from 16 November 2010)
ZAINAB MUDADirector, Food Industries Division
AHMAD TAJUDIN OMARDirector, Foreign Investment
Promotion, Europe Zone (until 2 May 2010)
HAFIZAH SHAHARDirector, Transport Industry Division
(from 8 November 2010)Director, Metal and Fabrication
Industries Division(until 19 September 2010)
N. JEYASIGANDirector, Foreign Investment
Promotion, Europe Zone(from 20 September 2010)
ROESLINA ABBASDirector, International Cooperation
Division (from 20 September 2010)
FOO SIN FONGDirector, Metal and Fabrication
Industries Division(from 20 September 2010)
AIZAH ABDULLAHDirector, ICT and Electrical Industries
Division (from 28 June 2010)
The Malaysian economy rebounded strongly in 2010 in linewith the continued recovery in the global economy. Thecountry’s Gross Domestic Product (GDP) registered a growthrate of 7.2 percent in 2010 after contracting by 1.7 per centin 2009. The manufacturing sector which expanded by 11.4per cent in 2010, was the fastest growing sector, underlyingits importance as an engine of growth for the economy. Itcontributed 27.7 per cent to the country’s GDP, 72.1 per centof total exports and 27.8 per cent of total employment.
It is heartening to note that Malaysia attracted significantly higher levels of investments in themanufacturing sector in 2010 compared with 2009. Investments approved in the manufacturing sectorsurged by 44.8 per cent to RM47.2 billion in 2010 from RM32.6 billion in 2009. The approvedinvestments in 2010 surpassed the average annual investment target of RM27.5 billion set under theThird Industrial Master Plan (IMP3) by RM19.7 billion or 71.6 per cent.
Despite the stagnation of global FDI inflows and the intense global and regional competition for FDI,Malaysia continues to remain a competitive investment location for foreign investors. Foreigninvestments amounted to RM29.1 billion, accounting for 61.7 per cent of total investments approvedin the manufacturing sector during the year.
Domestic investments approved in the manufacturing sector in 2010 surged to RM18.1 billion fromRM10.5 billion in 2009, indicating continued interest by domestic companies in investing in this sector.This is also in line with Government’s continued drive to encourage domestic investors to assume amore prominent role under the Economic Transformation Programme (ETP).
The services sector remains an important source of growth for the Malaysian economy. A total of 3,301projects, with investments of RM36.7 billion, were approved in 2010. Domestic investments amountedto RM32.8 billion, accounting for 89.4 per cent of the total investments approved during the year whileforeign investments totalled RM3.9 billion.
During the year, the Malaysian Government unveiled the New Economic Model (NEM), GovernmentTransformation Programme (GTP), ETP, National Key Economic Areas (NKEAs) and the 10th MalaysiaPlan (10MP) to lay the foundation for the country’s transformation into a high income economy.
MIDA will assume an important role in ensuring that there is a significant leap in investment activitiesin the 12 NKEAs and other growth areas led by a more dynamic private sector to achieve the targets setunder the 10MP. Towards this end, MIDA has been empowered by the Government with the necessaryauthority to negotiate directly with investors for targeted projects.
CHAIRMAN’S MESSAGE
8 • MIDA Annual Report 2010
MIDA Annual Report 2010 • 9
The National Committee on Investment (NCI) was established in MIDA to hasten the decision makingprocess whereby senior officials from relevant authorities deliberate on applications for investmentprojects and approve them in real time. This move is expected to improve Malaysia’s ability to attractand secure targeted projects.
A Special Task Force on Investment has also been established in MIDA to coordinate investmentpromotion activities and statistical information by all investment promotion agencies in the country.
The initiatives and targets set under the ETP would entail additional responsibilities for MIDA inenhancing FDI and domestic investments. The corporatisation exercise currently being undertaken byMIDA will enhance its organisational structure so as to enable it to focus on priority areas identifiedunder the ETP. The new structure will transform MIDA into a more effective investment promotion agencyto compete for and attract quality investments. The corporatisation of MIDA will also provide thenecessary organisational flexibility for MIDA to attract and retain the manpower and talents it needsin order to function more effectively. The empowerment and the corporatisation of MIDA will enableit to engage investors swiftly and more effectively, thus attracting higher levels of investments in themanufacturing and services sectors, as targeted under the 10MP and ETP.
TAN SRI DR. SULAIMAN MAHBOBChairman, MIDA
10 • MIDA Annual Report 2010
The year 2010 was a landmark year for MIDA. YAB PrimeMinister had announced on 30 March 2010 at the InvestMalaysia 2010 event that MIDA will be empowered andcorporatised. MIDA will be empowered to negotiate directlywith investors for targeted projects and assume the role as acentral investment promotion body to enhance thecoordination and cohesion among the various investmentpromotion agencies (IPAs) in the country. To reflect the newrole and functions, MIDA is renamed as the MalaysianInvestment Development Authority while maintaining its
acronym, MIDA. The corporatisation exercise currently being undertaken by MIDA will transform MIDAinto an effective investment promotion agency to compete and attract quality investments.
Following YAB Prime Minister’s announcement, MIDA initiated various measures relating to theempowerment and corporatisation process such as the establishment of the National Committee onInvestments (NCI) and a Special Task Force on Investment, the delegation of power on licensing andincentives matters from Ministry of International Trade and Industry (MITI) and the Ministry of Finance(MOF) through NCI, revision of the MIDA Act, the establishment of steering committees and workinggroups to oversee the corporatisation process, restructuring and redefining of its new corporate entityas well as the development of a new MIDA logo.
In line with the decision to empower MIDA, a new high level Committee known as the NationalCommittee on Investments (NCI) was set up in MIDA on 20 May 2010 to consider and approve projectsin real time. The membership of the NCI include MIDA Chairman as the Chairman of NCI and theDirector General of MIDA as the Alternate Chairman with permanent members consisting of seniorofficials from the relevant ministries and agencies.
I am pleased to note that Malaysia continued to attract a high level of investments into the manufacturingand services sectors in 2010. Within the manufacturing sector, a total of 910 projects involvinginvestments of RM47.2 billion were approved compared with RM32.6 billion in 2009, representingan increase of 44.8 per cent. Projects approved in 2010, when implemented, are expected to create atotal of 97,319 employment opportunities, of which 74.2 per cent will be in the managerial, technical,supervisory and skilled manpower categories. Foreign investments worth RM29.1 billion were approvedconstituting 61.7per cent of total investments. Domestic investments surged by 72.4 per cent toRM18.1 billion in 2010. The services sector attracted investments amounting to RM36.7 billion from3,301 projects approved with the majority of investments from domestic sources amounting to RM32.8billion or 89.4 per cent of total investments. These projects are expected to generate 53,506 employmentopportunities.
DIRECTOR GENERAL’SMESSAGE
MIDA Annual Report 2010 • 11
To raise the economy up the value chain, MIDA will adopt a more targeted approach in attracting qualityinvestments, which include high technology and capital intensive industries, R&D activities and highvalue-added industries. Some of the quality manufacturing and services projects approved in 2010include an expansion project in manufacturing, development and service of thin film solar modules,components and semi-finished products; an expansion and diversification project to manufacture thin-film magnetic disks and substrates; a new project to manufacture silicon ingots and solar wafers; anexpansion project by a local aerospace firm to undertake the activities of maintenance, repair andoverhaul (MRO) for commercial airlines; an expansion project to manufacture medical devices; anexpansion project to manufacture glass fibre and a flagship terminal project designed and built to bean important part of the downstream petroleum supply chain.
MIDA will further intensify its promotion activities to attract quality investments. In 2010, MIDApartnered with Bursa Malaysia in co-organising the Invest Malaysia 2010 event where the landmarkannouncement by YAB PM was made to empower and corporatise MIDA. In addition, MIDA was alsoinstrumental in organising the International Herald Tribune (IHT): Dawn of the New Decade Forumaddressing issues on financial recovery and Asia’s potential in developing alternative investments andimpact of financial reforms on investors. These programmes complemented the ongoing promotionalefforts to attract foreign investments on a targeted basis such as roundtable meetings with companies,specific project missions (SPMs) and strike force missions. As part of these efforts, MIDA had alsoexpanded its global networking presence with the opening of additional overseas offices in Munich,Bangkok and Houston. In line with the New Economic Model (NEM) and Economic TransformationProgramme (ETP), MIDA also intensified its domestic promotion activities through its extensive outreachprogrammes undertaken throughout the country namely organising domestic seminars andmeetings/dialogues with various local companies, chambers and industry associations.
After 43 years in existence, the empowerment and corporatisation of MIDA is a major milestone in itshistory and will enhance its capacity and capability to compete with other regional and domestic IPAsin attracting investments as well as enable it to complement the Government’s effort in transformingthe nation into a high income economy.
DATUK JALILAH BABADirector General, MIDA
12 • MIDA Annual Report 2010
Chapter 1
INTRODUCTION
MIDA Annual Report 2010 • 13
Global Developments
Domestic Economy
MIDA’s Corporatisation
Conclusion
14
1415
16
14 • MIDA Annual Report 2010
Global economic recovery continued in 2010, albeitat an uneven pace, led by strong economic activityin emerging market economies. Despite the healthierglobal growth, the international environmentremained highly uncertain, weighed down bycontinued structural weaknesses in the advancedeconomies. Various developments had also exertedan impact on the world economy, including theIcelandic volcanic ash cloud and protests in Europeas a result of austerity measures undertaken by somedebt-ridden European nations.
Global Developments
Based on the World Bank’s Global EconomicProspects 2011, world gross domestic product(GDP) expanded 3.8 per cent in 2010, led by strongdemand growth in developing countries. Demand insuch economies played a major role in the overallrecovery, contributing 46 per cent of global growthin 2010.
The recovery process had begun taking shape inmid-2009 in developing Asia, particularly China,where manufacturing production has alreadyreturned to pre-crisis levels. These Asian economies,buoyed by strong growth, continue to invest billionsof dollars on infrastructure, improving roads, ports,telecommunications and power plants. This presentsattractive opportunities for industry in this region.
With Asia as a major global economic powerhouse,and driven by key factors such as buoyant domesticdemand and the steady performance of the continent’semerging markets, Asian companies are nowincreasingly being recognised for their innovativeness,stature and global reach. Given Asia’s rising economicprowess, competition for business in the region willintensify; trade in goods and services between Asia andthe world will continue to increase.
According to UNCTAD’s Global Investment TrendsMonitor (published on 17 January 2011), global foreigndirect investment (FDI) inflows edged up 1 per cent toUS$1,122.0 billion in 2010, from US$1,114.1 billionin 2009. Despite the stagnation of global FDI inflows,Malaysia still attracted US$8.58 billion of globalFDI last year, far surpassing the US$1.4 billion in 2009.
Domestic Economy
Malaysia delivered a robust economic performancein 2010, achieving a 7.2 per cent GDP growth withthe manufacturing sector recording a double digitgrowth of 11.4 per cent. The manufacturing sector isan important contributor to the economy, accountingfor 27.7 per cent of the nation’s GDP, 72.1 per centof total exports and 27.8 per cent of total employment.This sector attracted a significantly higher level ofinvestments amounting to RM47.2 billion in 2010,compared with RM32.6 billion in 2009.
INTRODUCTION1
MIDA Annual Report 2010 • 15
The services sector also remains a major contributorto GDP. In 2010, this industry accounted for 57.4 percent of Malaysia’s GDP with a 6.8 per cent growth.The services sector is estimated to employ some 6.3million people, or 53.6 per cent of the country’sworkforce.
These developments augur well as Malaysia forgesahead towards the status of a high-incomedeveloped nation, as set out in the New EconomicModel. Driven by the series of transformation effortsembodied in the Tenth Malaysia Plan (10MP), theEconomic Transformation Programme (ETP) and theGovernment Transformation Programme (GTP),MIDA will strive to provide the necessary impetus fora private-sector-driven economy.
The ETP represents a comprehensive effort that aimsto transform Malaysia into a high-income nation by2020. Under the ETP, 12 National Key EconomicAreas (NKEAs) have been identified as drivers ofeconomic activities that have the potential to directlyand materially contribute a quantifiable level ofeconomic growth for the domestic economy. The 12selected NKEAs are oil, gas and energy; palm oil;financial services; tourism; business services;electrical and electronics; wholesale and retail;education; healthcare; communications content andinfrastructure; agriculture; and greater Kuala Lumpur.
Meanwhile, the 12 NKEAs have identified 131 Entry-Point Projects (EPPs) that will require US$444 billionof aggregate funding between 2011 and 2020, with92 per cent (US$410 billion) coming from the privatesector while the remaining 8 per cent (US$34 billion)will stem from the public sector.
Thus, a key challenge for MIDA is to ensure asignificant leap in investment activities in the 12NKEAs and non-NKEAs, led by a more dynamicprivate sector to achieve the targeted annualinvestment growth of 12.8 per cent or RM115 billionunder the 10MP.
MIDA’s Corporatisation
During the period under review, Malaysia was ableto harness increased trade flows in the regionbecause of its strategic location and extensiveconnections throughout Asia. Going forward, MIDAhas a pivotal role in ensuring that the nation willcontinue strengthening its manufacturing andservices bases. While foreign companies and MNCsestablish their regional bases in Malaysia, MIDAcontinues to ensure that domestic enterprises alsotake advantage of the country’s strengths to establishtheir presence in this region.
To spur growth and strengthen the organisationresponsible for the promotion and coordination ofthe manufacturing and services sectors, an ambitiousplan to corporatise MIDA is being undertaken tosupport i ts transformation and ensure thatcompanies can leverage on Malaysia’s excellentbusiness environment, strong market connectivity,access to talent and a skilled workforce.
The corporatisation of MIDA will enhance MIDA’sorganisation structure, with a view to focusing onpriority areas identified under the ETP. The neworganisation structure will transform MIDA into aneffective investment promotion agency to competeand attract quality investments in the NKEAs andnon-NKEAs. The corporatisation will also provide thenecessary organisational flexibility for MIDA toattract and retain the manpower and talent it needsto function more effectively in implementing theinitiatives outlined under the ETP and achieving therelevant goals.
MIDA has also been empowered by the Governmentwith the necessary authority to negotiate directlywith investors for targeted projects. In addition,MIDA has been designated as the central investment-promotion agency for the manufacturing andservices sectors, excluding utilities and financialservices, to enhance coordination and cohesion
16 • MIDA Annual Report 2010
among the various investment promotion bodies inthe country.
The empowerment and corporatisation of MIDA willenable it to act swiftly in engaging investors moreeffectively and attracting higher levels of investmentin the manufacturing and services sectors, astargeted under the 10MP and ETP.
The changes announced by the Government willentail additional responsibilities for MIDA in itsefforts to enhance FDI and domestic investments. Themajor new roles include facilitating the provision oftotal solutions for the entire business eco-system forcompanies in the areas of technology acquisition,funding, tax incentives, training programmes,business development and transformation, as well asnurturing local technopreneurs in acquiringsophisticated technologies in knowledge-intensiveindustries and services.
With its corporatisation already underway andtargeted for completion by the end of 2011, MIDAwill position itself as a world-class investmentpromotion agency for the 21st century.
Conclusion
The Malaysian economy is projected to expand 5 percent to 6 per cent in 2011. Growth is likely to improveduring the course of the year, with a better performancein the second half.
Private investment is expected to remain strong,supported by capital spending among the domestic-oriented industries given the high levels of capacityutilisation and business confidence, as well as theimplementation of key initiatives announced by theGovernment under the ETP.
UNCTAD’s World Investment Report 2010 indicatesthat global FDI inflows will pick up to about US$1.3trillion to US$1.5 trillion in 2011, rising to someUS$1.6 trillion to US$2 trillion in 2012. UNCTAD’sWorld Investment Prospects Survey 2010-2012shows renewed business optimism and investors’stronger intentions of pursuing foreign expansion in2011 and 2012.
Given the preceding scenario, global FDI inflowsinto Malaysia are expected to gather momentum in2011 and beyond. In this context, the Governmentwil l continue responding to local and globaldevelopments to maintain the country’sattractiveness as the preferred investment destinationin the region.
MIDA certainly experienced a defining year in 2010.With its continued focus on harnessing excellence,MIDA will keep pushing the frontiers, to positionMalaysia as an Asian hub as well as a home forinvestment, business, innovation and talent.
MIDA Annual Report 2010 • 17
Chapter 2
PERFORMANCE OF THEMANUFACTURINGSECTOR
18 • MIDA Annual Report 2010
OVERVIEW
INVESTMENT PERFORMANCE
New Projects
Expansion/Diversification Projects
Capital-Intensive Projects
Export-Oriented Projects
Employment Opportunities
Approved Projects by Ownership
Major Sources of Foreign Investments
Approved Projects by Industry
Approved Projects by Location
Implementation Rate
20
202121
21
22
22
22
232324
24
MIDA Annual Report 2010 • 19
OVERVIEW
In 2010, the Malaysian economy experienced astrong resumption of growth. Real Gross DomesticProduct (GDP) recorded a growth of 7.2 per cent in20101. Manufacturing continued to be an importantcontributor to the economy, accounting for 27.7 percent of the country’s GDP in 2010.
The production index of the manufacturing sectorincreased by 11.0 per cent while sales ofmanufactured products increased by 13.8 per centto RM469.5 billion in 2010. Exports of manufacturedproducts increased by 12.0 per cent from RM411.4billion in 2009 to RM460.9 billion in 2010 andaccounted for 72.1 per cent of Malaysia’s totalexports in 2010. Employment in the manufacturingsector was estimated at 3.3 million persons or 27.8per cent of total employment in 20102.
INVESTMENT PERFORMANCE
Malaysia attracted significantly higher levels ofinvestments in the manufacturing sector in 2010compared with 2009. The number of approvedprojects also recorded an increase. A total of 910manufacturing projects were approved withinvestment amounting to RM47.2 billion in 2010compared with 766 manufacturing projects withinvestments of RM32.6 bi l l ion in 2009. Theapproved investments in 2010 surpassed by RM19.7bill ion or 71.6 per cent of the average annualinvestment target of RM27.5 billion set in the ThirdIndustrial Master Plan (IMP3), 2006-2020.
PERFORMANCE OF THEMANUFACTURING SECTOR2
20 • MIDA Annual Report 2010
1 Department of Statistics2 Economic Report 2010/2011, Ministry of Finance, Malaysia
0
10
20
30
40
50
60
70
2010
47.2
38.3%
61.7%
2009
32.6
67.8%
32.2%
2008
62.8
26.6%
73.4%
2007
59.9
44.2%
55.8%
2006
46.0
43.9%
56.1%
2005
31.1
42.4%
57.6%
Total
RM
bill
ion
Total(RM billion)
DomesticInvestments
Foreign DirectInvestments
47.2
18.1
28.1
32.6
10.5
22.1
62.8
16.7
46.1
59.9
26.5
33.4
46.0
25.8
20.2
31.1
13.2
17.9
279.6
110.8
168.8
Chart 1 - Investments in Approved Projects, 2005-2010
MIDA Annual Report 2010 • 21
New Projects
The majority of the approved projects in 2010 werenew projects (537 projects) with investments ofRM23.9 billion representing 50.6 per cent of the totalinvestments approved. Of this, RM12.2 billion or51.0 per cent was domestic investments whileRM11.7 bi l l ion or 49.0 per cent was foreigninvestments.
Expansion/Diversification Projects
Expansion/diversification activities by ex istingmanufacturing companies continued in 2010. Of thetotal approved projects, 373 projects were forexpansion/diversification involving investments ofRM23.3 billion, accounting for 49.4 per cent of totalinvestments.
Capital-Intensive Projects
With increased competition from low cost producerssuch as China, India and Vietnam, Malaysia is nolonger competitive in the area of low-endmanufacturing. To raise the economy up the valuechain, the Government will continue to intensify itsefforts in identifying and attracting investments innew growth areas and emerging technologies, highvalue-added industries, high technology and capitalintensive industries and R&D activities in line withthe Government’s effort to become a high incomenation by 2020.
Capital- intensity (as measured by the capitalinvestment per employee or CIPE ratio) of approvedprojects in 2010 was RM484,767. The CIPE ratio ofmanufacturing projects has registered an increasingtrend since 1990 (RM167,638). This reflects the
Chart 2 - Investments in New Projects byIndustry, 2010
Basic Metal
Petroleum
E&E
Transport
Fabricated Metal
Machinery
Food
Others
3,753(15.7%)
5,168(21.6%)
3,270(13.7%)
2,146(9.0%)
1,764(7.4%) 1,442
(6.0%)
1,335(5.6%)
5,017(21.0%)
(RM million)
Chart 3 - Investments in Expansion/Diversification Projects by Industry, 2010
E&E
Non-Metallic
Petroleum
Chemicals
Scientific & Measuring Equipment
Transport
Food
Others
(RM million)
10,023(43.1%)
2,267(9.7%)
2,000(8.6%)
1,816(7.8%)
1,527(6.6%)
1,384(5.9%)
1,105(4.8%)
3,160(13.5%)
22 • MIDA Annual Report 2010
general trend towards more capital-intensive, highvalue-added and high technology projects.
In 2010, a total of 69 projects with investments ofRM100 million or more each were approved, ofwhich nine had investments exceeding RM1 billion.Investments in these 69 projects amounted toRM36.3 bi l l ion or 76.9 per cent of the totalinvestments approved.
These capital-intensive projects were mainly in E&Eproducts (RM11.9 billion), petroleum productsincluding petrochemicals (RM5.7 billion), basicmetal products (RM4.5 bi l l ion), non-metal l icmineral products (RM2.6 bi l l ion), transportequipment (RM2.5 billion), scientific and measuringequipment (RM2.0 billion) and fabricated metalproducts (RM2.0 billion) industries.
Export-Oriented Projects
Of the 910 approved projects in 2010, a total of 305projects (33.5%) were export-oriented projectsinvolving exports of at least 80 per cent of theiroutput. Investments in these export-oriented projectstotalled RM23.1 billion or 48.9 per cent of totalinvestments. Foreign investments in these export-oriented projects amounted to RM17.1 billion, whiledomestic investments totalled RM6.0 billion. Theseexport-oriented projects were mainly in the E&Eproducts (RM6.1 bi l l ion), petroleum productsincluding petrochemicals (RM3.7 billion), basicmetal products (RM2.4 bil l ion), scientific andmeasuring equipment (RM2.1 billion), fabricatedmetal products (RM1.5 billion) and chemicals andchemical products (RM1.3 billion) industries.
Employment Opportunities
A skilled workforce is essential for manufacturingcompanies to compete globally. The workforcetransition in the manufacturing sector is alreadytaking place with an increasing proportion of
employment being in more highly ski l ledoccupations. Approved projects in 2010 areexpected to generate a total of 97,319 employmentopportunities, of which 72,221 or 74.2 per cent willbe in the managerial, technical, supervisory andskilled manpower categories. Industries which areexpected to create the most number of employmentopportunities are E&E (29,212), transport equipment(13,159), basic metal products (6,901), rubberproducts (6,764), and machinery and equipment(6,653).
Approved Projects by Ownership
Domestic Investments
In-line with the call by the Government for domesticinvestors to assume a prominent role under theEconomic Transformation Programme (ETP),domestic investments approved in themanufacturing sector increased to RM18.1 billion in2010 from RM10.5 bil l ion in 2009. Domesticinvestments accounted for 38.3 per cent of totalapproved investments in 2010.
The major portion of the domestic investmentsapproved in 2010 amounting to RM12.2 billion wasin new projects, while RM5.9 bi l l ion was inexpansion/diversi fication projects. Domesticinvestments were mainly in the petroleum productsincluding petrochemicals (RM4.7 billion), transportequipment (RM2.8 billion), basic metal products(RM1.6 bi l l ion), E&E (RM1.5 bi l l ion), foodmanufacturing (RM1.2 billion), and chemicals andchemical products (RM1.1 billion) industries.
Foreign Investments
Malaysia continued to remain a competitiveinvestment location for foreign investors. Of the totalinvestments approved, RM29.1 billion or 61.7 percent was foreign investments. This was attributed tothe greater interest by foreign investors to invest in
MIDA Annual Report 2010 • 23
quality projects in new growth areas and emergingtechnologies, which are high value-added, hightechnology, and skills and knowledge-intensive innature.
Foreign investments in new projects totalled RM11.7billion. Investments were mainly in basic metalproducts (RM3.6 billion), E&E products (RM2.3billion), fabricated metal products (RM1.3 billion),petroleum products including petrochemicals(RM753.6 million) and scientific and measuringequipment (RM667.2 million).
Existing foreign investors continued to reinvest,consolidate, expand and diversify into higher value-added products and activities to increasecompetitiveness of their operations in the country.Foreign investments in expansion/diversificationprojects totalled RM17.4 billion. Investments weremainly in the E&E products (RM9.6 billion), non-metallic mineral products (RM2.1 billion), scientificand measuring equipment (RM1.5 billion), chemicalsand chemical products (RM1.5 billion) and foodmanufacturing (RM662.8 million) industries.
Major Sources of Foreign Investments
The five leading sources of foreign investments inapproved projects in 2010 were the USA (RM11.7billion), Japan (RM4.0 billion), Hong Kong (RM2.8billion), Singapore (RM2.2 billion) and Germany(RM1.9 bi l l ion). These five countries jointlyaccounted for 77.7 per cent of total foreigninvestments approved during the period.
Approved Projects by Industry
In 2010, the E&E industry remained the leadingindustry in terms of number of approved projects(126 projects), as well as investments (RM13.3billion). This was followed by petroleum productsincluding petrochemicals (RM5.8 billion), basicmetal products (RM5.2 billion), transport equipment(RM3.5 billion), non-metallic mineral products(RM3.2 billion), chemicals and chemical products(RM2.8 billion), fabricated metal products (RM2.5billion) and food manufacturing (RM2.4 billion).These eight industries accounted for RM38.8 billionor 82.3% of total investments approved.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Chemicals
2,830
FabricatedMetal
2,529
Food
2,440
Non-Metallic
3,212
Transport
3,530
Basic Metal
5,245
Petroleum
5,753
E&E
13,294
RM
mill
ion
Chart 4 - Investments in Approved Projects by Major Industry, 2010
24 • MIDA Annual Report 2010
Approved Projects by Location
The states of Penang, Selangor and Johor continuedto be the leading states both in terms of number ofapproved projects as well as investments. A total of625 projects or 68.7 per cent of the approvedprojects will be located in these three states. Theconcentration of projects in these states was mainlydue to the more developed infrastructures in thesestates. These three states jointly accounted for 365new projects or 68.0 per cent of the total number ofnew approved projects in 2010.
By value of investments, the state of Penangregistered the highest level (RM12.2 bi l l ion),followed by Selangor (RM10.6 billion), Johor (RM7.5billion), Sarawak (RM3.9 billion) and Perak (RM3.0billion).
Implementation Rate
A total of 5,648 manufacturing projects wereapproved during the period 2005 - 2010 of which4,185 projects (74.1%) had commenced productionas at 31 December 2010 while 258 (4.6%) were atthe stage of factory construction and machineryinstallation. Of the 4,185 projects in production,637 projects had commenced production in 2010.
Total capital investments in the 4,443 projects thatwere implemented (covering projects which havecommenced production and those that haveundertaken factory construction and machineryinstallation) amounted to RM155.1 billion. In addition,110 projects with investments of RM18.2 billionhave acquired sites for factories, while 795 projects(RM88.9 billion) are in active planning stage. Whenthese 905 projects are realised, total investmentswill amount to RM107.1 billion.
2,0000 4,000 6,000 8,000 10,000 12,000
Johor
Selangor
P. Pinang 12,238 (128)
Sarawak
7,465 (172)
10,642 (325)
3,945 (43)
Perak
Terengganu
Kedah
Melaka
Negeri Sembilan
Sabah
Pahang
Kelantan
Kuala Lumpur
Perlis
Labuan
3,040 (49)
2,328 (9)
1,961 (49)
1,631 (37)
1,293 (35)
1,326 (39)
1,039 (13)
170 (5)
55 (4)
31 (1)
15 (1)
RM juta
Chart 5 - Investments in Approved Manufacturing Projects by State, 2010
Note: Figures in parentheses refer to number of projects approved
MIDA Annual Report 2010 • 25
Chart 6 - Status of Implementation ofManufacturing Projects Approved during 2005-2010, as at 31 December 2010
Investments in Projects Implemented: RM155.1 billion
In Production
Factory Contruction &Machinery Installation
Site Acquired
Active Planning
Not Implemented
4,185(74.1%)
258(4.6%)
110(1.9%)
795(14.1%)
300(5.3%)
Chapter 3
PERFORMANCE OF THESERVICES SECTOR
26 • MIDA Annual Report 2010
OVERVIEW
REGIONAL ESTABLISHMENTS
Operational Headquarters (OHQs)
International Procurement Centres (IPCs)
Regional Distribution Centres (RDCs)
Regional/Representative Offices (ROs and REs)
SUPPORT SERVICES
Renewable Energy
Global Operations Hub/Global Distribution Centre
Integrated Logistics Services (ILS)
Research and Development (R&D)
Energy Conservation/Efficiency
Cold Chain Facilities
Bonded Warehouse
Oil and Gas
28
2929
29
3030
3030
31
32
3232
33
33
33
MIDA Annual Report 2010 • 27
28 • MIDA Annual Report 2010
OVERVIEW
The services sector has been identified as the nextengine of growth for the Malaysian economy. Itcomprises a broad range of services includingregional establishments; support services; MSCstatus companies; real estate (housing); transport;energy; telecommunications; distributive trade;hotels and tourism; financial services; healthservices and educational services.
The services sector remains the major contributor toGDP. In 2010, the services sector contributed 57.4per cent to GDP with a growth rate of 6.8 per cent3.Employment in the services sector was estimatedat 6.3 million people or 53.6 per cent of totalemployment4.
A total of 3,301 projects with investments of RM36.7billion were approved in the services sector in 2010.Of the total investments, domestic investment
PERFORMANCE OF THESERVICES SECTOR3
Table 1 - Approved Investments in the Services Sector
3 Department of Statistics.4 Economic Report 2010/2011, Bank Negara.
SERVICES SUB-SECTOR NO. RM MILLIONRegional Establishments 183 374.2Support Services 89 1,089.3MSC Status Companies 218 1,484.7Real Estate (Housing) 1,328 6,552.6Telecommunications (Including Post) 50 6,376.0Transport 54 5,633.0Energy - 5,059.5Hotel and Tourism 50 2,558.3Distributive Trade 857 2,383.1Education Services 347 2,340.8Financial Services 70 1,853.2Health Services 15 555.9Bionexus Status and Software 40 481.9Total 3,301 36,742.5
MIDA Annual Report 2010 • 29
amounted to RM32.8 billion and foreign investmentstotalled RM3.9 billion. The approved projects duringthis period are expected to provide 53,506 jobopportunities.
REGIONAL ESTABLISHMENTS
As at 31 December 2010, a total of 2,946 regionalestablishments have been approved, comprising 199Operational Headquarters (OHQs), 217 InternationalProcurement Centres (IPCs), 27 Regional DistributionCentres (RDCs), 809 Regional Offices (ROs) and 1,694Representative Offices (REs).
Malaysia’s world class infrastructure, goodconnectivity and strategic location within ASEAN aresome of the main reasons why MNCs continue tochoose Malaysia to locate their regionalestablishments. Attractive investment incentivepackages including tax incentives and l iberalpol icies on foreign equity participation andemployment of expatriates are other factors cited bythese MNCs for the establishment of these operationsin Malaysia.
In 2010, a total of 183 new regional establishmentswere approved to be set up in Malaysia withinvestments of RM374.2 million. Estimated annualsales turnover for IPCs and RDCs amounted toRM4.8 billion. These operations will create a total of1,169 jobs for Malaysians. Operations such asOHQs, IPCs and RDCs generally create more jobopportunities for Malaysians in the managerial,professional and technical levels.
The present trend for MNCs especially in the E&Esector is to move towards services activities byestablishing their global operations in this region.Malaysia could reap much benefit from this trend.
Operational Headquarters (OHQs)
In 2010, a total of 22 OHQs were approved withinvestments of RM197.5 million. Of these, six were
from the Netherlands, three were from Australia andthe USA, two were from the UK, one each fromGermany, Hong Kong, Denmark, Sweden, Austriaand Japan. The remaining two were joint-ventureprojects of which one was between Malaysia andThailand and the other, between France andAustralia.
A total of 158 expatriate posts were approved forthese OHQs and 396 employment opportunitieswill be provided for Malaysians.
These OHQs are involved mainly in oil and gas,finance, E&E, construction, food and beverages,timber, logistics, healthcare and health informatics,pharmaceuticals, chemicals, automotive, power andengineering services, IT and biotechnologyindustries.
International Procurement Centres (IPCs)
Multinational corporations, with their strongnetwork of production bases in the Asia Pacificregion, have established IPC operations in thecountry. Their IPCs serve as procurement anddistribution centres and undertake supply chainmanagement for their manufacturing operationsboth in Malaysia and abroad.
Five projects to establish IPCs were approved in2010 with investments of RM64.9 mill ion andestimated annual sales turnover of RM2.3 billion. Ofthe five IPCs approved, one each were from the USA,Japan and Singapore, one was a joint-venturecompany with Singapore and Japan and one by alocal company. These IPCs will provide employmentopportunities for 403 Malaysians, mainly in themanagerial, technical and skilled categories andwill procure a total of RM1.2 bil l ion worth ofproducts from local companies.
In addition, eight existing IPCs have embarked onexpansion programmes by adding new products intheir procurement and distribution network.
30 • MIDA Annual Report 2010
Regional Distribution Centres (RDCs)
As at 31 December 2010, a total of 27 RDCs havebeen approved with investments of RM122.8 millionand total annual sales turnover of RM2.6 billion. Ofthese, four were from Germany, two each from theUK, Malaysia and the USA, and one each fromAustria, the Netherlands, Switzerland, Belgium,Finland, France, Italy, Ireland, Spain, Denmark,Canada, Hong Kong, Pakistan, Japan and India whiletwo were joint-venture projects with Japan andGermany. A total of 655 employment opportunitieswill be created by these RDCs, of which 90 per centwill be filled by Malaysian.
In 2010, five projects were approved for RDCs withinvestments valued at RM42.7 million and totalannual sales turnover of RM2.5 billion. These RDCswill provide employment opportunities for 94Malaysians. Of these, one each were from the USA,Hong Kong, Japan, Pakistan and one by a localcompany.
Regional/Representative Offices (ROs and REs)
ROs and REs are establ ished mainly to assistforeign companies to plan or coordinate businessactivities for the corporations’ affiliates, subsidiariesand agents in Malaysia and in the region. Theestablishment of these ROs and REs will provideopportunities for the companies to set up OHQs/IPCs/RDCs in the long run.
In 2010, a total of 55 ROs and 96 REs were approvedwith total investments of RM69.2 million. Of thetotal, investments for ROs and REs were RM32.4mill ion and RM36.8 mill ion, respectively. TheROs/REs approved were mainly from Singapore (24),the USA (12), Japan (11) and the UK (eight). TheseROs and REs are expected to create employmentopportunities for 276 Malaysians.
SUPPORT SERVICES
Support services cover research and development(R&D), renewable energy and energy conservation/efficiency, engineering design, integrated logisticsservices, integrated market support services, coldchain facilities, sterilisation, central utilities facilitiesand bonded warehouse. These activities are thetargeted service activities currently being promotedby the Government to further enhance the valuecreation of the manufacturing sector in Malaysia.
In 2010, a total of 86 support services projects wereapproved involving total investments of RM1.1bil l ion. Domestic investments which total ledRM832.3 million continued to dominate the supportservices sector while foreign investments amountedto RM256.3 million. A total of 2,466 employmentopportunities would be created by these projects.
Renewable Energy (RE)
Renewable Energy (RE) was introduced in 2001 asthe fifth fuel policy by the Government. The policywas introduced to address issues on sustainabledevelopment for the country. The main renewableresources for generation of energy include biomasssuch as wastes from palm oil, rice, sugar cane,timber, sawmill and paper recycling mills; municipalwastes; biogas from landfills, palm oil mill effluentand animal wastes; mini-hydro; solar; and windpower. Within the RE sector, biomass resources andsolar energy are widely used for the generation ofelectrici ty, accounting for 90 per cent of therenewable energy sources.
Under the Ninth Malaysia Plan, the Governmenthad targeted for 350 MW of grid-connected powerfrom RE translating to 1.8 per cent of RE in theelectricity mix. However, only 53MW or 15 per centof the targeted RE capacity was achieved forpurposes of connecting the power to the national
MIDA Annual Report 2010 • 31
grid. Nevertheless, more than 430MW of off-gridelectricity was generated by companies for their ownconsumption. The RE target set under the TenthMalaysia Plan is 5.5 per cent of the total electricitygeneration mix or 985MW by 2015.
To encourage the usage of renewable resources forenergy generation, the Government via the Budget2011 announcement has extended the tax incentivesfor renewable energy for another five years whichwill end on 31 December 2015. The newly proposedRE Act has also incorporated a mechanism on Feed-in-Tari ff (FiT) to enable the sales of RE byindependent providers including households toutility companies.
In 2010, a total of 21 renewable energy projectswere approved with tax incentives compared with18 projects in 2009. Total investments in approvedprojects increased from RM381.6 million in 2009 toRM563.7 million in 2010. Of the total investmentsapproved, RM541.9 million or 96.1 per cent was
domestic investments while RM21.8 million or 3.9per cent was foreign investments. These projectswould provide employment opportunities for 493workers in this sub-sector.
Twenty of the approved projects were new projectsand one was an expansion project. These projectswould generate energy in the form of electricity,steam or heat using biomass, solar and hydro power.
Global Operations Hub/Global Distribution Centre
In 2010, four companies were approved taxincentives to undertake Global OperationsHub/Global Distribution Center with totalinvestments of RM235.2 million.
Two foreign-owned companies would provideGlobal Operations Hub activities such as GlobalTraining Centre, Global Payroll Centre, SharedServices Centre, Global Resources Services,
Table 2 - Investments in Approved Support Services, 2010
SUPPORT SERVICES NO. RM MILLION
Renewable Energy 21 563.7
Global Operations Hub/Global Distribution Hub 4 235.2
Integrated Logistics Services 3 102.6
Research and Development (R&D)• R&D Incentive 4 15.4• R&D grant schemes 33 47.0
Energy Conservation/Efficiency 7 37.5
Cold Chain Facilities 2 34.1
Bonded Warehouse 12 30.5
Oil and Gas Services 1 14.6
Other Services 2 8.7
Total 89 1,089.3
32 • MIDA Annual Report 2010
Strategic Marketing, Planning Support, DistributionHub, Trading, Global Information Data Centre,Global Logistics/Supply Chain Distribution Hub totheir group of companies.
A foreign-owned company will undertake GlobalDistribution Centre activities, distributing medicalproducts under its own brand to related companieswithin the Group.
Another company is an existing Malaysian-ownedcompany which is expanding its operation to set upa Centralised Principal for Full Fledged Supply ChainBusiness Model. This project covers activities suchas Global Procurement, R&D Hub, distribution andlogistics management.
Integrated Logistics Services (ILS)
The main activities in the ILS industry cover freightforwarding, warehousing, transportation and otherrelated value-added services such as distribution,procurement and supply chain management on anintegrated basis.
Companies undertaking ILS are eligible for taxincentives. The objective of granting the incentive isto create an efficient and competitive logisticsindustry to encourage the integration andconsolidation of the various transport intermediariesalong the logistics supply chain in Malaysia. In thisregard, Malaysian companies are encouraged toexpand and venture into higher value-added servicesto enable them to compete globally.
In 2010, three Malaysian-owned companies wereapproved to undertake new and expansion projectswith total investments of RM102.6 million. Theseprojects would involve activities such as buildingInland Container Depots, upgrading of warehousesand ICT equipment, increasing the number oftransportation, and having more value-added
activities such as distribution, packing, re-packaging, re-labeling, grading and sampling.
Research and Development (R&D)
R&D activities include industrial design (productand process development including designing andprototyping) and research services provided bydesign houses, contract R&D companies, R&Dcompanies, and approved R&D institutes/researchcompanies.
In 2010, four R&D projects were approved taxincentives. Of these, three projects would undertakeR&D activities for the E&E and testing equipmentindustries and one project was an in-house R&Dproject undertaken by a manufacturing company toimprove its coating product. Total investmentsamounted to RM15.4 million of which RM14.8mil l ion or 95.9 per cent comprised foreigninvestments while the remaining 4.1 per cent wasdomestic investments.
In addition, 33 R&D projects with total investmentsof RM47.0 million were approved under otherfinancial assistance schemes.
Energy Conservation/Efficiency
Conserving energy or using energy in a more efficientmanner is crucial to preserve our environment andachieve sustainable development. To encouragewider adoption of energy efficient systems andequipment by companies, the Government hasextended the tax incentives for energyconservation/efficiency for another five years whichwill end on 31 December 2015.
In 2010, seven energy conservation/efficiencyprojects were approved tax incentives comparedwith six projects in 2009. Total investments approvedamounted to RM37.5 mill ion (2009: RM375.2
MIDA Annual Report 2010 • 33
million), of which 97.1 per cent was domesticinvestments. Energy conserved from these projectsamounted to 1,614 MWh which translates into asaving of RM872,649 per annum.
Cold Chain Facilities
Companies providing cold chain facilities andservices for perishable agricultural such as fruits,vegetables, flowers, ferns and meat and aquaticproducts are eligible for tax incentives.
In 2010, two Malaysian-owned companies wereapproved tax incentives with total investmentRM34.1 million. These companies provide chilledand cold room/truck facilities for fishermen andfarmers nearby.
Bonded Warehouse
A bonded warehouse operates as a central storagefor the distribution of bonded goods (i.e. goods onwhich Customs duties and taxes have not been paid).Activities that can be carried out in these warehousesare warehousing, bulk breaking, repackaging, re-labelling of imported goods, consolidation andentreport.
In 2010, a total of 12 bonded warehouses wereapproved. Total investments in these projectsamounted to RM30.5 million of which 96.1 per centwas domestic investments.
Oil and Gas
The exploration of oi l and gas services hassubstantive linkages with supporting industries andservices. Malaysia has the potential to be the servicehub for the oil and gas industry in the Asia Pacificregion due to the activities of Petronas and thepresence of major oil and gas companies that haveestablished their regional operations in Malaysia.
In 2010, a Malaysian owned project withinvestments of RM14.6 mil l ion was approvedcustomised incentives to undertake pipel ineintegrity management, pipeline inspection andpipeline cleaning for the oil and gas industry.
Chapter 4
FOREIGN INVESTMENTPROMOTION
34 • MIDA Annual Report 2010
Trade and Investment Missions
Visits by YAB Prime Minister, YAB DeputyPrime Minister, YB Minister of MITI, YBDeputy Minister of MITI and DirectorGeneral of MIDA
Specific Project Missions
International Seminars/Forums/Briefings/Strike Force Missions participated andorganised by MIDA
Visits by Foreign Investors/Delegations
Enquiries Received and Briefings Conducted
Public Relations Activities
Advertisements and Advertorials
International Exhibitions/Trade Fairs
International Herald Tribune: Dawn of theNew Decade Forum
Media Hospitality
36
37
38
39
39
39
40
40
4040
MIDA Annual Report 2010 • 35
40
36 • MIDA Annual Report 2010
MIDA is the central investment promotion agency inMalaysia and serves as the first point of contact forforeign investors, considering Malaysia as aninvestment location. In 2010, MIDA continued withits various promotional programmes and activities topromote and attract foreign investments into themanufacturing and services sectors.
The programmes undertaken include Trade andInvestment Missions, Roundtable Meetings and MiniSeminars, Specific Project Missions, InternationalSeminars/Forums/Strike Force Mission/Dialogueswith foreign chambers, Industry Leaders Programmeand advertisements and advertorials. Theseprogrammes were targeted to attract new investments
as well as investments in expansion and diversificationactivities especially in high technology, capital-intensive, knowledge-intensive and high value-added industries.
Trade and Investment Missions
In 2010, MIDA organised and participated in sixtrade and investment missions abroad. Thedelegation members comprised Malaysiangovernment officials including officials from thestate governments as well as representatives from theprivate sector. In conjunction with these missions,seminars on Trade and Investment Opportunities inMalaysia and Roundtable Meetings were organised.
FOREIGN INVESTMENTPROMOTION4
Table 3 - Trade and Investment Missions in 2010
NO PROGRAMME DATE
1. Trade and Investment Mission to Europe 7 -13 March(Amsterdam, Hamburg and Birmingham)
2. Trade and Investment Mission to Korea (Seoul and Busan) 17-23 July
3. Trade and Investment Mission to Singapore 4-5 August
4. Trade and Investment Mission to USA 18-22 September(Atlanta, Philadelphia and Washington DC)
5. Trade and Investment Mission to Taiwan (Taipei and Kaoshiung) 4-8 October
6. Trade and Investment Mission to West Asia (Doha, Riyadh and Jeddah) 11-18 December
MIDA Annual Report 2010 • 37
Visits by YAB Prime Minister, YAB Deputy Prime Minister, YB Minister of MITI, YB Deputy Minister of MITI and Director General of MIDA
In 2010, MIDA was also involved in organisingseminars, Roundtable Meetings, Private Meetingsand visits to companies in conjunction with theofficial visits of YAB Prime Minister, YAB DeputyPrime Minister, YB Minister of International Tradeand Industry, YB Deputy Minister of InternationalTrade and Industry and Director General of MIDA.
Table 4 - Visits by YAB Prime Minister, YAB Deputy Prime Minister, YB Minister of MITI, YB Deputy Minister ofMITI and Director General of MIDA in 2010
NO PROGRAMME DATE
1. Visit of YB Deputy Minister of MITI to China 5 January
2. Visit of YAB Deputy Prime Minister to United Kingdom 10-14 January
3. Visit of YAB Prime Minister to India 19-23 January
4. Visit of YAB Prime Minister to Hong Kong 22-24 March
5. Visit of YAB Deputy Prime Minister to France 5-7 April
6. Visit of YAB Prime Minister to Japan 18-21 April
7. South East Asia Economic Ministers’ Roadshow to USA 2-8 May
8. Roundtable Meeting with selected American Companies and 5 MayPrivate Meetings with the American Corporations in USA
9. Visit of YB Minister of MITI to Singapore for the 12th Asia-Pacific 12-14 MayConference of German Business
10. Visit of YAB Prime Minister to Laos PDR 2-4 June
11. Visit of YB Minister of MITI to Japan 4-7 June
12. Visit of YAB Deputy Prime Minister to Indonesia 28-29 June
13. Visit of YB Minister of MITI to Shanghai, China 22-25 July
14. Visit of YAB Deputy Prime Minister to the Republic of Korea 26-29 July
15. Visit of YB Minister of MITI to Indonesia 1-3 August
16. Working Visit by Director General of MIDA to Shanghai, China 18-21 September
17. Visit of YB Minister of MITI to Australia in conjunction with the 27 September-FORBES Global CEO Conference 2010 4 October
18. Visit of YAB Prime Minister to Belgium 3-5 October
19. Visit of YB Minister of MITI and Minister of PM’s Office to Singapore 6-7 December
38 • MIDA Annual Report 2010
Specific Project Missions
A total of 32 Specific Project Missions wereorganised to meet targeted companies in the selected
countries in 2010. These missions met withcompanies in high-technology, capital-intensive andhigh value-added industries.
Table 5 - Specific Project Missions in 2010
NO TARGET SECTOR COUNTRY VISITED DATE
1. Backlighting, Display and Electronics Components Japan 17-24 February
2. Food Processing Singapore 7-9 April
3. Business and Other Services Industry United Arab Emirates 13-15 April (Dubai)
4. Polymers, Chemicals and Oleochemicals Taiwan 25 April-2 May
5. Machinery and Equipment USA 1-14 May
6. Iron and Steel, Special Steel and Europe 9-21 May Non-Ferrous Metal (Sweden, Italy, Spain)
7. R&D for Furniture, Duplex Board and Japan and Korea 9-20 MayOil Palm Biomass
8. Food Industry Japan 18-27 May
9. Business and Other Services Industry Korea 24-28 May
10. Solar, LED, Chemicals and Polymers Japan (Osaka, Tokyo) 23 May-5 June
11. OHQs, IPCs and RDCs India 30 May-6 June
12. Medical Devices and Pharmaceutical Industries USA 31 May-12 June(Los Angeles, Chicago, New York and Boston)
13. IC Design and Semiconductors Europe 7-17 June
(France, Germany and UK)
14. Automotive Electronic Components Korea (Seoul) 13-19 JuneJapan (Tokyo and Osaka)
15. Advanced Ceramics, Technical/Functional USA 19 June-4 July
Textiles and Green Building Products
16. Solar Industry Japan (Tokyo, Osaka) 30 June-9 July
17. OHQs, IPCs and RDCs Australia 1-7 July
18. Aircraft Parts Manufacturing and MRO Sub-sector Europe (Germany, 7-21 JulyAustria, Switzerland, France and UK)
19. Electronics USA (San Jose, 12-24 JulyLos Angeles andChicago)
20. Food Industry China (Yinchuan, 25 September-Changchun and 2 OctoberShanghai)
21. Business and Other Services Industry Europe (Germany, 26 September-France and UK) 5 October
Laporan Tahunan MIDA 2010 • 39
International Seminars/Forums/Briefings/Strike Force MissionsParticipated and Organised by MIDA
MIDA organised and participated in InternationalSeminars/Forums/Briefings Outside/Strike ForceMissions as part of its investment promotion strategiesin 2010.
Visits by Foreign Investors/Delegations
In 2010, MIDA received a total of 358 visits bydelegations/investors from overseas. They werebriefed by MIDA on the policies, facilities, incentivesand opportunities for investments in themanufacturing and services sectors. In addition,MIDA also liaised with other Ministries, Departments,State Governments, agencies and the private sectorto facilitate these visits.
Enquiries Received and BriefingsConducted
During the course of the year, MIDA received morethan 2,500 enquires from foreign and localcompanies on the establishment of manufacturingand services projects. MIDA also conductedbriefings for foreign delegations, private sector,
Table 6 - International Seminars/Forums/Briefings/Strike Force Missions in 2010
NO TARGET SECTOR COUNTRY VISITED DATE
22. Machinery and Equipment Korea and Japan 26 September-8 October
23. Medical Devices and Pharmaceutical Industries Europe 2-15 October(Germany, Switzerland, Italy, France and UK)
24. Food Industry Europe (France, Netherlands 18-30 Octoberand Switzerland)
25. Polymers, Chemicals and Oleochemicals Europe (Italy, Germany, 17-31 OctoberUK and France)
26. Machinery and Equipment Europe (Germany, 1-12 November Netherlands, Italy and Switzerland)
27. Solar and ICT Industry Europe (Italy, Sweden 16-30 Novemberand UK)
28. Business and Other Services Industry Australia 21-28 November
29. Advanced Ceramics and Technical/ Korea and Japan 28 November-Functional Textiles 9 December
30. Glulaminated Timber, Oil Palm biomass and Europe (Netherlands, 29 November-Paper Products (Specialty & Security paper) Austria, Germany, and UK) 8 December
31. OHQs, IPCs and RDCs People’s Republic of China 12-21 December(Guangzhou) and Hong Kong
32. Iron and Steel, Special Steel and Japan and Korea 12-23 December Non-Ferrous Metal
NO PROGRAMME NUMBER OFEVENTS
1. International Seminars 8
2. Forums 8
3 Briefings Outside MIDA 6
4 Strike Force Missions 1
40 • MIDA Annual Report 2010
industry associations, chambers of commerce andGovernment agencies to update them on thepolicies, incentives and business operatingenvironment in Malaysia.
Public Relations Activities
MIDA continued with its public relations activitieswhich included advertisements, visits of journalists,participation in exhibitions and trade fairs andIndustry Leaders Programme.
Advertisements and Advertorials
In 2010, MIDA placed advertisements in domesticand foreign publications, which included ForbesAsia, FDI, Financial Times, The Economist, GulfBusiness, International Herald Tribune, Chosun Ilbo,Nikkei Business, Site Selection, Aswaq, Al-Khaleejand Industry Europe.
International Exhibitions/Trade Fairs
MIDA continued to participate in internationalexhibitions and trade fairs in 2010 to createawareness on investment opportunities in Malaysia.These exhibitions and trade fairs also providedopportunities for networking between Malaysiansand foreign businessmen to explore businesspartnerships/collaborations and setting-up of joint-ventures. In 2010, MIDA participated in fouroverseas exhibitions in Brunei Darussalam, UnitedArab Emirates, Singapore and People’s Republic ofChina.
International Herald Tribune: Dawn ofthe New Decade Forum
On 27 and 28 September 2010, MIDA incollaboration with International Herald Tribuneorganised the Dawn of the New Decade: AlternativeInvestment forum. The Forum addressed issues onfinancial recovery, Asia’s potential in developingalternative investments and the impact of financialreforms on investors. YAB Deputy Prime Ministeron behalf of YAB Prime Minister gave a keynoteaddress on the second day of the event. A pressconference was held after the keynote address forthe local and foreign media.
Media Hospitality
In 2010, MIDA organised a Media Day on theSemiconductor Industry. The Media Day was heldto brief the media on the overview of thesemiconductor industry in Malaysia. MIDAsponsored five journalists to Penang and Kulim,Kedah to visit and interview selected semiconductorcompanies operating in the region.
MIDA Annual Report 2010 • 41
42 • MIDA Annual Report 2010
Chapter 5
DOMESTIC INVESTMENTPROMOTION
MIDA Annual Report 2010 • 43
Introduction
Domestic Investment Seminars
Specific Industry Seminars
Dialogues/Briefings with Chambers ofCommerce/ Association/Agency
Bumiputera Business Development Unit(BBDU)
44
444545
46
Chapter 5
44 • MIDA Annual Report 2010
Introduction
The New Economic Model (NEM) embodies a spiritof inclusivity emphasizing on public-privatepartnerships which will drive greater participation bythe private sector in the country’s economy. Domesticprivate investments is targeted to be a key engine ofgrowth further boosted by a comprehensive businessenvironment, investment policies and otherincentives. This is to ensure a more sustainable growthand diverse economic foundation.
Among the initiatives taken by MIDA to encouragehigher contribution of domestic investors wereproviding attractive incentives for Malaysiancompanies undertaking investments in promotedareas/activities, nurturing identified Malaysiancompanies to become major players in their industry,intensifying efforts for business matching andcollaborations among Malaysian companies, andcontinuously promoting a business and investor-friendly environment.
MIDA will continue to disseminate and updateinformation on investment policies, incentives,business opportunities and support services madeavailable for Malaysian businessmen through itsextensive outreach programmes which will beundertaken throughout the country. Among theoutreach initiatives that were held in 2010 wereDomestic Investment Seminars, Specific IndustrySeminars and meetings/dialogues with various localchambers and industry associations.
Domestic Investment Seminars
MIDA in col laboration with SME CorporationBerhad (SME Corp) organised three domesticseminars in Kuala Lumpur, Sabah, and Sarawak. Atotal of 2,582 participants attended these seminarsin 2010. The seminars were sponsored by Export-Import Bank of Malaysia (EXIM Bank), RHB Bank,Labuan Financial Services Authority (LFSA) andMalaysian Industrial Development Finance Berhad(MIDF) with the support of MITI agencies, stateGovernment agencies, and Federation of MalaysianManufacturers and other industry associations.
The seminars were conducted with the followingobjectives:
• to increase awareness and emphasise theimportance of the services sectors to thedevelopment of the Malaysian economy;
• to provide the latest updates on the governmentpolicies, incentives and facilities for Malaysianservices providers;
• to highl ight and promote the investmentopportunities available in the services sectors;and
• to provide a forum for the business communityto network with key Government agencies.
DOMESTIC INVESTMENTPROMOTION5
MIDA Annual Report 2010 • 45
Table 8 - Specific Industry Seminars in 2010
Table 7 - Domestic Investment Seminars in 2010
Specific Industry Seminars
Four specific industry seminars were organised in2010 on the Wood-Based and Food ProcessingIndustries, Outsourcing Opportunities and theElectronics Industry in Malaysia. The seminars wereheld in Kuala Terengganu, Kota Bharu, Johor Bahruand Penang respectively.
Dialogues/Briefings with Chambers ofCommerce/ Association/Agency
In fostering closer networking with the domesticplayers, MIDA also took the initiative to organise fourdialogues with various Chambers of Commerce andIndustry Associations in 2010. These dialoguesenabled the chambers to be updated on the latestpolicies on investment and promotional programmesorganised by MIDA and also provided a platform forexchanging ideas on related issues.
NO PROGRAMME VENUE DATE
1. National Domestic Investment Dialogue Kuala Lumpur 23 February and Seminar
2. Sabah Domestic Investment Dialogue Kota Kinabalu, 1 Julyand Seminar Sabah
3. Sarawak Domestic Investment Dialogue Kuching, 8 Octoberand Seminar Sarawak
NO PROGRAMME VENUE DATE
1. Seminar on Business Opportunities Kuala Terengganu, 5 Julyin the Wood Based Industry Terengganu
2. Seminar on Business Opportunities Kota Bharu, 5 Augustin the Food Processing Industries Kelantan
3. Seminar on Outsourcing Opportunities Johor Bahru, 27-28 July in Malaysia Johor
4. Electronics Industry Seminar Penang 29-30 November
46 • MIDA Annual Report 2010
Bumiputera Business DevelopmentUnit (BBDU)
The BBDU was established in MIDA with the role ofencouraging higher and more effective participationof Bumiputera players in the manufacturing andservices sectors. In this regard, the BBDU hasconducted nine programmes in 2010 such asdialogues/briefings/workshops/meetings withBumiputera Chambers of Commerce/Associations/agencies/companies and Networking Sessions withGLCs/Malaysian Companies.
MIDA has also been actively participating inexhibitions to further inform and create awarenessof investment opportunities to the local businesscommunity. Among the exhibitions were:
• GreenTechAsia 2010;• MTA Malaysia 2010; and• SMIDEX 2010.
Table 9 - Dialogues/Briefings with Chambers of Commerce/ Association/Agency in 2010
NO PROGRAMME VENUE DATE
1. Dialogue with Malaysian Companies in Johor Johor Bahru, Johor 20 April
2. Dialogue with Malaysian Companies Miri, Sarawak 29 April
3. Networking Session with Domestic Chambers Kuala Lumpur 12 October and Industry Associations
4. Networking Dinner with Foreign and Melaka 4 December Malaysian Companies in Melaka
5. Women Entrepreneurs Networking Luncheon Kuala Lumpur 17 December
MIDA Annual Report 2010 • 47
Chapter 6
PROMOTION OF CROSS BORDERINVESTMENTS
48 • MIDA Annual Report 2010
Introduction
Trends of Malaysian Investments Overseas
Promotion of CBI
Seminars on Business and InvestmentOpportunities in Targeted Countries
Visits and Dialogues
Familiarisation Programmes (South-South Countries and OIC Countries)
50
50
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Chapter 6
MIDA Annual Report 2010 • 49
50 • MIDA Annual Report 2010
Introduction
Malaysian companies are encouraged to ventureoverseas as they are well positioned to tap newinvestment opportunities through cross borderinvestments (CBIs). CBIs will enable Malaysiancompanies to become part of the global productionnetwork through expansion of marketing channels,acquisition of new technologies and sourcing oflower cost resources overseas. This would result inimprovement of the competitiveness of Malaysiancompanies in facing the challenges of the globaleconomic environment.
Trends of Malaysian InvestmentsOverseas
In 2010, Malaysia’s direct investments abroad(DIA) amounted to RM42.6 billion, a 52.7 percent increased from RM27.9 billion in 2009. Thesurge in DIA can be attributed to increasedinterest by Malaysian companies to diversify theiroperation abroad due to the global economicrecovery. The top destinations for Malaysiainvestments in 2010 were the ASEAN countries,which accounted for 41.8 per cent of the totalDIA. Other major destinations were Australia,United Kingdom, Hong Kong and Korea. SomeMalaysian investments were channeled via
international offshore financial centres, beforebeing redirected to its final destination. The keysectors include financial intermediation, miningand quarrying, services, trade/commerce andmanufacturing.
Promotion of CBI
MIDA has been tasked to promote CBI since 2002.Among the initiatives and programmes undertakenin 2010 to promote CBI were:
• Organising seminars on business and investmentopportunities for targeted countries;
• Networking with Investment PromotionAgencies/Boards of Investment in targetedcountries; and
• Evaluating and approving applications forMalaysia – Singapore Third Country BusinessDevelopment Fund.
Seminars on Business and InvestmentOpportunities in Targeted Countries
In 2010, MIDA collaborated with various foreignembassies in Kuala Lumpur and InvestmentPromotion Agencies (IPAs) of respective countries to
PROMOTION OF CROSSBORDER INVESTMENTS6
MIDA Annual Report 2010 • 51
organise seven seminars in Malaysia on businessand investment opportunities in the targetedcountries as follows:
• Seminar On Business And InvestmentOpportunities In Bangladesh (8 January);
• Seminar on Business Opportunities in Venezuela(16 April);
• Seminar on Business and InvestmentOpportunities in Sri Lanka (20 May);
• Seminar on Business Opportunities in Yemen(24 June);
• Seminar on Business and InvestmentOpportunities in Lesotho (29 June);
• Seminar on Iran Investment Opportunities(1 July); and
• Seminar on Business and InvestmentOpportunities in Zambia (26 July).
The objectives of these seminars were:
• to update participants on policies andprocedures, business and investmentopportunities available in the host country; and
• to provide networking platform and identify tradeand investment leads in the respective countries.
Visits and Dialogues
In 2010, MIDA received visits from 77 delegationsfrom countries such as Indonesia, Sudan,Bangladesh, Kazakhstan, Nigeria and Mauritius. Theobjectives of these visits were to strengthen bilateralties and seek business/investment interest fromMalaysian companies.
Familiarisation Programmes (South-South Countries and OIC Countries)
Two Familiarisation Programmes were organised in2010 as follows:
• Famil iarisation Programme for Officials ofInvestment Promotion Agencies of the South-South Countries - in collaboration with theMinistry of Foreign Affairs (Wisma Putra) underthe Malaysian Technical Cooperation Programme(MTCP); and
• Famil iarisation Programme for Officials ofInvestment Promotion Agencies of theOrganisation of Islamic Conference (OIC)Member Countries - in collaboration with theEconomic Planning Unit (EPU) under the MTCPand Islamic Development Bank (IDB).
The objectives of the programme include:
• to share Malaysia’s experience in promoting andcoordinating the development of themanufacturing and services sectors in Malaysia;
• to learn about the latest developments and bestpractices of Investment Promotion Agencies; and
• to foster closer rapport and strengthen tiesthrough networking and sharing of experienceamong participating countries.
Chapter 7
INTERNATIONALRELATIONS
52 • MIDA Annual Report 2010
Association of South-East Asian Nations(ASEAN)
Investment Cooperation
Trade Cooperation
ASEAN External Relations
Asia-Pacific Economic Cooperation (APEC)
Bilateral Economic Cooperation
Multilateral Trade Relations
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5656
Chapter 7
MIDA Annual Report 2010 • 53
56
54 • MIDA Annual Report 2010
Association of South-East AsianNations (ASEAN)
ASEAN Trade in Goods Agreement (ATIGA) which isan improvement over the ASEAN Free Trade Area-Common Effective Preferential Tariff (AFTA-CEPT)Scheme entered into force on 17 May 2010. TheATIGA consolidates all ASEAN’s existing initiatives,obligations and commitments on intra-ASEAN tradein goods, including both tari ff and non-tari ffelements, into one single comprehensive document.
Based on the commitments under the ASEAN CEPTscheme, import duties have been eliminated on99.65% of tariff lines in the Inclusion List for ASEAN-6 (Brunei, Indonesia, Malaysia, Singapore,Philippines and Thailand) effective 1 January 2010.
Another major achievement in 2010 was thecommencement of a pilot project to kick-start theASEAN Self Certi fication System by threeparticipating Member States namely, BruneiDarussalam, Malaysia and Singapore on 1November 2010 for a period of one year in responseto the need to streamline the rules of originprocedures to facilitate trade of ASEAN originatinggoods.
ASEAN also continues to strengthen and deepen theeconomic relations with her major trading and
Dialogue Partners through the establishment ofregional free trade areas. In 2010, the followingagreements have entered into force:
• ASEAN-China Investment Agreement which wassigned on 15 August 2009 came into force on 1January 2010;
• ASEAN-India Trade in Goods Agreement whichwas signed on 13 August 2009 came into forceon 1 January 2010; and
• ASEAN-Austral ia New Zealand Free TradeAgreement which was signed on 27 February2009 came into force on 1 January 2010.
MIDA’s role in the ASEAN economic cooperationprocess covers cooperation in market access andfacilitation of trade in goods, and cooperation in thepromotion, faci l i tation and l iberal isation ofinvestment.
Investment Cooperation
The ASEAN Comprehensive Investment Agreement(ACIA) signed on 26 February 2009 involvesrevision, combination and enhancement of thecurrent Framework Agreement on the ASEANInvestment Area (AIA) signed in 1998 and the ASEANAgreement for the Promotion and Protection ofInvestments (IGA) signed in 1987.
INTERNATIONAL RELATIONS7
MIDA Annual Report 2010 • 55
Currently, the ASEAN Coordinating Committee isfinalising the reservation lists under ACIA andcontinued its work to enhance the ASEANinvestment environment. The deliverables of theCCI in 2010 include:
• The South East Asia Ministers Road Show to theUS which focused on promotion of ASEAN as aninvestment destination;
• Annual ASEAN-China Expo (CAEXPO), inNanning, China;
• Web-link of Investment Promotion Agencies(IPA) to ASEAN Secretariat;
• On-going studies funded by the ASEAN-AustraliaDevelopment Cooperation Programme Phase II(AADCP II);
• Web-publication of Annual ASEAN InvestmentReport and Statistics of FDI in ASEAN 2010 onthe ASEAN Secretariat’s website; and
• Collaboration with the Organisation forEconomic Cooperation and Development(OECD) on investment pol icies includinginvitation to the Special Dialogue with the OECDInvestment Committee and ASEAN-OECDInvestment Policy Conference.
Trade Cooperation
ASEAN’s total trade declined by 19 per cent fromUS$1.9 trillion in 2008 to US$1.5 trillion in 2009,in line with global trade which experienced a totaldecline of 22.6 per cent in 2009. Intra-ASEANtrade was down by 20.0 per cent and so was tradewith the rest of the world, which contracted by18.7 per cent. ASEAN trade with its DialoguePartners also remained strong despite the globalfinancial/economic crisis. Even with a 9.5 percent decline in total trade, China emerged asASEAN’s largest trading partner in 2009. The
European Union and Japan came in as ASEAN’ssecond and third largest trading partner despitesignificant drops in total trade, i.e. 17.6 per centand 25.0 per cent, respectively. ASEAN’s tradesurplus with the rest of the world reached US$61.2billion in 2009, more than double the level in2008.
Continuous work has been taken to facilitate intra-ASEAN trade and to enhance market access. In2010, MIDA continued to participate in themeetings of the Sub-Committee on ATIGA Rulesof Origin (SC-AROO) and Coordinating Committeeon the Implementation of the ATIGA (CCA).
The work of the committees in 2010 included:
• Implementation of the Pilot Project on Self-Certification;
• Resolving of implementation issues; and
• Review of the General Exceptions List (GEL).
ASEAN External Relations
In 2010, ASEAN continued to pursue deeper regionaleconomic integration initiatives with her DialoguePartners. MIDA participated in these initiativesthrough supporting the Ministry of InternationalTrade and Industry in ASEAN’s Free Trade Agreement(FTA) negotiations by providing inputs andrecommendations in the areas of trade in goods(including rules of origin) and investments. The FTAnegotiations were as follows:
• ASEAN-Japan Comprehensive EconomicCooperation on Investment Chapter;
• ASEAN-India Investment Agreement; and
• ASEAN-Australia/New Zealand FTA – WorkProgramme on Investment Chapter.
56 • MIDA Annual Report 2010
Asia-Pacific Economic Cooperation(APEC)
MIDA continued to be Malaysia’s lead agency for theInvestment Experts Group (IEG) meetings. Three IEGmeetings were held in Japan in 2010.
MIDA’s contributions towards the deliverables of theIEG for the year included:
• Being a focal point of the APEC E-Portal on Guideto Investment Regime of APEC MemberEconomies responsible for providing andupdating information on Malaysia’s investmentregime;
• Providing information and identifying priorityprogrammes for the overall APEC InvestmentStrategy (Roadmap for Investment) 2010;
• Participating in the APEC Seminar on CapacityBuilding for Sharing Success Factors ofImprovement of Investment; and
• Continuing to participate in the InvestmentFaci l i tation Action Plan (IFAP) programmeproposed by Member Economies to accelerateregional economic integration.
Bilateral Economic Cooperation
In 2010, MIDA continued to participate in Malaysia’sbilateral FTA negotiations with her trading partners.MIDA’s role covered negotiations for market accessin trade in goods, rules of origin and investments. Thefocus of the work included:
• Malaysia - Turkey FTA;
• Malaysia - Australia FTA; and
• Malaysia - India CECA.
Multilateral Trade Relations
In 2010, MIDA continued its role in the World TradeOrganisation (WTO) on the market access modalitiesfor non-agricultural products and tariff eliminationfor environmental goods.
The Ministry of International Trade and Industry asthe focal point in consolidating and streamliningMalaysia’s positions on international trade andinvestment has been continuously consulting MIDAon various trade and investment related issues.
MIDA Annual Report 2010 • 57
Chapter 8
THE AUTHORITY
58 • MIDA Annual Report 2010
Functions of MIDA
MIDA Organisation Chart
Board Meetings
Annual Media Conference 2010
Human Resource Development
Empowerment and Corporatisation of MIDA
Establishment of National Committee onInvestment
Establishment of National Task Force onInvestment
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Chapter 8
MIDA Annual Report 2010 • 59
THE AUTHORITY
60 • MIDA Annual Report 2010
MIDA is the principal Government agency for thepromotion and coordination of the developmentof the manufacturing and services sectors(excluding util ities and financial services).
MIDA was established in 1967 under the FederalIndustrial Development Authority Act, 1965 as astatutory body under the purview of the Ministryof International Trade and Industry (MITI).
Functions of MIDA
The functions of MIDA are as follows:
(a) Undertake activities related to the promotion ofmanufacturing and services sector (excludingutilities and financial sectors) within or outsideMalaysia;
(b) Undertake or cause to be undertaken researchand planning on matters related to industrialdevelopment and its services sector andrestructuring;
(c) Advise the Government on the granting ofmanufacturing licences, incentives, expatriateposts and any other facilities related to thepromotion, development and coordination ofindustries;
(d) Advise the Government on measures for thepromotion of industries and their related
services, including the imposition or alterationof, and exemption from customs and otherduties, and import and export licensing;
(e) Facilitate and assist the activities of the Federal andState institutions engaged in or connected withindustrial development and its related services;
(f) Provide consultancy service including trainingand technical assistance;
(g) Undertake any activity that promotes cooperationwith other countries in line with the objective ofthe Government with respect to industries andtheir related services;
(h) Assist Malaysian companies in seekingtechnology and investment opportunitiesabroad;
(i) Report annually to the Minister on the progressand problems of industrialisation and its relatedservices in Malaysia and make recommendationson the manner in which such problems may bedealt with;
(j) Carry out other functions consistent with this Actas the Minister may in writing authorise; and
(k) Generally do all such matters incidental to orconsequential upon the exercise of its power onthe performance of its functions under the Act.
8
MIDA Annual Report 2010 • 61
MIDA ORGANISATION CHART
DIRECTORGENERAL
Datuk Jalilah Baba
BOARDMEMBERS
CHAIRMANTan Sri Dr. Sulaiman
Mahbob
DEPUTY DIRECTOR GENERAL I
Dato’ AfifuddinAbd. Kadir
SENIORDIRECTOR
NON-RESOURCEINDUSTRY
Azman Mahmud
SENIORDIRECTOR
INVESTMENT Phang Ah Tong
SENIORDIRECTORSERVICES
N. Parameswaran
SENIORDIRECTORRESOURCEINDUSTRY
Radha Menon
DEPUTY DIRECTOR GENERAL IIDato’ Wahab
Hamid
ICT & Electrical Industries DivisionDirector, Chua Chee Kiong (until 27 June 2010)Director, Aizah Abdullah (from 28 June 2010)
Electronics Industries DivisionDirector, Inon Abdul Hamid
Transport Industry DivisionDirector, Phang Yew Fook (until 19 October 2010)Director, Hafizah Shahar (from 8 November 2010)
Machinery & Engineering Supporting Industries DivisionDirector, N. Sangaran
Textiles & Non-Metallic Mineral Industries DivisionDirector, K. Sukomaran (until 6 September 2010)Director, Chai Siew Foon (from 7 September 2010)
Domestic Investment Promotion DivisionDirector, Hindon Abdul Aziz
Cross Border Investment DivisionDirector, Mohamad Hashim Abdul Ghani (until 21 February 2010)Director, K.Sukomaran (from 7 September 2010 until 21 November 2010)
Foreign Investment PromotionDivision, Asia/Oceania ZoneDirector, Hoo Ah Teng (until 2 August 2010)Director, N. Rajendran (from 14 October 2010)
Foreign Investment Promotion Division, America ZoneDirector, Wan Hashim Wan Jusoh
Foreign Investment Promotion Division, Europe ZoneDirector, Ahmad Tajudin Omar (until 2 May 2010)Director, N. Jeyasigan (from 20 September 2010)
Strategic Planning DivisionDirector, Manmohan Singh
International Cooperation DivisionDirector, Simon Lee Yew Weng (until 27 June 2010)Director, Roeslina Abbas (from 20 September 2010)
Information Management & Statistics DivisionDirector, Kang Lay Kim
Communications & Media DivisionDirector, Teng Yit Chan
Corporate Management
DivisionHuman Resource
Development DivisionFinance
Management Division
Business and Other Services DivisionDirector, Azian Mohd Yusof
Logistics & Regional Operations DivisionDirector, Tan Piak Bong
Secretariat DivisionSenior Manager, Hoznia Hamidia (until 27 June 2010)Senior Manager, Mohd Zulkafli Ismail (from 28 June 2010)
Industry Support DivisionDirector, William Ho Yueh Weng(until 13 October 2010)Director, Tan Chee Chai (from 16 November 2010)
Chemical Industry DivisionDirector, Yeoh Hock Eng
Life Sciences Industry DivisionDirector, Chai Siew Foon (until 6 September 2010)Director, Jaswant Singh (from 7 September 2010
Food Industries DivisionDirector, Zainab Muda
Wood & Paper Industries DivisionDirector, Mathialakan Chelliah
Metal & Fabrication Industries DivisionDirector, Hafizah Shahar (until 19 September 2010)Director, Foo Sin Fong (from 20 September 2010)
Overseas Offices
Advisory Services Centre
Resource Centre Management
State Offices
62 • MIDA Annual Report 2010
Board Meetings
MIDA’s Board comprises 13 members, headed by aChairman appointed by the Minister of InternationalTrade and Industry. Other members are the SecretaryGeneral of the Ministry of Finance or hisrepresentative, the Secretary General of the Ministryof International Trade and Industry, the DirectorGeneral of MIDA, the Permanent Secretary of theMinistry of Industrial Development for Sabah andSarawak respectively, and seven other membersrepresenting the commercial , manufacturing,financial, industrial and services sectors. Sevenmeetings were held in 2010 including two specialBoard Meetings.
Annual Media Conference 2010
The Annual Media Conference was held on 18 January2011. The Minister of International Trade and Industry,YB Dato’ Sri Mustapa Mohamed, officiated the MediaConference and announced the investments in themanufacturing and services sectors in 2010. Companieswere also invited to share the success stories of theirinvestments in Malaysia. The Conference was attendedby members of the print and electronic media, diplomatsfrom foreign missions based in Malaysia, foreign andlocal chambers of commerce and industry, bilateralassociations, CEOs of multinational companies andGLCs, senior Government officials and bankers.
Human Resource Development
In 2010, a total of 62 in-house training programmesand 77 external training programmes were organisedand coordinated. These programmes wereconducted with a view to enhance the knowledgeand competency of MIDA's staff.
Empowerment and Corporatisation ofMIDA
MIDA has contributed significantly to Malaysia’srapid industrial development in the past and willassume an important role in the future developmentof the manufacturing and services sectors in thecountry. MIDA has been in the forefront of theGovernment’s efforts in attracting investments andhas stressed on pro-business attitude, efficiency andeffectiveness in meeting investor’s needs.
In line with the vision to achieve a developed nationstatus, the Government recognised the urgent needto relook at the role and functions of MIDA. Againstthis backdrop, the Honorable Prime Ministerannounced on 30 March 2010 the following four keychanges to MIDA:
(a) MIDA to be renamed as the MalaysianInvestment Development Authority whilemaintaining the acronym MIDA;
(b) MIDA to be corporatised;
(c) MIDA to be empowered to negotiate directlywith investors; and
(d) MIDA to be designated as the central investmentpromotion agency.
The changes announced by the Government arecrucial for the following reasons:
(a) The change of name is to convey to investorsits broader scope and centrality in promotinginvestments in the manufacturing and servicessectors;
MIDA Annual Report 2010 • 63
(b) The corporatisation will provide MIDA thenecessary organisational flexibility to attractand retain the manpower and talents it needsin order to be an internationally competitivenational investment promotion agency;
(c) The empowerment of MIDA will give MIDAthe necessary authority to negotiate directlywith investors for targeted projects in themanufacturing and services sectors. This willalso enable MIDA to approve incentives inreal time and act swiftly to engage investorsmore effectively; and
(d) The designation of MIDA as the centralinvestment promotion agency for themanufacturing and services sectors(excluding utilities and financial services) willenable the Government to enhance thecoordination and cohesion among the variousinvestment promotion bodies in the country.
The changes announced by the Government wouldentail additional responsibilities for MIDA in itsefforts to enhance FDI and domestic investments.
Establishment of National Committeeon Investment
The National Committee on Investment (NCI) wasestablished in MIDA in May 2010 to enable fasterdecision making process whereby senior officials fromthe relevant authorities such as Ministry of Finance(MOF), Ministry of International Trade and Industry(MITI), Inland Revenue Board (IRB), Economic PlanningUnit (EPU), Bank Negara Malaysia and other co-optedagencies deliberate on applications for investmentprojects and approve them in real time. This has cut redtape and bureaucracy and enables faster decisionmaking by the Government. This move is expected toassist Malaysia to secure targeted projects expeditiously.
Establishment of National Task Forceon Investment
A special Task Force on Investment (TFI) has alsobeen established in MIDA to coordinate investmentpromotion activities and statistical information by allstate investment promotion agencies and economiccorridors.
64 • MIDA Annual Report 2010
FINANCIAL STATEMENTSThe following pages contain the audited financial statements of the
Malaysian Industrial Development Authority for the year ended 31
December 2010 together with the Auditor General’s Certificate as
transmitted to the Minister of International Trade and Industry in
compliance with Sections 7 & 8 of the Statutory Bodies (Accounts and
Annual Report) Act, 1980.
MIDA Annual Report 2010 • 65
Certificate of the Auditor General on theFinancial Statements of the MalaysianIndustrial Development Authority for theyear ended 31 December 2010
Statement by the Chairman and a Memberof the Board
Declaration by the Officer primarilyresponsible for the financial managementof the Malaysian Industrial DevelopmentAuthority
Balance Sheet
Statement of Income
Statement of Changes in Equity
Cash Flow Statement
Notes to the Accounts
General Information
Basis of Preparation
Financial Risk Management Policy
Significant Accounting Policies
Taxation
Property, Plant and Equipment
Work In Progress
Receivables
Special Accounts
Other Payables
Employee Benefits
Other Income
Emoluments
Other Expenditure
Cash and Cash Equivalents
Development Fund
Capital Commitments
Contingent Liability
66
67
68
697070
72
7272
7575
77
77777878
787979
80
8181
81
7272
71
FINANCIAL STATEMENTS
MIDA Annual Report 2010 • 67
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
68 • MIDA Annual Report 2010
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
MIDA Annual Report 2010 • 69
Note 2010 2009 RM RM
NON CURRENT ASSETSPROPERTY, PLANT AND EQUIPMENT 6 155,302,518 10,528,587 WORK IN PROGRESS 7 174,331 142,711,499 RECEIVABLES 8 920,740 897,431
CURRENT ASSETSReceivables 8 3,441,426 2,916,663 Advances 286,293 377,339 Deposits 7,558,332 7,669,415 Prepayments 4,920,712 5,465,107 Fixed Deposits with a Licenced Bank 507,449,771 212,000,000 Cash at Bank and in Hand 52,642,873 27,174,996
TOTAL CURRENT ASSETS 576,299,407 255,603,520
CURRENT LIABILITIESSpecial Accounts 9 317,991,347 117,344,464 Other Payables 10 51,235,790 48,608,886 Short Term Employee Benefits 11 386,752 247,874
TOTAL CURRENT LIABILITIES 369,613,889 166,201,224
NET CURRENT ASSETS 206,685,518 89,402,296 TOTAL NET ASSETS 363,083,107 243,539,813
FINANCED BY:
OPERATING FUND 95,438,176 59,133,469 DEVELOPMENT FUND 16 259,278,898 176,806,782 CONVEYANCE LOAN FUND 3,000,000 3,000,000 COMPUTER LOAN FUND 350,000 350,000
358,067,074 239,290,251
NON CURRENT LIABILITIESLONG TERM EMPLOYEE BENEFITS 11 5,016,033 4,249,562
363,083,107 243,539,813
BALANCE SHEET AS AT 31 DECEMBER 2010
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
The accompanying notes form an integral part of the financial statements.
70 • MIDA Annual Report 2010
Note 2010 2009 RM RM
INCOMEGOVERNMENT GRANT 181,103,400 158,152,000 OTHER INCOME 12 12,384,510 2,940,429
193,487,910 161,092,429
LESS: EXPENDITUREEMOLUMENTS 13 54,876,771 57,476,688 OTHER EXPENDITURE 14 96,291,415 88,433,275 DEPRECIATION 6 6,015,017 3,673,796
157,183,203 149,583,759 EXCESS INCOME OVER EXPENDITURE 36,304,707 11,508,670
STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2010
Operating Development Conveyance Computer TotalFund Fund Loan Fund Loan FundRM RM RM RM RM
Balance as at 1 January 2009 47,624,799 159,852,071 3,000,000 350,000 210,826,870 Government grant received - 19,035,125 - - 19,035,125 Excess/(less) income 11,508,670 (411,232) - - 11,097,438over expenditure
Application - (1,669,182) - - (1,669,182)Balance as at 31 December 2009 59,133,469 176,806,782 3,000,000 350,000 239,290,251 Government grant received - 90,424,000 - - 90,424,000Excess/(less) income 36,304,707 (4,007,950) - - 32,296,757
over expenditureApplication - (3,943,934) - - (3,943,934)Balance as at 31 December 2010 95,438,176 259,278,898 3,000,000 350,000 358,067,074
STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 31 DECEMBER 2010
The accompanying notes form an integral part of the financial statements.
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
MIDA Annual Report 2010 • 71
Note 2010 2009 RM RM
CASH FLOW FROM OPERATING ACTIVITIES
EXCESS INCOME OVER EXPENDITURE 36,304,707 11,508,670 Gain on Sale of Property, Plant and Equipment (8,250) -Loss on Disposal of Property, Plant and Equipment 2,980 13,126 Write-offs 19,885 -Depreciation of Property, Plant and Equipment 6 6,015,017 (5,583,474)Deferred Grant Recognition (3,943,934) (1,669,182)Interest Income (1,376,521) (568,780)Miscellaneous Income (6,237,065) -Profit on Computer Loan (2,479) (2,983)
EXCESS INCOME FROM OPERATING ACTIVITIES 30,774,340 3,697,377BEFORE WORKING CAPITAL CHANGES
DECREASE/(INCREASE) IN:Receivables (548,072) (1,099,094)Advances 91,046 (133,049)Deposits 111,083 (259,681)Prepayments 544,395 (1,540,964)
INCREASE/(DECREASE) IN:Special Accounts 200,646,883 38,315,473 Other Payables 2,626,903 31,096,708 Employee Benefits 905,349 4,497,436 Net Cash from Operating Activities 235,151,927 74,574,206
CASH FLOW FROM INVESTING ACTIVITIESDevelopment Grant Received 90,424,000 19,035,125 Acquisition of Property, Plant and Equipment (1,969,900) 9,507,462 Work In Progress (67,680) (27,732,664)Proceeds from Sale of Property, Plant and Equipment 8,251 -Development Expenditure (6,248,127) (1,352,930)Interest Received - Operating Fund 1,376,521 568,780 Interest Received - Development Fund 1,705,562 941,698 Rental Received - Development Fund 534,615 -Profit Received - Computer Loan 2,479 2,983
Net Cash from/(used for) Investing Activities 85,765,721 970,454
NET INCREASE IN CASH AND CASH EQUIVALENTS 320,917,648 75,544,660
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 239,174,996 163,630,336
CASH AND CASH EQUIVALENTS AT END OF THE YEAR 15 560,092,644 239,174,996
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
The accompanying notes form an integral part of the financial statements.
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
72 • MIDA Annual Report 2010
1. GENERAL INFORMATION
Malaysian Industrial Development Authoritywas incorporated in Malaysia under theMalaysian Industrial Development Authority(Amendment) Act, 2002.
MIDA’s main activity is to promote andcoordinate the development of themanufacturing and related services sector inMalaysia. MIDA is headquartered in PlazaSentral, Jalan Stesen Sentral 5, Kuala LumpurSentral, 50470 Kuala Lumpur, Malaysia.
2. BASIS OF PREPARATION
The financial statements have been prepared onthe historical cost basis of Accounting and inaccordance to applicable approved AccountingStandards in Malaysia for ‘Private Enti tyReporting Standard’ (PERS) issued by‘Malaysian Accounting Standards Board’(MASB) and relevant Treasury Circulars.
3. FINANCIAL RISK MANAGEMENTPOLICY
MIDA’s financial risk management policy seeksto ensure that adequate financial resources aremade available to carry out its activities and tomeet its obligations whilst managing its risk offoreign currency rates, non-payment of loans toemployees and liquidity and cashflow risk.MIDA is not exposed to market risk and interestrate risk as it is not involved either directly orindirectly in stock market transactions andborrowings from financial institution.
(a) Foreign Currency Exchange Risk
MIDA is exposed to foreign currencyexchange risk in maintaining the operating
cost of its 23 overseas branches. To monitorthe risk, MIDA sends remittances once intwo months as well as util isation ofAccountant General’s rate for translation offoreign currencies.
(b) Credit Risk
Credit risk is managed on loans toemployees whereby all loans approvedcomply with loan disbursement rules andregulations.
(c) Liquidity and Cashflow Risk
MIDA relies on managing the FederalGovernment grants received, theoperational cashflows and the allocationand utilisation of funds for working capitalrequirements.
4. SIGNIFICANT ACCOUNTINGPOLICIES
(a) Property, Plant And Equipment
Property, plant and equipment eachcosting RM1,000.00 and more or property,plant and equipment which requiresregular maintenance irrespective of its costhave been capitalised. Furniture, curtains,carpets, office partition and other similaritems, irrespective of the cost have notbeen capitalised.
Property, plant and equipment are stated atcost less accumulated depreciation andimpairment loss (if any) except for freeholdland and work-in-progress which is notamortised. Computer Software purchasedon a package basis according to specific
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
MIDA Annual Report 2010 • 73
projects is capitalised. Depreciation ofproperty, plant and equipment areprovided on the straight l ine basiscalculated to write off the cost of the assetsover their estimated useful l ives. Theprincipal rates used are as follows:
Office Building 2% per annumOffice machines 10% per annum
and equipmentMotor vehicles 20% per annumComputers, 20% per annum
peripherals and software
(b) Receivables
Known bad debts are written-off andallowance is made for any debtsconsidered to be doubtful of collection.
(c) Special Accounts
All receipts are credited and all paymentsare debited to the relevant account.Balances of special accounts at balancesheet date are recognised as liabilities.
Special Accounts managed by MIDA arefinanced by third parties according tospecific projects and activities.
(d) Federal Government Grants
Government grants received for thepurpose of meeting operating expenses arerecognised as income in the incomestatement for the current year.
Other grants received for the purpose ofmeeting approved development projectcost or other specific cost are credited to
the development fund or the relevant fund.All applications are debited to the relevantfund. Balances at balance sheet date arerecognised as fund balances.
(e) Deferred Grant
Deferred grant is a component ofdevelopment fund and is recognised asincome in the income statement over theperiod necessary to match them with therelated cost that they are intended tocompensate on a systematic basis.
(f) Conversion of Foreign Currencies
(i) Foreign currency transactions
Transactions in foreign currencieshave been translated and recordedinto Ringgit Malaysia at theAccountant General’s (AG) rates ofexchange rul ing on the date oftransaction except for contractsquoted in foreign currency wherebythe transaction is translated using theCentral Bank or Commercial Bankrate prevailing at the date of payment.
Foreign currency balances at balancesheet date are translated into RinggitMalaysia at the AG rates ruling on thatdate. All exchange differences aredealt with through the income statement.
(ii) MIDA Overseas Offices
The operations of MIDA overseasoffices are integral to the headofficeoperations and the foreign currencytransactions are translated byapplying the policy described above.
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010 (Continued)
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
74 • MIDA Annual Report 2010
4. SIGNIFICANT ACCOUNTINGPOLICIES (Continued)
(f) Conversion of Foreign Currencies(Continued)
(iii) Closing Rates
The principal closing rates used in thetranslation of foreign currencyamounts are shown below:
(g) Income Recognition
Interest and rental income is recognised inthe income statement based on the accrualconcept. Interest on deposits at banks orthat relate specifically to developmentfund or special accounts are credited to thedevelopment fund or special accounts.
(h) Employee Benefits
(i) Short Term Benefits
Salary, wage, bonus and employeesocial security contribution aretreated as current year’s expenditure.
(ii) Permanent Contribution Plan
MIDA made contributions to theEmployees Provident Fund (EPF) foremployees on the EPF scheme and to thePension Trust Fund for those employeeson the Government’s pension scheme.These contributions are treated ascurrent year’s expenditure. Once thecontributions have been paid, MIDA hasno further payment obligations.
(iii) Long Term Benefits
Cash award in lieu of accumulated leave
Cash award in lieu of accumulatedleave is given to employees who areunable to utilise all their leave upto toa max imum of 150 days due toexigency of the service. The cashaward is paid on the last working daybefore retirement and thecomputation is based on the salariesand fixed allowances at the balancesheet date.
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010 (Continued)
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
2010 2009RM RM
US Dollar 3.1419 3.4208
Australian Dollar 3.1182 3.1531
Euro 4.3113 5.1010
British Pound 5.0302 5.6868
China Renminbi 0.4724 0.5011
Swedish Krona 46.2521 49.4628
Japanese Yen 3.8174 3.8206
Taiwan Dollar 10.3542 10.5710
South Korea Won 0.2792 0.2942
UAE Dirham 84.6512 92.2879
Indian Rupee 7.0347 7.3728
Singapore Dollar 2.4250 -
Thai Baht 10.5278 -
MIDA Annual Report 2010 • 75
(i) Cash and cash equivalents
These are short term, highly liquid assetsthat are readily convertible to knownamounts of cash and which are subject toan insignificant risk of changes in value.
(j) Impairment of Asset
The carrying values of assets are reviewedfor impairment when there is an indicationthat the assets might be impaired. Animpairment loss is charged to the incomestatement immediately. Subsequentincrease in the recoverable amount of anasset is treated as reversal of the previousimpairment loss and is recognised to theextent of the carrying amount of the assetthat would have been determined (net ofamortisation and depreciation) had noimpairment loss been recognised. Thereversal is recognised in the incomestatement immediately.
(k) Financial Instruments
The carrying amounts of financial assetsand liabilities approximate their fair valuesat the balance date.
(l) Maturity Principle
The Receivables maturity structure is asfollows:
(i) Maturity due within 12 months
(ii) Maturity due after 12 months
5. TAXATION
Malaysian Industrial Development Authority(MIDA) has been granted tax exempt status underSection 127, of the Income Tax Act, 1967.
6. PROPERTY, PLANT AND EQUIPMENT
Kuala Lumpur Sentral Sdn. Bhd. (KLSSB) andMalaysian Resources Corporation Berhad(MRCB) contributed a sum of RM1,075,000 inthe form of a rebate against the final instalmentof the purchase price of MIDA’s new headoffice building and the contribution wastowards the cost of setting up of an immigrationfacility to be located in the building.
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010 (Continued)
76 • MIDA Annual Report 2010
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010 (Continued)
Freehold Land
Office Building
Motor Vehicles
Com
puter & Peripherals
Machines &
Office Equipm
ent
Total
Operatin
gOperatin
gDevelop
ment
Develop
ment
Operatin
gOperatin
gDevelop
ment
Develop
ment
Operatin
gOperatin
gDevelop
ment
Develop
ment
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund
2010
2010
2009
2009
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
COST
As a
t 1 Ja
nuar
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6,81
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-7,
205,
807
5,37
8,64
2 19
,579
,381
2,
676,
800
100,
000
35,2
67,4
40
44,8
69,6
93
Add
ition
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6,81
3,23
873
5,57
8 40
4,78
4 69
2,80
0 14
5,53
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150,
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931
2,89
3,43
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Dis
posa
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--
(80,
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(30,
731)
-(9
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)-
(120
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)(9
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Adj
ustm
ents
--
--
--
--
-(1
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0,89
2)
As a
t 31 Dec
embe
r32
6,81
0 42
,000
,000
10
6,81
3,23
8 7,86
0,61
4 5,75
2,69
5 20
,272
,181
2,81
3,26
7 10
0,00
0 18
5,93
8,80
5 35
,267
,440
ACCUMULA
TED
DEP
RECIATION
As a
t 1 Ja
nuar
y-
--
4,35
2,60
8 3,55
2,14
0 15
,229
,396
1,58
4,70
9 20
,000
24
,738
,853
30
,403
,992
Adj
ustm
ents
--
--
--
--
-(9,257
,270
)
Dis
posa
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(80,77
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(6,825
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(117
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Cur
rent
yea
r's d
epre
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ion
--
2,13
6,26
5 1,22
5,59
2 60
8,31
6 1,79
7,67
0 23
7,17
4 10
,000
6,01
5,01
7 3,67
3,79
6
As a
t 31 Dec
embe
r-
-2,13
6,26
5 5,49
7,43
0 4,13
0,46
8 17
,027
,066
1,81
5,05
8 30
,000
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,636
,287
24
,738
,853
As a
t 31 Dec
embe
r 201
032
6,81
0 42
,000
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4,67
6,97
3 2,36
3,18
4 1,62
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7 3,24
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8,20
9 70
,000
15
5,30
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8-
As a
t 31 Dec
embe
r 200
932
6,81
0 -
-2,85
3,19
9 1,82
6,50
2 4,34
9,98
5 1,09
2,09
1 80
,000
-
10,528
,587
6.PR
OPE
RTY
, PLA
NT AND EQUIPMEN
T (Con
tinued)
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
MIDA Annual Report 2010 • 77
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010 (Continued)
7. WORK IN PROGRESS
Balance as Capitalised/ Payments made Balance aat 1.1.2010 Transferred in the year at 31.12.2010
RM RM RM RM
MIDA Building, KL Sentral 141,329,790 (141,329,790) - -Technical Advisor MIDA Building 1,008,658 (1,008,658) - -PKI (Public Key Infrastructure)/ 266,400 (266,400) - -Digital Signature
Computer Software 106,651 - 67,680 174,331Total 142,711,499 (142,604,848) 67,680 174,331
8. RECEIVABLES
2010 2009RM RM
Other receivables 3,067,745 2,540,672Receivables - Conveyance loan 1,209,627 1,217,800Receivables - Computer loan 84,794 55,622
4,362,166 3,814,094
Receivables due within 12 months 3,441,426 2,916,663Receivables due after 12 months 920,740 897,431
4,362,166 3,814,094
9. SPECIAL ACCOUNTS
Strategic Upgrading of Basic Investment and Infrastructure of Industry Studies High Impact Existing Industrial and Other Balance BalanceProject Funds Estates Projects as at 2010 as at 2009
RM RM RM RM RM
Balance as at 1 January 2010 108,575,988 79,446 8,689,030 117,344,464 79,028,991
Receipts 303,571,997 170,643,409 1,843,638 476,059,044 458,846,773 Interest on deposits 4,257,519 667,549 160,288 5,085,356 3,397,563with bank
Application (152,149,595) (127,785,431) (562,491) (280,497,517) (423,928,863)Balance as at 31 December 2010 264,255,909 43,604,973 10,130,465 317,991,347 117,344,464
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
78 • MIDA Annual Report 2010
10.OTHER PAYABLES
In 2010, payment of RM2,067,527 (2009:RM22,656,257) was paid to local serviceproviders/companies, service industryassociations and professional bodies from theallocation of RM50 million received for theServices Sector Capacity Development Fund(SSCDF) project approved under the FirstEconomic Stimulus Package. The project is toassist Malaysian service provider to enhancecapacity and competitiveness in line with thegovernment’s objective to liberalise the servicesector.
Settlement of invoices are in accordance withMIDA’s Financial Rules and Regulations. Thebreakdown of other payables in Ringgit Malaysiaand foreign currencies are as follows:
2010 2009RM RM
Ringgit Malaysia 50,444,346 46,959,242
US Dollar 62,579 476,854
Australian Dollar 40,883 271,969
Euro 121,613 183,887
British Pound 10,464 171,276
China Renminbi 41,601 57,880
Swedish Krona 70,408 113,017
Japanese Yen 87,426 321,163
Taiwan Dollar 22,027 14,841
South Korea Won 10,841 6,929
UAE Dirham 25,629 24,872
Singapore Dollar 245,153 -
Indian Rupee 43,723 6,956
Thai Baht 9,097 -
51,235,790 48,608,886
11.EMPLOYEE BENEFITS
Provision of employee benefits:
2010 2009RM RM
Balance as 4,497,436 -at 1 January
Adjustment (219,296) -
Payment (247,874) -
Additions 1,372,519 4,497,436
Balance as at 5,402,785 4,497,43631 December
Payable within 386,752 247,87412 months
Payable after 5,016,033 4,249,56212 months
5,402,785 4,497,436
12.OTHER INCOME
2010 2009RM RM
Deferred grant 3,943,934 1,669,182recognition (Note 16)
Interest on deposits 1,327,809 506,855at banks
Interest on 46,335 55,014conveyance loan
Interest on 2,479 2,983computer loan
Interest on deposits 2,377 6,911
Rental income 351,600 345,600
Gain on sale of 8,250 -property, plant and equipment
Miscellaneous 6,701,726 353,884income
12,384,510 2,940,429
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010 (Continued)
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
MIDA Annual Report 2010 • 79
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010 (Continued)
12.OTHER INCOME (Continued)
Miscellaneous income includes an amount ofRM6,237,065 paid from the Development FundAccount for the cost of setting up new overseasbranch offices under the project for theestablishment of additional MIDA officesoverseas.
13.EMOLUMENTS
2010 2009RM RM
Salaries and wages 27,848,702 27,118,912
Fixed allowances 16,565,555 16,602,382
Statutory 4,395,993 4,336,834contributions for employees
Overtime allowances 774,587 637,276
Other employee 5,291,934 8,781,284benefits
54,876,771 57,476,688
No. of employees 733 726at the end of the financial year
14.OTHER EXPENDITURE
2010 2009RM RM
Travel and 12,879,504 10,113,009transportation
Transportation 1,233,604 1,845,621of things
Communications 11,859,098 8,059,154and utilities
Rental 37,578,507 37,072,960
Supplies and 2,975,414 9,467,434materials
Maintenance 6,008,096 3,530,648and minor repairs
Professional/ 21,674,404 17,206,211other services and hospitalities
Miscellaneous 1,468,001 1,039,660expenses
Loss on foreign 591,922 82,642exchange conversions
Loss on sale 2,980 13,126of property, plant and equipment
Write-offs 19,885 2,810
96,291,415 88,433,275
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
80 • MIDA Annual Report 2010
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010 (Continued)
15.CASH AND CASH EQUIVALENTS
2010 2009RM RM
Cash and cash equivalents comprised of:
Fixed deposits 507,449,771 212,000,000at a licensed bank
Cash deposits 52,610,139 27,149,311at licensed banks
Cash in hand 32,734 25,685560,092,644 239,174,996
Cash comprises of cash at bank and in handincluding deposits. Cash equivalents comprises offixed deposits maturing within one month from thedate of placement and which are readilyconvertible to known amount of cash which aresubject to an insignificant risk of change in value.The weighted average interest rate that waseffective during the year 2010 was 2.30% with anaverage maturity period of two weeks.
Included in Cash and Cash equivalents are RinggitMalaysia and foreign currency balances as statedbelow:
Also included in cash and cash equivalents atyear end are cash balances of Special Accounts(Note 9) amounting to RM317,991,347 (2009:RM117,344,464) which can only be utilisedfor the approved purpose.
2010 2009RM RM
Ringgit Malaysia 553,303,105 235,168,509
US Dollar 1,792,742 1,501,403
Australian Dollar 492,956 129,127
Euro 1,228,532 973,971
British Pound 447,622 231,231
China Renminbi 174,955 140,827
Swedish Krona 232,233 146,887
Japanese Yen 1,470,784 465,841
Taiwan Dollar 69,393 31,558
South Korea Won 43,071 29,686
UAE Dirham 147,625 37,468
Singapore Dollar 231,170 -
Thai Baht 56,019 -
Indian Rupee 402,437 318,488
560,092,644 239,174,996
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
MIDA Annual Report 2010 • 81
NOTES TO THE ACCOUNTS - 31 DECEMBER 2010 (Continued)
16.DEVELOPMENT FUND
Income Statement
2010 2009RM RM
Income
Deferred grant 3,943,934 1,669,182 recognition (Asset)
Rental Income 534,615 -
Interest income 1,705,562 941,698
6,184,111 2,610,880
Less: Expenditure
Expenditure 6,248,127 1,352,930
Depreciation 3,943,934 1,669,182
10,192,061 3,022,112
(Less) income (4,007,950) (411,232)over expenditure
Deferred grant
Balance as 176,806,782 159,852,071at 1 January
Current year’s - 35,125development grant (Asset)
Current year’s 90,424,000 19,000,000development grant (Cash)
Amortisation of (3,943,934) (1,669,182)deferred grant (Asset)
263,286,848 177,218,014
Balance as at 259,278,898 176,806,78231 December
Payment of RM6,237,065 to Operating Fundaccount (Note 12) for the cost of setting-up newoverseas branch offices under the developmentproject for the establishment of additonal MIDAoffices overseas.
Development fund comprises of grants for projectsrelated to MIDA Building KL Sentral, MIDA ICTsystems, Industry Study and establishment ofMIDA’s new overseas offices.
17.CAPITAL COMMITMENTS
Capital commitments that have been contractedby MIDA and not provided for in the financialstatements.
2010 2009RM RM
MIDA Building - 7,717,210
Technical Advisor, - 443,810MIDA Building
Office Renovations 78,800,000 -
Motor Vehicles 938,370 196,144
PKI (Public Key 49,200 379,600Infrastructure)/ Digital Signature
Computer and Peripherals 4,135,520 2,153,459
83,923,090 10,890,223
18.CONTINGENT LIABILITY
In 2010, MIDA signed a three (3) year contractualobl igation wi th a thi rd party valued atRM38.2 million for continuation of the rentalof telecommunication infrastructure;maintenance of Wide Area Network-IPVPN;technical support services and ElectronicMessaging System (EMS) for head office,existing overseas and state offices and 3 newoverseas branches.
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)(Incorporated in Malaysia under the Malaysian Industrial Development Authority (Amendment) Act, 2002)
HEADQUARTERS AND STATE OFFICES
82 • MIDA Annual Report 2010
Headquarters
State Offices
Overseas Offices
8484
86
MIDA Annual Report 2010 • 83
84 • MIDA Annual Report 2010
HEADQUARTERS AND STATE OFFICES HEADQUARTERSMalaysian Industrial Development AuthorityBlock 4, Plaza Sentral, Jalan Stesen Sentral 550470 Kuala Lumpur, MalaysiaTel : (603) 2267 3633Fax : (603) 2274 7970Website : www.mida.gov.myE-mail : [email protected]
PEJABAT NEGERI
JohorUnit 15.03Level 15,Wisma LKN49, Jalan Wong Ah Fook80000 Johor BahruJohor Darul TakzimTel : (607) 224 2550/224 5500Fax : (607) 224 2360E-mail: [email protected]
Kedah dan Perlis4th Floor, East Wing88, Menara Bina Darulaman Berhad Lebuhraya Darulaman05100 Alor SetarKedah Darul AmanTel : (604) 731 3978Fax : (604) 731 2439E-mail: [email protected]
KelantanAras 5-C, Menara Pejabat Kelantan Trade CentreJalan Bayam15200 Kota BharuKelantan Darul NaimTel : (609) 748 3151Fax : (609) 744 7294E-mail: [email protected]
Melaka3rd Floor, Menara MITCKompleks MITC, Jalan Konvensyen75450 Ayer Keroh, MelakaTel : (606) 232 2876/78Fax : (606) 232 2875E-mail: [email protected]
Negeri SembilanSuite 13.01 & 13.0213th Floor, Menara MAA70200 SerembanNegeri Sembilan Darul KhususTel : (606) 762 7921/ 7884Fax : (606) 762 7879E-mail: [email protected]
PahangSuite 3, 11th FloorKompleks TeruntumP.O. Box 17825720 KuantanPahang Darul MakmurTel : (609) 513 7334Fax : (609) 513 7333E-mail: [email protected]
MIDA Annual Report 2010 • 85
Perak4th Floor, Perak Techno Trade Centre (PTTC)Bandar Meru RayaOff Jalan Jelapang30720 IpohPerak Darul RidzuanTel : (605) 526 9962/526 9961Fax : (605) 527 9960E-mail: [email protected]
Pulau Pinang4.03, 4th FloorMenara Boustead Penang39, Jalan Sultan Ahmad Shah10050, Pulau PinangTel : (604) 228 0575Fax : (604) 228 0327E-mail: [email protected]
SabahLot D9.4 & D9.59th Floor, Block DBangunan KWSP, Karamunsing88100 Kota Kinabalu, SabahTel : (6088) 211 411/230 411Fax : (6088) 211 412E-mail: [email protected]
SarawakRoom 404, 4th FloorBangunan Bank Negara147, Jalan SatokP.O. Box 71693714 Kuching, SarawakTel : (6082) 254 251/237 484Fax : (6082) 252 375E-mail: [email protected]
SelangorLot 22.2.1,22th FloorWisma MBSAPersiaran Perbandaran40000 Shah AlamSelangor Darul EhsanTel : (603) 5518 4260Fax : (603) 5513 5392E-mail: [email protected]
Terengganu5th Floor, Menara Yayasan IslamTerengganuJalan Sultan Omar20300 Kuala TerengganuTerengganu Darul ImanTel : (609) 622 7200Fax : (609) 623 2260E-mail: [email protected]
86 • MIDA Annual Report 2010
ASIA PACIFIC
THAILANDBangkok3601, 36th Floor, Q. House Lumpini BuildingSouth Sathorn RoadTungmahamek, SathornBangkok 10120ThailandTel : (66) 2 677 7487Fax : (66) 2 677 7488E-mail: [email protected]
UNITED ARAB EMIRATESDubaiUnit 2205, 22nd FloorTower A Business Central TowerDubai Media City(P.O. Box: 502876)Dubai, United Arab EmiratesTel : (9714) 4343-696/697Fax : (9714) 4343-698E-mail: [email protected]
PEOPLE’S REPUBLIC OF CHINAGuangzhouUnit 1804B-05CITIC Plaza Office Tower233 Tianhe Bei Road Guangzhou510610, People’s Republic of ChinaTel : (8620) 8752 0739Fax : (8620) 8752 0753E-mail: [email protected]
ShanghaiUnits 807-809, Level 8Shanghai Kerry Centre1515 Nanjing Road (West)Shanghai, 200040People’s Republic of ChinaTel : (86 21) 6289 4547/(86 21) 5928 6335Fax : (86 21) 6279 4009E-mail: [email protected]
INDIAMumbai81 & 87, 8th Floor3rd North Avenue, Maker MaxityBandra Kurla Complex, Bandra (E)Mumbai 400051, IndiaTel : (91 22) 2659 1155/(91 22) 2659 1156Fax : (91 22) 2659 1154E-mail: [email protected]
REPUBLIC OF KOREASeoul17th Floor, SC First Bank Building100, Gongpyung-dong, Jongro-guSeoul 110-702, Republic of KoreaTel : (82 2) 733 6130/6131Fax : (82 2) 733 6132E-mail: [email protected]
OVERSEAS OFFICES
MIDA Annual Report 2010 • 87
ASIA PACIFIC
SINGAPORENo. 7, Temasek Boulevard26-01, Suntec Tower OneSingapore 038987Tel : (65) 6835 9326/6835 9580/6835 7069Fax : (65) 6835 7926E-mail: [email protected]
AUSTRALIASydneyLevel 6, 16 Spring StreetSydney, NSW 2000AustraliaTel : 61 (02) 9251 1933Fax : 61 (02) 9251 4333E-mail: [email protected]
TAIWANTaipei12F, Suite A, Hung Kuo Building167, Tun Hua North RoadTaipei 105, TaiwanTel : (886 2) 2718 6094/(886 2) 2713 5020 (GL)Fax : (886 2) 2514 7581E-mail: [email protected]
JAPANTokyo32F, Shiroyama Trust Tower4-3-1, Toranomon, Minato-kuTokyo 105-6032, JapanTel : (81 3) 5777 8808Fax : (81 3) 5777 8809E-mail: [email protected] : www.midajapan.or.jp
OsakaMainichi Intecio 18F3-4-5 Umeda, Kita-kuOsaka 530-0001, JapanTel : (81 6) 6451-6661Fax : (81 6) 6451-6626E-mail: [email protected]
88 • MIDA Annual Report 2010
EUROPE
Frankfurt17th Floor, Frankfurt KastorPlatz der Einheit 160327 Frankfurt am MainGermanyTel : (4969) 7680 7080Fax : (4969) 7680 708-20E-mail: [email protected]
London17, Curzon StreetLondon W1J 5HRUnited KingdomTel : (4420) 7493 0616Fax : (4420) 7493 8804E-mail: [email protected]
Milan5th Floor, Piazza Missori 320123 Milan (MI), ItalyTel : (3902) 3046 521Fax : (3902) 3046 5242E-mail: [email protected]
Munich6th. Floor, BürkleinhausBürkleinstrasse 1080538 MunichGermanyTel : (4989) 20300430Fax : (4989) 203004315E-mail: [email protected]
Paris42 Avenue Kleber75116 ParisFranceTel : (331) 4727 6696/(331) 4727 3689Fax : (331) 4755 6375E-mail: [email protected]
StockholmKarlavaegen 37P.O. Box 26053S-10041 StockholmSwedenTel : (468) 791 7942/(468) 4408 400Fax : (468) 791 8761E-mail: [email protected]
OVERSEAS OFFICES
MIDA Annual Report 2010 • 89
UNITED STATES OF AMERICA
BostonOne International PlaceFloor 8, Boston, MA 02110United States of AmericaTel : (1617) 338 1128/(1617) 338 1129Fax : (1617) 338 6667E-mail: [email protected]
ChicagoJohn Hancock Center, Suite 1515875, North Michigan AvenueChicago, lIIinois 60611United States of AmericaTel : (1312) 787 4532Fax : (1312) 787 4769E-mail: [email protected]
Houston6th Floor, Suite 630Lakes on Post Oak3050 Post Oak BoulevardHouston, TX 77056United States of AmericaTel : (1713) 979-5170Fax : (1713) 979-5177/78E-mail: [email protected]
Los Angeles550, South Hope StreetSuite 400, Los AngelesCalifornia 90071United States of AmericaTel : (1213) 955 9183/(1213) 955 9877Fax : (1213) 955 9878E-mail: [email protected]
New York313 East, 43rd StreetNewYork, NY 10017United States of AmericaTel : (1212) 687 2491Fax : (1212) 490 8450E-mail: [email protected]
San Jose226 Airport ParkwaySuite 480 San JoseCalifornia 95110United States of AmericaTel : (1408) 392 0617/(1408) 392 0618Fax : (1408) 392 0619E-mail: [email protected]
OVERSEAS OFFICES
90 • MIDA Annual Report 2010
MIDA Annual Report 2010 • 91
92 • MIDA Annual Report 2010