Announcement!!!

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Conference Malaysia (IGEM2012) aims to help push the rapid adoption .... So far, Japanese Honda and Toyota have ..... a Students Internship Programme (SIP).
Embassy of the Kingdom of the Netherlands Economic Newsletter June 2012

CONTENTS

Announcement!!! Dutch Pavillion at: IGEM 2012 – October Bio Malaysia - November

1. Economic Policy update 2. Business & Industry news 3. Events

The AmpWalk, 7th Floor South Block 218 Jalan Ampang 50450 Kuala Lumpur Malaysia Tel: +603-2168 6262 Fax: +603-2168 6240 E-mail: [email protected] www.netherlands.org.my

Dear Readers, With this newsletter the Embassy intends to inform (potential) Dutch investors and traders about business developments in Malaysia. This newsletter features articles from the local media as well as other sources. If you like to know more about doing business in Malaysia or the featured news articles, please feel free to contact us. The Embassy assists you a.o. with: * partner search and business matchmaking * country & market information and sector analysis * investment consultancy * conference and seminar organisation The Economic Department

IGEM – October 10-13, 2012

BIO MALAYSIA – November 5-7, 2012

Themed "A Green New Deal: Greentech for Growth", the 3rd International Greentech & Eco Products Exhibition & Conference Malaysia (IGEM2012) aims to help push the rapid adoption of green technology, which is an emerging driver, to deliver a double impact of sustainable economic growth as well as to address the environmental and energy security issues.

The Bio Malaysia Exhibition is the largest trade exhibition on biotechnology in the region. Exhibits will include products and solutions for Healthcare and Pharmaceuticals, Agriculture, Food & Beverage, Environment, Water and Wastewater Management, Manufacturing and Bio-Processing, Forestry, Mining, Biochemical and Biofuel.

Having achieved its foothold as the largest green exhibition in the region, IGEM2012 will continue its pursuit to gather like-minded industry players and professionals from various sectors, public and private, big and small, local and foreign, new as well as established, to explore and seize the opportunities from the exciting and emerging green market in the country and the region.

With an estimated 10,000 visitors, 200 exhibitors and 1500 conference delegates expected to be in attendance, making little best meeting point of the year for industry professionals. The networking events tailored specifically to the needs of the industry and a highly effective business matching program, Bio Malaysia 2012 will fulfil the most ambitious business aspirations. "Biotechnology has been recognized by the Government of Malaysia as one of the key growth drivers in aiding the country to become a developed nation by 2020.

The biggest pavilion is reserved for the European Union. The Netherlands Embassy is planning to organise a big Dutch participation in this Pavilion. Don’t miss out on the green opportunities and register your participation now. If you are interested to join this pavilion, please contact the Netherlands Embassy at: [email protected]

SUMMARY OF THE PAVILION PACKAGE: • • • • •

• •

Far-reaching visibility and outreach for exhibitors. Networking cocktail at Ambassador’s Residence (for Dutch Exhibitors). Networking Breakfast. Meeting area “EU Business Lounge” for business networking throughout exhibition. Coordination with EU and bilateral chambers in ASEAN for further trade promotion in the region as well as information on green technology in the ASEAN. Booth cost subsidised by 10% for EU SME with no prior presence in Asia. Match making programme with local companies (if possible)

The Netherlands Embassy organised a Dutch Pavilion last year to showcase Dutch technology and know-how as well as what the country has to offer as a gateway to Europe with great success. The Embassy is planning to organise a Dutch Pavilion at Bio Malaysia again this year and a package has been designed for participants which includes: • Built-up booth space (open concept) • Far-reaching visibility and outreach for exhibitors. • Networking cocktail at Ambassador’s Residence (for Dutch Exhibitors). • Free stage presentation • Match making programme with local If you are interested to join this pavilion, please contact the Netherlands Embassy at: [email protected]

ECONOMIC POLICY UPDATE Trade Performance : April 2012 Malaysia's total trade in April 2012 amounted to RM107.97 billion, an increase of 3.2% from April 2011. Exports in April 2012 valued at RM57.74 billion was almost at the same level of April 2011 of RM57.8 billion. Imports increased by 7.4% to RM50.23 billion. Exports of manufactured goods valued at RM38.66 billion, decreased by 1.2% or RM458.9 million. It constituted 67% of total exports in April 2012. Exports of mining goods, rose by 15.8% or RM1.69 billion to RM12.35 billion while agricultural goods, contracted 18.1% or RM1.38 billion to RM6.25 billion. The slower growth in major economies and worries about the Europe debt crisis impacted exports in April 2012, with lower exports of mainly electrical and electronic (E&E) products (↓6.8% or RM1.35 billion), crude rubber (↓48.4% or RM710.8 million) and palm oil (↓12.5% or RM604.4 million). The weak global demand for semiconductor in major markets including Singapore and Germany contributed to the lower exports of E&E products. Higher exports of E&E products were however recorded to the People's Republic of China (PRC) by 6.2% due to the increase of hybrid integrated circuits and Thailand by 26.7%, due to parts and accessories for computers. Malaysia's Exports slowing, contracting vis-a-vis the EU While Malaysia's total trade has continued to expand in 1Q2012 (with a record surplus), exports have slowed down, with a considerable slump as compared to 1Q2011. Exports to the European Union, in particular, have contracted 10.4% from last year. Media have suggested that this contraction is due to the weak economic developments in the Eurozone. Compared with 4Q2011, a strong increase in exports can be seen in the petroleum and rubber products, and

mining commodities sectors. A decline in exports is however to be noted in the primary agriculture, semiconductors or crude oil and liquefied natural gas sectors. First quarter drop in Foreign Direct Investment, net outflow increasing First quarter Foreign Direct Investment (FDI) inflows to Malaysia totalled EUR1.88 billion (out of which EUR1.48 billion was invested in the manufacturing sector), a 25% y-o-y decrease. FDI inflows to Malaysia have been in a downward trend since 2H2011. In 2011, Malaysia attracted EUR8.2 billion of FDI, but saw approximately 50% less investment in the latter half of the year. Given this, Malaysia is likely to find it difficult to repeat last year's 12.3% y-o-y FDI increase. BNM reported that the financial account recorded a larger net outflow of EUR2.59 billion during the first quarter (4Q2011 EUR0.05 billion). Investment outflows increased to EUR4.25 billion in the first quarter 2012, something mainly attributed to large direct investments abroad by Malaysian companies. Malaysia hopes for top 10 ranking in World Bank's "Ease of Doing Business Report" Malaysia aspires to be in the top 10 in the World Bank's "Doing Business Report" in a few years’ time, said Tan Sri Yong Poh Kon, the Co-Chair of the Special Taskforce to Facilitate Business (PEMUDAH). In 2012, Malaysia was ranked 18th, after being in the 23rd position in 2011. “Malaysia has proved, and will continue to show to the World Bank and other economies, that it is serious in transforming its business-doing agenda,” remarked Yong. "This in turn will reflect better rankings in surveys and reports," he added.

The annual report is published every October to indicate ranks for the following year. In the 2012 report, released by the World Bank last year, Malaysia was placed fourth in protecting investors and number one in providing credit. “Malaysia also registered a massive improvement in rankings such as for Starting a Business, from being 111th previously to 50th now," Yong told reporters after the forum on "World Bank Methodology Workshop in Dealing with Construction Permits". According to the World Bank, Malaysia is ranked 31st in the segment for Enforcing Contracts, a jump from 60th position previously, while climbing leaping 10 places to the 47th spot in Resolving Insolvency. The PEMUDA Chairman stressed the fact that to achieve the top 10 position, everyone in the public and private sectors must work together. "Though we are not driven by the World Bank Report rankings alone, it provides us with an opportunity to see how much we have progressed and more importantly, the effectiveness of our initiatives. Minimum wage announced On International Labour Day, Prime Minister Najib announced the introduction of a national minimum wage which will amount to RM900 (EUR 225) for Peninsular Malaysia and RM800 (EUR200) for East Malaysia, and is expected to benefit 3.2 million people. Most companies will be required to begin paying the minimum wage in six months, while companies with five workers or less will be given a year to comply with the new law. Foreign workers will be entitled to the minimum wage. The scheme however excludes domestic workers, like maids and gardeners. The minimum wage was allegedly introduced as a result of a consultation with the Technical Committee of the National Wage Advisory Council at the World Bank.

However, the government has also been under pressure from trade unions for over a decade, during which wages only rose by 2.6% while productivity increased by 6.7%. The 900-ringgit monthly wage will double the salary of many workers particularly in rural areas, while it might prove insufficient for those working in big urban centres such as Kuala Lumpur, which have seen a sharp rise in living costs over the last few years. This is particularly beneficial for the Government as rural areas are Barisan Nasional strongholds and will likely continue to support the ruling coalition. Despite the benefits it will bring to those affected, the new scheme was met with criticism. For example, according to experts the introduction of a minimum wage could increase the cost of exports if companies passed the extra cost onto their customers. Furthermore, the new minimum wage may cause a rise in unemployment, 'black market' labour and inflationary pressures. On the other hand, the opposition Socialist Party of Malaysia has called for the minimum wage to be 1,500 ringgit (EUR 375) a month. Incentives provided to Energy Efficient Vehicle (EEV) producers and importers The Ministry for International Trade and Industry (MITI) has announced that the government had been successful in attracting foreign investments in local EEV manufacturing capacity. Attracting EEV investments is in line with MITI’s plan to transform Malaysia into a hub for EEV production by 2020 and likely to be a key issue in the upcoming National Automotive Policy, a sector regulatory steering document. The exact investment plans, specifying the foreign investor and type of capacity build-up is yet to be announced. So far, Japanese Honda and Toyota have been the main beneficiaries of the 100% import and excise duty exemptions on hybrid vehicles (with engine capacity of below 2000cc) provided since 2011.

Business & Industry News Malaysia’s E&E given a boost with opening of a collaborative research centre Malaysia’s electrical and electronics (E&E) sector is given a boost with the official opening of a publicprivate Collaborative Research in Engineering, Science and Technology (CREST) Centre in Penang. The centre in Bukit Jambul, involves participation from the academia, corporate sector and the government to promote and work together on innovative research, design and development activities for the E&E sector. The founding members include the Northern Corridor Implementation Authority (NCIA); the government’s investment arm, Khazanah Nasional Bhd; Universiti Sains Malaysia as well as a number of global technology companies with operations in the country such as Intel, AMD, Agilent Technologies, National Instruments, Avago Technologies, Motorola Solutions, Osram Opto Semiconductors, Altera and Silterra Malaysia. Another two companies are expected to join this year. NCIA Chief Executive, Datuk Redza Rafiq had earlier said that some RM12 million has been injected into the project to-date and another RM800 million will be invested for R&D in the E&E sector over the next decade with RM100 million coming from the public sector. Through the public-private collaboration, Crest targets to develop a research ecosystem, which is selfsustainable in the Northern Corridor, focusing on E&E as a base and further deepening the sector he said, adding that the R&D projects would be responsive to market requirements. The centre will also focus on building up talents for the sector as well as the commercialization of the R&D projects.

Ten research projects have so far been identified among which are in the areas of semiconductor, light emitting diode (LED), sustainable sources, medical electronics, radio frequency and microwave as well as display devices. Global demand prompts local LED manufacturers to expand production As the global demand for LED surges, Light-emitting diode (LED) product companies in the country are either expanding or manufacturing new LED test equipment and high brightness modules in 2012. The increase in demand is also due to the gradual phasing out of incandescent lighting in Europe and China. Osram Opto Semiconductors (M) Sdn Bhd would be expanding its LED chip production plant in Bayan Lepas, Penang, while local public-listed LED companies such as Globetronics Technology Bhd, Elsoft Research Bhd, and MMS Ventures Bhd were producing a new range of high brightness LED modules, LED test equipment for high voltage LEDs, and multi-functional LED test equipment this year. China currently accounts for 35% of the global general lighting market, which is expected to rise 45% by 2020. Osram Opto Semiconductors’s LED chip production plant in Bayan Lepas is expanding its production capacity to support the demand for LED lighting in China. This scenario in the Chinese LED market had prompted the company to set-up a new assembly facility in Wuxi, which would commence operations in 2013 to assemble LED chips manufactured in Penang. By 2014, incandescent lighting would no longer be available in the replacement market in the country. There are 20 local LED companies involved in the assembly of LED lighting products for domestic

consumption in the household and commercial segment in Malaysia.

means that the total outlay for railway projects in Malaysia may hit RM190bil.

Healthy construction outlook with rail projects investments alone seen at RM160bil The order books of construction players should remain healthy going forward on expectations that the Government will continue to embark on rail projects, with estimated investments for the industry to reach RM160bil by 2020.

The expected RM160bil investment is also inclusive of some of the on-going projects. A construction analyst said this spending, either from the Government or the private sector in improving the country's rail network would provide a layer of insulation from the current external pressures from the eurozone and the United States.

News reports yesterday, citing the Land Public Transport Commission (SPAD), said more than RM50bil had been invested in the transportation industry since the 1990s and that investments for the sector could reach RM160bil in another eight years' time . MIDF Research said construction companies were expected to benefit strongly if all the projects planned under the Urban Rail Development Plan materialised and the feasibility study of high speed rail (HSR) turned out positive.

It will not only benefit the construction players but also keep employment rate and support other related industries as well such as cement and steel. Furthermore, for a country of this size and location, the improvement of rail network would be very beneficial to economy when it finally picks up.

This news reinforces the research house's positive view on the sector, especially on the efforts of the Government to increase public investment by embarking on public infrastructure projects. There is also an urgency to speed-up the construction of public infrastructure projects as was the case of the first line of mass the rapid transit. Additionally, MIDF also believes that the RM160bil indicated by SPAD does not include HSR project, based on media reports quoting the Malaysian Industry Government Group for High Technology (MIGHT). The HSR project is still in the drawing board and is currently at the feasibility study stage. According to SPAD, a consultant has been appointed to study the technical, economic and financial viability of the project. The HSR project could cost RM30bil, which

Terengganu’s bio-refinery complex to draw RM7 bil in investment A bio-refinery complex to be built in Terengganu covering 1,000ha, the largest in Asia, is expected to draw close to RM7billion in investment. The project to be developed at the Kerteh Biopolymer Park has received an allocation of RM17 0million for its infrastructure development and construction work is scheduled to begin in July, according to Terengganu Menteri Besar, Datuk Seri Ahmad Said. Datuk Seri Ahmad was speaking after witnessing the signing of a strategic collaboration agreement between the Terengganu State Government, East Coast Economic Region Development Council (ECERDC) and the Malaysian Biotechnology Corp (BiotechCorp) in Kuala Terengganu. The complex, to be operational by 2014, would use renewable energy from biomass instead of natural gas. It would be the first in Malaysia to use cellulosic feedstock to produce bioderivatives such as advanced

carbohydrates, biochemical, biomaterial, biofertiliser and active feed ingredient.

installed on a Module Structure Frame deck level of the existing F23R-A platform.

The total project is expected to generate a cumulative gross national income of RM20.4 billion and 2,500 green-jobs by 2020.

The third structure was a four-legged, five bay jacket concept substructure and would support the F14DR-A topside. With piles and conductor, the entire jacket would weigh about 6,400 tonnes.

BiotechCorp Chief Executive Officer, Datuk Mohd Nazlee said that 30,000 ha have been allocated as feedstock plantations that would yield 10.5 million tonnes of wood chips a year from Acacia mangium and Leucaena lrucocephala species, to ensure uninterrupted supply of feedstock. Meanwhile, the East Coast Economic Region (ECER) had attracted investments of over RM30billion to-date. MMHE wins RM278m jobs from Sarawak Shell Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) has secured three contracts worth RM278mil from Sarawak Shell Bhd to build topside, process module and jacket for the latter's oil and gas operations. Malaysia Marine and Heavy Engineering Sdn Bhd, had successfully bid for the F14/F29 project award which comprised three structures. The first was the procurement, fabrication and yard pre-commissioning of the F14DR-A topside, which would weigh 2,024 tonnes when completed. The F14DR-A is a nine-slot unmanned satellite drilling riser platform and would initially consist of three gasproducing wells. The topside would be fabricated with the added flexibility of producing up to five gasproducing wells in the future. The second was the procurement, fabrication and yard pre-commissioning of F14/F29 process module weighing 1,731 tonnes. The process module would separate the gas produced by F14DR-A and F29 subsea system and it would be

The F14/F29 would enhance the production of gas in Sarawak as these structures would be installed at gas field located at a water depth of about 320 ft when they are completed in about a year's time. Sugar producer MSM looking for upstream opportunities Sugar producer MSM Malaysia Holdings Bhd is in talks with parties in South-East Asia to pursue possible upstream opportunities, including acquiring sugar cane plantations. The company, which is part of the agro-based Felda Global Ventures Holdings Bhd, is particularly interested in Indonesia while Myanmar and Cambodia remained viable options. About RM100mil from the RM422.5mil raised via MSM's IPO last year has been set aside for the purpose of going upstream. Of the proceeds, about RM85mil would be spent this year to upgrade production facilities, among others. MSM currently has an annual production capacity of more than 1.1 million tonnes of refined sugar and plans to increase this further by 2015. The firm made a net profit of RM263.82mil for the financial year ended Dec 31, 2011, 13% more than the RM237.87mil achieved in the same period a year earlier.

RM200m fund for creative industry The government will launch a RM200 million MyCreative Venture Capital fund soon to invest in and provide loans to targeted enterprises. Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the fund would also be used to promote new ventures in the highgrowth creative industry. “We have identified the creative industry as one with exciting growth potential,” he said. Ahmad Husni also announced that another RM200 million has been set aside for skills development projects under the Strategic Action for Youth programme. On another creative industry loan launched last year, Ahmad Husni said the response was overwhelming with RM164 million worth of loans approved as of last month. Among the activities covered under the loan scheme are the film-making, music, animation and content development. The minister said Malaysia’s third industrial revolution would be led by a new breed of entrepreneurs. “They are innovative and creative and they will come out with market-leading products. Ahmad Husni said the government would continue to play a big role in providing support for companies with strong potential to become leaders in their fields. To further encourage growth of this industry and facilitate cross-border exchanges, Cradle Fund, an agency under the Finance Ministry, will establish the Malaysia Business Angel Network by the end of the year.

EVENTS

12 – 14 July 2012 Putra World Trade Centre (PWTC), Kuala Lumpur www.mifb.com.my MIFB is well recognized by F & B industry players from Malaysia and beyond. Staging for the 13th time, MIFB series has been growing not only in size, but most importantly in quality and scope of exhibits. Its proven track record, popularity with visitors and success for exhibitors are indeed making it one of the most anticipated events of its kind in the region. Bringing together a thrilling richness and varied mix of Malaysian and multinational F & B products and services is the unique feature of MIFB 2012. It targets to attract high number of quality buyers and top decision makers from around the world to explore unlimited potentials from the lucrative F & B global marketplace.

18 - 20 September 2012 Kuala Lumpur Convention Centre Kuala Lumpur www.mogsec2012.com.my The new Oil and Gas show where Malaysian Oil and Gas companies gather under one roof! This event is fully supported by Petronas and Malaysia Petroleum Resources Corporation (an agency under the Prime Minister’s Office). Come and be part of this milestone for Malaysia’s Oil and Gas Industry.

21 – 24 September 2012 1Borneo, Kota Kinabalu (Sabah) www.sie.com.my

The 7th Sabah International Expo 2012 (SIE2012) will once again kick off from 21st to 24th September 2012 at Kota Kinabalu, Sabah. It is a State Government sanctioned event organized by the Federation of Sabah Manufacturers (FSM) and the Malaysian International Chamber of Commerce & Industries (MICCI), Sabah Branch with the corporation of the Malaysia External Trade Development Corporation (MATRADE) and Ministry of Industrial Development (MID). This year's theme is "Sabah-Hub For The Far East". It is the State's premier trade fair organized biennially since 2000. Since its inception, SIE has become one of the largest and most successful trade events in the BIMP-EAGA (Brunei, Indonesia, Malaysia, Philippines East Asean Growth Area). In the last 6 events, SIE has recorded an attraction of 244,771 visitors and participants from over 20 countries.

10 – 13 October 2012 Kuala Lumpur Convention Centre (KLCC) Kuala Lumpur www.igem.com.my Themed "A Green New Deal: Greentech for Growth", the 3rd International Greentech & Eco Products Exhibition & Conference Malaysia (IGEM2012) aims to help push the rapid adoption of green technology, which is an emerging driver, to deliver a double impact of sustainable economic growth as well as to address the environmental and energy security issues.

Having achieved its foothold as the largest green exhibition in the region, IGEM2012 will continue its pursuit to gather like-minded industry players and professionals from various sectors, public and private, big and small, local and foreign, new as well as established, to explore and seize the opportunities from the exciting and emerging green market in the country and the region. To spur on fast track growth of Green Technology for sustainable consumption and production, IGEM2012 brings the dynamism of renewable energy, energy efficiency and green transportation for adoption and start-ups, while providing an essential platform to launch, feature and showcase innovative eco-products, green technologies and services. It is indeed a mustattend event for green product buyers and sellers to interact, transact and forge new partnerships and cross border collaboration. This four-day event is expected to draw on more than 600 booths with exhibitors from around the world with over 60,000 visitors. Don’t miss out on the green opportunities and register your participation now.

05 – 07 November 2012 Kuala Lumpur Convention Centre (KLCC) Kuala Lumpur www.biomalaysia.com.my The Bio Malaysia Exhibition is the largest trade exhibition on biotechnology in the region. More than 10,000 trade visitors from every region are expected to visit this international showcase that will feature breakthrough inventions from more than 350 leading corporations, research institutions, universities, government agencies and prominent individual researchers. Exhibits will include products and solutions

for Healthcare and Pharmaceuticals, Agriculture, Food & Beverage, Environment, Water and Wastewater Management, Manufacturing and Bio-Processing, Fo restry, Mining, Biochemical and Biofuel. The Exhibition is designed to be the best meeting place for the forming of mutually beneficial partnerships and the introduction of exciting new business opportunities. With an estimated 10,000 visitors, 200 exhibitors and 1500 conference delegates expected to be in attendance, making little best meeting point of the year for industry professionals. The networking events tailored specifically to the needs of the industry and a highly effective business matching program, Bio Malaysia 2012 will fulfil the most ambitious business aspirations. "Biotechnology has been recognized by the Government of Malaysia as one of the key growth drivers in aiding the country to become a developed nation by 2020.

The Malaysian Dutch Business Council (MDBC) is a membership organisation for Dutch and Malaysian companies. The broader aim of the MDBC is to foster business ties between Malaysia and the Netherlands. MDBC organises numerous business and social events for its members. MDBC provides as such ample networking opportunities. Furthermore MDBC executes a Students Internship Programme (SIP). Through SIP MDBC members can employ Dutch student interns on a temporary basis. For information about MDBC and its upcoming events, please visit: www.mdbc.com.my