DOMESTIC DIRECT INVESTMENT DDI INITIATIVES MITI

DOMESTIC DIRECT INVESTMENT (DDI) INITIATIVES

MITI & ITS AGENCIES MALAYSIA PRODUCTIVITY CORPORATION HALAL INDUSTRY DEVELOPMENT CORPORATION 2 MALAYSIA AUTOMOTIVE INSTITUTE

Chairman MIDA’S NEW ORGANISATION STRUCTURE Chief Executive Officer Manufacturing Development (Resource) Services Development (I) Chemical & Advanced Material Oil & Gas Food Tech. & Sustainable Resources Life Sciences & Medical Technology Metal & Metal Alloy Healthcare, Education & Hospitality Clean Tech. & Environment Mgmt. R&D and Design Deputy CEO (Manufacturing & Services Development II) Senior Executive Director (Strategic Planning & Investment Ecosystem) Deputy CEO (Manufacturing & Services Development I) Investment Promotion Strategic Planning Investment Ecosystem Management Services Foreign Investment Coordination Strategic Planning & Policy Advocacy Licence & Incentives Compliance & Monitoring Finance Mgmt. Domestic Investment Info. Centre Investment Comm. Investment Analysis & Info. Database National Investment Secretariat Technology & Business Frontier IT System Development IPAs Coordination, ICM Secretariat & Pipeline Tracking Infrastructure, Utilities & After Sales Administration Human Resource Mgmt. Legal & Govt. Relations Internal Audit Manufacturing Development (Non-Resource) Services Development (II) E&E Regional Establishment, Logistics & Supply Chain Production & Advanced Engineering Building Technology & Lifestyle Transportation Technology Business & Professional Services IT & Comm. Services Capacity Development Mgmt. & Industry Talent Tariff 3

Functions of MIDA Promotion § § Foreign Direct Investment Domestic Investment Business matching Manufacturing Services Evaluation § § § Manufacturing licenses Tax incentives Expatriate posts Duty exemption OHQ, RDC, IPC and R&D status Planning Follow-up / Monitoring § Planning for industrial development § Recommend policies and strategies on industrial promotion and development § Formulation of strategies, programmes and initiatives for international economic cooperation § Assist companies in the implementation and operation of their projects § Facilitate exchange & co-ordination among institutions engaged in or connected with industrial development § Advisory Services 4

The Mission Investment Targets under Economic Transformation Programme (ETP), by 2020 73% DDI 92% (RM 953 billion) (RM 1. 3 trillion) RM 1. 4 trillion Private Investments 27% FDI 8% Public Investments * Industrial Master Plan 3 (IMP 3) Investment Ratio, DDI: FDI is 60 : 40

Domestic Direct Investment (DDI) Initiatives Domestic Investment Strategic Fund (DISF) Incentives for Acquiring a Foreign Company for High Technology Incentives for Small Scale Companies Incentives for Companies in Production (Desirous Issue) Incentives for Merger Among Malaysian Services Providers 6

D. I. S. F RM 1 billion for the fund under the 10 th Malaysian Plan Provided under the Customised Incentive Scheme, Section 127, Income Tax Act 1967 7

Objectives of the Fund To accelerate the shift of Malaysian-owned companies in targeted industries to high value-added, high technology, knowledge-intensive and innovationbased industries To enable domestic investors to develop new sources of competitive advantage and to become active participants in the global ecosystems of industries. To assist capable Malaysian companies to make the quantum leap required in driving the national investment agenda in transforming the economy The fund is not a business start-up fund but it is applicable to local companies which have new/additional investments 8

Priority Sectors Aerospace Machinery & Equipment Medical Devices Pharmaceuticals Advanced Electronics Renewable Energy Services including Design, R&D, testing, quality and standard certification, technical and skills training, engineering services, and logistics service providers Other industries, on a case by case basis 9

Scope of the Fund The fund will provide matching grants (1: 1) on reimbursable basis to cater for expenditures incurred for the following activities: Training of Malaysians R&D activities carried out in Malaysia Licensing or Purchase of New Technology Obtaining International Standards/Certification Modernisation and upgrading of facilities and tools to undertake manufacturing or services activities for Multinational Corporations (MNCs) and Malaysian conglomerates (Outsourcing activities) Definition of Outsourcing: A subcontracting process that involves manufacturing, manufacturing related services, business services and delegation of some/all operations to an external entity, usually specialised in that operation. 10

Eligibility For Training, R&D, International Standards / Certification and Licensing and Purchase of New Technology: Incorporated under the Companies Act, 1965 New and Existing companies in the Manufacturing & Services sectors with Malaysian equity ownership of at least 60% 11

Eligibility For Upgrading and Modernisation of Facilities for Outsourcing activities: New Company A subsidiary of an existing company operating in the relevant industry The parent company must have proven track record in the relevant industry Effective equity of at least 60% owned by Malaysians; Existing Company A company which undertakes reinvestments in the form of expansion / modernisation / diversification; The company must have the capability and proven track record in the relevant industry; Effective equity of at least 60% owned by Malaysians 12

Approved Projects under D. I. S. F. As at 31 July 2013: International Standards/Certification RM 1. 5 million Licensing & Purchase of New/High Technology RM 2. 65 million RM 238. 3 million A total of 40 projects Electrical & Electronics Machinery & Advanced Engineering Services Training RM 39. 1 million Transport Life Sciences ICT Wood-based R&D Capital RM 80. 8 million R&D RM 114. 2 million 13

Training of Malaysians Types of Training Pre-operational / Operational Training On-the-job Training Validation D&D and R&D In-house Training (Internal, External or Overseas Trainers) External Training (within Malaysia) Overseas training Eligible Courses such as product technology, process technology, equipment maintenance, quality control, tools & facilities and other training related to the approved project. Not Eligible Motivational courses / workshops / seminars Language courses Management / Marketing courses Further study (Postgraduate; PHD / Masters) Training related to safety Based on Guideline on Training Grant under Strategic Fund 14

Research & Development Definition of R&D – systematic or intensive study carried out in the field of science & technology Eligible Improvement of materials, devices, products, produce or processes Design, Development and Prototyping Based on Guideline on R&D Grant under Strategic Fund Not Eligible Quality Control of products, or routine testing of materials, devices, products or produce Research in social sciences or humanities Routine data collection Efficiency surveys or management studies Market research or sales promotion 15

Purchase of Machinery and Equipment for Modernisation and Upgrading of Facilities and Tools for Outsourcing activities Eligible Expenditure Special machinery / equipment which is only used in the relevant industry. Special production machines can be considered if these are additional machines and not replacing existing machines; whereby these machines are required to penetrate new markets or industries Special machinery / equipment which is required by MNCs / Malaysian conglomerates for vendors to undertake outsourcing activities Non-Eligible Expenditure Normal production machinery / equipment which is used in the general production line Normal testing machinery / equipment 16

Licensing or Purchase of New/High Technology The fund covers technology acquisition through: Technology Licensing; and Acquisition of Technology Eligible Cost of Licensing / Acquisition of Technology : Patent Design Blueprints Manufacturing/Services Know-How Technical support Note: Eligibility does not include costs of acquisition of trademark, copyright and proprietary information 17

Submission Submit application form: - ML 08 or ICA/JA-1 or ICA/JA-3 for New companies ; - ML 08 or ICA/JA-2 or ICA/JA-4 for Existing companies. Supporting documents / additional information related to the grant application 18

Thank you 19