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Liberalisation of the Services Sector in Malaysia
Spearheading Outsourcing Opportunities in High Tech Industries20 June 2012
CONTENT OUTLINE
Approvals of Services Projects
Role of MIDA
Promoted Activities
Services Liberalisation
FTAs
Major Incentives
2
Benefits of Liberalisation
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Investments in the Services Sector
APPROVED INVESTMENTS IN THE SERVICES SECTOR
4
2012
(Jan – Mar)2011 2010 2009 2008 2007
Number of Projects 1,197 4,006 3,305 2,730 2,780 2,632
Potential Employment 19,894 43,867 54,647 37,469 36,036 50,042
Total Proposed Capital Investment (RM billion)
17.7 70.4 37.0 38.7 50.1 66.4
- Domestic (RM billion) 12.1 52.5 32.7 35.4 44.6 55.6
- Foreign (RM billion) 5.6 17.5 4.3 3.3 5.5 10.8
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Domestic
(RM52.5 billion)
74%
26%
Foreign
(RM17.9 billion)
5
Share of Domestic Investments in the Services Sector vis-a-vis
Foreign Investments
68%
32%
Domestic
(RM12.1 billion)
Foreign
(RM5.6 billion)
20112012
Jan - Mar
MAJOR SERVICES SUB-SECTORS
6
RM Billion
20112012
Jan - Mar
16.9
11.7
9.6
6.1
6.0
9.4
Transport
Global Operations Hub
Energy
Financial Services
Real Estate
Telecommunications
Others
Education
4.9
3.93.6
1.5
1.1
0.6
TransportReal Estate
Dist. Trade
Support
Services
Global Operation
Hub
Hotel &
Tourism
Others
Energy
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Current Role of MIDA in the
Services Sector
ROLE OF MIDA IN THE SERVICES SECTOR
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• First point of contact for information on services sector;
• Identify and coordinate the promotion of investment for specific services activities;
• Recommend appropriate policies and incentives to relevant ministries/agencies;
• Assist investors in the implementation of projects; and
• Collate statistics on investments in services sector.
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Promoted Activities in the Services
Sector
Promoted Activities in the Services Sector
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• Integrated Logistics Services
• Supply Chain Activities
Regional Establishments
• Operational Headquarters (OHQ)
• International Procurement Centre (IPC)
• Regional Distribution Centre (RDC)
• Treasury Management Centre (TMC)
Logistics
• Technical, Vocational & Science Training Institutions
• International / Private Schools
Education
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Promoted Activities in the Services Sector
11
• Private hospitals
• Ambulatory care centres
• Hotel
• Tourist project
• Recreational camp• Convention centre
Tourism
Healthcare Travel
Promoted Activities in the Services Sector
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Environmental Management
• Energy conservation/efficiency
• Energy generation, using renewable energy sources
• Storage, treatment and disposal of hazardous waste
• Recycling of agricultural waste and agricultural by-products
• Research & Development (R&D)
• Integrated Market Support Services
• Testing for Medical Devices
• Irradiation & Gas Sterilisation
• Industrial Design Services
Business & Other Support Services
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MAJOR INCENTIVES / FACILITIES PROVIDED
MAJOR INCENTIVES/FACILITIES PROVIDED
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� Pioneer Status - partial or full income tax exemption for a period of 5 to 10
years
� Investment Tax Allowance (ITA) ranging from 60% to 100% on qualifying
capital expenditure for a period of 5 to 10 years
� Customised incentives
� Tax and non-tax incentives according to the wish list of investors and
based on the merit of the case
� Exemption from import duty and sales tax on imported machinery,
equipment, materials, components, spare parts/replacement parts and
consumables
� Expatriate Posts
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FREE TRADE AGREEMENTS (FTAs)
COVERAGE OF BILATERAL FTAs OF MALAYSIA
16
Japan NZ Pakistan Chile India
Business Services Y Y Y N Y
Communication Services Y Y Y N Y
Construction Services y Y Y N Y
Distribution Services N N Y N Y
Education Services Y Y Y N Y
Environmental Services N Y N N Y
Financial Services Y Y Y N N
Health Services Y Y Y N Y
Tourism Services Y Y Y N Y
Recreational & Cultural and
Sporting Services
Y Y Y N Y
Transport Services Y Y Y N Y
Other Services Y Y Y N Y
Source : MITI
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REGIONAL FTAs
17
�At the regional level, Malaysia and its ASEAN partners
established the ASEAN Free Trade Area in 1992 which
focuses on trade in goods
� In 1995, ASEAN Framework Agreement of Services
(AFAS) was signed by ASEAN. The agreement aims to
establish complete liberalisation of 128 services sub-
sectors identified by WTO services classification list by
2015.
Services Sectors Identified for
Development Under the National Key
Economic Areas (NKEAs)
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ESTABLISHMENT OF 12 NATIONAL KEY ECONOMIC AREAS (NKEAs)
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Out of the 11
industry
sectors, 8 are
focusing on
services
sectors
Liberalisation of the Services Sector
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8 Broad Sectors -27 sub-sectors with no
equity condition imposed
Business
Services
Rental/Leasing
Services
Sporting &
Other
Recreational
Services
Transport
Health &
Social Services
Tourism
Supporting
& Auxiliary
Transport
Services
Finance
Transport
Computer &
Related
Services
1ST ANNOUNCEMENT – 22 APRIL 2009
Others
(i.e. Skills)
22
Computer & Related Services
Consultancy services related to the installation of computer hardware
Software implementation services
Data processing services
Data base services
Maintenance & repair services of computers
Other services – data preparation, training, data recovery & development of creative content
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23
Health & Social Services
All veterinary services
Welfare services delivered through residential institutions to old person & the handicapped
Welfare services delivered through residential institutions to children
Child day-care services including day-care services for the handicapped
Vocational rehabilitation services for handicapped
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Tourism Services
Theme park
Convention and exhibition centre (seating capacity of above 5,000)
Travel agencies & tour operators services (for inbound travel only)
Hotel & restaurant services (for 4 & 5 star hotels only)
Food serving services (for services provided in 4 & 5 star hotels only)
Beverage serving services for consumption on the premise (for services provided in 4 & 5 star hotels only)
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25
Transport Services
Class C freight transportation
(Private Carrier Licence – to transport own goods)
Sporting & Other Recreational Services
Sporting Services
(Sports event promotion & organisation services)
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Business Services
Regional Distribution Centre
International Procurement Centre
Technical testing & analysis services
Management consulting services
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27
Rental/Leasing Services
Rental/leasing services of ships that exclude cabotage& offshore trades
Rental of cargo vessels without crew (bareboat charter) for international shipping
Supporting & Auxiliary Transport Services
Maritime agency services
Vessel salvage & refloating services
7 Broad Sectors -17 + 1* sub-sectors allowed up
to 100% foreign equity
Healthcare
Distributive
Trade
Professional
Services
Education
Telecomm.
Services
Courier
Services
Environmental
Services
Finance
*An additional sub-sector identified under the SRI Lab : Quantity Surveying Services
Computer &
Related
Services
2nd ANNOUNCEMENT – 7 OCT 2011
Others
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Status of Liberalisation
No. of Sectors Implemented In Progress
17 + 1 9 (50%) 9 (50%)
Implemented In Progress
Telecommunication – ASP Legal Services (40%)
Tech & Vocational Schools Telecommunications (NSP & NFP)
(70%)
Tech & Vocational Schools – Special
Needs
Private Universities
Private Hospitals International Schools
Departmental & Specialty Stores Medical Specialist Services
Incineration Services Dental Specialist Services
Accounting/Taxation Architectural Services
Skills Training Centres Engineering Services
Courier Services Quantity Surveying Services
Benefits of Liberalisation
30
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BENEFITS OF LIBERALISATION
31
� Ability to attract foreign direct investments;
� Encourage transfer of specialized expertise and technology into
the services sectors;
� Allow opportunity for Malaysian companies to expand out of
domestic market and enter into the regional markets or global
markets;
� Create higher value employment opportunities; and
� Inject competitiveness in the services sector in Malaysia.
Thank You
