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INVESTMENT OPPORTUNITIES IN THE HALAL FOOD INDUSTRY

IN MALAYSIA

About MIDA

Malaysia Key Economic Indicators

Approved Investments

Investment Opportunities in the Halal Food Industry

Investment Policies & Incentives

Potential of Halal Food Industry in Johor

Ranking

Why Malaysia?

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Who Are We?

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First point of contact for investors who intend to set up projects in the manufacturing

and services sectors in Malaysia

Malaysian Industrial Development Authority - Established in 1967 under Act of Parliament, 1965

The principal Malaysian Governmentagency responsible for the promotion ofinvestments and coordination ofindustrial development and selectedservices sectors in the country

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Follow-up /

Monitoring

• Foreign Direct Investment

• Domestic Investment

• Manufacturing & Services

• Manufacturing Licenses

• Tax Incentives

• Expatriate Posts

• Duty Exemption

• Principal Hub & selected services

• Assist companies in the

implementation & operation of

their projects

• Facilitate exchange & coordination

among institutions engage in or connected

with industrial development

• Advisory Services

• Planning for industrial development

• Recommend policies & strategies on

industrial promotion and development

• Formulation of strategies, programmes and

initiatives for international economic

coorperation

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MALAYSIA PRODUCTIVITY CORPORATION

Tokyo

Osaka

Seoul

Taipei

ShanghaiGuangzhou

Malaysia

Singapore

Sydney

Mumbai

Dubai

Stockholm

Frankfurt

Munich

Milan

Paris

London

Boston

New York

ChicagoSan Jose

Los Angeles

Houston

23 Overseas Centres

Beijing

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Headquarter

KL Sentral, Kuala Lumpur

Johor Bahru

Melaka

Seremban

Selangor

Ipoh

Penang

Alor Setar

Kota Bharu

Kuala

Terengganu

KuantanKota Kinabalu

Kuching

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Based outside MIDA

Immigration

Department

Royal Malaysian

Customs

Telekom Malaysia

Berhad Labour

Department

Iskandar Region Development Authority

(IRDA)

East Coast Economic Region Development

Council(ECERDC)

Regional Corridor Development Authority

(RECODA)• Financial Services• Petrochemical and Maritime • Healthcare• Tourism and Logistic Industry • Manufacturing & Services

• Resource Based Industry• Aluminum, Glass, Steel, Oil-

based Industry, Palm Oil, Fishing & Aquaculture, Livestock, Timber-based, Marine

• Energy• Tourism

• Tourism• Oil & Gas• Manufacturing • Agriculture • Education

• Agro-based Industry • Tourism • Logistics • Manufacturing

Tourism Manufacturing &

Design Modern Agriculture Logistics Education & Health

Northern Corridor Investment Authority

(NCIA)

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Sabah Economic Development Investment Authority

(SEDIA)

Sarawak Economic

Development CorpJohor State Investment

Centre

InvestMelaka

Negeri Sembilan

Investment Centre

Biotechnology

Corporation

InvestPenang

Kedah Investment Centre

Pahang State Development

Corporation

Invest Selangor Berhad

InvestPerak

Now, Malaysia’s investment environment consists of multiple

national, regional and state investment promotion agencies

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2013 2014 2015 2016f

Real GDP (%) Growth 4.7 6.0 5.0 4.0-4.5

Inflation (%) 2.1 3.2 2.1 2.0 – 3.0

Per Capita Income (US$) 10,034 10,111 9,080 9,396

Unemployment (%) 3.1 2.9 3.2 2.9

International Reserves (US$ bil) 134.9 115.9 95.3 NA

Source: MOF, BNM, Economic Report 2015/2016

11Source: MIDA 11

4,887Projects Approved

USD1.00 = RM4.29

180,244 Employment Opportunities

81 : 19Domestic : Foreign

FDI

USD 8.4 bil.

(19%)

DDI

USD 35.1 bil.

(81%)

DDI

FDI

81

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USD1.00 = RM4.29

19MANUFACTURING

USD 17.4 B(40%)

USD43.5 BILLION

SERVICESUSD25.2 B

(58%)

PRIMARYUSD 0.89 B

(2%)

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MANUFACTURING DDI

FDIUSD5.1 bil

(29%)

USD

17.4 B

USD12.3 bil

(71%)

680 Projects Approved

66,494 Employment Opportunities

TOTAL APPROVED INVESTMENTS FOR

MANUFACTURING & SEVICES SECTORS (2015)

USD1.00 = RM4.29

USD

25.2 B

SERVICES

USD2.8 bil

(11%)

USD22.4 bil

(89%)

112,194 Employment Opportunities

4,150 Projects Approved

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No. Industry No. of Project Approved

Investment (USD Billion)

1 Petroleum Products (Inc. Petrochemicals) 12 6.29

2 Natural Gas 1 2.43

3 Electronics & Electrical Products 93 2.08

4 Transport Equipment 55 1.52

5 Non-Metallic Mineral Products 25 0.86

6 Basic Metal Products 28 0.84

7 Food Manufacturing 51 0.62

-

0.2

0.4

0.6

0.8

1.0

1.2

15

USD Billion

0.7

1.00.9

0.4

0.3 0.3 0.3 0.30.2

0.1

USD1.00 = RM4.29

87 Projects

5,351 Employment opportunities

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0.7

0.4

0.3 0.3 0.3 0.3

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Malaysia exported RM 42 billion of halal products in 2015.

In 2014, Malaysia exported RM 37.7 billion of halal products representing 5.1% of

the total exports for the country.

RM 50 billion is to be targeted for 2016.

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Food processing in Malaysia contributed about 10% to total manufacturingoutput.

More than 3,200 establishment ; > 80% SMEs and predominantly Malaysian-owned establishments

Diverse production of wide variety of food products ranging from meat products,seafood products, cereal products, cocoa products, herbs and spices

MNC’s in Malaysia are mainly producing palm-based products such as cookingoils, non-dairy creamer, food ingredients & seasonings and etc.

Major exports of processed food:- edible products and preparations- cocoa and cocoa preparations- prepared cereals and flour preparations - sugar & sugar confectionery

Sources of FDI for food products are mostly from Singapore, Netherlands, Japan,USA, Switzerland

WORLD’S LARGEST EXPORTER OF PALM OIL

SOURCE : MPOB

ASIA’S LARGEST COCOA PROCESSOR

WORLD’S FIFTH LARGEST COCOA PRODUCER

SOURCE : MCB

WORLD’S FIFTH LARGEST PRODUCER OF PEPPERSOURCE : MPIC

JAPAN

USA

Switzerland Netherlands

Denmark France, UK

Singapore

Malaysia

Availability of resources • Palm Oil Derivatives• Bio-diverse forest, flora

Strategic location

ASEAN• 7th largest economy in

the world – combined GDP USD2.4 trillion

• Over 620 million population

World RecognisedJAKIM Halal Certification

Dedicated Halal Parks

Well developed Infrastructures

Pro-government Business

Attractive IncentivesInside & Outside Halal

Parks

Malaysia has Liberal Policies

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Freedom to Repatriate Capital, Interest, Dividends and Profits – No Restrictions

Manufacturing & selected services sectors can be wholly foreign-owned

OWNERSHIP

CAPITAL

EXPATRIATE POSTS

Liberal policy, based on merit of each case

Palm Oil Products & Derivatives• Palm based food products & ingredients :a. Specialty animal fat replacerb. Palm based mayonnaise & salad dressingc. Milk or coconut powder substituted. Red palm oil & related productse. Palm based food ingredientsf. Modified (interesterified) palm oil/kernel

oil productsg. Margarine, vanaspati, shortening & other

manufactured fat productsh. Cocoa butter replacers, cocoa butter

substitute, cocoa butter equivalent, palm mid fraction or special olein

• Processed products from :a. Palm kernel cakeb. Palm oil mill effluentc. Palm biomass

Processing of Agricultural Produce• Chocolate & chocolate confectionery• Vegetables, tubers or roots & fruits• Livestock products (Downstream &

High Value Added)• Agricultural waste or agricultural by

products• Aquatic products• Aquaculture feed• Plant extracts for pharmaceutical,

perfumery, cosmetic or food industries& essential oils

• Food supplement• Additives, flavours, colouring &

functional ingredients

INCENTIVES

Pioneer Status (PS)Income Tax Exemption

70 % or 100 % for 5 years (MIDA)

10 years (MOA)

Investment Tax Allowance (ITA)

60 % or 100 % on qualifying capital expenditure for 5 or 10

years

(MIDA)

Investment Tax

Allowance (ITA) 100%

of qualifying capital

expenditure incurred within a

period of 5 years

HALAL

(MIDA)

Investment Tax Allowance (ITA)

100% for 10 years or Income tax exemption on

export sales for a period of 5 years

(HALAL PARK)HDC

R&D Activity i. R&D Co. – ITA 10 years

ii. Contract R&D – PS 100% for 5 years or ITA 100% for 10 years iii. In-house R&D – ITA 50% for

10 years(MIDA)

Incentive for Reinvestment (Section 4F PIA 1986) PS 70%

for 5 years / ITA 60% for 5 years(MIDA)

- Reinvestment Allowance (RA) of 60% for 15 consecutive year- Special RA : Another 3 years after RA expired , YA 2016 – 2018 (Budget 2016)

(IRB)

Eligible activity/product HALAL (MIDA)• New/additional halal food

products utilising modern and state-of-the-art machinery / technology

• Expansion with upgrading of existing plant with additional machineries/modern technology

Exemption from Import Duty on Machinery & Equipment and Raw Materials / Components (MIDA)

HALAL

Less Developed Areas• Income Tax Exemption 100% up to 15 years

of assessment (5+5+5) or• ITA 100% of qualifying capital expenditure

incurred within 10 years (MIDA)

Income Tax Exemption :

100% up to 15 years of assessment (5+5+5) OR

Investment Tax Allowance :

100% of qualifying capital expenditure incurred within 10 years

Stamp Duty Exemption on :

Transfer or leased of land or building used for development in relation to

manufacturing and services activities

Witholding Tax Exemption on :

Fees for technical advice, assistance or services or royalty in relation

tomanufacturing or services activities

Import Duty Exemption on :

- Raw materials & components used directly in the manufacturing process

- Machinery & equipment in the activity for the selected services sector

Incentives

TARGET

GROUPS

ELIGIBILITY

CRITERIAEFFECTIVE DATE

OF APPLICATION

Existing

companies

expanding their

operation into the

less developed

areas; OR

Newly established

companies

Undertake

manufacturing or

services activities in

less developed areas

with substantial

employment creation

and rural

development

Comply with

conditions including

value added, local

employment and

Managerial, Technical

and Supervisory

Index (MTS index)

Submission

period: 1 January

2015 to 31

December 2020

Application

submitted to

MIDA

Availability of 28 Industrial Areas in Johor

Availability of Raw Materials in Johor • Palm Oil, Cocoa

Supporting Industries in Johor • Cold Chain, Logistics players• Port of Tanjung Pelepas – Container

Services, Marine Services & FreeZones

Good infrastructure / connectivity in Johor• Senai International Airport• Port of Tanjung Pelepas, Tanjung

Langsat Port, Johor Port• Highways• Railways

Dedicated Zone - Iskandar Malaysia • 221,634 hectares (2,217 sq km) of

land area• 3 times the size of Singapore and 2

times the size of Hong Kong

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MAJOR INDUSTRIAL AREA WITHIN ISKANDAR MALAYSIA

global offshoring destination(A.T. Kearney Global Services Location Index™ 2016)

protecting investors(World Bank Doing Business 2015 Report)

IMD world talent rankings(IMD's World Competitiveness Yearbook 2014)

most competitive economy in overall performance (IMD's World Competitiveness Yearbook 2015)

in ease of doing business (World Bank Doing Business 2015 Report)

most competitive nation in the world (WEF's Global Competitiveness Report 2015-2016)

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most attractive investment destination(Baseline Profitability Index (BPI) 2015)

Liberal Investment Policies

Harmonious Industrial RelationsQuality of Life

Good Track Record

STRATEGIC LOCATION

Banking System

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Well Developed Infrastructure/

Connectivity

Pro-businessGovernment

Political and Economic Stability

Young, Trainable and Educated Labour Force

Malaysia Your Profit Centre in Asia

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Thank YouMr. Mohd. Rasli MudaDirector, Food Technology & Sustainable Resources DivisionMIDA SentralNo. 5 Jalan Stesen Sentral 5, KL Sentral50470 Kuala LumpurTel: +603 – 2267 3643 Fax: +603 – 2273 8467Email: investmalaysia@mida.gov.my / rasli@mida.gov.my