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INVESTMENT POLICIES & INCENTIVES FOR PLASTICS INDUSTRY IN MALAYSIA
By:
Umarani Muniandy
Chemical and Advanced Materials Division
Conference on Future of Innovation for Plastics Industry on 1st October 2015
PRESENTATION OUTLINE
CONTACT US
INVESTMENT POLICIES
INCENTIVES: • MAIN INCENTIVES • NEW INCENTIVES UNDER BUDGET
2015
2
PLASTICS INDUSTRY IN MALAYSIA
PLASTICS INDUSTRY
IN MALAYSIA
RM million
4
WORLD
PLASTICS
MATERIALS
PRODUCTION
2012
Plastics Industry Sub-sectors In Malaysia
CONSUMER & INDUSTRIAL PRODUCTS
E&E AND AUTOMOTIVE COMPONENTS
PACKAGING OTHERS
Source: Malaysian Plastics Manufacturer Association
5
FEEDSTOCK & BASIC BUILDING BLOCKS
RESINS USER RECYCLING
Consist of petroleum crude oil and natural gas
Such as PE, PP, PVC, PS, ABS, PA, SAN and PBT
Packaging, specialised plastic, E&E and automotive
components
Pallet & secondary plastic products
COMPANIES IN OPERATION
Plastics Industry Ecosystem
Enablers
6
PETRONAS’ Pengerang Integrated Complex (PIC) development
comprises the Refinery and Petrochemical Integrated
Development (RAPID) Complex and its associated facilities.
As at June 2015, MIDA approved RM39.7 billion worth of
petrochemical plants’ manufacturing licenses in relation to the
project. The PIC is expected to begin its operation by 2019.
PETRONAS remains fully committed to the project that has
received its Final Investment Decision (FID) and the project is
currently progressing well.
PETRONAS RAPID
• Liquefied Petroleum Gas, Naphtha, Gasoline, Jet Fuel, Diesel, Slurry/Fuel Oil
• Hydrogen
• Syngas
• Propylene
• Ethylene
• Butadiene
• Methyl Tertiary Butyl Ether (MTBE)
• Raffinate 2
• Methanol
• Phenol
• Bisphenol A
• Polycarbonate
• Ethylene Glycol
• Linear Low Density Polyethylene (LLDPE)
• Low Density Polyethylene (LDPE)
• Ethylene Vinyl Acetate (EVA)
• Polypropylene (PP)
• Mono Ethylene Glycol
• Di Ethylene Glycol
• Tri Ethylene Glycol
• Butadiene Rubber
• Styrene Butadiene Rubber
• Ethylene Propylene Non Conjugated Diene Rubber (EPDM)
Some Potential Products from RAPID
RM million
1,076
635
770 780
665
1,109
848 884
0
200
400
600
800
1,000
1,200
2007 2008 2009 2010 2011 2012 2013 2014
8
Approved Investments In Plastics Industry In Malaysia (2007- 2014)
9
Domestic Investment : RM755.2 Million
Foreign Investment : RM129.2 Million
4,278 Job Opportunities
51 Projects
RM884.4 Million
Approved Projects In Plastics Industry 2014
10
Approved Projects In Plastics Industry 1H- 2015
RM591 million
76.5 : 23.5 Domestic-Foreign investment ratio
26 Projects
Approved
2,290 Employment opportunities
10
Major Investments o Scientex Great Wall Sdn. Bhd. o Top A Plastic Sdn.Bhd. o BERICAP Malaysia Sdn. Bhd. o CLPG Packaging Industries Sdn.Bhd. o Klife Global Sdn. Bhd. o EG Operations Sdn. Bhd.
Note: Further details of Investment Performance is available at MIDA website http://www.mida.gov.my/home/facts-and-figures/posts/
INVESTMENT POLICIES
12
Promote the entire value chain of industry clusters
Strengthen & complete the ecosystem
Ecosystem Approach
Quality Investment (FDI & DDI)
Strong Linkages with Domestic Industries
Completing the ecosystem
Capital Intensive
High Value Added
Utilization of natural resources
Green & Clean Technology
Skills Intensive
High Income Jobs
Iconic/ Pioneer Project
High Technology & Knowledge
Intensive
13
Quality Investment
High technology, capital intensive & knowledge driven industries:
Industries manufacturing intermediate goods:
Resourced-based industries:
• Alternative Energy Sources
• Biotechnology
• Advanced materials
• Advanced electronics
• Optics and photonics
• Petrochemicals
• Pharmaceuticals
• Medical devices
• ICT
• Aerospace
• Oil & Gas • Food & Agro based • Value-added products from natural resources
• Machinery & equipment • Components & parts • Moulds and dies
14
Targeted Sectors In Manufacturing
• Principal Hubs
• Business and professional services
• Logistics
• ICT services
• Offshore and outsourcing activities
• Distributive trade
• Education and training
• Healthcare
• Tourism
15
Targeted Sectors In Services
The Industrial Coordination Act 1975 requires manufacturing companies with shareholders’ funds of RM2.5 million and above or engaging 75 or more full time paid employees to apply for a manufacturing license (ML). ML application will be processed by MIDA.
Guidelines on Manufacturing License
16
Investment Policies
Repatriation of Funds
Foreign Equity
17
Investment Policies
18
Investment Policies
Guidelines on
• The consideration of expatriate posts will be based on the company’s requirement and merits of the case.
• The company must submit the following documents before the expatriate post can be considered:
SSM ML and/or Incentive Business Licence
• Minimum basic salary of RM5,000 (term-post).
• The approval will be automatically cancelled if the company failed to fill-in the approved expatriate post within 1 year from the date of approval.
MAIN & NEW
INCENTIVES
20
•Manufacture of plastic products such as:-
• Specialised plastic films or sheets
• Geosystem products
• Engineering plastic products
• Products moulded under clean room conditions
• Biopolymers or products thereof
• Manufacturing related services – Recycling of waste such as:
• Toxic & non toxic waste
• Biodegradable disposable packaging products and household wares
GENERAL LIST
•Development and manufacture of polymers and biopolymers
HIGH TECHNOLOGY
•Manufacture of plastic products such as:-
• Decorative panels & ornaments
• Epoxy encapsulation moulding compound SMALL SCALE
Promoted List Under PIA 1986 – Related to Plastics
PIONEER STATUS (PS) Income tax exemption ranging from 70% or 100% for a period of 5 or 10
years
GENERAL LIST
INVESTMENT TAX ALLOWANCE (ITA) 60% or 100% on qualifying capital
expenditure for 5 years. Can be offset against 70% or 100% of statutory
income.
PIONEER STATUS (PS) 100% income tax exemption for a
period of 5 years
SMALL COMPANIES LIST
INVESTMENT TAX ALLOWANCE (ITA) 60% on qualifying capital
expenditure for 5 years. Can be offset against 100% of statutory
income.
Main Incentives
21
Reinvestment Allowance
60% on qualifying capital expenditure for 15 consecutive years
(Application to be submitted to IRB)
Import Duty Exemption
For raw materials and components
(Application to be submitted to Tariff Division, MIDA)
Other Incentives
22
IMPORT DUTY EXEMPTION
Self-Declaration Mechanism For Import Duty Exemption on Machinery and Equipment Through The Customs Duties (Exemption) Order 2013
Import Duty Exemption on Raw Materials / Components
SELF-DECLARATION
MECHANISM
Improve business efficiency
Confirmation letter issued once by MIDA valid
until 31/12/2017
Permission to claim the exemption can be obtained
within a period of two (2) weeks from Customs
No necessity to use the bank guarantee facilities
for the clearance of goods
No necessity to redeem the bank guarantee
No additional costs incurred
Self-declaration and self-regulated
have enjoyed the facilitation up to 3rd August 2015
www.mida.gov.my
Scope of Exemption
Customs Duties
(Exemption) Order
2013
Qualifying Criteria
Import duty exemption on machinery
and equipment excluding spare parts
and consumables imported or purchased
from a Licensed Manufacturing
Warehouse (LMW), Bonded Warehouse
or Free Zone (FZ)
Under item 115
The machinery and equipment,
must be new, unused and directly
used in the manufacturing process
of the finished product(s) at the
approved manufacturers’
premise(s)
www.mida.gov.my
STEP 1 : APPLICANT Submit the following form online via https://jpc.online.mida.gov.my to obtain the confirmation letter from
MIDA: SPM 1/2015 - Manufacturer in PCA
STEP 2 : MIDA Accept complete application form and supporting documents Issuance of the confirmation letter via online
STEP 3 : APPLICANT View and download the confirmation letter via https://jpc.online.mida.gov.my/midawebpki/checkStatus.jsp Provide complete information on the machinery and equipment to be imported in Appendix I, downloaded
via http://www.customs.gov.my. Submit the following documents to the State Customs Control Station (Industrial Section) to obtain the
permission to import the machinery and equipment: Company’s covering letter Confirmation letter issued by MIDA Appendix I (hard copy and soft copy)
STEP 4 : STATE CUSTOMS CONTROL STATION (INDUSTRIAL SECTION) Accept complete Appendix I and supporting documents Verify the confirmation letter issued by MIDA and other company’s document via
https://jpc.online.mida.gov.my/SMPCMIDA Issuance of the permission letter for the importation of the machinery and equipment
STEP 5 : APPLICANT Submit the permission letter to the Customs Import/Export and Border Control Branch for the clearance of
goods Notify MIDA and the related State Customs Control Station (Industrial Section) when a company ceases
operation or winds up
www.mida.gov.my
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5
3
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IMPORT DUTY EXEMPTION ON RAW
MATERIALS / COMPONENTS
2
3
Scope of Exemption Qualifying Criteria
Import duty exemption on
raw materials /
components
Directly used in the manufacturing activity(s) at
the approved premise(s) and subject to local
availability
Minimum duty exemption which will be
considered for evaluation: RM5,000 (subject to
changes)
Application must be submitted before the
materials are imported
Period of exemption 1 - 3 years
Type of
Application
New /
Extension
Additional
Quantity
Appeal
Post Approval
(Amendments
on Approval)
Current
Form
PC2 PC2-1 Company’s
letter with
justification &
supporting
documents
Company’s letter
with justification &
supporting
documents
Mode of
Submission
Online / Manual Manual
Step 1 • Submission of application through online/physical form
Step 2 • Accept complete application and issued acknowledgement
letter
Step 3 • Evaluation by the processing officer
Step 4 • Decision made in the JPC2 meeting
Step 5 • Notify company on the decision through email
Applicant
MIDA
MIDA
JPC2 Committee
MIDA
Tariff Division Tel : 603-22673539 Fax : 603-22745156 E-mail : [email protected] Website : www.mida.gov.my
For further clarification, please contact:
New Incentives Under The 2015 Budget
Capital Allowance to Increase Automation
in Labour-Intensive Industries
Incentive for Less Developed Areas
Incentive for the Establishment of
Principal Hub
Incentive for Industrial Area Management
Incentive for Industrial Area Management
Category 2:
Other industries - ACA of
200% on the first RM2 million
expenditure incurred within
Year of Assessment 2015 to
2020.
IMPLEMENTATIO
N TIMELINE
Manufacturing
companies (labour
and non-labour
intensive) operating
at least 36 months in
Malaysia
Category 1:
Year of Assessment
(YA) 2015 – YA 2017
TARGET GROUP TYPE OF INCENTIVE
Category 2:
Year of Assessment
(YA) 2015 – YA 2020
Category 1:
Labour intensive industries
(rubber products, plastics,
wood, furniture and textiles) –
ACA of 200% on the first RM4
million expenditure incurred
within Year of Assessment
2015 to 2017.
ACCELERATED CAPITAL ALLOWANCE (ACA)
33
Possesses a valid Business Licence from
Local Authority and/or Manufacturing Licence
from MITI
Company residing in Malaysia and in
operation for at least 36 months
Expenditure incurred within the relevant years
of assessment
ELIGIBILITY CRITERIA
34
APPLICATION PROCEDURES
35
To submit ACA form to the respective division in
MIDA for non-technical eligibility;
To submit application to SIRIM for each
machine’s verification of productivity level
(technical eligibility).
Implementation timeline:
- Category 1:
Year of Assessment (YA) 2015 – YA 2017
- Category 2:
Year of Assessment (YA) 2015 – YA 2020
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 lease 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 to
manufacturing 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
INCENTIVE FOR LESS DEVELOP AREA
36
TARGET
GROUPS
ELIGIBILITY
CRITERIA EFFECTIVE 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
37
APPLICATION
PROCEDURES
Submission using
ICA/JA1 or
ICA/JA2 or
ICA/JA3
DEFINITION OF PRINCIPAL HUB
• A locally incorporated company that uses Malaysia as a base for conducting its regional and global businesses and operations to manage, control, and support its key functions including management of risks, decision making, strategic business activities, trading, finance, management and human resource.
38
Strategic Services 1. Regional P&L/Business Unit
Management 2. Strategic Business Planning and
Corporate Development 3. Corporate Finance Advisory Services 4. Brand Management 5. IP Management 6. Senior-level Talent Acquisition and
Management
Business Services 1. Bid and Tender Management 2. Treasury and Fund Management 3. Research, Development &
Innovation 4. Project Management 5. Sales and Marketing 6. Business Development 7. Technical Support and
Consultancy 8. Information Management and
Processing 9. Economic/Investment Research
Analysis 10. Strategic Sourcing, Procurement
and Distribution 11. Logistics Services
Shared Services 1. Corporate Training and Human
Resource Management 2. Finance and Accounting
(Transactions, Internal Audit) 3. General Administration 4. IT Services
QUALIFYING SERVICES
39
EFFECTIVE
DATE OF
APPLICATION
Newly established
companies; OR
Existing
companies
appointed by Local
Authority
100% tax exemption
on statutory income
for 5 years
commencing from the
date a company
commences its
activities
Submission
period: 1 January
2015 to 31
December 2017
Application
submitted to
MIDA
TARGET
GROUP
TYPE OF
INCENTIVE
INDUSTRIAL AREA MANAGEMENT
40
Umarani Muniandy
Malaysian Investment Development Authority (MIDA)
Chemical & Advanced Materials Division
Tel: 03-2267 6678
Fax: 03-2274 8502
Email: [email protected]
www.mida.gov.my
Thank You MIDA Sentral No. 5 Jalan Stesen Sentral 5 K L Sentral 50470 Kuala Lumpur Tel. 03 – 2267 3633, Fax. 03 – 2274 7970 [email protected] 42
Malaysia Your Profit Centre in Asia