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Shw1 ECONOMIC COMPETITIVENESS AND GLOBALISATION Dato’ Wong Siew Hai EC investPenang January 14 th, 2006.

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Presentation on theme: "Shw1 ECONOMIC COMPETITIVENESS AND GLOBALISATION Dato’ Wong Siew Hai EC investPenang January 14 th, 2006."— Presentation transcript:

1 shw1 ECONOMIC COMPETITIVENESS AND GLOBALISATION Dato’ Wong Siew Hai EC investPenang January 14 th, 2006

2 shw2 Agenda  Why Malaysia?  Competitiveness  Site Selection  Challenges  Penang’s Focus  Recommendations

3 shw3 Why Malaysia? - 1  30+ years track record of success and excellence  Politically stable and business friendly government  Unparalleled ease of doing business (needs improvement)  Human Resources and Development (82 technical schools, 20+ universities and multi lingual work force)  Competitive Costs (total and operational costs)

4 shw4 Why Malaysia? - 2  Highly developed and reliable infrastructure  Vibrant business environment and good legal & accounting practices  World-class competencies  Gateway to the ASEAN market and extensive trade ties to other countries  Quality of life

5 shw5 Attractive Incentives  Pioneer Status (tax free) Promoted: 70% of statutory Promoted: 70% of statutory income or 5 years Hi-tech: 0 tax for 5 years Hi-tech: 0 tax for 5 years Strategic: 0 tax for 10 years Strategic: 0 tax for 10 years  Investment Tax Allowance 60% allowance on qualifying 60% allowance on qualifying capital expenditure Offset against 70% of statutory Offset against 70% of statutory income income  Reinvestment Allowance 60% allowance on qualifying 60% allowance on qualifying capital expenditure Offset against 70% statutory Offset against 70% statutoryincome Extended to 15 consecutive Extended to 15 consecutiveyears Lo w e r TOTAL Cost of Doing Business ! Low utility costs – electricity and water rates that are among the water rates that are among the most competitive in the world most competitive in the world Competitive wage structures for Competitive wage structures for all levels of employees all levels of employees Cost avoidance due to Cost avoidance due to lower turnover rates lower turnover rates higher productivity higher productivity culture of quality & excellence culture of quality & excellence Low cost of living – rental, Low cost of living – rental, fuel, entertainment, food fuel, entertainment, food Inflation closely monitored Inflation closely monitored and contained and contained Competitive Costs

6 shw6 Cost of doing business (USD) – 1 Operational Cost (2005) Malaysia(Penang)China(Shenzhen)Thailand Industrial Electricity (USD/kwh) Industrial Water Tariff (USD/M3) Average Office Rent per m2 per month (USD) 5.17 – – n.a Average Industrial Land Cost per m2 (USD) 34.6 – n.a Telephone Charge per minute in USD 0.02 for first 2 mins and 0.01 min thereafter 0.03 for first 3 mins, 0.01 min thereafter 0.08 ADSL Broadband (Monthly charges in USDD) (1mbps – 2mbps) (n.a.) 17 – 90 (256 kbps) Source: SERI

7 shw7 Cost of doing business (USD) - 2 Monthly Wages (2004) Malaysia (Penang) China (Shenzhen) Thailand Management 395 – – 1847 Engineers – Technicians 316 – 789 n.an.a Operators 118 – n.a Source: SERI

8 shw8 Site Selection  Total incentives – cash or capital grant (  )  Operational costs ( )  Human Resource availability ( not enough/experience)  Business friendly government and laws ( delivery system to be improved)  Logistics ( )  Infrastructure ( )

9 shw9 Challenges  China/India factor and emerging economies - market, strategy and/or lower costs  HR to support growth up the value chain  Innovation and research in Universities  Public delivery system – ease of doing business lacking (time/costs in permit/licenses approval - ranked 21/155 countries by World Bank)  Transparency – exclusive contracts  Malaysia not well known as a location for investment

10 shw10 Penang’s response  investPenang – total service  Promote “China + 1” strategy  Identify focus areas  Promotion - roadshows – local and overseas  MITI approved projects: RM1.923b RM1.923b RM2.030b RM2.030b RM1.971 (till Sept 2005) RM1.971 (till Sept 2005)  MSC status companies 68 vs 30 goal (as of Nov 2005)

11 shw11 Recommendations  Move up the value chain – hi-tech, hi-value, R&D and innovations value chainvalue chain  Continue to grow MSC status company – technology, software,..  HR development Industry collaboration with universities Industry collaboration with universities Close short term gap with foreign K-workers Close short term gap with foreign K-workers  Creative Incentives to overcome grants expectations (ongoing)  Improve Public delivery system – be effective/responsive  Take advantage of Off Shoring Opportunities - SSO (Malaysia ranked no 3 by AT Kearney)  Grow and develop local industries (92% of Malaysian companies are SMEs) – go global Use e-commerce and e-log with RosettaNet as the standard Use e-commerce and e-log with RosettaNet as the standard  Make Malaysia known to the world as the investment location of choice (China+1) – focus on promotion

12 THANK YOU

13 shw13

14 shw14 Penang’s Focus Areas Penang’s Focus Areas Biotech & Medical devices R & D on Products Natural/bio-pharma Toxicology (CRO**) Med. Devices & Instruments Manufacturing (CMO) - Monoclonal, enzyme** - Diagnostics (biochip) Marine Biotech Clinical Trials Manufacturing and ICT* Assembly/ Test manufacturing for semicon, computer, wireless etc IC Design, RF, Photonics, Bio- informatics, Software applications, e-Biz Supply Chain Precision engineering, Automation equipment Shared services MSC status companies * ICT – Information Communication Technology


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