GOVERNMENT POLICIES, FACILITATIONS & ASSISTANCE FOR THE PLASTICS AND THE MOULD AND DIE INDUSTRIES IN MALAYSIA By: Umarani Muniandy Chemical and Advanced Materials Division Seminar on Government Policies, Facilitations & Assistance For The Plastics and Mould & Die Industries 1
PRESENTATION OUTLINE PLASTICS INDUSTRY IN MALAYSIA MOULD & DIE INDUSTRY IN MALAYSIA INVESTMENT POLICIES INCENTIVES: • MAIN INCENTIVES • OTHER INCENTIVES 2
PLASTICS INDUSTRY IN MALAYSIA
Plastics Industry Sub-sectors In Malaysia RM million PACKAGING OTHERS E&E AND AUTOMOTIVE COMPONENTS CONSUMER & WORLD PLASTICS INDUSTRIAL MATERIALS PRODUCTS PRODUCTION 2012 Source: Malaysian Plastics Manufacturer Association 4
Plastics Industry Ecosystem FEEDSTOCK & BASIC USER RECYCLING RESINS BUILDING BLOCKS Consist of petroleum Packaging, specialised Pallet & Such as PE, PP, PVC, PS, crude oil and natural gas plastic, E&E and automotive secondary plastic products ABS, PA, SAN and PBT components COMPANIES IN OPERATION Enablers 5
PETRONAS RAPID PETRONAS ’ Pengerang Integrated Complex (PIC) development comprises the Refinery and Petrochemical Integrated Development (RAPID) Complex and its associated facilities. As at September 2016, MIDA approved RM46.16 billion worth of petrochemical plants’ manufacturing licenses and its associate facilities 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. 6
Some Potential Products from RAPID • Liquefied Petroleum Gas, • Methanol Naphtha, Gasoline, Jet Fuel, • High Density Polyethylene Diesel, Slurry/Fuel Oil (HDPE) • Hydrogen • Linear Low Density • Syngas Polyethylene (LLDPE) • Propylene • Polypropylene (PP) • Ethylene • Mono Ethylene Glycol • Butadiene • Di Ethylene Glycol • Methyl Tertiary Butyl Ether • Tri Ethylene Glycol (MTBE) • Raffinate 2
Approved Investments In Plastics Industry In Malaysia (2008- 2015) RM million 1,200 1,109 1,000 911 884 848 780 770 800 665 635 600 400 200 0 2008 2009 2010 2011 2012 2013 2014 2015 8
Approved Projects In Plastics Industry 1H - 2016 RM271.6 million 25 Projects 58.2 : 41.7 Approved 1,026 Domestic-Foreign investment ratio Employment opportunities Major Investments o Maxonic Marketing Sdn. Bhd. o Aikay Plastic Manufacture Sdn. Bhd. o Plashouse Sdn. Bhd. o BP Plastics Sdn. Bhd. o Ichiplas (M)Sdn. Bhd. Note: Further details of Investment Performance is available at MIDA website http://www.mida.gov.my/home/facts-and-figures/posts/ 9 9
MOULD & DIE INDUSTRY IN MALAYSIA
Industry Snapshot Industry Snapshot – Malaysia (2014) Exports Imports Production RM27.3 billion # RM54.5 billion # Companies RM36.6 billion* M&E (1115) , ESI (1023) 2,138 Employees 138,524 • Specialised / Process M&E • Metal Working M&E M&E • General M&E, Modules & Sectors Components • Power Generating Manufacturing, Services, Agriculture, • Mould & Die Mining, • Forging • Machining Construction • Surface Engineering ESS • Stamping • Heat Treatment • Casting * Source from Frost and Sullivan at 2008 with consideration of 5% growth 11 # Matrade
Mould & Die Industry Background Opportunities Mould & High precision mould and dies for E&E Die industry Large moulds (>10MT) for automotive and plastic industries - Established since 1970s - About 400 industry Precision players specifications by international semiconductor industry requirements End-user industry : Automotive, E&E 12
INVESTMENT POLICIES
Investment Policies Guidelines on Manufacturing License 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. 14
Investment Policies Foreign Equity Repatriation of Funds 15
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: Companies Commission of Malaysia ML and/or Incentive Business Licence • Minimum basic salary of at least RM5,000 (term-post) and academic qualification with experience in related field. • The approval will be automatically cancelled if the company failed to fill-in the approved expatriate post within one (1) year from the date of the approval letter. 16
MAIN & NEW INCENTIVES
Targeted Plastic Sectors In Manufacturing Promoted List Under PIA 1986 – Related to Plastics • Manufacture of plastic products such as:- • Specialised plastic films or sheets • Geosystem products • Engineering plastic products • Products moulded under clean room conditions GENERAL LIST • Biopolymers or products thereof • Manufacturing related services – Recycling of waste such as: • Toxic & non toxic waste • Biodegradable disposable packaging products and household wares • Development and manufacture of polymers and HIGH TECHNOLOGY biopolymers • Manufacture of plastic products such as:- SMALL SCALE • Decorative panels & ornaments • Epoxy encapsulation moulding compound 18
Main Incentives GENERAL LIST SMALL COMPANIES LIST PIONEER STATUS (PS) PIONEER STATUS (PS) Income tax exemption ranging from 100% income tax exemption for a 70% or 100% for a period of 5 or 10 period of 5 years years INVESTMENT TAX ALLOWANCE (ITA) INVESTMENT TAX ALLOWANCE (ITA) 60% or 100% on qualifying capital 60% on qualifying capital expenditure for 5 years. Can be offset expenditure for 5 years. Can be against 70% or 100% of statutory offset against 100% of statutory income. income. 19
Incentives (Continued) Reinvestment Allowance Import Duty Exemption 60% on qualifying capital For raw materials and expenditure for 15 components consecutive years (Application to be submitted Under 2016 Budget, Malaysia to Tariff Division, MIDA) Government has agreed to provide a special RA for 3 years to companies in manufacturing and selected agricultural sectors, whose RA have expired. (Year of assessment of 2016 - 2018) (Application to be submitted to IRB) 20
Other Incentives Capital Allowance to Increase Automation in Labour-Intensive Industries Incentive for Less Developed Areas Green Technology Incentive
AUTOMATION CAPITAL ALLOWANCE (ACA) IMPLEMENTATIO TYPE OF INCENTIVE TARGET GROUP N TIMELINE Category 1: Manufacturing Category 1: Labour intensive industries companies (labour Year of Assessment (rubber products, plastics, and non-labour (YA) 2015 – YA 2017 wood, furniture and textiles) – intensive) operating ACA of 200% on the first RM4 at least 36 months in million expenditure incurred Malaysia within Year of Assessment 2015 to 2017. Category 2: Category 2: Other industries - ACA of Year of Assessment (YA) 2015 – YA 2020 200% on the first RM2 million expenditure incurred within Year of Assessment 2015 to 2020. 22
INCENTIVE FOR LESS DEVELOPED AREA Income Tax Exemption : 100% up to 15 years of assessment Stamp Duty Exemption on : (5+5+5) OR Transfer or lease of land or building Investment Tax Allowance : used for development in relation to manufacturing and services activities 100% of qualifying capital expenditure incurred within 10 years Incentives Import Duty Exemption on : Witholding Tax Exemption on : - Raw materials & components used Fees for technical advice, assistance or directly in the manufacturing process services or royalty in relation to - Machinery & equipment in the manufacturing or services activities activity for the selected services sector 23
ELIGIBILITY EFFECTIVE DATE CRITERIA TARGET OF APPLICATION Undertake GROUPS manufacturing or Submission Existing services activities in period: 1 January less developed areas companies 2015 to 31 with substantial expanding their December 2020 employment creation operation into the Application and rural less developed submitted to development areas; OR MIDA Newly established Comply with companies conditions including APPLICATION value added, local PROCEDURES employment and Managerial, Technical Submission using and Supervisory ICA/JA1 or Index (MTS index) ICA/JA2 or ICA/JA3 24
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