Investment Opportunities In The Aerospace Industry In Malaysia

Investment Opportunities
In The Aerospace Industry
In Malaysia
MALAYSIAN INVESTMENT DEVELOPMENT
AUTHORITY (MIDA)
1
CONTENT OUTLINE
•
•
•
•
•
•
•
M a l a y s i a n E c o n o m y An d T h e E c o n o m i c
Tr a n s f o r m a t i o n P r o g r a m m e
Investment Performance
Ae r o s p a c e I n d u s t r y : G l o b a l & R e g i o n a l
Investment Outlook
Aerospace Industry in Malaysia
Asean & Regional Free Trade Agreements
W hy Malaysia?
Ab o u t M I D A
2
Facts on Malaysia
3
MALAYSIA
Penang
West Malaysia
East Malaysia
Federal Territory
THAILAND
Perlis
Kedah
Labuan
Sabah
Strait of
Malacca
Kelantan
Terengganu
South China Sea
Perak
Pahang
Selangor
Putrajaya Kuala Lumpur
Negeri Sembilan
Malacca
Johor
INDONESIA
Sarawak
SINGAPORE
INDONESIA
4
MALAYSIA’S
ECONOMIC
DEVELOPMENT
GDP BY
INDUSTRIAL
ORIGINJOURNEY
Innovation, ETP &
High Income
2010
Technology
Intensive
1990s
Export-Oriented &
Labour-Intensive
1980s
1970s
2000
Economic Corridors
& Services
Resource-Based &
Heavy Industries
1960s
Import
Substitution
M A L A Y S I A N
I N V E S T M E N T
D E V E L O P M E N T
A U T H O R I T Y
MALAYSIA’S VISIBILITY
Diversity
Multiracial,
multicultural and
multilingual
Malaysians living
in harmony
Petronas
Ranked 68th in
FORTUNE Global 500®
Silicon Valley of
Malaysia
High-tech
manufacturing hub
Palm Oil
39 % of world’s palm
oil production and
44% of world’s
exports
Gloves
Malaysia is the
largest supplier of
examination and
surgical gloves 50% of the global
demand
Islamic Banking
Over 30 years of
experience and world
leader in Islamic banking
with a strong legal and
regulatory Framework
MALAYSIAN ECONOMY AND ECONOMIC
TRANSFORMATION PROGRAMME
7
MALAYSIA’S KEY ECONOMIC INDICATORS
2007
2008
2009
2010
2011
2012
Real GDP (%) Growth
6.2
4.6
- 1.7
7.2
5.1
5.6
Inflation (%)
2.0
5.4
0.6
1.7
3.2
1.2
Per Capita Income
(US$)
6,700
7,812
6,764
8,140
9,508
10,134
Unemployment (%)
3.2
3.3
3.7
3.2
3.1
3.3
101.3
91.4
96.7
106.5
138.3
140.3*
8.4
7.4
9.7
8.5
9.6
9.5*
International Reserves
(US$ bil)
Retained Imports
Equivalent (months)
* As at 15th February 2013
Source: Central Bank of Malaysia/Department of Statistics Malaysia/MATRADE
8
GDP BY INDUSTRIAL ORIGIN
GDP Contribution (%)
Sector
1970
1990
2000
2010
2011
Agriculture
33.6
19.3
8.8
7.3
7.3
Mining
7.2
9.8
6.7
7.0
6.3
Construction
3.8
3.4
3.4
3.3
3.2
Manufacturing
12.8
26.5
32.6
27.6
27.5
Services
42.6
42.1
53.0
57.7
58.6
Source : Economic Reports/Bank Negara Annual Report, Malaysia 11/12
9
OVERVIEW OF ECONOMIC
TRANSFORMATION PROGRAMME
Gross National
Income (GNI)
• USD15,000 (RM48,000) per Capita GNI
• USD523 Billion (RM1.7 Trillion) GNI
• 6% GDP Growth per Annum
Focus
•12 NKEAS
•131 EPPs
•60 BOs
Transformational
Actions
Jobs
• 3.3 Million
Additional
Jobs
Competitiveness
•51 Policy Measures
•6 SRIs & Natural Homes
Investment
• USD444 Billion Investment
• 92% Private, 8% Public Investment
• 73% Domestic, 27% FDI
10
ESTABLISHMENT OF 12 NATIONAL KEY ECONOMIC AREAS
(NKEAs)
Wholesale
Tourism
and retail
Financial
services
Business
services
NKEAs
selected which
can materially
impact
economic
growth
Greater KL
Agriculture
Electrical &
electronics
Education
Comms Content
Infrastructure
11
Oil, gas
& energy
Palm oil
Malaysia: Your Profit Centre in Asia
Healthcare
PROMOTED MANUFACTURING ACTIVITIES
High technology, capital intensive &
knowledge driven industries:
• Alternative Energy Sources
•
Aerospace
•
Biotechnology
•
Advanced materials
•
Advanced electronics
•
Optics and photonics
•
Petrochemicals
•
Pharmaceuticals
•
Medical devices
•
ICT
Industries manufacturing
intermediate goods:
•
•
•
Machinery & equipment
Components & parts
Moulds and dies
Resourced-based industries:
• Food
• Value-added products
from natural resources
12
PROMOTED ACTIVITIES IN THE
SERVICES SECTOR
•
•
•
•
•
•
•
•
•
Regional Establishments
Business and professional services
Logistics
ICT services
Offshore and outsourcing activities
Distributive trade
Education and training
Health
Tourism
13
Investment Performance
14
Total Approved Manufacturing Projects (2009 – 2012)
Year
Number
of Projects
Approved Investments (US$ Billion)
Domestic
Foreign
Total
2009
766
3.0
6.5
9.5
2010
910
5.9
9.4
15.3
2011
846
6.9
10.8
17.7
2012
804
6.60
6.81
13.42
TOTAL
3,326
22.4
33.51
55.92
REALISED MANUFACTURING PROJECTS BY COUNTRY, As of
31 DEC 2012 (Top 10)
Rank
Country
Investment
(US$ Billion)
1.
Japan
22.0
2.
USA
18.9
3.
4.
Singapore
8.0
Germany
6.2
5.
Taiwan
5.3
6.
Netherlands
4.6
7.
South Korea
4.0
8.
United Kingdom
1.8
9.
Hong Kong
1.6
India
1.2
10.
Source: MIDA
REALISED INVESTMENT IN THE
MANUFACTURING SECTOR BY MAJOR
SECTORS, AS AT 2012
Fab. Metal
4%
M&E
3%
Others
15%
E&E
30%
Natural Gas
4%
Food
4%
Transport
6%
Non-Metallic
5%
Chemicals
8%
Basic Metal
10%
Petroleum
11%
Total
Investment
US$ 156.1 bil
Total Foreign
Investment
US$ 86.9 bil
Total Projects
18,148
Source: Malaysian Investment Development Authority
APPROVED AEROSPACE PROJECTS
Year
No.
Domestic
Foreign
Total
Investment
Investment
Investment
(RM Mill)
(RM Mill)
(RM Mill)
2008
7
277.0
714.6
991.6
2009
5
392.0
160.0
552.0
2010
5
907.8
30.2
938.0
2011
7
64.6
282.6
347.2
2012
11
1,429
920 mill
2,349.3
18
Aerospace Industry:
Global & Regional Outlook
* Source of info- BOEING
19
AIRCRAFT DEMAND - FORECAST
Airlines will need 33,500 new airplanes valued at USD 4 trillion by 2030
Types of
Aircrafts
No. of
Aircrafts
%
Regional jets
1,980
6
Single-aisle
23,370
70
Twin-aisle
7,330
22
820
2
Large
Source : BOEING
20
REGIONAL MARKET FOR NEW AIRPLANES
New Airplane deliveries by region
2011-2030
Region
Unit
Market value by region
2011-2030
%
Region
USD Bil
%
Asia Pacific
11,450
34
Asia Pacific
1,510
37
Europe
7,550
23
Europe
880
22
North America
7,530
22
North America
760
19
Latin America
2,570
8
Latin America
250
6
Middle East
2,520
8
Middle East
450
11
C.I.S.
1,080
3
C.I.S.
110
3
Africa
800
2
Africa
100
2
World Total
USD 4,060
World Total
33,500
Source : BOEING
21
ASIAN AVIATION MARKET
Economy
•GDP to grow 4.7% per year over next 20 years, above world average
growth rate of 3.3%
•Asia’s share of world’s GDP to expand from 27% today to 35% by 2030
Air travel
•Traffic to grow 6.7% per year over next 20 years, world traffic growth at
5.1% per year
•Shorter-haul flying, including domestic and inter-regional travel, to grow
at 7.0% per year
•One-half of world’s new traffic added during next 20 years will be to,
from, or within Asia
Source : BOEING
22
ASIAN AVIATION MARKET
Market outlook
• Regulations expected to loosen as rapid economic growth
drives air traffic to increase
• Airlines evolving new business models, changing
operations, and modernizing fleets in order to efficiently
compete in this growing market
• Low cost airlines expanding air travel and gaining market
presence
Source : BOEING
23
SOUTHEAST ASIA AIRLINES WILL NEED 2,750 NEW
AIRPLANES VALUED AT USD 410 BILLION (2011-2030)
Types of
Aircrafts
Regional
jets
No. of
Aircrafts
50
%
1,720
62
Twin-aisle
850
31
Large
130
5
Singleaisle
2
Source : BOEING
24
AEROSPACE INDUSTRY
IN MALAYSIA
25
MALAYSIAN AEROSPACE INDUSTRY ROADMAP
Aerostructure
Avionics
Engine
Source: MIGHT
M A L A Y S I A N
I N V E S T M E N T
D E V E L O P M E N T
A U T H O R I T Y
AEROSPACE ECOSYSTEM - MANUFACTURING
AEROSPACE ECOSYSTEM - MRO
MAJOR LOCAL AEROSPACE COMPANIES
Company
Products
SME Aerospace Sdn. Bhd.
Ground support equipment, airborne training ordinance,
aircraft pylon, aircraft/aero engine components, and
aircraft assemblies.
Airod Sdn. Bhd.
Reconditioning/ servicing & repairing of aircraft of all
descriptions & its related equipment/ components
Upeca Aerotech Sdn. Bhd.
Design, development and manufacture of aerospace
components including aircraft structures, actuators and
engine parts and
aircraft engine casings.
Malaysia Aerospace Engineering
Sdn. Bhd. (MAE)
Maintenance, repair, overhaul and services of aircrafts
and components, modifications, installations and
conversions of aircrafts
CTRM Aero Composites Sdn.
Bhd.
Aircraft parts and light composite aircraft.
Strand Aerospace (M) Sdn. Bhd.
Analysis and design for aircraft primary structures
Aeromek Mfg. Sdn. Bhd
Aerospace Component & Surface Treatment
29
MAJOR FOREIGN AEROSPACE COMPANIES
Company
GE Malaysia Sdn. Bhd.
Airfoils Services Sdn. Bhd.
(JV with MTU & Lufthansa)
Country
Products
USA
Repair and overhaul of aircraft jet engines.
Germany
Aircraft low/high pressure compressor
airfoils.
IAC Manufacturing Sdn. Bhd.
(IMAI)
Japan
Aircraft Parts & components
(inspar ribs).
Eurocopter Malaysia Sdn. Bhd.
France
Manufacturing and reassembling of
helicopter cockpit and MRO of helicopter.
AAR Landing Gears Sdn. Bhd.
USA
Aircraft landing gear.
Honeywell Aerospace Avionics (M) Sdn Bhd
USA
Aircraft avionics components.
Spirit Aerosystem Malaysia Sdn. Bhd.
USA
Advanced technology composite
aerostructures.
Asean Composites Manufacturing Sdn. Bhd.
(JV with Boeing & Hexcel)
USA
Composites parts for aircraft.
Messier-Bugatti-Dowty (M) Sdn. Bhd
Aviatron (M) Sdn. Bhd
(Fomerly known as Singapore Aerospace
Manufacturing Pte. Ltd.)
France
Singapore
Aircraft Carbon Brakes
Machined Aerospace Structures
30
INCENTIVE PACKAGES FOR AEROSPACE INDUSTRY
Sector
Proposed Incentives
1. Research, design and development
Tax exemption for 5 years and up to 15 years subject
to evaluation by MIDA in terms of investment level,
value added, technology and other criteria.
Systems Integration
Manufacturing and assembly
2. General Aviation
3. Maintenance, Repair & Overhaul
(MRO)
ITA of 100% on the qualifying capital expenditure
incurred within 10 years subject to investment in
fixed assets more than RM150 million within 5
years.
Income tax exemption of 100%
of statutory income for up to
10 years. Subject to evaluation by MIDA in terms of
investment level, value added, technology and
other criteria.
Income tax exemption of 100%
of statutory income for up to
15years depending on level of
strategic and economic impact
to the country. Subject to evaluation by MIDA in
terms of level of strategic and significant impact to
the economy.
31
INCENTIVE PACKAGES FOR AEROSPACE INDUSTRY
Sector
Proposed Incentives
Expansion, modernization or automation
of existing business of diversify existing
business into any related product within
the same industry.
4. Aerospace Training
Investment Tax Allowance of 60% on the
qualifying capital expenditure incurred within 5
years.
5. Certification
PS with income tax exemption
of 100% of statutory income
for a period of 5 years; or
Standard Development
Testing & Evaluation
Double deduction on expenses incurred by
employers in training their employees.
ITA of 60% on the qualifying
capital expenditure incurred
within 5 years.
Licencing
32
IMPORT DUTY & SALES TAX EXEMPTIONS
Aircraft & Aircraft Parts/
Components Assembler/
Manufacturer
Machinery/ Equipment/
Spare Parts
Raw Materials/ Components
33
RELATED FACILITES
•
Design and R&D (Sapura, Astronautics, CTRM, Ikramatic, Spirit,
Strands and others)
- Design on airframe, related component and ground equipment
- R &D on space products and stress analysis
•
Training School (MIAT, Local Universities, MAS Academy, APR
and Flying Schools)
- Specific training on MRO, avionics, pilot training , and graduate
engineers
- Companies and Institutes
•
Selected Aerospace Location
- MIAC , KLIA, Batu Berendam, Senai , Penang
34
Asean & Regional Free Trade
Agreements
35
MALAYSIA – STRATEGIC GATEWAY TO ASIA
Malaysia is strategically located in the very heart of Southeast
Asia; between India and China:
36
GATEWAY TO ASEAN AND ASIAN ECONOMIES
Strategic location: Malaysia is a gateway to other markets with
preferential access through Free Trade Agreements (FTAs)
ASEAN
REGIONAL / BILATERAL FTAS
China
Japan
Korea
India
Australia
New Zealand
Chile
Potential market of 2.7 billion
Tariff reduction and
elimination mostly by 2016
ON-GOING FTA NEGOTIATIONS
TPP
EU
Turkey
Potential market of 1.08 billion
37
TRANS-PACIFIC PARTNERSHIP (TPP)
•
Trade and investment liberalization initiative involving 11 countries;
Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, United States,
Vietnam, Mexico and Canada
* Mexico and Canada is going to joint TPP on December 2012.
•
The aim of TPP is the creation of Free Trade Agreement (FTA) that will enhance
trade and investment among TPP partner countries and set a new standards in
the conduct of global trade.
•
14 rounds of negotiations have been held with good progress achieved.
•
USA is one of the largest investors in Malaysia investing in E&E products,
chemical & chemical products, transport equipment, plastic product, etc.
•
The TPP is expected to further enhance malaysia’s attractiveness as FDI
destination for USA where companies would be able to leverage on the market
access agreement and concession given to Malaysia export products to enter
other TPP member countries.
38
INTELECTUAL PROPERTY PROTECTION IN MALAYSIA
i.
ii.
iii.
iv.
v.
vi.
vii.
Malaysia is member to the following Agreements,
Conventions and Treaties:The Paris Convention 1883
The Berne Convention 1886
WIPO 1967
TRIPS Agreement 1994
Patent Cooperation Treaty (PCT)
Nice Agreement 1957
Vienna Agreement 1973
Removal of Malaysia from IP violations ‘watch list’
- United States Trade Representative (USTR) ‘Special
301 Report’ on IP Rights
39
Malaysia: Your Premier Investment Destination
WHY MALAYSIA?
* Source of info- BOEING
40
MALAYSIA’S COMPETITIVENESS RANKINGS
Malaysia’s strong performance in international
rankings:
-10th most attractive destinations for FDI
(A.T. Kearney’s FDI Confidence Index 2012)
-14th most competitive economy
(World Competitiveness Yearbook, IMD 2012)
-12th in ease of doing business
(World Bank Doing Business Report 2013)
-3rd most preferred services location
(A.T. Kearney’s Global Services Location Index 2012)
)
41
WHY MALAYSIA?
•
•
•
•
•
•
•
•
•
•
•
Political & Economic Stability
Pro-business Government
Liberal Investment Policies
Transparent Policies
Policy of Welcome
Sound Banking System
Well Developed Infrastructure
Harmonious Industrial Relations
Trainable & Educated Labour Force
Quality of Life
Excellent Track Record
42
Malaysia: Your Premier Investment
Destination
ABOUT
43
MILESTONES
The principal Malaysian
Government agency
responsible for the
promotion and
coordination of
industrial development
in the country
First point of contact for
investors who intend to
set up projects in the
manufacturing and
services sectors in
Malaysia
Established in 1967 under Act of Parliament, 1965
27 March 2004 : Government Mandated MIDA to Promote
Investments in the Services Sector
2011 : Rebrand as Malaysian Investment Development Authority
44
FACILITATION OF INVESTMENT
MIDA as a One Stop Agency :
a) Advisory & consultancy
•
24 Overseas Centers
b) Approval of projects
c) After- care services
Under the National Committee on
Investment (NCI)
Evaluation of applications for:
45
Malaysia: Your Premier Investment
Destination
Manufacturing licence
Tax incentives
Import duty exemptions on raw materials,
components and machinery
Expatriate posts/work permits
Regional establishments such as
Operational Headquarters, International
Procurement Centres, etc
Please visit us at
www.mida.gov.my
[email protected]
46