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

ECONOMIC COMPETITIVENESS AND GLOBALISATION Dato’ Wong Siew Hai EC investPenang January 14 th , 2006. Agenda. Why Malaysia? Competitiveness Site Selection Challenges Penang’s Focus Recommendations. Why Malaysia? - 1. 30+ years track record of success and excellence

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

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  1. ECONOMIC COMPETITIVENESS AND GLOBALISATIONDato’ Wong Siew HaiEC investPenangJanuary 14th, 2006 shw

  2. Agenda • Why Malaysia? • Competitiveness • Site Selection • Challenges • Penang’s Focus • Recommendations shw

  3. 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) shw

  4. 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 shw

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

  6. Cost of doing business (USD) – 1 shw Source: SERI

  7. Cost of doing business (USD) - 2 shw Source: SERI

  8. 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 () shw

  9. 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 shw

  10. Penang’s response • investPenang – total service • Promote “China + 1” strategy • Identify focus areas • Promotion - roadshows – local and overseas • MITI approved projects: • 2003 - RM1.923b • 2004 - RM2.030b • 2005 - RM1.971 (till Sept 2005) • MSC status companies 68 vs 30 goal (as of Nov 2005) shw

  11. Recommendations • Move up the value chain – hi-tech, hi-value, R&D and innovations • Continue to grow MSC status company – technology, software,.. • HR development • Industry collaboration with universities • 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 • Make Malaysia known to the world as the investment location of choice (China+1) – focus on promotion shw

  12. THANK YOU

  13. shw

  14. Penang’s Focus Areas • 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 • 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 shw * ICT – Information Communication Technology

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