INCENTIVES FOR EXPORTING MALAYSIAN PRODUCTS

1. INCENTIVES FOR EXPORTING MALAYSIAN PRODUCTS National Regulatory Conference 7 September 2005 A Presentation by Malaysia External Trade Development Corporation (MATRADE)

2. Contents: • What Incentives available ? • Who can apply ? The Malaysia Export Exhibition Centre (MEEC)

3. Why Exporters Need Incentives ? Financial support Infrastructure & facilities Information Advisory Human Resource Branding Packaging Promotional activities Image building Research & Development SMEs Non - SMEs Exporters Service Provider Traders Manufacturers

4. THE MALAYSIA EXTERNAL TRADE DEVELOPMENT CORPORATION (MATRADE) • Established under an Act of Parliament – the Malaysia External Trade development Corporation Act 1992. • Operational in March 1993. • The national export promotion agency under Ministry of International Trade & Industry (MITI).

5. VISION Making Malaysia The Premier Exporting Nation MISSION To Develop And Promote Malaysia’s Exports To The World

6. FUNCTIONS OF MATRADE • To promote, assist and develop Malaysia's external trade with particular emphasis on the export of manufactured and semi manufactured products and services. • To formulate and implement export marketing strategies and trade promotion activities to promote Malaysia's exports. • To undertake commercial intelligence and market research and create a comprehensive database of information for the improvement and development of Malaysia's trade.

7. FUNCTIONS OF MATRADE To organise training programmes to improve the international marketing skills of Malaysian exporters. To enhance and protect Malaysia's international trade interest abroad. To promote, facilitate and assist in the services areas related to trade.

8. Moscow London Rotterdam Beijing Paris Cologne New York Seoul Milan Tokyo Shanghai Los Angeles Hong Kong Dubai Taipei Jeddah Ho Chi Minh Chennai Nairobi Singapore Sao Paulo Johannesburg Santiago Sydney Our Network Overseas – 31 Offices Worldwide

9. WHAT TYPE OF INCENTIVES OFFERED BY MATRADE ? • Market Development Grant (MDG) • Brand Promotion Grant (BPG) • WHO CAN APPLY ? • Small & Medium Enterprises (SMEs)

10. OBJECTIVE:To provide a matching grant to assist Small and Medium Enterprises in undertaking activities for the development of export markets. MARKET DEVELOPMENT GRANT (MDG) Malaysia External Trade Development Corporation

11. Participation in: Trade missions Specialized selling missions International Trade Fairs and Industry Related International Conference trade fairs Attended meetings related to negotiations on Mutual Recognition Agreement by representatives of the Trade & Industry and Professional Services Association Overseas international tenders Exhibit products at Malaysian trade centres overseas Preparation of promotional items Promotion of brands overseas Setting up sales promotion office overseas to promote exports of Malaysian products and services For women entrepreneurs, additional activities are:- Participation in Malaysia Export Exhibition Centre (MEEC) at MATRADE Participation in local export training seminar Eligible Activities

12. The scheme is available to the following SMEs :·SMEs involved in manufacturing products in Malaysia for the export market.·SMEs engaged in export of services, which include integrated engineering, construction, architectural, education, healthcare, printing and publishing, information and communication technology services, legal, accounting and locally developed franchise. SECTORS

13. Trading companies (SMEs):exporting Made in Malaysia products, especially products manufactured by SMEs andnot more than 20% of the company’s annual sales is derived from trading in primary commodities SECTORS

14. SMEs must be: --    Incorporated under the Companies Act 1965 (For professional services it can include partnership and sole proprietors)-   Manufacturing sector, Having an annual sales turnover not exceeding RM 25 million (based on the latest financial report) OR not more than 150 full-time employees - Services sector Having an annual sales turnover not exceeding RM 5 million (based on the latest financial report) ORnot more than 50 full-time employees QUALIFYING CRITERIAS

15. QUALIFYING CRITERIAS • Trading companies (SMEs) that meet the following conditions:- Having annual sales turnover of between RM 10 million RM 25 million or RM3 million export sales of more AND - Exporting Made In Malaysia products especially those manufactured by SME AND - Not more than 20% of the company’s annual sales is derived from Trading in primary commodities • At least 60% equity owned by Malaysians

16. Companies can obtain 50% matching grant on the approved costs of the eligible activities subject to a maximum grant of RM 100,000 per company.The grant is:- available for one or more of the eligible activities - Once the grant of RM 100,000 is fully utilized, the company is no longer eligible to apply for the grant. GRANT

17. APPLICATION PROCEDURES

18. APPLICATION PROCEDURES • Companies are encouraged to apply for the matching grant at least : • - one month before undertaking the activity. • ( This is to ascertain if the company or • activity is eligible for the grant )

19. Application for the grant is made using : The application form (MDG1/05)available : free of charge at MATRADE or download from MATRADE’s website at www.matrade.gov.my APPLICATION PROCEDURE

20. APPLICATION PROCEDURES • For: • preparation of promotional items and, • promotion of brands overseas and designing. • Companies must submit the application for the grant one (1) month before undertaking the activity.

21. Documents Required:* Certificate of incorporation- Form 9 * Memorandum and articles of association* Form 24 - Shareholders* Form 49 – Directors * Copy of manufacturing/local authority license and incentives currently/had enjoyed* Copy of latest Company’s Audited Account* Copy of latest EPF statement * Trading companies- exports sales achieved RM3 million or more but less than RM10million are required to submit latest summary of K2 Form (Custom 2 Form)

22. FOR MANUFACTURING COMPANIES, they must submit a copy of the manufacturing license or license from local authorities. This is to ensure that the company is operating in a legal premise. If companies do not have these documents, the application can be considered provided:* the factory is located in an approved industrial area/Free Trade Zone * company has been approved incentive by MITI/MSC status by MDC * company has a licensed manufacturing warehouse (LMW License) ** Sales Tax License issued by Customs Department will not be considered.

23. CLAIM PROCEDURES

24. CLAIMS • Claims for reimbursement for all eligible activities must be submitted within 3 months of • completion of the activity with: • - receipts and • - invoices and • - supporting documents as required in the application form. • (originalor copies certified by External • Auditors)

25. PROCEDURE CLAIM FOR LOCAL INTERNATIONAL TRADE FAIR • Claims for local international trade fair, company must • submit: • a copy of the event report which has been certified by an external auditor together; with • a copy of the auditor’s practicing certificate from the fair organizer. • The report must certify that the fair has fulfilled the criteria of an international fair, as follows :

26. ELIGIBILITY CRITERIAFOR LOCAL INTERNATIONAL TRADE FAIRS • minimum space occupied for the fair must be at least 1000 sq meters gross, AND • at least 10% of visitors must be foreign visitors, OR • at least 20% net space is rented to foreign exhibitors OR; • at least 20% of exhibitors are foreign exhibitors.

27. ELIGIBLE EXPENSES • TRADE MISSION, SPECIALISED SELLING MISSIONS • AND INTERNATIONAL TRADE FAIRS - Participation fee paid to the organizer of the event-    Economy class airfare for one personWomen entrepreneurs: Additional eligible expenses for one air fare (economy class) provided one of participant is women • -    One hotel room limited to :- • i)USD200 per night for international trade fairs held in overseas • ii) RM200 per night for local international • trade fairs • Women entrepreneurs: Additional eligible expenses for one hotel room • -    Rental of standard booth which is limited to:- 9sqm for small items18sqm for big items like furniture and machinery

28. ELIGIBLE EXPENSES Construction of standard booth or shared cost of construction on group basis-    Rental of space in Malaysian trade centre overseas- Shipment of exhibits/samples and promotional materials-    Advertisement in trade fair publications- For participation in trade mission not organized by MITI/PM Office, the organizer must apply for approval of the mission programme one month before undertaking the activity.

29. ELIGIBLE EXPENSES • MALAYSIAN TRADE CENTRE OVERSEAS -    Participation fee paid to organizer of the event • -    Shipment of exhibits/samples and promotional materials • -    Cost of renting business centre

30. PREPARATION OF PROMOTIONAL ITEMSAll expenses incurred in relation to the production of promotional items, including:Printed materials - Design concept - Finished Artwork - Colour separation - Printing ELIGIBLE EXPENSES

31. CD-ROM and VIDEO-  Content of text, audio, video, photography, graphic, animation, etc.-   Design-   Development-   Replication and production-   CD-ROM packagingProduction of CD ROM and Video can be consideredfor MDG only if it is part of the participation at trade fairs, trade missions or participation in MTC Dubai

32. PROMOTION OF BRANDS OVERSEASThis Scheme is for the promotion of Malaysian branded products and services overseas.The brand must be registered in Malaysia or overseas and the company must own rights to the brand. Eligible expenses include:--    Trademark and patent registration fees-    Advertisement in printed media -    Advertisement in electronic media -    Advertisement in the internet

33. OVERSEAS INTERNATIONAL TENDERS -   Purchase of tender documents -   Legal and translation services • Participation in Meetings for Negotiating Mutual Recognition Agreements (MRA) - Economy class airfare for one person - One hotel room not exceeding USD200 per night covering one day before the meeting, duration of meeting and one day after the meeting

34. Setting up sales promotion office overseas - Rental subject to maximum grant - Utilities (water/electricity), subject to maximum grant

35. SPECIAL ACTIVITIES FOR WOMEN ENTREPRENEURS • Participation in Malaysia Export Exhibitions Center (MEEC) • Participation fees • Cost of shipment of sample • Participation in Industries Related International Conference • Participation fees

36. Status of MDG For the year 2002- 4 July 2005 of 2,209 claims were disbursed to 955 companies totalling RM13.45 million

37. TYPES OF GRANTS BRAND PROMOTION GRANT (BPG)

38. OBJECTIVE BRAND PROMOTION GRANT To develop and promote in the international market, brand names owned by Malaysian companies for products and services originating from Malaysia.

39. FORM OF GRANT The grant is given in three forms:- • 100% reimbursable grant of up to a maximum of RM1 million per company per brand only for SMEs. • 50% reimbursable grant of up to a maximum of RM2 million per company per brand for non-SMEs. • Combination of two grants – 100% grant reimbursable grant and 50% reimbursable grant up to a maximum of RM2 million per company per brand only for SMEs Cont’d

40. LIMITS OF GRANT • For 100% reimbursable grant: - Not more than 10% of the grant approved will be given as an advance payment and the remaining 90% of the grant approved will be reimbursed 100% of the activities done by the company. • Not more than 50% of total grant should be spent on A & P.

41. LIMITS OF GRANT • Not more than 10% of total grant approved should be spent on consultancy. • Not more than 10% of total grant approved should be spent on domestic promotion of the brand.

42. ELIGIBILITY CRITERIA • Company incorporated under Companies Act 1965. • At least 60% equity owned by Malaysians. • Company owns the brand i.e. registered owner of the trademark. • Annual sales turnover of not more than RM250 million. (based on latest financial report) Cont’d

43. ELIGIBILITY CRITERIA • For 100% reimbursable grant, the company’s annual sales turnover must not exceed RM25 million or with not more than 150 full time employees for manufacturing companies. • For services sectors, enterprises with full time employees not exceeding 50 or with annual sales turnover not exceeding RM5 million. • Product/services are already exported with at least 20% of sales derived from exports. Cont’d

44. ELIGIBILITY CRITERIA ELIGIBILITY CRITERIA • For companies that do not meet 20% export condition, the application may be considered based on such consideration as:- • Resources invested on branding and company’s commitment to the branding programme. Cont’d

45. ELIGIBILITY CRITERIA • Promotion programmes and activities undertaken by company to promote brand. • Indication of market penetration and consumer acceptance (e.g. share of market) both local and overseas. Cont’d

46. ELIGIBILITY CRITERIA • Trend in overall sales and export growth. • Awards and recognitions received. • Obtained international quality certifications such as HACCP, ISO or Quality Improvement Programme, GMP or approved the use of the “Malaysia’s Best” Quality seal. Cont’d

47. ELIGIBILITY CRITERIA • Products/services should originate from Malaysia. For products manufactured offshore, the brand can be considered if the company undertakes value added activities in Malaysia such R&D, designing, packaging, marketing, distribution and invoicing.

48. ELIGIBLE EXPENSES The grant will cover the cost of developing and promoting only one brand per company. The expenses include:- • Branding/Marketing Strategy Consultancy (not more than 10% of grant approved): - Brand strategy, creation and development. - Marketing strategy and implementation. Cont’d

49. ELIGIBLE EXPENSES • Media strategy • Brand communication strategy - Brand management system - Brand manual & information system Cont’d

50. ELIGIBLE EXPENSES • Brand Development:- - Logo design and redesign - Product design & redesign - Packaging design & redesign - Intellectual property matters, including registration and trademark works (not including renewal of trademark and patent) Cont’d