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Investing in Malaysia March 2015 “A Trusted Partner and Reliable Close Friend for the AEC” This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. Contents Malaysia – Brief Introduction Malaysia in Figures National Key Economic Areas Construction Projects Advantages of Investing in Malaysia Malaysia Tax Structure Strengths & Weaknesses Prospects in Malaysia To Succeed Banking Services for Companies in Malaysia Local Banking Sector Foreign Private Commercial Banks in Malaysia Bangkok Bank in Malaysia Key Contacts End 3 4 5 6 7 8-9 11 12 13 15 16 17 18-19 20 21 2 Malaysia – Brief Introduction Consists of 13 states and 3 federal territories Contribution of SMEs to GDP in year 2014 – 33% Aims to increase the percentage to 41% by year 2020 Average annual growth rate of GDP is 6.5% for almost 50 years Source: Ministry of International Trade and Industry (MITI) 3 Malaysia in Figures 2011 2012 2013 2014 Population (Million Persons) 29.1 29.5 29.9 30.5 GDP - Current Price (Billion USD) 289.3 304.9 313.2 336.9 9,995.7 10,331.3 10,456.9 11,062.0 GDP Growth Rate (%) 5.2 5.6 4.7 5.9 Inflation (%) 3.2 1.7 2.1 2.9 FDI (Million USD) 12,198 10,074 12,306 N/A International Reserve* (Million USD) 133,642 139,724 134,911 115,937 Foreign Exchange Rate (MYR per USD), avg. 0.327 0.324 0.318 0.306 GDP per Capita (USD) Source: Bank Negara Malaysia, MITI, WEO Update October 2014 Note: International Reserve as of calendar year end. 4 National Key Economic Areas 12 Key Sectors Oil, Gas & Energy Palm Oil & Rubber Financial Services Tourism Business Services Electrical & Electronics Wholesale & Retail Education Healthcare Communications Content & Infrastructure Agriculture Greater Kuala Lumpur/Klang Valley 5 Construction Projects Ongoing & Future Projects Rail KL-Singapore High Speed Rail ERL extension to Malacca Freight Relief Line (Serendah – Port Klang – Seremban) KVMRT line 2 & 3 Highway West Coast Expressway – 276km remaining Damansara-Shah Alam Highway (DASH) – 47km Kinrara-Damansara Expressway (Kidex) Others Bukit Bintang City Centre Project 4-B gas-fired power plant (2x1000MW) Kuantan Port expansion Source: Maybank IB Research as of December 2014 6 Advantages of Investing In Malaysia Assistance from Malaysian Investment Development Authority (MIDA) which has a global network of 19 overseas offices Tax Incentives & Allowances Pioneer Status Investment Tax Allowance Double Deduction of Expenses Incentive for Approved Overseas Investment Plenty of Free Trade Zones Implementation of supporting policies – Strategic Reform Initiatives (SRIs) : fostering a business friendly environment conducive for private investment flows Ease of starting business – procedures require minimum 6 days and costs 7.6% of income per capita in fees (global stats: 25 days and costs 32% of income per capita in fees) 7 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. Malaysia Tax Structure Personal Income Tax: For Residents, 1%-25% For Non-Residents (period of stay is less than 182 days regardless citizenship/nationality), 10%-26% Corporate Income Tax: Resident Company, 20%-25% Non-Resident Company, 10%-25% Goods & Services Tax (GST) Will be replacing the existing Government Service Tax of 10% Proposed to be imposed at 6% from 1st April 2015 Source: Inland Revenue Board Of Malaysia This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. 8 Malaysia Tax Structure (ctd.) Goods & Services Tax (GST) Applicable if and only if the business is registered under GST (registration threshold of annual turnover for taxable supplies: RM500,000) Can be registered voluntarily Taxable supplies : Standard-rated supplies Zero-rated supplies Exempt supplies Scope and Charge Charged on the importation of goods and services as well Amount of GST incurred on input can be deducted from the amount of GST charged by the registered person. Output > Input, difference is remitted to Government Input > Output, difference is refunded by Government Source: Royal Malaysia Customs Department This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. 9 Why Malaysia? 10 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. Strengths & Weaknesses Strengths Strong political stability Large number of young, hardworking, and highly literate labor force Growing consuming class with higher purchasing power Abundant natural resources – opportunities of both downstream and upstream Strategic location – able to reach 60% of the countries within 5 hour radius. Hence, secured location for Foreign Direct Investment Competitive tax rates Weaknesses Fluctuation of Money Market and Exchange rate Shortage of workers in the downstream sectors Dependent on the external factors such as the Asia Pacific Community for business Instability of weather which may affect certain industries 11 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. Prospects in Malaysia InInthe thenext next3-5 3-5years years Growth in the Islamic Banking Sector – currently largest in the world Proliferating opportunities due to current projects – Multimedia Super Corridor/Economic Transformation Programme/10th Malaysia Plan Steady growth in exports Growing number of consuming class 12 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. To Succeed Key success factors Know well and respect local regulations Plenty of bodies/organisations to refer to i.e. Royal Malaysian Customs Department, Immigration Department of Malaysia, Companies Commission of Malaysia(SSM) Manage well in human resources Understand culture of Malaysian consumers Decision maker must be on-site Have Bangkok Bank Bhd as your partner 13 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. Financial Services 14 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. Banking Services for Companies in Malaysia All Banks are governed by Bank Negara Malaysia (BNM). Local Banking Sector Commercial Bank Postal Savings Bank Building Society Co-operative Bank Islamic Bank Foreign Commercial Bank Wholly Foreign-owned Bank Representative Offices of Foreign Bank Islamic Bank 15 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. Local Banking Sector Banks List 1. Commercial Bank Malayan Banking Bhd RHB Bank Bhd Public Bank Bhd CIMB Bank Bhd Hong Leong Bank Bhd AmBank (M) Bhd Alliance Bank Malaysia Bhd Affin Bank Bhd Malaysia Building Society Bhd 2. Postal Savings Bank 3. Building Society 4. Co-operative Bank 5. Local Islamic Bank Source: Bank Negara Malaysia Bank Simpanan Nasional Bank Kerjasama Rakyat Malaysia Bhd Bank Persatuan Malaysia Bhd Bank Islam Malaysia Bhd Bank Muamalat Malaysia Bhd Maybank Islamic Bhd Alliance Islamic Bank Bhd 16 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. Foreign Private Commercial Banks in Malaysia Banks Examples 1. Wholly Foreign-owned Bank 2. Representative Offices of Foreign Bank 3. Foreign Islamic Bank Source: Bank Negara Malaysia Bangkok Bank Bhd Bank of China (Malaysia) Bhd J.P. Morgan Chase Bank Bhd Standard Chartered Bank Malaysia Bhd United Overseas Bank (Malaysia) Bhd Citibank Bhd HSBC Bank Malaysia Bhd OCBC Bank (Malaysia) Bhd The Royal Bank of Scotland Bhd BNP Paribas Malaysia Bhd Credit Suisse Ltd DBS Bank Ltd The Royal Bank of Scotland Ltd Wells Fargo Bank Ltd The Bank of Tokyo-Mitsubishi UFJ Ltd National Australia Bank Ltd Zamora Trading Ltd Middle East Investment Bank Ltd Al Rajhi Banking & Investment Corporation Kuwait Finance House (Malaysia) Bhd HSBC Amanah Malaysia Bhd This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. 17 Bangkok Bank in Malaysia Bangkok Bank Kuala Lumpur Head Office 105, Jalan Tun H.S. Lee, 50000 Kuala Lumpur Tel: (+60)3-2173 7200 Kuala Lumpur Main Branch 105, Jalan Tun H.S. Lee, 50000 Kuala Lumpur Tel: (+60)3-2173 7219 Bandar Botanic Branch No 1, Jalan Kasuarina 2/KS07, Bandar Botanic, 41200 Klang, Selangor Tel: (+60)3-3325 2178 Taman Molek Branch No. 1 & 3, Jalan Molek 1/30, 81100 Taman Molek, Johor Bahru, Johor Tel: (+60)3-353 3001 Jalan Bakri Branch No.8, Taman Pesta Baru, Pusat Perniagaan Pesta Baru, Jalan Bakri, 84000 Muar, Johor Tel: (+60)3-953 1001 Penang Auto-City Branch 815-A, Jalan Perusahaan, Auto-City North-South Highway, Juru Interchange, 13600 Prai, Penang Tel: (+60)3-5012388 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. 18 Bangkok Bank in Malaysia Deposit (USD, MYR) Current, Savings, Fixed Loan (USD, MYR) Revolving Short-term Loan Long-term Loan Trade Finance Facility: L/C, S/G, T/R, B/A, L/G, etc. Local and Foreign Fund Transfer (USD, MYR, GBP, EUR, etc.) Foreign Exchange International Trade Inward/Outward Bills for Collection: D/P, D/A Letter of Credit Source: www.bangkokbank.com.my This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. 19 Key Contacts Malaysian Investment Development Authority (MIDA) First Contact Point before investment Ministry of International Trade and Industry (MITI) Facilitates trade sector Ministry of Finance InvestKL Facilitates companies to set up regional businesses in Greater Kuala Lumpur In line with Economic Transformation Programme Bursa Malaysia Stock Exchange for Malaysia Source: Performance Management and Delivery Unit (PEMANDU) This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent. 20 Our International Branch Network - Thailand’s only truly regional bank BBL international network covers 13 countries globally, with 28 overseas branches and 1 representative office in Yangon, Myanmar. BBL is the Thai bank with the most extensive branch network in the ASEAN region, putting us in the best position to support the growing businesses of our clients ASEAN Malaysia (subsidiaries) Laos Vietnam (Hanoi and Ho chi Minh) Indonesia (Jakarta, Surabaya and Madan) Philippines Singapore Cambodia Myanmar (preliminary approved) Other important Economies China (subsidiaries) Hong Kong Taiwan (Taipei, Kaohsiung and Taichung) Japan (Tokyo and Osaka) United Kingdom United States 21 This information is confidential and was prepared by Bangkok Bank solely for the use of our client; it is not to be relied on by any 3rd party without Bangkok Bank’s prior written consent.