Transcript Penang ICT Perspective

ECONOMIC
COMPETITIVENESS AND
GLOBALISATION
Dato’ Wong Siew Hai
EC investPenang
January 14th, 2006
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Agenda
 Why
Malaysia?
 Competitiveness
 Site Selection
 Challenges
 Penang’s Focus
 Recommendations
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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)
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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
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Competitive Costs
Attractive Incentives

Pioneer Status (tax free)


TOTAL
Cost of Doing Business !
• Low utility costs – electricity and

water rates that are among the
most competitive in the world
Investment Tax Allowance

60% allowance on qualifying
• Competitive wage structures for
capital expenditure
all levels of employees

Offset against 70% of statutory • Cost avoidance due to
income
• lower turnover rates
Reinvestment Allowance
• higher productivity

60% allowance on qualifying
• culture of quality & excellence
capital expenditure
• Low cost of living – rental,

Offset against 70% statutory
fuel, entertainment, food
income
• Inflation closely monitored

Extended to 15 consecutive
and contained


Promoted: 70% of statutory
income or 5 years
Hi-tech : 0 tax for 5 years
Strategic: 0 tax for 10 years
Lower
years
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Cost of doing business (USD) – 1
Operational
Cost (2005)
Malaysia
(Penang)
China
(Shenzhen)
Thailand
Industrial Electricity
(USD/kwh)
0.06
0.08
0.07
Industrial Water
Tariff (USD/M3)
0.14 - 0.26
0.23
0.24 - 0.40
Average Office Rent
per m2 per month
(USD)
5.17 – 6.37
0.73 – 32.67
n.a
Average Industrial
Land Cost per m2
(USD)
34.6 – 59.5
15.7 - 338.8
n.a
Telephone Charge
per minute in USD
0.02 for first 2
mins and 0.01
min thereafter
0.03 for first 3
mins, 0.01 min
thereafter
0.08
ADSL Broadband
(Monthly charges in
USDD)
110 - 313 (1mbps
– 2mbps)
76 - 339 (n.a.)
17 – 90
(256 kbps)
Source: SERI
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Cost of doing business (USD) - 2
Monthly Wages
(2004)
Malaysia
(Penang)
China
(Shenzhen)
Thailand
Management
395 – 2632
255 - 3025
1208 – 1847
Engineers
526 - 821
224 – 1682
656
Technicians
316 – 789
n.a
n.a
Operators
118 – 342
82 - 847
n.a
Source: SERI
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Site Selection
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 ()
 Total
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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
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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)
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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
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THANK YOU
Regional Competitiveness - Value Chain Analysis
Value Add
Proposed Strategy…
Malaysia is currently here
Other Countries catching up!
Research
Market
Path
Finding
Continue to do this
well, and...
Towards
Expand
Higher
Product
here
value
Development
add
And here
Engineer
to Order
Service
&
Support
Build to Order
Build to Capacity
R&D
Custom
Manufacturing
Order
Generation
High Volume
Manufacturing
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Order Mgt
& Delivery
Customer Experience
Business
Development
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Penang’s Focus Areas
Manufacturing and ICT*
Biotech & Medical devices
• Assembly/ Test manufacturing
for semicon, computer,
wireless etc
• R & D on Products
• IC Design, RF, Photonics, Bioinformatics, Software
applications, e-Biz
• Med. Devices
& Instruments
• Supply Chain Precision
engineering, Automation
equipment
• Shared services
Natural/bio-pharma
• Toxicology (CRO**)
• Manufacturing (CMO)
- Monoclonal, enzyme**
- Diagnostics (biochip)
• Marine Biotech
• Clinical Trials
• MSC status companies
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* ICT – Information Communication Technology
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