18TH CICA COUNCIL MEETINGBY

PUAN SRI MAIMON ARIF PATAILVICE-CHAIRMAN

FMM MALAYSIAN CERAMIC INDUSTRY GROUP (FMM MCIG)

MALAYSIA COUNTRY REPORT

7.20 6.00

-1.70

4.706.505.80

5.30

6.805.405.20

-0.90

-1.50

-0.30

7.30

4.20

5.80

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

YEAR

Gro

wth

Ra

te (

%)

M'sia GDP

Construction

M'sia GDP 6.80 5.30 5.80 6.50 4.70 -1.70 7.20 6.00

Construction -0.90 -1.50 -0.30 7.30 4.20 5.80 5.20 5.40

2004 2005 2006 2007 2008 2009 2010 (p) 2011 (f)

Source :Bank Negara Malaysia/Economic Planning Unit2009= preliminary2010= forecast

Malaysia GDP & ConstructionSector Growth Trend 2004-2011

MALAYSIA KEY ECONOMIC INDICATORS

2009 2010

Population 27.9 million 28.3 million

GDP US$ 147.8 billion US$ 166.8 billion

GDP Growth -1.7% 7.2%

Per Capita Income US$ 6,764 US$ 8,140

Inflation Rate 0.60% 1.7%

Labour Force 12.1 million 12.2 million

Unemployment 3.70% 3.20%

Total Export US$ 157 billion US$ 193 billion

Total Import US$ 123 billion US$ 160 billion

Major Exports Electrical & Electronic products, palm oil & palm oil products, crude petroleum , liquefied natural gas, timber & timber

based products and petroleum products.

Major Imports Electrical & Electronic products, petroleum products. Telecommunication equipments, copper and machines.

Source : Annual Report Bank Negara Malaysia 2010

Source : Bank Negara MalaysiaBase Lending Rate

6.13

5.996.61 6.72

6.70

5.62

5.64

6.27

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2004 2005 2006 2007 2008 2009 2010 2011

YEAR

Inte

res

t R

ate

(%

)

as at 1Q

BANK INTEREST RATE2004 - 2011

Source : Bank Negara Malaysia

6.27

5.516.48

2.00

3.60

3.00

1.40

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

2004 2005 2006 2007 2008 2009 2010

YEAR

Infl

ati

on

R

ate

(%

)INFLATION RATE

2004 - 2010

Source : Bank Negara Malaysia

3.02

3.31

3.803.79

3.67

3.44

3.33

3.53

3.00

3.10

3.20

3.30

3.40

3.50

3.60

3.70

3.80

3.90

2004 2005 2006 2007 2008 2009 2010 2011

YEAR

RM

/US

DFOREIGN EXCHANGE RATE2004 – 2011(RM/USD)

As at July 13, 2011

ELECTRICITY AND NATURAL GAS PRICE

2010 2011

Average electricity price US$ 0.09/kWh US$ 0.11/kWh

Natural Gas US$ 4.50/MMBtu US$ 5.35/MMBtu

Source : Suruhanjaya Tenaga and Gas Malaysia

� Launched of Economic Transformation Programme (ETP) on October 25, 2010-transform Malaysia into a high-income nation by 2020.

� Increase Gross National Income (GNI) per capita from USD6,700 toUSD15,000 by 2020

� ETP focus on 12 National Key Economic Areas (NKEA) .

� The 12 NKEAs are ;Oil, Gas and Energy; Palm Oil; Financial Services; Tourism; Business Services; Electronics and Electrical; Wholesale and Retail; Education; Healthcare; Communications.

CURRENT SCENARIO

Source :PEMANDU

Construction Industry

�Construction industry is expected to rely more on private project in 2010-2011.

�The growth in construction industry was supported mainly by the civil engineering sub-sector and non-residential sub sector.

�Civil engineering sub-sector continued to grow with the implementation of infrastructure projects such as the new Low Cost Carrier Terminal (LCCT), Second Penang Bridge, double-track rail project and several highways.

CURRENT SCENARIO

Source : Annual Report Bank Negara

�Promoting Green Technology

- Government is working in developing standards, certification scheme, labelling mechanism and green procurement manuals and procedures to enable the public and private sectors to embark ongreen purchasing which will be internationally recognised.

- The Green building Index, a rating tool to grade-environment-friendly buildings and the Government is providing fiscal incentives to buildings which are GBI-certifies.

- Green technology will be as an engine of growth to drive innovation and create employment in the country.

CURRENT SCENARIO

Source: Ministry of Energy , Green Technology & Water

Highlights of FTA’s

� Malaysia-New Zealand FTA- August 1, 2010

� Malaysia FTA negotiations with Chile and Indian were successfully concluded;

� Malaysia FTA negotiations with Turkey and EU commenced in 2010;

� Malaysia was accepted as a full negotiating partner in the Trans-Pacific Partnership Strategic Economic Partnership (TPP). Members of TPP are:-Australia, Brunei, Chile, New Zealand, Peru, Singapore, United States and Viet Nam

Source: Ministry of International Trade and Industry (MITI)

Malaysia's FTA Involvement

ABOUT

FMM MCIG

Tiles

40%

Sanitary-

ware

14%Table-

ware

10%

Claypipe

5%

Others

30%

�� Main subMain sub--sectors are tile, sectors are tile, sanitarywaresanitaryware, ,

tableware, clay pipes and adhesive ( Total: 20 tableware, clay pipes and adhesive ( Total: 20

membersmembers))

MEMBERSHIP STRUCTURE OF MCIG

ChairmanChairman YM Raja DatoYM Raja Dato’’ Abd Aziz b Raja Abd Aziz b Raja Muda MusaMuda Musa

Johan Ceramics BhdJohan Ceramics Bhd

Vice Chairman Vice Chairman

(I)(I)

YBhg Puan Sri Maimon YBhg Puan Sri Maimon ArifArif PatailPatail Malaysian Mosaics BhdMalaysian Mosaics Bhd

Vice Chairman Vice Chairman (Ii)(Ii)

Mr Ian KokMr Ian Kok Niro Ceramic Sdn BhdNiro Ceramic Sdn Bhd

Hon. Secretary/Hon. Secretary/

TreasurerTreasurer

Mr Seow Kok HooiMr Seow Kok Hooi GuoceraGuocera Tile Industries Sdn Tile Industries Sdn BhdBhd

SubSub--sector Coordinatorssector Coordinators

TilesTiles Mr Alvin LohMr Alvin Loh Kim Kim HinHin Industry Sdn BhdIndustry Sdn Bhd

SanitarywareSanitaryware Mr Chan Kum SengMr Chan Kum Seng ClaytanClaytan Corporation Sdn BhdCorporation Sdn Bhd

Tableware/Tableware/

ArtwareArtware

Mr Tan Chong JenMr Tan Chong Jen Oriental Ceramic Sdn BhdOriental Ceramic Sdn Bhd

Associate Associate

MembersMembersMr Michael ChongMr Michael Chong CentriconCentricon Industrial Supplies Industrial Supplies

S/BS/B

SecretariatFMM Malaysian Ceramic Industry Group (FMM MCIG)c/o Federation of Malaysian Manufacturers, Wisma FMM, No 3 Persiaran Dagang, PJU 9 Bandar Sri Damansara, 52200 Kuala Lumpur

FMM MCIG EXECUTIVE COMMITTEE

� Regular dialogues with the Government to address:

- Stability in energy supply at a competitive price

- enforcement of Standards for ceramic tableware

- Curtail the influx of sub-standard ceramic products into the domestic market

� Training Malaysian Customs officials on the proper valuation and classification of imported ceramic products

� FMM MCIG continues to be recognised as the authoritative voice for the ceramics industry.

FMM MCIG ACTIVITIES

Quality & Standard

Mutual Recognition Agreement (MRA) are not adopted by some countries.

Lack of enforcement/ regulation by authority on MS compliance

Lack of awareness on quality/MS products amongst public.

Research & Development (R&D)

Lack of R&D culture, human capital & facilities.

Resistance of industry players to utilise latest construction technologies.

Non Tariff Barriers (NTB)

Human rights/Corporate Social Responsibility (CSR)

Environmental issue (Green issue)

Bureaucracy in imposing trade remedies

CHALLENGES

CERAMIC INDUSTRY 2010

Production Domestic Market

Unit

Tiles 83. 3 million 70.4 million sqm

Sanitaryware 3.2 million 3 million pcs

Tableware 17.4 million 21.8 million pcs

Source : Department of Statistic & FMM MCIG

5053

46

28

22

27

45

2726

17

33

1820

854

0

10

20

30

40

50

60

2003 2004 2005 2006 2007 2008 2009 2010

Export Value Import Value

Million US$

Source : Department of Statistic Malaysia

Major Export :1. Singapore- 21%2. Australia-10%3. Thailand-8%

Major Import:1.China- 67%2. Vietnam-25%

Year

IMPORT & EXPORT VALUES OF 6907- UNGLAZED TILES

5661

74

16 1621

63

4751

5751

1319

15 15 11

0

10

20

30

40

50

60

70

80

2003 2004 2005 2006 2007 2008 2009 2010

Export Value Import Value

Million US$

Source : Department of Statistic Malaysia

Major Export :1.Australia-25%2.Singapore-14%3. United Kingdom-7%

Major Import 1.Indonesia-48%2. Thailand-31%3. China-8%

Year

IMPORT & EXPORT VALUES OF 6908- GLAZED TILES

22

19

22

9

6

8.5

15

12

1615

20

3 45 6 6

0

5

10

15

20

25

2003 2004 2005 2006 2007 2008 2009 2010

Export Value Import Value

Million US$

Source : Department of Statistic Malaysia

Major Export1.Australia-48%2.Singapore-21%3.United Kingdom-10%

Major Import :1.China-70%2.Indonesia-21%3. Thailand-5%

Year

IMPORT& EXPORT VALUES OF HS 6910-SANITARYWARE

22 24

14 13

3024

49

82

30 32

22

34

64

16 12 15

0

10

20

30

40

50

60

70

80

90

2003 2004 2005 2006 2007 2008 2009 2010

Export Value Import Value

Million US$

Major Import 1.China-77%2. Thailand-5%3. Singapore-3%

Major Export 1.Japan-20%2. USA-10%3. Thailand-14%

Source : Department of Statistic Malaysia

Year

IMPORT & EXPORT VALUES OF 6911 & 6912-TABLEWARE

159 155166

75

5869.5

150

129

174

126 135

515344

92

55

0

20

40

60

80

100

120

140

160

180

200

2003 2004 2005 2006 2007 2008 2009 2010

Export Value Import Value

Million US$

Source : Department of Statistic Malaysia4 ceramic products group : Unglazed Tiles, Glazed tiles, tableware and Sanitaryware

Year

IMPORT & EXPORT VALUES OF 6907, 6908, 6910, 6911 & 6912

� Introduction of affordable housing programme launched under a public-private initiative will boost the activities in the residential sub sector for 2011.

� Public expenditure on building and upgrading of schools, universities, hospitals and clinics under 10th Malaysian Plan will also provide positive outlook to the ceramic sector.

� The performance of the ceramic tiles sub-sector will continue to be sensitive to foreign exchange rate movements as well as raw materials and energy costs.

Outlook for Ceramic Industry