EUMCCI Trade Issues and Recommendations 2012 · 2019. 4. 19. · EU-Malaysia Chamber of Commerce and Industry EUMCCI Trade Issues and Recommendations 2012 7 Corporate Social Responsibility

EUMCCI

Trade Issues and

Recommendations

2012

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Introduction ...................................................................................................... 4

1. EU-Malaysia Chamber of Commerce and Industry ...................................... 5

2. Overview of Malaysian Economy ................................................................. 12 2.1 Overview of Malaysian Economy in 2011 ....................................... 13 2.2 Malaysian Economy Outlook for 2012 ............................................ 13 2.3 Services Sector .............................................................................. 14 2.4 FTA ................................................................................................ 15 2.5 International Economic Outlook 2012............................................. 15

3. Key Measures ................................................................................................ 16 3.1. Economic Transformation Programme - Propelling Malaysia Towards Becoming A High-Income Developed Nation ................... 17 3.2 Key Measures ................................................................................ 17

4. Cross Sectoral ............................................................................................... 22 4.1 Corporate Social Responsibility ...................................................... 23 4.2 Intellectual Property Rights ............................................................. 28

5. Issues by Sector ............................................................................................ 36 5.1 Construction and Building Materials ............................................... 37 5.2 Education ...................................................................................... 39 5.3 Energy, Environment and Green Technology................................... 44 5.3.1 Renewable Energy ......................................................................... 46 5.3.2 Energy Efficiency ............................................................................ 47 5.3.3 Green Building and Sustainable Communities ................................ 51 5.3.4 Waste Management (Anaerobic Digestion & Biogas) ...................... 53 5.3.5 Waste Management (Clinical Waste) ............................................... 55 5.3.6 Water ............................................................................................. 56 5.4 Financial Services - Green Financing .............................................. 58 5.5 Healthcare ..................................................................................... 66 5.6 Human Resources ......................................................................... 69 5.7 Information & Communication Technology ..................................... 71 5.8 Logistics ........................................................................................ 73 5.9 Oil & Gas ....................................................................................... 77 5.10 Wines and Spirits ........................................................................... 78

6. Appendix ...................................................................................................... 83 Table A1. The Global Competitiveness Index ................................................ 84 Table A2. Malaysia’s Total Trade ................................................................... 86 Table A3. Malaysia’s Trade with European Union .......................................... 87 Table A4. Malaysia’s Export by Sector .......................................................... 88 Table A5. Malaysia’s Imports by Sector ........................................................ 89 Table A6. Malaysia’s Export to EU - 27 by Product Sector ........................... 90 Table A7. Malaysia’s Imports from EU - 27 by Product Sector ...................... 91 Table A8. Malaysia-EU Trade Figures by Member State ................................ 92 Table A9. Malaysia-EU Trade Figures by Member State ................................ 93 Appendix A10. Manufacturing Projects Approved with EU-27 ..................... 94 Countries Participating in 2011 by Country Project Description “Enhancing the EU-Malaysia Dialogue ........................... 95 and Business Cooperation in Services Sector”

Table of Contents

Introduction

4 EUMCCI Trade Issues and Recommendations 2011

Introduction

In line with EUMCCI’s mission of enhancing business and investment relations and opportunities between the EU and Malaysia, I am pleased to present our EUMCCI Trade Issues and Recommendations 2012.

This Trade Issues and Recommendations publication focuses on the current status of EU business in Malaysia and presents a compilation of industry specific issues and recommendations, composed by our sectoral committees, to further improve the business environment from a corporate standpoint.

Providing an overview of EU Trade with Malaysia and the viewpoint of European and Malaysian businesses, we offer key recommendations that touch on all the major points of the Malaysian trade economy. It is noted that whilst in certain areas there has been marked progress, for many issues there has been more limited advancement. The developments to the Government Transformation Plan and the Economic Transformation Plan are clearly aimed at furthering the efforts to create a paradigm shift in Malaysia’s advancement and it is with this in mind that the recommendations in this publication are made, to support the continuing drive to make Malaysia more competitive within the region.

EUMCCI’s prime focus remains on the services sector, through this final year of the ‘Enhancing Business Dialogue and Cooperation in the Services Sector’ project, co-financed by the European Commission. In 2012 the EUMCCI Sectoral Committees also continue to focus on the of the Free Trade Agreement (FTA) negotiations being progressed between both the EU and Malaysia and Malaysia and ASEAN, putting forward issues and recommendations that could impact or assist both the EU and Malaysian businesses at the conclusion of these agreements.

The publication has come together as a collaboration between the Committees and Chamber staff and I trust that it may serve as both valuable insight and support for investors from both Europe and Malaysia, EUMCCI corporate partners and our stakeholders.

David Jones, April 2012EUMCCI Chairman

EU-Malaysia Chamber of Commerce and Industry

EUMCCI Trade Issues and Recommendations 2012 5

About Us

The EU-Malaysia Chamber of Commerce and Industry (EUMCCI) is a non-profit organisation that emerged in May 2003 from the former European Union Business Council (EUBC).

As an umbrella organisation of all the EU chambers of commerce and business councils EUMCCI is the largest bilateral chamber in Malaysia, representing approximately 1200 corporations.

Our Mission

To promote, support and develop EU business interests in Malaysia as well as facilitate trade, commerce and investments between EU and Malaysia. In order to fulfill its mission, EUMCCI carries out activities that will catalyze and stimulate networking of European companies in Malaysia with the Malaysian business community, business associations, relevant ministries, official representations and other Chambers in Asia.

Objectives

• Highprofilelobbying/dialoguewithInstitutions,Government• Speedupdecisionsandactionswithintheministriesandauthorities• PromoteandmarketEUtechnologies,SMEsproductsandservicesinMalaysia• FacilitatethedialoguebetweentheEuropeanprivatesectorandMalaysiangovernment• TodevelopandenhanceEUpositionandimageinMalaysia

EUMCCI Committees – Strong Lobbying Tool

The EUMCCI Committees are platforms for EUMCCI members of specific sectors. The Committees meet regularly to discuss issues affecting their particular industries, to hold seminars with guest speakers from the government, academia and business and to lobby with the government. Each committee is responsible for writing a Trade Issues and Recommendations paper outlining the most pressing business problems and recommendations for the government to reduce these issues. Every year all papers drafted by the Committees are compiled into a EUMCCI ‘Trade Issues & Recommendations’ paper. This document is circulated among Government administrations, relevant authorities in Malaysia and the European Commission in Brussels. At the moment, EUMCCI has 14 Committees covering the following sectors:

1. EU-Malaysia Chamber of Commerce and Industry

At the moment EUMCCI has 14 active committees. More information about these committees can be found by clicking on ‘Committees’ in the main menu.

If you are interested in joining one of our committees, please email [email protected].



Aerospace

The EUMCCI Aerospace Committee offers members a platform to discuss and raise key issues in the sector. The Committee provides members the space to exchange, brainstorm and develop new ideas to improve the industry as well as draft relevant guidelines and most of all, enhance our cooperation with Malaysian and European authorities and representatives.

The Committee aims are:1. Promote improved aviation safety and European safety standards

2. Raise awareness of European aviation practices

3. Development of routes between the EU and Malaysia

4. To cooperate with EU environmental initiatives

5. Education and technical training

6. To promote Malaysia as an Asian Aerospace Hub

Automotive

The goals of the EUMCCI Automotive Committee are to raise the issues related to automotive industry with the Malaysian authorities, and build a constructive working relationship to ensure a cooperative approach with market access or regulatory issues.

Committee aims: • ToreviewthecurrentimportdutiesandtariffsimposedonimportedandCKDvehicles.Thisisimportant

given the opening of the ASEAN market under AFTA.

• Toreviewcurrentnon-tariffbarriers-localstandards,specificationsandtestsimposed

• Toreviewcurrentprotectionoflimitedsparepartmanufacturers(suchaslightmanufacturersetc)

• Improvingthesafetystandardofallvehiclese.gcrashtesting

• To debate imposition of CO2 emission regulations and other ‘green’ regulation anomalies including definition of a hybrid vehicle

• Workingwiththegovernmenttoreviewroadsafetymeasures

Construction and Building Materials

Head of Committee: Mr. Aat van der Horst, General Manager, Victor Buyck Sdn Bhd

The EUMCCI Construction and Building Materials Committee is the lobbying partner for EU construction and building materials companies, architects and engineering companies. The Construction Committee aims to assist its members in addressing current issues to the government and to act as a network forum to exchange best practices. The Committee addresses issues to Pemudah, Ministry of Works, CIDB and other authorities relevant to the industry.



Corporate Social Responsibility (CSR)

Head of Committee: Dr. Geoffrey Williams, Managing Director and CEO, OWW Consulting Sdn BhdDeputy Heads: Ms. Sumitra Nair, Head - Business Environment Management & Corporate

Responsibility, DiGi Mr Arno Thöny, General Manager, Melia Kuala Lumpur

The EUMCCI CSR Committee with representatives from several European and Malaysian companies is focusing on gaining more attention for CSR in Malaysia. The CSR Committee has published a book; a compilation of case studies featuring good CSR practices and episodes in Malaysia. It also covers the development of CSR in Malaysian companies, especially those with business links to the EU.

The CSR book, entitled ‘Budi di Semai, Jasa di Tuai’ (Benevolence is Rewarded in Return), contains a collection of stories told by EUMCCI member companies that have implemented CSR programmes. Our CSR Committee believes this is the best way to demonstrate what CSR really means and to inspire others to do the same.

Our CSR mission statement: A platform to foster closer cooperation and engagement with governmental agencies to further enhance the protection and enforcement of CSR in Malaysia.

Defence and Security

Head of Committee: Mr. Krzysztof J. Splawiec, Director of Regional Office, Bumar Sp. Zo.o Regional OfficeDeputy Heads: Mr. Alberto Ciaramicoli, Chief Operating Officer, Comlenia Sdn Bhd Mr. Andrin Raj, Managing Director, Stratad Sdn Bhd

The EUMCCI Defence and Security Committee offers a platform for members to network, discuss and raise issues in the Defence and Security sector. The Committee organises talk sessions with guest speakers from the Government to talk about development in the sector and new regulations.

Education

Head of Committee: Dr. Geoffrey Williams, Managing Director and CEO, OWW Consulting Sdn Bhd

The EUMCCI Education Committee fosters dialogue, promotes initiatives and recommends and implements strategies, creating awareness and facilitating active engagement between members, educational institutions and the business sector in Malaysia. The Committee has engaged with 12 Malaysian Universities concentrating on facilitating industry-academia linkages in R&D, placement of academia at EUMCCI member companies and EUMCCI Industry captains placed on Curriculum Boards of Universities.



Environment, Energy and Green Technology

Head of Committee: Mr. Thomas Brandt, General Manager, Malaysian German Chamber of Commerce & IndustryDeputy Heads: En. Rosman Hamzah, Director of Business Development, Alstom Asia Pacific Sdn Bhd Ms Marina Yong, CEO, Sustainability Momentum Sdn Bhd

The Environment, Energy and Green Technology (EEGT) Committee was created in order to provide memberswith information,aswellascreatingawarenessconcerningenvironmentalmattersandgreen/clean energy issues. The Committee functions as a forum and regular meetings are held, providing dialogue with opinion leaders and highly ranked government officials involved in environmental and energy policy making processes. These speakers address and inform our members about the structure, the regulations and the prospects of the sector. The Committee addresses issues of concern with the relevant government authorities for further action through its position paper, lobbying and face-to-face interaction with government officials and facilitates trade, business opportunities and investment for EU companies in Malaysia as well as Malaysian companies.

The five EEGT Sub-Committees; Water, Waste, Energy Efficiency, Renewable Energy and Green Building are the most active and co-operative partners for exchange of information and a solution provider to the private sector, the Malaysian Government and further related stakeholders.

Heads of Sub-Committees:

Water: Dr. Franz Schröder, Commercial Counsellor, Austrian EmbassyWaste: Mr. Christian Senat, Solar PremiumEnergy Efficiency: Ms. Marina Yong, CEO, Sustainability Momentum Sdn BhdRenewable Energy: En. Rosman Hamzah, Director of Business Development, Alstom Asia Pacific Sdn BhdGreen Building: Dr. Stellios Plainiotis, Managing Director, Neapoli Sdn Bhd

Financial Services Sector

Pursuant to the EU Services Sector Projects – Financial Services Sector, EUMCCI established the EUMCCI Green Finance Task Force in December 2011 to focus on project financing issues in relation to green financing. It seeks to identify the current financing gaps and possible solutions to the barriers in accessing financing for green technology project developers.

Co-Chairs1. Ms. Marina Yong, CEO, Sustainability Momentum Sdn Bhd

2. Ms. Minna Saneri, General Manager, EUMCCI

Technical Group3. Ms. Jacqueline Chang, Policy & Project Manager, EU Services Sector Projects

4. Ms. Ng Yin Ching, Associate Director, PricewaterhouseCoopers Advisory Services Sdn Bhd

5. Ms. Natasha Yap, Manager, PricewaterhouseCoopers Advisory Services Sdn Bhd



Advisory Group6. Dr. Amat Taap Manshor, Senior Director, Centre of Excellence, Asian Institute of Finance

7. Mr. Tay Kay Luan, CEO, Institute of Banks Malaysia (IBBM)

8. Mr. Syed Ahmad Syed Mustafa, Head, GTFS Strategic Planning, Alliance and Business Development Division, Malaysian Green Technology Corporation

9. Mr. Biren Mohan, Vice President, Commercial Banking, HSBC, Malaysia

10. Mr. Murugadas Loganathan, Climate Change Officer, Southeast Asia Regional Climate Change Team, British High Commission KL

11. Mr. Suresh Palpanaban, Senior Manager, NKEA, PEMANDU

Healthcare

The aim of the EUMCCI Healthcare Committee is to be at the centre of debate in order to identify and prioritize key issues in the Healthcare industry, including issues relevant to the EU-Malaysia FTA negotiations. The Committee acts as a forum to discuss and facilitate business and to propose an environment in which to improve business conditions as well as acting as a conduit, raising issues and creating a clear and transparent relationship with Malaysian Government. The Committee also functions as a lobbying tool for European companies to improve interrelation and communication with the stakeholders and other related government agencies.

Human Resources

Head of Committee: Ms. Chan Swee Hwa, Human Resources Director, TNT Express Worldwide (M) Sdn BhdDeputy Head of Committee: Mr. R. Ravindra Kumar, Partner Raja Darryl & Loh –

Advocates and Solicitors

Formed in November 2009, the EUMCCI HR Committee aims to promote the importance of human capital in trade in general and among member companies specifically.

The Committee acts as:• aLobbyGroup-WeactivelygatherfeedbackandviewsfrommembersonimportantandpressingHR

issues and channel them to the relevant Government authorities for discussion and due consideration

• a Resource Group - We work to provide member companies with current and useful HR relatedknowledge, skills and information through appropriate channels such as workshops, seminars, surveys and training program

• aNetworkingGroup -Wework to raiseawarenessofHRmatters throughmeaningful activities andevents and to contribute to other Committees in EUMCCI through regular networking or social events



Information & Communication Technology

Head of Committee: Mr. Harith Menon, Head, Customer Marketing & Communications Regional Marketing, APAC, Nokia Siemens Networks

Deputy Head of Committee: Ms. Zaiton Hj Idrus, Director, Corporate Affairs Division, DiGi Telecommunications

The EUMCCI ICT Committee offers a platform for members to network, discuss and raise issues in the ICT sector. The Committee organises talk sessions with guest speakers from the government to discuss the developments in the sector and new regulations.

The ICT Committee mission is to build a stronger, bigger, louder and better forum to deliver our stated objectives to enhance our cooperation with Malaysian and European authorities for the deliverance of innovative ICT solutions and services.

Intellectual Property Rights

Head of Committee: Ms. Wong Jin Nee, Partner, Wong Jin Nee & Teo - Advocates & SolicitorsDeputy Head: Mr. Chew Phye Keat, Senior Partner, Raja, Darryl & Loh - Advocates & Solicitors

The EUMCCI Intellectual Property Rights (IPR) Committee reviews IPR related matters with the Royal Malaysian Customs and with other relevant authorities. The Committee is organising a regional IPR capacity building and exchange of best practices workshop, with the aim to reduce the amount of counterfeit goods entering Malaysia. It is also cooperating with the Royal Malaysian Customs and member companies by conducting specific product identification training workshops.

Logistics

Head of Committee: Mr. Marco Tieman, Chief Executive Officer, LBB Teams (M) Sdn BhdDeputy Head of Committee: En. Kamarul Azman, Customs and Regulatory Affairs Manager, National Operations, DHL Express (M) Sdn Bhd

The EUMCCI Logistics Committee, formed by representatives from both large and small logistics companies, regularly discusses relevant issues and means to resolve them or at least minimise their impact. The Committee lobbies the appropriate authorities and organises seminars and sector-related events. In addition, the Committee acts as a forum for exchanging information about logistics in Malaysia and has conducted a regional survey on logistics processes and costs.

The mission of the Logistics Committee is to be the representative body of the logistics industry in Malaysia. To promote, support and develop logistics in Malaysia as well as facilitate trade, logistics and investments between EU and Malaysia.



Oil & Gas

Head of Committee: Mr. Fermin Fautsch, CEO, South East Asia, Logica Malaysia Sdn BhdDeputy Head of Committee: Mr. Luis Ochoa, General Manager, Anchor Chain Sinar Malaysia Sdn Bhd

The Committee provides a platform for members to discuss and lobby industry issues as well as focus on the following topics:• Manpowersourcingandtraining

• Cooperation:EU-Environmentalinitiatives

• Upstream:DeepwaterandMarginalFields

• TopromoteMalaysiaasanOilandGasDeepwaterHub

The vision of the Oil & Gas Committee is to be the central, focal point for all issues related to the oil and gas industry in Malaysia.

The Committee aims are:• TobeacentreofdebatetoidentifyandprioritizekeyissuesintheOilandGasIndustry

• To be a forum to facilitate business, discuss and propose an environment to improve the businesscondition

• Tobeachanneltoraiseissuestogovernmentauthoritiestocreateaclearandtransparentrelationshipwith Malaysian Government and to establish a lobbying tool for European companies to improve interrelation and communication with Petronas and subsidiaries

Wines and Spirits

Head of Committee: Mr. Frédéric Noyere, Managing Director, Moët Hennessy Diageo Malaysia Sdn BhdDeputy Head of Committee: Mr. CK Tan, Managing Director, Pernod Ricard Malaysia Sdn Bhd

The Wines and Spirits Committee was introduced at the start of 2011. The EUMCCI Wines and Spirits Committee is comprised of market leading companies engaged in the importing and selling of wines and spirits in Malaysia. The members represent more than 50 premium brands of wines and spirits that represent a significant proportion of wines and spirits imported and consumed in Malaysia.

The Committee aims are:• To promote and establish a regular communication and well-informed relationship with Government

authorities and other interested parties in order to create optimum acceptability of the branded alcohol products amongst Government authorities and other interested parties

• Toadvocatethedistributionindustryofimportedspirits,champagnesandwinestobecompetitiveandto participate in activities of common interest for the well being of the distribution industry; to assist to overcome any prejudice arising from any misunderstanding or misconception relating the said distribution industry and to promote safe and responsible consumption of the imported spirits, champagnes and wines

• Tocollateallinformationrelatingtoalcoholicbeveragesconsumptionissues;toprovideaforumforthevarious Malaysian distributors to facilitate the exchange of ideas and information on matters of common interest and to promote better relationship and understanding amongst themselves; to enhance the image of the distribution industry of imported spirits, champagnes and wines by dealing with issues in one voice

EU-MALAYSIA BUSINESS

Overview of Malaysian Economy




2.1 Overview of Malaysian Economy in 2011

After the sharp recovery in 2010, the Malaysian economy showed moderated growth of 5.1 % in 2011. The slowdown is attributed to a weakened global economic environment. Nevertheless, Malaysia’s economy registered solid growth, lead by strong domestic demand. Private consumption increased by 6.9% in 2011, attributed to robust employment and wage growth. Household, business and public sector expenditure all registered expansion. Services and manufacturing, two of the largest contributors to the GDP with 58.6 and 27.5 % share respectively, continued to grow last year. The value-added of services increased by a healthy 6.8 %, lead by the trade, transport and finance sub-sectors. The manufacturing sector is up by a more modest 4.5 % from 2010, driven by strong production of construction-related materials and resource-based industries.

The possibility of a spike in inflation during 2011 was timely addressed by a tightening in the monetary policy and a reduction in the temporary supply side factors. As a result, the headline inflation was contained at an average of 3.2%. Despite higher government spending on subsidies fiscal policy remained within the boundaries of the projected 5.4% deficit. The larger spending was offset by bigger budget inflows from higher petroleum prices and tax revenues. The unemployment rate decreased further from 3.3% in 2010 to 3.1% in 2011 with new jobs created mainly in the wholesale and retail trade, transport and communications sub-sectors.

Malaysia’s total trade registered strong growth of 8.7% and ended the year with a trade surplus of a RM 120.31 billion. The EU is still one of the biggest trading partners for Malaysia with a share of 9.4% of the total trade. Even in the face of the euro zone sovereign debt crisis Malaysia’s bilateral trade with the EU showed growth in both exports (4.7%) and imports (10.8%).

An increase in the inflow of foreign direct investments, a key aim for 2011, was achieved. Total FDI grew by 12.3% to amount to RM 32.9 billion, which is still substantially lower than the RM 82.3 billion from domestic investments. UNCTAD has ranked Malaysia as the top host country for FDI in 2011-2013. Malaysia performs very well also the World Bank’s global competitiveness report – it shows an improved 21st position for the country.

2.2 Malaysian Economy Outlook for 2012

In 2012 the Malaysian economy is expected to experience further slowdown due to a weaker external environment. The GDP growth forecast is set by Bank Negara at the level of 4-5%. Malaysia has a highly open economy which is vulnerable to the projected low growth in the major advanced economies. Several factors mitigate the negative external effects though. Malaysia’s export markets have been diversifying since 2000. Currently, Malaysia’s trade with the developed countries, mainly Japan, the US and the EU, has fallen to approximately 30% of its total exports (exports to the EU are 10%). On the other hand, exports to the thriving Asian market and the rest of the developing world now amount to 48% and 22% respectively. This diversification means that Malaysian exports would be less vulnerable to stagnated growth in the advanced economies. Malaysia’s strong macroeconomic fundamentals in the domestic economy also provide some cushion to external shocks. A shortage of external funding sources can be offset by the good liquidity in the domestic financial sector (banking and corporate sub-sectors). Bank Negara still has a

2. Overview of Malaysian Economy



substantial margin of discretion in the field of monetary policy, exchange rate and financial policies. In fact, domestic demand is going to be the engine of growth in the upcoming year. The fiscal policy is geared up to stimulate the domestic private sector investment and consumption.

Across most sectors the outlook for 2012 is one of moderated growth. Worsening conditions in the advanced economies mean a shrinking of the main markets for Malaysia’s E&E exports. As a result of the expected weakened global economic environment the inflow of FDI will moderate, as will prices of rubber and crude palm oil. The current account surplus should continue to be large as the deficit in the services decreases and the trade surplus is maintained.

The major risks to the Malaysian economy in 2012 come from the international arena. The three key risk factors are deterioration in the euro zone debt crisis, slower than predicted growth in Malaysia’s main trading partners, and global sharp increase of financial stress. Some volatility in the domestic level can result from the general elections that should be held sometime before spring 2013.

2.3 Services Sector

The services sector grew by 6.8% in 2011 and currently comprises 58.6% of Malaysia’s GDP. The services sector remained the largest contributor to growth, with a contribution of 3.4% to overall GDP growth in 2011 and employing 53.3% of Malaysia’s total work force. The level of growth rose in the second half of the year and the expansion of productivity in the sector was lead by the communications, utilities and transport and storage sub-sectors respectively.

Performance of the Services Sector (value added at constant 2000 prices)

Share2010(%)

2010 2011

1Q 4Q Year 1Q

Annual change (%)

Intermediate Services 43.7 8.7 6.0 7.3 6.8

Finance & insurance 20.3 7.1 3.7 6.4 6.8Real estate & business services 9.5 14.2 8.7 7.8 8.7Transport & storage 6.6 8.1 5.2 6.9 4.3Communication 7.4 6.7 9.8 8.5 6.5Final Services 56.3 8.5 6.3 6.4 5.1

Wholesale & retail trade 23.6 9.7 8.3 8.0 6.8Accommodation & restaurant 4.2 5.5 3.7 5.0 4.0Utilities 5.2 16.8 4.2 8.2 0.4Government services 13.0 7.6 6.1 5.8 5.3Other services 10.2 4.7 3.9 4.0 3.9Total Services 100.0 8.6 6.1 6.8 5.9

Source: Department of Statistics, Malaysia



2.4 FTA

In December 2010, negotiations for a Free Trade Agreement (FTA) between the European Union and Malaysia were officially opened. When successfully completed, the FTA will become the long-term framework for economic relations, promising many opportunities for both partners. The FTA is an ambitious endeavor that could ultimately remove tariffs on all trade in goods. Equally groundbreaking would be the liberalization of the Malaysian services sector to levels exceeding WTO commitments.

The FTA negotiations have put sensitive areas, such as government procurement, competition, and sustainable development, on the discussion table. Most recently the negotiations have been concerning sectors such as the auto sector, and services sector, with the talks scheduled to conclude at the end of 2012. The anticipated outcomes are that European companies will benefit from greatly improved market access conditions and will gain a firmer foothold in the growing Asian market; the advantages of this agreement for the Malaysian market are substantial - granting lucrative preferential access to the EU which is the largest market in world.

Studies have predicted an 8% GDP growth for Malaysia by 2020 if a comprehensive FTA is forged. The conclusion of an EU-Malaysia FTA would be a landmark step in the fostering of bilateral trade between the two partners and will deepen their economic integration.

2.5 International Economic Outlook 2012

The prospects for the world economy are looking dim in 2012 as self-perpetuating pessimism sets in. Global growth is expected to be weak at 2.6% due to continuing euro zone strains and overall fragile financial environment. Most advanced economies, particularly in the euro area, might fall back into a recession. There is risk of much broader freezing up of capital markets Two of the world’s biggest economies- the EU and the US, are plagued by high unemployment rates and shattered confidence of business and consumers. Underlying problems require strong political action but policy-makers on both sides of the Atlantic are failing to unite over the best course of action.

Although developing countries remain the engine of world growth, their pace is decelerating. The forecast is for them to grow on average by 5.6% in 2012 (down a percentage point from 2011). Developing Asia is the best performer globally with projected growth of 7.5%. In the present reality of interdependence between economies, the woes of developed countries spill over on developing areas. The strongest negative effects would be felt in Central and Eastern Europe because of those regions’ high trade and financial links with the euro zone.

Economic gloom is furthered by the realization that should high-income countries tip over into another majorcrisisliketheonein2008/2009,theywouldnotrecoverasfastthistimeround.Theirgovernmentswould lack the fiscal means to launch a new grand counter-cyclical policy. Although not so constrained, developing countries would also have limited fiscal space to act against a new recession. Monetary policy responses in advanced economies are scarce as well as central banks already facing heavy balance sheets. To the (limited) consolation of emerging markets they are still equipped to relax monetary policies should a new global crisis hit.

Sources: Bank Negara Malaysia. International Monetary Fund (IMF), Malaysian Investment Development Authority (MIDA), Ministry of International Trade and Industry Malaysia (MATRADE), The World Bank, United Nations


Key Measures 2012

Key Measures


In order for Malaysia to gain and attract investor confidence, EUMCCI applauds the government’s efforts to put in place policies and actions that are supportive of business.

3.1 Economic Transformation Programme - Propelling Malaysia Towards Becoming A High-Income Developed Nation

EUMCCI commends the Government and Economic Transformation Programmes launched by the Prime Minister and looks forward to their impact. Successful implementation of the ETP would see Malaysia’s economy undergo significant changes and move towards a service-based economy, with the services sector contribution growing from 58 percent to 65 percent by 2020.

3.2 Key Measures

Many of the issues EUMCCI has previously brought attention to in its annual Trade Recommendations and advocacy activities, are now recognized in government strategies. We consistently continue to review the business environment in Malaysia in light of our roadmap of key measures. Reflecting the spirit of cooperation between the Chamber and Malaysian policy makers, our ongoing recommendations are related to the most recent government development programmes - the GTP and ETP.

1. Ensure policy consistency and provide clear direction in development of policiesThe smooth operation of business requires that the regulatory environment in the country is reliable, easy to navigate through and inclusive of the stakeholders. The Malaysian government has recognized that deficiencies exist in its internal processes and these are hampering the economy from attracting much-needed private investments. Improving government services is at the core of the GTP. The ongoing FTA negotiations can also be used as a platform for bringing more transparency, clarity and policy predictability to the regulatory framework. Regular consultation, engaging in meaningful dialogue with all stakeholders is also key to the introduction of policy changes. For example, EUMCCI proposes to become involved in the ETP so that there is a continuous flow of feedback between government and business.

Rank 2012 Rank 2011 Change in Rank

Starting a Business 50 111 61

Dealing with Construction Permits 113 111 -2

Getting Electricity 59 60 1

Registering Property 59 59 No Change

Getting Credit 1 1 No Change

Protecting Investors 4 4 No Change

Paying Taxes 41 39 -2

Trading Across Borders 29 28 -1

Enforcing Contracts 31 60 29

Resolving Insolvency 47 57 10

Doing Business Overall Ranking 18 23 5

Doing Business 2012 by the World Bank based on 183 countries

3. Key Measures

Key Measures


2. Develop IPR protection and enforcementMalaysia’s legislation on intellectual property rights in the main, conforms with international standards. The three issues which are identified as most problematic in this field are: i) problems with enforcement, ii) border measures, and iii) territoriality of trademarks. EUMCCI proposes an array of measures to help address these issues. Awareness campaigns to familiarize the public with the negative effects of piracy are needed. More efficient legal action would encourage IPR holders to pursue their infringed rights more often. Specialized training of customs officers will prepare them to adequately deal with seizing of counterfeits. Better inter-agencies cooperation and intelligence-sharing is required. This is particularly important for the multiple cases where Malaysia is only a transit country for counterfeit goods originating from China, Vietnam, and Indonesia. One of the focal points of the EU-Malaysia FTA will be the strengthening of IPR protection. As barriers to trade between the two markets are lowered, it must be ensured that counterfeits become subject to stricter control.

3. Review the equity conditionsThe government has identified as a policy priority, the strengthening of private investments and the attraction of FDIs. At the same time, the cap on foreign ownership and the Bumiputra participation in a number of sectors continues to be upheld. In particular, restrictions in the service sector (telecommunication, logistic, financial, environmental, professional and business etc.) should be reassessed. Malaysia should seize the opportunity provided by the currently negotiated Free Trade Agreement with the EU to liberalize its equity regulations.

4. Develop a competitive taxation and tax incentive climateA competitive taxation system would encourage economic growth. The anticipated reduction in individual and corporate tax rates was not implemented in Budget 2012. Neither has there been a clear date set for the introduction of the goods and services tax (GST). In an effort to prevent a real estate bubble the government has modified the real property gains tax (RPGT). In its new form, the RPGT gets progressively lower the longer ownership is retained. This is designed to curb speculative acquisition of properties. Several corporate tax incentives will come into effect in 2012 for targeted sectors: hotels, industrial design services, treasury management centres, hybrid and electric cars. No new indirect taxes have been introduced. A commendable move to encourage better efficiency of the Inland Revenue Board (IRB) is the new compensation for late tax refunds. Starting from 2013, taxpayers will be entitled to a daily compensation of 2% if i) over 90 days have passed from the due date (for e-filing), or ii) over 120 days have passed from the due date (for manual filing). EUMCCI encourages the government to set a timeframe for the introduction of the GST tax as companies value transparency and predictability of the tax system.

5. Develop human capitalLack of a qualified workforce is one of the biggest impediments that investors identify with doing business in Malaysia. The demand for talent is growing while academic institutions struggle to provide graduates with practical skills. There seems to be a disconnect between the curriculum and the requirements of employers. Better co-ordination between industry and universities, more focus on internships and language training are some of the requisites for preparing graduates for the real world and making them more employable. At present, the government is reforming its education system by, among other things, introducing a new curriculum for primary and secondary schools and promoting significant growth of the private education sector.

6. Improve security level in MalaysiaSecurity is an important factor in inspiring investors’ confidence. The main thrust of the government’s anti-crime policy has been to increase number of policemen in hotspots. This policy seems to be delivering results and the national crime rate has been declining since 2009. Sustained efforts should be made to

Key Measures


further this trend. Moreover, studies show that crime levels have an inverted relationship to economic performance, hence, a more holistic approach to security should be considered.

The 2011 GTP Annual Report announces a 11.1% drop in index crime and a 39.7% decrease in street crime.

Source: Pemandu

7. Liberalization of servicesThe services sector is the largest contributor to Malaysia’s GDP. Therefore the development of this sector is of paramount importance to the health of the entire economy. Despite some previous advances toward relaxing the equity restrictions and market access for foreign companies, currently Malaysia’s services sector remains highly protected. The country is currently facing a rare opportunity in the form of the EU-Malaysia FTA. It can bring its protectionist regime into conformity with the demands of a globalized world. By doing that, Malaysia will gain lucrative, preferential access to the world’s largest market - the European Union. EUMCCI strongly supports a review of the main barriers to FDI and the establishment of Malaysia’s services sector. Among these, although the list is non-exhaustive, are:• RestrictionsonacquisitionsofMalaysiancompanies

• Restrictionsonthepurchaseofland,propertyandrealestate

• Obligationtoenterthemarketthroughjointventure

• Limitationsoncapitalownership(thecountrytoallow51%ownershiptoforeigninvestors,hencecontrolof the company, a necessary condition to trigger real investment in the services sectors, that would initiate transfer of know-how and management expertise, creating local growth and local jobs)

• Limitationsonlicensesallottedtoforeigncompanies

• Restrictionsonbranching

• LackofNationalTreatmentinmanyservicessectors

• Localemploymentrequirements(whenthepercentageistoohigh,itcanpreventforeigncompaniesthatusually start with small operations)

• Longandburdensomeadministrativeprocedures

• PublicprocurementpracticesgivebetteraccesstoBumiputra,tothedetrimentofforeigninvestors,theMalaysian budget, and ultimately the Malaysian citizens. The lack of transparency in the bidding system needs to be addressed

Snatch theft2%

Car theft10%

Motorcycle theft31%

Van, Lorry theft2% House break-in

18%

Theft18%

Violent Crime19%

Key Measures


8. Enhance transparency and minimize the level of corruptionCorruption is still present in Malaysia. According to PEMUDAH estimations, inefficiencies resulting from corruption cost the country around RM10 billion a year. Legislative measures against corrupt officials do exist, however, there is much to be desired on the implementation side. A 2010 survey by Transparency International revealed that the situation is not significantly improving. The government now recognises the necessity in delivering better results in the 3 most problematic areas - regulatory and enforcement agencies, government procurement and political corruption. EUMCCI encourages the implementation of the GTP policies aimed at combating corruption.

9. Create a more conducive environment for innovation and creativityThe European Union has long since recognized the importance of innovation in achieving sustainable growth and competitiveness. In the Europe 2020 strategy, launched by the European Commission in March 2010, innovation is singled out as one of the motors of the economy. Malaysia aims to become a high-income nation through inclusive and sustainable growth, not through short-term progress (ETP). It also tries to gain a competitive edge in the region. Creating an environment that is conducive to innovation is a means to accomplish these goals. EUMCCI suggests taking policy measures in the following directions:

• Taxincentives• Removingbureaucraticobstaclesandcreatingahassle-freeenvironmentforprivatesectoractivity

• Liberalizationofvarioussectorstoallowthemostefficient(andinnovative)businessestothrive;thereisnow extensive evidence that multinational companies are more innovative and productive; this could lead to ‘spill-over’ benefits for domestic business

• HaveanefficientfinancialservicessectorwhichcanprovidecapitalforR&Dactivities

• Ensureprotectionofintellectualpropertyrights

• Supportastrongsciencebase-universitiesareoftenthecradleofR&D

• Encouragepublic-privatepartnerships

The NKEAs of the ETP can be a suitable vehicle for executing innovation-promoting projects. Special attention must be devoted to enforcing IP rights, making it more profitable for companies to invest in R&D.

10. Foster awareness of climate change and incentivize and speed up implementation of green technology

Reliance of fossil energy is not a sustainable solution. Currently, Malaysia is falling far behind developed countries and even behind some of the less advanced neighbouring economies, in its share of grid-connected renewable energy. It amounts to only 1% of Malaysia’s energy mix. With a mere 5% of the waste being recycled, there is much room for improvement if the country wants to reach developed nations’ recycling rate of approximately 50%.

At the end of 2011 Malaysia introduced a strong stimulus for the development of renewable energy - the feed in tariff (FiT). FiT is payment by the state for electricity generated from renewable sources. The Malaysian government hopes to thus increase the share of renewable energy from the current 1% of the energy mix to 5.5% by 2015. The FiT is a commendable initiative by the government to diversify Malaysia’s heavy dependence on conventional energy sources. However, the current FiT system should be finetuned to ensure better realization of its impact potential. Most pressing is the revision of the quota available to producers – it should either be quickly increased or abolished entirely.

Key Measures


Europe is the renowned global leader in green technology and the fight against climate change. Co-operation between the EU and Malaysia in this field can thus bring significant benefits.

Creating a broad awareness of environmental issues and business opportunities in the growing green sector is one of the future challenges. In this respect, initiatives such as the International Green technology and Eco-Product Exhibition (IGEM) can play an important role. The government should also consider more incentives for the private sector to develop in a nature-friendly manner (e.g. energy and water efficiency, green building, production of renewable energy). Raising awareness among the population will create a demand for green solutions, boost a new, profitable sector of the economy, and ensure that Malaysia’ growth into a high-income country is not at the expense of its nature.

Sources:

• EuropeanServicesForum,Brussels-2010Non-PaperonMainbarriers toFDI/Establishment inServicesSectors inMalaysia;

• Ernst&Young-APACTaxMatters(March2012)

• PricewaterhouseCoopers

• PEMANDU-Performance Management and Delivery Unit, Malaysia-Economic Transformation Programme: ARoadmap for Malaysia (2010);

• PEMANDU-Performance Management and Delivery Unit, Malaysia-Government Transformation Programme: TheRoadmap (2010);

• TransparencyInternational-GlobalCorruptionBarometer2011.


Cross Sectoral

Cross Sectoral


4.1 Corporate Social Responsibility

The EUMCCI CSR Committee has compiled a list of best practices to inculcate among employers:

Provide Nurseries for staff’s childrenThis will help families with young children to achieve their work and family commitments more easily.

Be receptive to staff participation in the decision-making processA more intensive involvement of the staff in the decision-making process is an important cornerstone of success.

Launch a fight against illiteracy and raise levels of literacy among employeesThis will create a “win-win” situation enabling the staff to better understand operational issues, thus enabling people to understand their roles in the ever-changing work environment and boosting self-esteem in the process.

Establish a long-term program to improve human competencesThis will allow consistent development of human potential which will contribute to the company’s overall effectiveness and at the same time providing the employees a sense of security and work stabilisation.

Improve employees benefitsProviding medical or health insurance including a group personal accident or death benefits to all employees. This will provide a sense of security to the employees and their families.

Issues

Traditional CSR vs Shared Value Strategic CR

There is still a misconception in the country that CSR is more about charity that about creating shared value, i.e. where a company carries our it’s Corporate Responsibility in a manner that creates value for itself as well as society and environment at large.

RecommendationsAs Malaysia transforms to a higher income, inclusive and sustainable nation, it is important for corporations and the government to recognise that Corporate Responsibility must be integrated and aligned to an organisation’s business goals, and at the same time addresses key issues in our society. CSR cannot be a standalone nice-to-have activity that is merely promotional or PR in nature. The government may also consider making CSR a compulsory subject in university syllabus, to ensure that graduates have a more CSR-conscious mindset as they join the workforce, and later as they become future leaders of the nation.

Transparency and Ethics in Procurement

The Malaysian government’s focus on CSR often touches on soft issues that tend not to be controversial. Hence CSR is seen mainly as a private sector corporate initiative to promote good environmental, community, labour and trade practices, and so on. Whilst the government’s support of CSR in the private

4. Issues

Cross Sectoral


sector is laudable, it also needs to look at government agencies and their internal practices. This is important particularly where the work of government agencies intersects with private sector initiatives and where government makes business decisions.

In an economy where private sector initiatives play a significant role in nation building it is no longer possible to disassociate corporate commercial practices from good governance in general. As such government procurement activities must also endeavour to conform to CSR best practices.

The widespread privatization of public services and procurement of goods and services, means that the government itself has become deeply involved in commercial transactions and negotiations, which like other corporate activities, can no longer be above scrutiny with CSR lenses. The power of government to award contracts also comes with the power to favour, and this concern is heightened where contracts are lucrative.

RecommendationsCSR must equally dictate the way in which the Malaysian government agencies manage and award contracts for goods and services. In other words, having good CSR practices in the corporate sector alone does not take us very far, particularly where transparency is lacking in the award of procurement contracts. It is noted that in Malaysia, it is still relatively common to find sizable government contracts being awarded to newly formed entities with no track record and that may be owned by persons with no relevant corporate history. Bidding for government contracts also does not always favour companies that have the necessary technical expertise but may instead be awarded on criteria that are neither objective nor transparent.

These are major concerns of EU investors. The Chamber considers that a lack of transparency will not promote confidence in the economy as it prevents European enterprises with the appropriate expertise from bidding in a fair way. The Chamber believes that a lack of transparency in government procurement also promotes “middlemen” and increases the cost of delivery and ultimately reduces the value offered to Malaysian taxpayers.

The Chamber accepts that Malaysia is not the only country with these systemic weaknesses, but it also feels that European companies weigh up Malaysia’s relative advantages as a nation regulated by laws, with other countries in the region which though less developed in their legal jurisprudence, offer far greater business opportunities in terms of market size and penetration. Malaysia loses its comparative advantage when it can not offer that differentiation. Malaysia must therefore bolster its governance structures and institutions with good SR practices.

The Chamber notes that the government sees CSR as an integral part of developing a high income society. However it cannot depend on the corporate sector to do this alone and must lead by example. It must urgently move SR up the government’s list of priorities.

Reducing the income gap

The income gap between rich and poor in Malaysia is widening. Whilst Malaysia tries to find its way out of the middle income trap, it has to be careful that a portion of the population is not left behind. Of vital importance are improved productivity, education and skills. The current trend and intention to increase wages to compensate for increased prices and simplify the curriculum to ensure graduation targets are met will make the Malaysian labour market less competitive and prevent incentives to improve skills if not linked to real productivity. This will create a burden for business requiring productivity improvements to remain competitive.

Cross Sectoral


Income will not be determined by what people control but what they know. This can only be brought about through effective education and an allocation of resources that is merit based. Licensing regimes that see wealth creation as a function of monopolies and privileged access to resources must end. They stand directly in the way of a higher income society, benefiting only a small segment.

Whilst the government may appear to be promoting education and training, it is questionable if the focus is on business rather than education. A general complaint is that whilst there are many “graduates,” they lack basic knowledge and skills and are therefore are unable to compete in a real way and prevented from moving up the income ladder.

A narrow political agenda also prevents important changes being made, that would help those at the lowest end of the income scale from improving themselves. This is seen in the dramatic decline in the level of English which has far reaching consequences for those unable to speak it well. This agenda gives priority to politics not nation building.

In future, a high income level will be dictated by those who best exploit talent and knowledge. That can only be brought about by a competitive meritocratic environment. The longer the government delays in bringing about this transformation in Malaysian society, the greater the loss will be to those who need it most.

RecommendationsInstead of only increasing wages, focus should shift towards productivity and teaching important skills such as English. A productivity increase can be achieved through formal education programs, e.g. apprenticeship schemes, industrial training and higher industry specific education. As most programs are privatized, establishing quality standards issued by government authorities and monitored for compliance by an independent institution could drive the quality of many of those programs to gradually increase the skill level and the competitiveness of the workforce while at the same time addressing issues related to labor law and employment codes.

The government must commit to promoting competition and merit both at the skills level as well as at the reward level. This is crucial to increasing productivity and ultimately creating a high income society.

Transformation of labour laws

The labour laws should favour employees. However, when they work against promoting a strong and efficient business sector, they ultimately work against the employee by making Malaysia less competitive and therefore less able to generate wealth.

Labour laws in Malaysia have become so lopsided that companies are often punished whether they are right or wrong. There is a need for labour laws to be balanced so that they provide incentives for performance and development but at the same time are flexible enough for employers to remove employees who do not meet reasonable standards of work and ethics.

More equitable employment laws will bring about greater efficiencies and productivity. Not only would employees have to be more pro-active to be relevant, businesses will have to improve the remuneration package and work environment to keep good employees. This would transform the labour market.

Cross Sectoral


RecommendationDecisions are arbitrary and although designed to protect the weak they should also be fair and relevant to present conditions. Employees should shoulder responsibility if they bring a wrongful claim against their employer. This will discourage frivolous claims. The mediation process should be improved so that the process is more substantive than superficial, with employees with weak claims being warned of the cost consequences if they proceed with their claims and lose.

Environment

The Prime Minister indicated at the Copenhagen Summit 2009 that Malaysia will commit to a reduction of up to 40% Carbon Intensity emissions (based on 2005 levels) by 2020. In order to meet this target companies (and individuals) need to know their current carbon footprint in order to develop strategies to reduce CO² emissions from their activity.

RecommendationsGreenhouse Gas (GHG) and CO² audits should be compulsory for all large companies and strongly encouraged for SMEs. The Government should also provide grants for GHG and CO² audits and assist Standards Malaysia and SIRIM to develop courses for locally based GHG and CO² auditors to help companies at lower cost than using overseas auditors.

Also, the Government should reduce the import tariff on low-carbon technology such as solar panels from overseas to allow Malaysian companies to retro-fit their buildings quickly and offer grants for such purpose.

Land Acquisition

With the increase in construction and development within Malaysia, the issue of land acquisition is one that is a constant concern. In rural areas in particular the acquisition of land can often be seen to be to the disadvantage of the displaced peoples if fair compensation is not made.

RecommendationLand acquisition must be done in a fair manner where displaced people are provided fair compensation for their land/homes or provided reasonable alternatives. It is important that the companies involved(construction,propertydevelopers,town/citycouncils,etc)shouldnotjustpay“lip-service”bypromotingtheir CSR initiatives but not “walking the talk.”

Charitable sponsorship

Orphanages and retirement homes in Malaysia are charitable organisations often solely dependant on the donations of generous individuals and fundraising activities. Whilst these are valid income revenues they cannot be relied upon and as a result the institutions cannot guarantee consistent levels of service.

RecommendationGreater effort should be made by corporations to adopt retirement homes, shelters and orphanages. Government could provide better incentives to corporations to encourage and promote the effort.

Cross Sectoral


Better Disabled Facilities

Whilst Malaysia is a signatory to the 2008 UN Convention on the Rights of Persons with Disabilities, very little has been done across the country to ensure that the same opportunities of access are granted to venues and buildings for people with impaired movement, motor skills, hearing or sight impairments, in terms of signage and public audio information. The EU looks favourably on equality for all citizens and in 2010 announced a 10 year European Disability Strategy. The aim of this strategy is to provide help for disabled people to live their lives with as little disruption as possible, whilst enjoying the benefits of EU citizenship just as people without disabilities are able to.

RecommendationMore efforts should be made to provide better facilities for the disabled both at the work premises and in general. The installation of step free access to all government buildings would be an example for other businesses and public facilities to follow.

Intermediary Refugee Employment

The treatment of refugees in Malaysia is a subject that has been highlighted by human rights organisations in the last year. Currently refugees and asylum seekers from countries such as Myanmar are detained prior to repatriation, but denied legal recognition, protection or the right work. In February 2010, Malaysian Home Secretary Hishamuddin Hussein proposed that refugees be issued government identification cards that would allow them to gain employment. There has been no move towards this suggestion however.

RecommendationGovernment to make it easier for refugees to find gainful employment in companies until such time as they are repatriated to a third-country.

Cross Sectoral


4.2 Intellectual Property Rights

IPR issues are an important component in Malaysia’s current Free Trade Agreement (FTA) negotiations with EU. The FTA with its intention to establish open trading conditions would encourage inflow of private sector investment for research in pharmaceuticals and other fledging sectors, namely heavy duty industries, chemical and electronics into Malaysia. The coming into force of the Competition Act 2010 on 1st January 2012 is another legislation which will bring Malaysia in line with over 100 jurisdictions worldwide with the aim of encouraging economic development by supporting and protecting the process of competition thus promoting competitive prices, wider choices and improvement in the quality of products and services.

One of the conditions at the forefront of the FTA would be the need to further strengthen the protection and enforcement of intellectual property rights in Malaysia and to tackle various unresolved intellectual property rights issues in the country.

Malaysia’s legal system is fundamentally based on the English common law. Historically, Malaysia’s intellectual property laws are closely linked to the evolution of such laws in the United Kingdom. Before identifying the challenges encountered and issues to be addressed, it should be emphasised that Malaysia’s intellectual property laws are generally in conformity with international standards, particularly with regard to the amendments made due to Malaysia’s obligations under the TRIPs Agreement. Malaysia is a member of the following treaties and conventions:• WorldIntellectualPropertyOrganisation(WIPO)

• BerneConventionfortheProtectionofLiteraryandArtisticWorks(1886)

• ParisConventionfortheProtectionofIndustrialProperty(1883)

• AgreementonTradeRelatedAspectofIntellectualPropertyRights(TRIPs)signedundertheauspicesofthe World Trade Organisation (WTO)

• PatentCooperationTreaty(PCT).

There is also a move for Malaysia to join the Madrid Protocol in 2013 which would allow member countries to use the Madrid international filing system to file trademarks around the world. In addition, Malaysia intends to accede to the Budapest Treaty in the near future. The Budapest Treay is the Agreement on the International Recognition of the Deposit of Microorganisms at the Deposit Centre (International Depository Authority) for the purposes of patent procedure.

This is evident through the various intellectual property related legislations and regulations which include the following:• ThePatentsAct1983,thePatentRegulations1986,Patent(Amendment)Regulations2011;

• TheTradeMarksAct1976andTrademarksRegulations1997,TradeMarks(Amendment)2011;

• TheCopyrightAct1987,theCopyrightAmendmentAct2012(tocomeIntoeffecton1st March 2012);

• IndustrialDesignsAct1996andIndustrialDesigns(Amendment)Regulations2012;

• GeographicalIndicationsAct2000;

• Layout-DesignsandIntegratedCircuitsAct2000;

• TradeDescriptionsAct2011;

• ConsumerProtectionAct1999;

• OpticalDiscsAct2000;

• ProtectionofNewPlantVarietiesAct2004.

• TradeDescription(OriginalLabel)order2002

• PriceControl(LabellingbyManufacturers,Importers,ProducersorWholesalers)Order1980

Cross Sectoral


The presence of these fundamental laws goes to demonstrate Malaysia’s continuing interest and commitment in pursuing the development of IPR-related issues in the country.

What are the salient Intellectual Property Rights (IPR) issues in Malaysia?

Although there are various issues that could arise, the following seem to be regularly in the forefront for foreign investors when dealing with IPR issues in Malaysia:1. Enforcement2. Border Measures

Enforcement

Although Malaysia does have fairly advanced and comprehensive laws on the protection of IPR, the issue and extent of enforcement of these rights often cause concern to the IPR holder. With the advent of the internet and its widespread use, the sale of counterfeit goods online is now the trend and the way forward surpassing the conventional counterfeiting methods. Due to the global nature of the internet, identifying counterfeiters behind the operation of websites selling such offending products is a huge task and enforcement becomes tedious in view of the borderless nature of this trade and the grey areas that are found in the cyber laws.

There are essentially the civil and criminal methods of enforcement in Malaysia and they are as set out below.

Civil Action

The civil action mode suggests a dispute resolution mechanism between the parties, in conflict. This action is usually commenced through an exchange of demands, and if unresolved, would result in litigation. The majority of the statutes governing IP laws prescribe that any action for infringement be brought, at the first instance, in the HIgh Court. For the enforcement of IP rights under common law, given that the principal remedy in an IP related action involves injunctive and other equitable relief, actions are almost always commenced at the High Court. The other remedies that avail to the IPR holder would include damages (or an account of profits), discovery, delivery-up and cost. As IPR related disputes often result in the degeneration and dilution of the rights, interim relief would often be required while the dispute is pending a final disposition after trial. Such interim relief is available to the court of equity through interlocutory injunctions and Anton Piller Orders.

There is a move to enact a common set of procedural rules for the High Court and Subordinate Courts. The proposed combined court rules are currently being reviewed b the Attorney General’s Chambers in consultation with a task force set up by the Malaysian Bar. It is expected that the combined rules will be tabled for discussion in Parliament at some point in 2012.

Criminal Enforcement

Although this is essentially a state action, criminal enforcement is usually initiated by filing an official complaint with the Enforcement Division of the Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC). Complaints in the IPR field are almost always premised on offences under either the Copyright Act 1987 (which deals with copyright related offences) or the Trade Descriptions Act 2011 (TDA) (which deals with trade mark and trade descriptions related offences). The enforcement actions that would be

Cross Sectoral


taken by the MDTCC, include conducting raids at identified premises, seizing the offending goods and collation of evidence. Criminal prosecution can follow such actions if there is sufficient evidence to warrant such an action. The MDTCC alternatively has the option of imposing compound on the target under the TDA and upon payment of the compound, the seized goods are likely to be forfeited for destruction.

The Trade Descriptions Act 2011 (“the new TDA”) came into force on 1 November 2011, repealing the Trade Descriptions Act 1972 (“the old TDA”).

Some of the salient changes made in the new TDA include:

Scope of definition and offences has been widenedA “trade description” has now been clearly defined in the new TDA to include a registered trade mark. It has also included a provision to provide that an oral statement may also amount to a use of a trade description. The new TDA has omitted the requirement for an offence to be committed in the course of trade or business, as required under the old TDA. It is now an offence for a person to expose for supply or has in his possession, custody or control or control for supply any goods to which a false trade description is applied.

Increased PenaltyThe new TDA has introduced significantly increased penalties for the offences.New provisions have been introduced in the new TDA to provide for fines based on the number of infringing goods found. A body corporate shall be liable to a fine of not more than RM15,000 for each goods bearing the false trade description and for a second or subsequent the fine is doubled to not more than RM30,000 for each goods bearing the false trade description. This is a departure from the previous penalty of a fine not exceeding RM250,000 and, for a second or subsequent offence, to a fine not exceeding RM500,000.

An individual is liable to a fine not exceeding RM10,000 for each goods bearing the false trade description or to imprisonment for a term not exceeding three years or to both and for a second subsequent offence a fine not exceeding RM 20,000 for each goods bearing the false trade description or to imprisonment for a term not exceeding 5 years or to both. Previously the penalty for an offence committed by an individual is a fine not exceeding RM100,000 or to imprisonment for a term not exceeding 3 years or to both.

Scope and life span of a Trade Description Order have been narrowed significantlyWhile the new TDA retains the right of a registered trade mark owner to file an application to the High Court for a Trade Description Order (TDO), it appears that a trade mark owner’s right to make an application for a TDO based on the ground of passing off (which was clearly provided for under Section 16 of the old TDA) has been removed.

In addition, the life span of a TDO has been reduced to 1 year as compared to the previous 5 years. Even so, it may be the case that the High Court may allow an extension for a further year or more if the High Court is of the view that such a term is reasonable.

The MDTCC has been very active over the past few years in combating piracy and counterfeiting activities in Malaysia as can be seen from the statistics set out below.

Cross Sectoral


ERADICATION OF COUNTERFEIT PRODUCTS YEAR TOTAL NUMBER OF CASES TOTAL VALUE OF SEIZED ITEMS (RM)2005 2,606 12,212,808.552006 2,018 42,686,237.692007 1,936 56,169,682.092008 1,528 23,463,304.882009 409 3,570,857.512010 870 9,425,568.172011 1,507 11,035,244.99

Until October 2011

ERADICATION OF COPYRIGHT PIRACY ACTIVITIESYEAR TOTAL NUMBER OF CASES TOTAL VALUE OF SEIZED ITEMS (RM) PREMISES INSPECTED2005 3,812 100,370,598.00 38,0692006 3,792 120,001,103.00 38,1662007 2,720 54,907,108.49 70,8632008 1,942 20,680,942.20 150,3102009 902 33,537,375.81 112,7992010 1,728 30,425,070.00 93,1802011 140 1,682,281 1,413,455

Until October 2011

ACTION TAKEN ON BUSINESS OWNERSYEAR TOTAL NUMBER OF CASES TOTAL VALUE OF SEIZED ITEMS (RM)2005 16,792 188,058,574.842006 15,066 271,919,968.542007 11,902 145,262,739.992008 10,188 111,347,914.452009 4130 43,854,325.73 2010 7,564 60,812,645.002011 1,183 n/a

Until December 2011

Despite the implementations and actions taken above, there are various challenges in the enforcement of IPR both on the civil and criminal sides which are set out below.

MDTCC also launched the Basket of Brands (BOB) in 2011. One of the reasons cited by MDTCC for initiating BOB was the difficulty in obtaining prompt and full cooperation from certain brand owners in the past to verify the seizures made by them. BOB is essentially a database system identifying a list of owners of the registered marks and their representatives who have agreed in writing to fully cooperate with the MDTCC in their enforcement actions and the MDTCC will only take proactive actions against counterfeit products bearing these lists of registered trade marks listed in the BOB and MDTCC has specified the timeframeforthebrandownersand/ortheirrepresentativestoverifyandsubmittheverificationreport.Inthe event the brand owners or their representatives fail to carry out such verification or submit the verification report within the stipulated timeframe, MDTCC shall have the right to take any of the following actions:• Toissuereminders/showcauseletters;

• Torefrainfromtakinganyactionsproactivelyorbasedoncomplaintslodgedbythebrandowners;

• Toceasetheactionstaken;and/or

• Todisposeofftheseizedgoodsasitdeemsfit.

TherearecurrentlyongoingdiscussionsandengagementsbetweentheMDTCCandbrandownersand/ortheir representatives to work out the various kinks of this new mechanism.

Cross Sectoral


Challenges of Enforcement of IPRs

• DuetothetechnicalnatureofIPlawsandlackoffamiliarity,thereisapossibilitythatmisunderstandings/ miscomprehensions of IPR and the law could occur in court which also adds to the delay in thedisposition of cases.

• Incertaininstances,IPRholdersfailtoprovidefullco-operationtotheprosecutionofthecaseinCourt,commonly in the form of providing expert witnesses, proper lab analysis reports or professional assistance to faciliate the prosecution.

• Afterraidsareconducted,prosecutionofoffendersisslowtocommenceordoesnothappenatall.Asa result of which, IPR holders may have lost interest in the case by the time an action is commenced due to the delay involved – stagnation of court process.

• BarriersfacedbytheMDTCCintheprosecutionofIPcasesinclude:- lack of cooperation from IP holders;- lack of or insufficient evidence to prosecute the master minds or key players involved;- failure of witnesses to attend Court;- questionable rights (higher courts tend to challenge the rights owned by the IPR holder.

• Investigationsaresometimesnotconductedthoroughlyenough.

• Lenientsentences imposedonoffendersandthe lowfinesorcompoundsimposedarenotactingasstrong enough deterrents. Custodial sentences are rarely given.

• Counterfeitingandpiracyhavenowbecomeorganisedcrimescontrolledbysyndicatesandcurrentlythere are lack of effective legislations to combat this new approach.

• AcontinuingperceptionthatIPRinfringementsarenotseriouscrimesorarevictimlesscrimes.

• Expensiveandprotractedproceedingsinvolved.

• A special agency needs to be set up in Malaysia, to track down such websites selling counterfeitproducts and at the same time work closely with the ISP’s.

• Thebacklogoftrademarkapplicationswhichare intheprocessofbeingexaminedattheMalaysianIntellectual Property Office would need to be addressed and resolved particularly as Malaysia has imminent plans to accede to the Madrid Protocol.

EUMCCI Recommendations• Additional judgesareappointedtospecificallydealwithIPmattersalone.TheestablishmentoftheIP

Court on 17 July 2007 through the renaming and officating of the Criminal Session Court 4 in Kuala Lumpur as the first Intellectual Property Sessions Court, and the establishment of a High Court of Malaya dedicated to IPR related disputes in Kuala Lumpur on the same day, has certainly been a more efficient and systematic approach in resolving IPR disputes. It is clear from the number of cases involved that there should be additional judges being appointed expedite the disposal of cases.

• Dedicatedteamofpublicprosecutorsspecialising in IPcrimeshouldbeestablished.Wearegiventounderstand that MDTCC has plans to enlist the assistance of deputy public prosecutors from the Attorney General’s Chambers to prosecute IP cases. Such plans would definitely address the challenges encountered and are highly commendable.

• SomeformofencouragementforIPRholderstogenerateinterestinpursuingtheirclaims,forexample:- Create awareness of the adverse consequence of counterfeiting activities in monetary value;- Information disseminated to public on counterfeiting through ad campaigns and road shows for more

effective IP enforcement including awareness activities in schools;- Reward scheme offered to informants.

• Theindustries,recognisingandappreciatingthechallengesencounteredbytheenforcementofficersincarrying out their duties, should conduct regular and periodic capacity building programs for enforcement

Cross Sectoral


officers. Such capacity building programs would include product identification techniques, assisting the enforcement authorities to develop and establish standard operating procedures in conducting search and seizures, investigation skills and techniques in gaining, gathering and managing evidence as well as enhancing the prosecutors’ advocacy skills and techniques.

• TheloopholesandshortcomingsfoundintheIPlegalframeworkshouldbetightened. For example, there should be imposition of minimum fines or depending on the amount of goods seized

or if the value of seized goods exceeds a certain amount, the Court must impose a custodial sentence. Any burdensome documentary requirements and method of proving subsistence and ownership should be addressed. MDTCC should consider accepting verification by way of digital images and if they believe that such practices would be challenged in court, they should consider the inclusion of an express provision in the relevant laws such as the TDA and CA to specifically cater for the acceptance of digital images in a court of law. This would definitely result in win-win situation for both MDTCC and the IP holders in getting their cases completed and prosecuted expeditiously.

• Enforcementofficerscouldbegivenawiderscopeofpower,forexample:- To work hand in hand with other governmental agencies under task forces (for manpower purposes

to reduce delay);- Theexchangeofinformationandintelligencebetweenthesetaskforces/governmentalagencies;- Encourage cooperation among governmental agencies;- Provide police personnel with support & training.

• MDTCC should use other means and laws including Anti-Money Laundering and Anti-TerrorismFinancing Act 2001 to tackle counterfeiting activities, adopting various strategies that to hit the targets where it hurts the most, i.e. their wallets.

• Collaborationbetween IPholdersandenforcement/task forcebyholding regularmeetings/forums toshare information and assist in combating counterfeiting and piracy.

• InadditiontotheissuesraisedandrecommendedintheIPRsection,thereareotherspecificIPissuesof concern which have been highlighted in the Healthcare section.

Border Measures

With the advent of globalisation, the movement of infringing goods through the borders of various countries have been on the rise. Developing countries continue to be a hot bed for such activities particularly where the infrastructure for transhipment is good. Malaysia, in dealing with this issue and in fulfilling their treaty obligations, has enacted various border provisions, particularly into the Trade Marks Act 1976. The Border provisions allow the proprietor of a registered trade mark or an agent of the proprietor to make the requisite complaint or request (by filling in the prescribed forms) to invoke these border provisions. Once approval for such action has been granted, necessary measures are undertaken to notify the authorised officer, being a proper officer of customs as defined under the Customs Act 1967. The officer then has the power to restrain and prohibit the importation of such the goods identified in the Registrar’s notice and shall seize and detain the infringed goods at the point of entry into the country. However, in light of the availability of this avenue, border measures suffer the following drawbacks that result in the difficulty to rely upon it as a protective measure for IPR holders.

Setbacks / Problems of Border Measures

• BordercontrolisonlyavailableforcounterfeitgoodswheretrademarksareregisteredMalaysia.Theseactions would not avail common law owners.

• TheprovisionsundertheTradeMarksAct1976providesfortherestrictionandprohibitiononimportationofcounterfeittrademarkgoodsoncetriggeredbyacomplaint/applicationbyanIPowner.Whileex-officio powers are provided by the Act, these are rarely utilised by the relevant authorities. Due to the

Cross Sectoral


highly onerous requirements imposed in the Act, these border measures are rarely invoked by IP holders.

• Bulk of counterfeit goods – The growth of industrialisation of low cost manufacturing countries, i.e.China, Vietnam, Indonesia, generate an increase of infringing products entering the country. The tracking of these goods are difficult, because:

• Sometimes,partsofproductsarebroughtintothecountrytobeassembledlocally;

• Localcontacts;

• Packagingandlabellingdoneinthecountry;

• Identificationoftherelevantdetailsofapossibleinfringingimportersuchastheregistrationnumberofthe ship / aircraft / vehicle, name of the place of the counterfeit trade mark goods expected to beimported, expected date and time of arrival, is difficult. The gathering of such intelligence information, being a requirement under the Act, is not practical as this information, in most instances, would be unavailable to the IP owner;

• Evidencegatheringmaybetime-consuminginnature.

• Air travel – trainingprovided tocustomsat theairportsdoesnot include training todetect / identifycounterfeit goods.

• Due to the absence of training with regards to counterfeit goods, the level of awareness amongstcustoms officers needs to be improved as they currently are not provided with substantive amounts of motivationtocombatpiracy/counterfeiting.

• CustomsofficersdonotviewIPRasapriorityoftenfocussingontheirmoretraditionalroleofdealingwith prohibited items and duties chargeable on imported products.

• EnforcementofficersmustalsobegivenjurisdictioninFreeTradeZonesandcounterfeitproductsheldinthese areas should be subject to seizures.

EUMCCI Recommendations• Training for customs officers should include training to enforce IPRs at all borders and/or more

involvement from MDTCC officials’ in dealing with border enforcement.

• Sharingof information iscrucial– intelligencesharing,customshandshake (agreementwithcustomsofficials from other countries).

• Cooperationbetweenagenciesiscrucial–INTERPOL,WTO,WIPO.

• RightsholdersmustsupporttheCustomsinfarmoreefficientenforcementofrights.

• RecordIPrightswithCustomsinordertoassistinup-keepingaregularmonitoringsystem–“tokeepon the lookout”.

• Verificationofimporters.

• Identificationofimporters/highriskcompanies.

• Conductjointenforcementactions.

• Brandowners/industrytotrainfrontlineofficersinidentifyingcounterfeit/piratedgoods.

• Usethemedia(throughpressreleasesandpressconferences)whencounterfeitgoodsareseized.Thiswouldactasawarning/deterringfactor.

• ThereisalsoacriticalneedtoaddresslackofexpressauthorityandpoweronthepartoftheCustomsadministrations under the Customs Act 1967 to prevent/prohibit the importation and exportation ofcounterfeit goods at the border, and to put in place the required laws and procedures to facilitate the exercise of this authority and power. This will also change the mindset of the Customs officers to deviate from their traditional role of collection of taxes and revenues to the fact that they could play a pivotal role in effective enforcement of IPR.

Cross Sectoral


Various IP Actions taken so far

1. IP and innovation are recognised by the Government as playing a significant role in transforming the country into a high income economy under the Economic Transformation Programme (ETP). In achieving this objective, the Government recently passed the Malaysian Innovation Agency Act 2010 which provides the legal framework to enable the implementaion of the Government’s innovation agenda in order to stimulate and develop the innovation eco-system in the ocuntry. A National Innovation Policy is also in the midst of being drafted which will set out amongst others, the policies and guidelines in order to regulate IP admnistration and management with a framework in place to meet the innovation needs of the country.

2. With the establishment of IP Courts and the implementation of the ‘fast-track’ system in the Malaysian courts, the time taken for an IP suit from filing to completion of a full trial can be as short as 9 months.

3. Public awareness and interest in IP rights has been boosted with 26th April being earmarked as National IP Day, to cultivate and increase the awareness in Intellectual Property rights amongst the public.

4. The Copyright (Amendment) Act 2012 which came into force on 1st March 2012 provides for various additional provisions including the following:• LimitingtheliabilityofInternetServiceProviders(ISP)andprotectingISPfromliabilityofanytransient

storage of copyright work• ProvisionswherebytheISPistoremove/disableaccessuponnoticefromthecopyrightowner;• VoluntaryregistrationofcopyrightandcreatingaRegisterofCopyright;• Amendmentsdealingwithremunerationrightsofperformers;• Provisionsonanti-camcordingactivities

5. The Trade Descriptions Act 2011 came into effect on 1 November 2011 repealing the Trade Description Act 1972. One of the significant features of the TDA 2011 is that only the owners of registered trade marks can apply for a Trade Description Order (TDO) to declare that the infringing mark is a false trade description. Another feature of the TDA 2011 is that the life span of a TDO is now one year from the date on which it is made instead of five years under the TDA 1972.

6. The Trade Mark (Amendment) Regulations 2011 and Patent (Amendment) Regulations 2011 came into force on 15 February 2011. One of the significant amendments to the regulations is the provision of expedited examination which will allow an applicant of a patent or trademark application to request for an expedited examination of the application. This would help the owners to enforce their rights against infringers at a quicker pace as the patent or trademark registration process can be expedited.

7. The Industrial Designs (Amendment) Regulations 2012 came into force on 15 February 2012. The current Industrial Designs Regulations 1999 is repealed and replaced by this new Regulation. Some of the changes include an increase in official fees, the requirement to file an appointment of agent form and the provision for online filing of industrial designs.

8. In line with the Government’s drive to stimulate IP based transactions, there are proposals to amend the IP legislation to include provisions to allow for the monetisation and securitization of IP rights in order to provide a legal basis for various IPR including trade marks and patents to be accepted as collaterals by financial institutions.

9. Malaysia is expected to accede to the Madrid Protocol in 2013. The Madrid Protocol provides a centralised international filing system for the registration of trade marks.

10. The Competition Act 2010 came into force on 1st January 2012. The Act prohibits anti-competitive practices which include both anti competitive agreements and abuse of a dominant position. The Act targets commercial activities which would have an effect on competition in any market in Malaysia, irrespective of whether the activities were carried out within or outside of Malaysia.

11. The Personal Data Protection Act 2010 is expected to come into force sometime in 2012. The Act comprises seven principles that must be abided by to safeguard the integrity of personal data.


Issues by Sector

Issues by Sector


5. Issues by Sector

5.1 Construction and Building Materials

The Malaysian construction sector is showing healthy signs of recovery. The construction industry transferred its focus from Malaysia to Australia, the Far and Middle East regions, exporting building materials and sourcing construction projects outside Malaysia. It suddenly finds itself increasingly exposed to competition from China, Thailand and Vietnam. To compete successfully, sourcing cheap hard working labour, efficient and automated production, having a competent well educated management staff and access to competitively priced building materials are becoming more and more vital to the industry.

Issues

Licensing and Registration Systems

One of the National Key Economic Areas is Oil and Gas. The Malaysian oil and gas sector is mainly operated by Petronas. Petronas requires construction companies to be registered or licensed. The registration and licensing scheme requires companies to fulfill certain quota requirements on Bumiputra participation within all levels of the company, from equity to staffing. Additionally, the release of major construction licenses is frozen. This virtually eliminates the chances for European based construction companies to participate in tenders for major off-shore construction projects. For European off-shore construction companies willing to invest in Malaysia and set-up factories in Malaysia, the above limitations will reduce the chances successfully getting return on their investment and will make them defer to other countries.

RecommendationOpen-up the off-shore construction market for European companies by allowing adequately experienced European companies situated in Malaysia to obtain licenses and converting the existing licensing and registration systems to competency based systems.

Hiring and firing local staff

During the global recession, Malaysia finds itself competing with the reduction in the prices of products and services offered by outside competition. This, combined with the government’s efforts to convert Malaysia into a knowledge based, high-tech economy, make it essential to be able to release redundant and inadequately functioning staff, in order to reduce prices and improve efficiency and the competitive position. Locally hired staff are extremely well protected by labour laws and dismissal costs are substantially higher than in the surrounding countries. This increases the cost of conversion to high-tech, less labour intensive production technologies and will hamper the progress of established companies with plans to upgrade.

RecommendationPrioritizing the measures promised under the 10th Malaysian plan to improve the speed in which labour disputes are settled and bring the costs to dismiss staff to a level compliant with surrounding countries.

Issues by Sector


Development of Building Codes and enforcement of its implementation in buildings

The quality and technical application of building materials continuously improves. The energy efficiency code however, dates back to 2007 and does not take into account the latest energy efficiency development criteria. This does not stimulate implementation of green construction technology.

RecommendationUpdate the energy efficiency code to the most recent standards, and introduce compulsory basic compliance for new buildings.

Building contracts

Building material prices have been fluctuating heavily over the past 5 years. Local standard contract forms like the currently used CIDB contract form or the PAM form do not offer compensation for building material price fluctuation during contract execution. This prevents the government benefiting from dropping material prices or protecting contractors from unexpected and unforeseen material costs increases. The consequences of this are more expensive building projects as contractors will build in contingencies, or bankruptcy of contractors during the execution of works.

RecommendationSimilarly to most European governments, the Malaysian government could take an exemplary role for the construction industry by factoring material price fluctuation formulas into governmental contracts.

Registration of foreign professionals in the construction sector

For foreign professionals it is not possible to register as independent professional engineers, architects or quantity surveyors etc. with local registration boards. Registration is limited to temporary annual permits for working on single projects only. By so doing, foreigners are effectively prevented from legally establishing or investing in locally incorporated consulting engineering/architectural/quantity surveyor practices, as theyare prevented from being partners and directors of such organisations, due to the requirement of full-time local registration for practices registered with the various professional boards. This is an unfair restriction of trade and investment in service industries in Malaysia.

According to MITI, currently, professionals such as architects, engineers and quantity surveyors are regulated under their respective legislations. Temporary registration for some professions such as architects and engineers is allowed and this registration is renewable on an annual basis. For example, registration for engineers is under the Registration Engineers Act 1967 which is under the purview of the Ministry of Works. Malaysia’s commitments in the WTO for engineering services (multidisciplinary) only provides for foreign equity up to 10 per cent for joint ventures by professionals who are registered in the country of origin. Nevertheless, foreign directorship is not allowed.Recommendation

The government should allow foreign professionals in the construction sector with foreign qualifications to be able to register in Malaysia and become shareholders and directors in their respective professional practices. Foreign qualifications can be defined as consulting engineers, architects and quantity surveyors. In this way increased foreign investment in the professional services sector would be stimulated in line with the government’s stated aspirations.

Issues by Sector


5.2 Education

In order to grow, develop and compete, Malaysia must create a world-class educational system which leads through research and development, as well as through top-quality teaching. This will produce the human capital and human resources required for sustainable socio-economic development and create a workforce that is immediately employable, skilled, hard working, creative, inventive, productive, adaptable and flexible.

Currently the Malaysian education system, from primary to tertiary education, is widely perceived to have a number of persistent deficiencies. These have been acknowledged by the Government and are now a key focus of widely supported reforms within the Economic Transformation Programme (ETP).

The Malaysian education system is divided into three levels: primary, secondary and tertiary. Most Malaysians have completed the second level and the Malaysian government aspires to increase the number of students aged between 17 and 23 in higher education from 30% to 40% by 2020.

By the end of 2011, Malaysia educated around 900,000 students in 20 public universities, 33 private universities and university colleges, 4 foreign university branch campuses, 22 polytechnics, 37 community colleges and about 500 private colleges. The number of local and international universities has been increasing and recently three new foreign university branch campuses have been established or announced by University of Southampton, University of Newcastle and Heriott-Watt University all from the United Kingdom.

Three ministries are primarily responsible for providing education services, the Ministry of Education, the Ministry of Higher Education and the Ministry of Human Resources. The Malaysian government had allocated a total budget of around RM49.4 billion in 2011, which was more than 10% higher than the previous year. The majority RM35.8 billion focussed on the work of the Ministry of Education, an increase of more than 17% from the previous year. The remaining budget allocated RM12.6 billion (down 3%) for the Ministry of Higher Education and around RM1 billion (down 18%) for the Ministry of Human Resources.

The education sector is one of the key sectors in which the Malaysian government has decided to invest, in accordance with the goals set by the Vision 2020 project, the Industrial Master Plan 3 (IMP3) 2006 – 2020 and the Economic Transformation Programme (ETP) 2009-2020. Under the ETP, education has been designated one of the 12 National Key Economic Areas (NKEAs). Within the Education NKEA there are 13 Entry-Point Projects (EPP) ranging from early child education through to higher education, with key focus areas on creating a strong brand for Malaysian education and in developing a number of key education hubs and clusters in strategic areas such as Islamic Business and Hospitality. There will also be an emphasis on developing new online education processes and distance learning as alternatives to traditional study methods.

The Education NKEA focuses on five areas of transformation covering industry structure, student internationalisation, new ways of working, regulatory transformation and shifts in funding. Education is targeted to raise its total contribution to Gross National Income (GNI) from RM27.1 billion in 2009 (around 4% of GNI) to RM60.7 billion in 2020 (around 6% of GNI). The target for 2020 is to create 535,000 new jobs in education and to increase student enrolment by 200,000 in higher education. Internationalisation will be a key driver of this growth with plans to increase international students from 16,000 in 2009 to 74,000 by 2020.

Despite these very positive developments, we believe that there are many areas which require attention in terms of policy development and implementation and these are outlined below.

Issues by Sector


Primary and Secondary Education Issues

Curricula and Teaching Methods

Many educationalists point to rote learning, under-developed and out-dated curricula and a grading and reward system that appears to be compromised by reluctance to fail underperformance in students and institutions. Students are not taught lateral or creative thinking in schools. Teaching by rote creates employees who are often incapable of working without direction or arriving at conclusions independently.

RecommendationsGreater focus must be placed on issues in curricula and teaching methods in primary and secondary education. These are critical for child development and successful preparation for further study at vocational level or higher education level.

Child creativity and innovation develops primarily from the education provided in primary and secondary schools. Schools should encourage students to be more pro-active and to be involved in extra-curriculum activities beyond their academic studies. There should be a wide range and mix of extra-curriculum activities for students.

A wider curriculum is needed that encourages lateral and creative thinking that can be applied to solving real world problems in the future. Critical appreciation for subjects such as art, music and global issues can engender independent thinking and new approaches to problem solving and so creating a dynamic and innovative workforce of the future.

English Language Proficiency

There is also a persistent and unresolved issue in the use of English language and the problems of striking a balance with Bahasa Malaysia (BM) in the education system as a whole. English is a language of communication knowledge in most areas of study and there is often a lack of high quality BM materials in many areas. The Malaysian economy has become reliant on English speaking Malaysians who are educated abroad while the local graduates from public universities are often unemployable due to poor command of these important language skills.

RecommendationGreater focus must be placed on developing English language proficiency in primary and secondary education. These are critical for development and success in further study at vocational level or higher education level.

Tertiary and Higher Education Issues

Entry-level Qualifications, Aptitude and Suitability for Higher Education

As a consequence of deficiencies in primary and secondary education, there is a view amongst many academics that universities are not getting the right type of students. This results in a mismatch between the abilities of students and the academic and non-academic programmes offered by the education system. The result is a shortage of skilled labour.

RecommendationsThere should be a progressive process of “raising the bar” to have more stringent screening protcols for university entry levels. This should include entrance examinations for all students and interviews for the most demanding courses. Within the university system higher marking thresholds are needed with a strict

Issues by Sector


policy of failing students who are inadequate or not up to the mark. This will help to overcome the preoccupation with quantity and place a greater emphasis on quality.

Pressures on the Development of University Staff

The reliance on mass tertiary education as the primary or only response to these issues has created a system in which education has become a commodity, rather than an effective investment in creating a world-class workforce. In turn the high enrolment of students has put pressure on academics and teacher education at university level. A lack of quality teachers has arisen in many universities because of the need for greater numbers of lecturers. This has lead to inadequate selection processes for potential teachers and doctoral students as universities try to expand the teaching cohort with under-qualified candidates.

RecommendationFor well qualified candidates with an aptitude for research or who aspire advance their career, the demands of university rankings with an almost obsessive focus on research publications has compromised teaching in many instances. Teacher training and the selection process for teaching staff should be revised to encourage higher standards.

Under-performing universities

Malaysian universities, especially in the public sector have recently under-performed in relation to their peers in international assessments of teaching, research and output. During 2012 EUMCCI will be discussing and researching these issues with workshops by leading academics from Malaysia and overseas to evaluate the usefulness of Malaysian University Rankings as a complement to international ratings, acting as a stepping stone to higher levels of achievement.

RecommendationVice-Chancellors and senior managers must fully understand the processes used for international ratings of higher education institutions. Universities must establish management responsibility to respond to criteria in order to improve the overall ratings of Malaysian universities. Private higher education specialists from Europe should be appointed as consultants to the higher education institutions to advise them on strategy, management and implementation issues related to international ratings. There should be very clear targets for improvement and an intolerance of under-performance and excuses for poor results.

Poor quality private higher education institutions

There are a large number of Private Higher Education Institutions (PHEIs) in Malaysia, which offer low value marginal or limited course options to the students involved. The assessment of staff in such institutions is also poor and often under-qualified teachers using out-dated material continue to be the mainstay of the faculty at some PHEIs.

RecommendationThe government should review the performance of PHEIs more effectively as part of the national efficiency programmes such as the GTP and ETP. A clear and transparent framework for reform of the PHEI Sector should be created and introduced. Under-performing PHEIs should be required to reform, merge or open up for acquisition by public universities, other PHEIs or specialist education companies. In extreme cases their licences should be removed.

Staff at PHEIs should also be subject to regular reviews of their course content, teaching methods and success as measured by pass rates and student satisfaction. Under performing staff should be required to retrain. The assessments should be independent of the PHEIs and should use external assessors from the public and private sectors to provide a comprehensive and objective assessment system.

Issues by Sector


Lack of skills among graduates

EU and other foreign companies find it difficult to employ potential recruits as they do not possess the required skills; one of the main concerns, as mentioned above, is the level of English language amongst jobseekers. A common comment made by companies is that recent graduates do not have the appropriate real world business skills necessary to tackle even the most basic roles without substantial retraining.

RecommendationA greater emphasis should be placed on teaching English language and on the basic real world skills that are required in modern executive roles, at a secondary and higher education level so that graduates are prepared to hit the ground running when they secure employment.

Loss of students to other learning avenues

Recruitment of both teachers and students at a tertiary level is hindered by an adherence to quota filling rather than filling the available positions with the highest calibre candidates. This has lead to a mass exodus of students, graduates and teachers to either private institutions in country or educational institutions overseas in search of quality education in their desired fields, despite the increased cost.

RecommendationThe introduction of a placement system with greater emphasis on meritocracy to ensure that the most talented members of society receive the appropriate level of education, remain within the country and utilise their skills locally. Public universities and Private Higher Education Institutions should be encouraged and offered incentives to open up faculty places to overseas academics on Visiting Professor schemes, contract appointments and full-time tenure track positions.

Lack of public-private communication

Engagement between business and education needs to improve. Business should communicate with universities and engage in discussion on the latest developments in both academic and business advances. Miscommunication of intent, opportunities and availability of both students and placements occurs when contact between business and universities takes place at an inappropriate level.

RecommendationA more coordinated dialogue between industry and universities should be engaged upon at a national level and additional contact should be made between recruitment or HR departments and the specific faculties and faculty members as relevant, so that opportunities for placements or visits by industry to talk to students are directed towards the correct students. In this way relationships are built between institutions that can be nurtured and maintained to the benefit of all parties.

Technical Education and Vocational Training

There appears to be a stigma associated with technical education and vocational training (TEVT) in Malaysia which pushes students into the academic stream or forces them to drop-out without any effective skills to place them in productive employment.

Issues by Sector


RecommendationsProfessionalisation of technical and vocational education is essential to change the mindset of this important component of the education system. Efforts must be made to promote technical and vocational education and to de-stigmatise vocational professions by giving them professional status, higher wages and professional certification.

Malaysia should build a dual system for the vocational education at the upper secondary level where work and study go hand in hand with the possibility of further education at the tertiary level in higher institutes and technical universities. Investigating and learning from other education systems especially the German system will help to develop a suitable Malaysian model.

Lack of industry placement recognition

For academics, time taken away from academia and spent in industry is not given the same value as traditional sabbatical leave engaged in research. Academic and career credit is often not granted for industrial placements meaning that fewer academics chose to take this option and so miss out on the opportunity to gain more ‘up to date’ working knowledge. In the same way, very few workers take the opportunity to spend time in academia due to a similarly negative perception.

RecommendationA programme should be instigated enabling services and industry personnel to spend a period of time at university and university teaching staff to spend time in industry and services. This time should form part of an academic’s KPIs and performance indicators and should be valued in promotion, remuneration and career development as other forms of placement and sabbatical activity.

Length of internships

Whilst work placements and internships are a part of many vocational courses, the amount of time allowed by the majority of programmes, no longer than 3 months in many cases, is seen as a inefficient use of resources by industry as by the time students have found their feet in a placement it is time for them to return to college.

RecommendationIndustry placements should be for 6 months at least, giving both businesses and students time to create a meaningful and effective programme. Many EU university programmes that involve time in business often offer a ‘sandwich year’ – a year spent in industry, usually experiencing time in more than one role to gain a rounded and accurate view of what is expected in the relevant field of work. Businesses in Malaysia would also be more open to student placements if they had a guarantee of a rolling programme of interns every 6 months – this would also create an opportunity to grow relations between universities and industry.

Additionally, EUMCCI will assist in the process of commercialisation of R&D by encouraging faculty to establish links with industry through participation in selected Committees e.g. Oil & Gas, ICT and EEGT.

Issues by Sector


5.3 Energy, Environment and Green Technology

The Country’s Future Lies in the Green Field

Malaysia’s abundance and good supply of fossil energy resources have served the country for decades in attracting foreign investments, thus becoming a benchmark example for many others. The attractive infrastructure of low-priced energy has aided the country to a large extent in becoming an international centre of excellence for the manufacturing industries, with many of the world’s largest corporations establishing their largest production facilities in the country. Malaysia has enjoyed a period of tremendous wealth and prosperity. During this dynamic period of rapid economic and population growth however, the shadow side of the development, for example long-term energy security and an appropriate waste, water and/orseweragemanagementsystemhasbeenlargelyneglected.

Depleting oil and gas resources will push energy prices considerably higher and Malaysia will not be spared. This is already an accepted certainty which is of considerable concern because Malaysia is heavily reliant on hydrocarbon fuel for powering its industries and services. In 2011, Peninsular Malaysia’s electricity supply was generated from gas (45.1%), oil (2.5%), distillate (2.5%), hydro (5.8%), coal (~43%) and renewable energy (~1%). Hence the energy sector is one of the most urgent topics. In addition, per capita CO2 emission has increased by 226% since 1990, with Malaysia’s waste recycling rate standing at 5% - extremely low compared to many developed countries with recycling rates of often more than 50%.

Lost chances and opportunities in recent decades

The great proverb ‘We do not inherit the Earth from our ancestors. We borrow it from our children’ has been in fact overlooked in the past. Despite or perhaps, because of the recent few decades of prosperity, the country’s most valuable assets, the fossil resources of oil and gas, are nearing depletion in less than one generation. Incomes from these assets have been used in consumptive ways and government budgets are largely dependent on this soon to be depleted source. The country and its current generation lives on yesterday-built energy resources and hardly any of this income has been invested to secure a sustainable energy supply and security for future generations.

The ‘Fifth Fuel Policy’ to target diverse energy resources for power regeneration was successfully introduced in 2001 with the aim of having a higher share of Renewable Energy (RE). Nevertheless, the results during the first years were disappointing.

Until today, Malaysia, with only 1% share of grid-connected renewable energy in the country’s energy mix, is far behind the RE levels of most industrial countries and even most of the less developed neighbours in the region. Nevertheless the overall targets with 6% of Renewable Energy (RE) by 2015 and 15% RE share by 2020 are attainable.

Green Technology as key driver of the future economic growth in Malaysia

Europe’s development of an entire new industry segment with immense future potential, the Green Technology field, is a great example for Malaysia to likewise develop a new future growth industry. This is consistent with the country’s aims to achieve a high-income status and to focus more strongly on the services sector. Green technologies could and should become a new future growth sector to generate sustainability, secure economic growth as well as to solidify the country’s international position and reputation. To become outstanding in the field of Green Technology and to claim, at least, a regional leadership, Malaysia needs to gain much ground. In 2011, Malaysia was the world’s No 3 manufacturing hub for solar cells and solar modules. However, the country has hardly leveraged on this great potential and to take strategic measures to develop a world-level industry downstream.

Issues by Sector


We believe that next to KETTHA all the other relevant ministries, especially MITI and the relevant industry associations like FMM, and associations for the palm oil industry and the solar industry have to grasp the chances and responsibility to develop a new green corporate sector with great employment opportunities.

Introduction of the FIT-system

The introduction of the FIT-system by December 2011 is the right move by the government to grow a more sustainable energy future and allow a higher share of Renewable Energy. That the given quota was taken up in some areas within hours should be understood as a strong industry call to increase the quota quickly or to abolish the quota entirely. The latter would require bold political backing and a strong financial commitment.

Year to Year Results

Looking into recent years, the “Green Agenda” has advanced significantly with KeTTHA and many others spearheading the development, including the Green Tech Malaysia Corporation which has been trusted to foster private sector development . Many major political and legal frameworks have been established or are in the process of being drafted during the coming months.

The International Green Technology & Eco Products Exhibition & Conference (IGEM) was launched in 2010 and has become a major platform for exchange whereby the EU with its active member states demonstrates its leadership in RE & EE technologies and expertise. The EU-Pavilion contributed the largest overall number of exhibitors in 2010 as well as 2011. In October at IGEM 2012, the EU pavilion is expected to host to an even greater number of exhibitors.

On the flip side of the coin, neither the tremendous increase in various green tech-related symposia, workshops and seminars nor the given policies and acts have resulted a considerable increase of renewable energy share. In this respect, Malaysia lags behind its regional neighbours. Despite being third in the global production of solar cells and modules, Malaysiahas not built up a world-class supply chain for the renewable energy industry. And it is particularly striking when visiting last year’s world largest Solar Trade Fair in Munich, Germany; that of the 2300 exhibitors listed, not a single Malaysian company was registered. This year MATRADE’s support scheme is the first step into the right direction.

Europe: A global Green Tech leader and partner

Europe is considered overall world leader in Green Technology policy incentive schemes products as services and therefore the perfect match for Malaysia. European technologies are much admired and in the highest demand around the globe. Thus, Europe is committed to contribute much to the identification and development of Green Technology as a key driver of future economic growth in Malaysia.

Another great challenge for Malaysia is the capacity building in all the relevant Greentech areas, private sector as well as relevant ministries and industry associations and we believe the education sector has great potential for partnerships with partners from the EU.

The EUMCCI EEGT sub Committees ‘Energy Efficiency, Green Buildings, Renewable Energy, Waste and Water’ are active and cooperative partners for exchange of information andsolution providers to the private sector, the Malaysian Government and further related stakeholders. The EUMCCI EEGT builds on the great partnership with Malaysia’s green tech partners with a wide spectrum of activities ranging from accompanying the Minister in Europe in organizing Delegations to Europe,business luncheons, exchange of information and expertise with Malaysian ministries, as well as IGEM and other activities. 2011’s EU-

Issues by Sector


Malaysia Business Greentech Platform is a perfect example of the dialogue exchange between the EU and Malaysia, be it by the government or the corporate sector.

5.3.1 Renewable Energy

Progress towards energy sustainability and security

InEUMCCI’sTradeIssuesandRecommendations2010/2011,theEEGTCommitteemadeseveralrecom-mendations including developing a comprehensive renewable energy (RE) policy, introducing feed-in tariff (FiT) for RE generation, increasing limit for RE projects from then maximum 10MW and introducing Smart Grid technologies. Since then, we are encouraged to observe promising progress in the sector such as implementation of the RE Act and FiT, increased in the maximum size of RE projects to 30MW and several smart grid initiatives undertaken by the utility.

In 2010, we expanded our recommendations to include large scale thermal power and recommended that new thermal plants be equipped with the best available efficiency that is economically viable. We are pleased toobserve that the twocoal-firedpowerplantsscheduled forcompletion in2025/2016willbeequipped with the latest and highly efficient supercritical steam plant technology. Also, the impending development of several gas-fired power plants is expected to utilise efficient and proven advanced technologies.

We are encouraged to note that Malaysia is moving in the right direction towards strengthening her energy sustainability and security and towards her aspirations to voluntarily reduce carbon emission intensity to up to 40% of GDP by the year 2020 compared to 2005 levels.

Strengthening the Growth of RE

Annual Target for RE

Malaysia has set too modest an annual target for RE. In fact, the quota for solar PV for the period 2012-2014 was almost fully taken up.

RecommendationIncrease the given quota and address the balance between the four technologies in the short term. We propose to increase quotas for popular technologies, such as solar PV and increase if possible the tariffs for the most available sources such as biomass (palmoil industry). For the medium term, we propose to increase the overall quota with corresponding increases in funding for RE power generation by increasing levy from the current 1% of the electricity bills, developing a mechanism that allow environmentally consciencious consumers to procure green electricity either indirectly or directly from RE power generators and introducing a carbon tax that can be used to fund the FiT.

FiT Eligible RE Technologies

The FiT schedule in the RE Act lists only 4 eligible technologies, namely Solar PV, Biomass, Biogas and Mini-hydro. There are more RE technologies with potential to be applied in Malaysia such as geothermal, tidal, fuel cells and excess power from Electric Vehicles. Applying FiT will increase the economic viability of these carbon-friendly technologies.

Issues by Sector


RecommendationRE generation from geothermal resources is beginning to show real potential with the development of the 30MW geothermal plant near Tawau, and studies are being performed in several areas in the Peninsula Malaysia.

Fuel cells can play an important role as energy storage to support demand when other RE generators are offline. Hydrogen can be harvested in the future from bio-refinery processes in agriculture and municipal solid waste sites in Malaysia. With properly planned collection network, the hydrogen can be utilized in fuel cells stations.

We therefore propose to increase the FIT quota for other technologies and to expand the quota to include these technologies.

We also recommend a specific R&D funding scheme for all types of RE technologies and for accelerateration of the commercialisation of RE start-ups. The Green Technology Financing scheme is not an appropriate funding scheme to commercialise RE start-ups.

Other recommendations for REEUMCCI would also like to highlight some of the recommendations made in 2010 and 2011 that have yet to be realised:• Encourageutilisationoflatesttechnologiesbyprovidingattractiveincentivesandtoincreaseeligibilityof

incentives to the entire value chain of the project

• Regulatesupplyofbiomassfuel

• Exploreandpromotewastetoenergytechnologies

• Imposetaxon“polluting”technologiesandpossiblytransferringthetaxtofundREprojects

• ConsiderSmartGridtechnologythatintelligentlyregulatesthepowergenerationdispatch,inviewofamore complex generation network for when more small RE plants come online and explore microgrid implementation in educational institutions, up-coming townships, tourist areas and islands

• AllowsignificantholdingofforeignequityindevelopmentofREprojects

• FacilitatefinancingofREprojectsutilisingnewtechnologiesthatarenotyetpresentinMalaysiabutthatalready have successful references in other countries

• ImporttaxanddutiesexemptionsforimportationofREtechnologyproductsandsolutions

5.3.2 Energy Efficiency (EE)

It is recognized that demand side management plays a large role in the necessary transformation towards an energy efficient economy but this requires transforming the way people think about energy. Malaysia is still hindered in this respect by low electricity tariffs which are enjoyed by all strata of society as well as the industrial and commercial sector. Merely offering positive incentives (e.g. rebates) alone without engaging disincentives at the same time (e.g. high electricity tariffs) will make for very slow adoption of energy efficiency.

At the same time, it is also imperative that the drive to an EE economy is facilitated by management of energy efficiency in its totality. This requires a holistic roadmap where the national EE framework and targets are established. The national roadmap must demonstrate the various sector channels (e.g. transport, electrical appliance efficiency, construction) that feed into the roadmap with their respective EE targets, which will collectively meet the national targets.

Issues by Sector


Because energy efficiency can be measured by a single indicator, i.e. carbon, all the diverse EE targets can be very easily unified under a single approach in the EE roadmap, providing the country with a structured and strategic policy instrument for achieving energy efficiency and making Malaysia competitive in the world market.

Positive Developments

• Thedrivetoenergyefficiencyhasgainedmoretractionwithanumberofdevelopmentsinthepolicyandimplementation aspects.

• There is a significant increase in the number of Energy Service Companies (ESCOs). The MalaysianAssociation of Energy Service Companies (MAESCO) has registered 67 members.

• Aworkinggroup,EntryPointProject9–EnergyEfficiencyforOil,GasandEnergySector(EconomicTransformation Program) has established several EE initiatives:– The SAVE rebate program for domestic consumers: This program kicked off in July 2011, offerings

rebates to the public on the purchase of new energy saving appliances in three categories - refrigerators, air conditioners, and chillers. A total of RM41.22 million was allocated for this.

– Energy Efficiency in government buildings: The government intends to lead the way in energy efficiency with an initial budget of RM22.3 million. A first step was taken in late 2011 when all government departments were to set the thermostats at 24°C.

• TheMalaysianIndustrialEnergyEfficiencyProgram,whichisfundedbyUNIDO-GEF,hasbeeninplacesince late 2011.

• TheNationalEnergyEfficiencyMasterPlan (NEEMP)drafthasbeenfinalisedand isscheduled tobeendorsed by the Cabinet in 2012.

• TheEnergyEfficiencyAct (KETTHA)whichwastargeted forgazettement in2013maybedelayedto2014. The scope of the Act is not fully clear but will at the very least cover the energy performance of industrial and commercial appliances.

• ALowCarbonGreenGrowthAct(KETTHA)isbeingproposedbutitscorrelationwiththeEEActandtheNEEMP is unclear at this time.

Consumer appliances

We laud the government’s SAVE rebate program but urge the government to persist with continued public awareness programs and to encourage more appliance manufacturers and retailers to undertake continuous promotion efforts.

RecommendationsRetailers put up permanent store displays informing the public of the energy savings from energy efficient lighting and appliances and to highlight the energy wastage of setting electrical appliances in the standby mode. Energy labeling be extended to all home appliance products without waiting for the Energy Efficiency Act as the manufacturers already have the information in hand.

Information, Research and Development

The Green Tech Corporation Malaysia (GTCM) was created to enhance the private sector development. It is extremely important that the GTCM fulfill its role in information coordination and dissemination in a more expeditious manner.

Issues by Sector


Recommendations• Createadatabaseofenergyefficiencypracticesand industrialcasestudieson thewebsitee.g.The

Finance Ministry offices in Putrajaya were refitted for energy efficiency at about RM7 million with savings of RM3 million annually. There are also EE case studies from the ISO14001 certified companies in Malaysia.

• Announce funding and program opportunities such as the recently started UNIDO-GEF fundedMalaysian Industrial Energy Efficiency Program (MIEEP), EU funded Sustainable Consumption and Production policy program.

• PublishanupdatedlistofenergyefficiencyR&Dprojectsandtheiroutcomesonthewebsite.

• Provideupdatesonthegreenprocurementinitiativebeingestablishedforgovernmentprocurement

• EstablishcoordinationbetweenGTCMandtheDOE’sCleanProductionunitwhichisdevelopinggreentechnology initiatives for SMEs.

Manufacturing Industry, Service Industry

There are many issues hampering the take-up of energy efficiency in the manufacturing and service industry, which is particularly magnified for the SMEs. Industrial SMEs defer their decision to implement EE projects due to the the lack of visibility on energy prices and the low Pay Back period or Internal Rate of Return for such EE projects. Industrial EE project funding does not benefit from direct investment incentives from the Government in addition to the import duty and tax incentives already established.

Recommendations• Increasetheenergytarifffortheindustrialandcommercialsectoringraduatedquantumswhichwilldrive

the move to energy efficiency in a shorter time.

• Createarequirementthatapplicationsforindustryordevelopmentloansmustincludeananalysisoftheenergy efficiency of the proposed project.

• Dialogue with financial institutions to resolve the industry concerns on approving loans for energyefficiency projects.

• TocreatepolicyandsupportEEprojectswithaco-fundinginvestmentportion–withamaximumcap-based on achieved savings and benchmarks.

Transport and Fuel Efficiency

The energy efficiency of the transport sector continues to be hampered by the same factors discussed in the 2011. However, it is noted that progress has occurred in commitments to improve public transportation, for example, construction works have already started on the Kelana Jaya – Putra Heights line extension and the Ampang Jaya – Putra heights line extension. There is also rising interest in hybrid vehicles with encouraging sales in 2011 and a road map for electric vehicles also been drafted.

Recommendations• CommittograduatedtargetsforreducingtheaverageCO2 emissions of new vehicle models.

• CompelallautomanufacturerstoprovideCO2 emission data (using standardized units) for their vehicle models.

• CommittoatargetfortheadoptionofEuro5fuel(petrolanddiesel)by2013.

• Openupopportunitiesforadoptionofelectricvehiclesandthenecessaryinfrastructure.

• Toestablishgoalsforfleetoperatorstomigratetofuel-efficientalternatives.

Issues by Sector


Energy Service Company

The number of experienced ESCOs is still limited and the various services offered are confusing for industrial and commercial users because the scope differs in terms of the role i.e. consulting, technology provider, operator as well as the type of equipment offered. Competencies and capabilities are also not easily ascertained. The energy audit service level provision is variable from one ESCO to the other and energy efficiency commitments are limited.

In addition, complicated, non-standardised measurement and verification (M&V) of energy savings doesn’t translate to key decision makers, such as lenders, owners and tenants.

Recommendations• DevelopanESCOaccreditationsystemandcriteriaforrenewal,toclassifyESCOsaccordingtoservice

scope

• Toestablishstandardsforenergyauditprocesses,todefineenergyauditservicelevels,andtodefineenergy auditors qualification and compulsory registration

Government agencies

The custodial agency for driving the National Energy Efficiency Master Plan is at present unclear and it is of concern that this will delay the implementation of the NEEMP. The full contents of the NEEMP are also not yet known. It is uncertain whether the custodial agency will have the over-arching responsibility to expand the NEEMP to cover all public and private sectors.

Energy efficiency service outsourcing schemes on energy system operation or energy supply for public services such as hospitals, street lighting networks, universities are limited. The concept of public private partnership (PPP) with energy efficiency performance contracts and commitment on efficiency and savings has not been developed yet. Crucially, the stumbling block is the lack of a classification code for energy efficiency/management services. Government budgets cannot be approved and released without thiscode.

Recommendations • Establish the custodial agency for the NEEMP as soon as possible and provide more stakeholder

engagement for the NEEMP.

• TodevelopPublicPrivatePartnerships(PPP)forefficientenergytechnologyprovisionandinvestment,that offer a long term concession scheme for energy service supply with a commitment on energy savings

• ToincludeinthePPP,anallowanceforsignificantforeignsharetoattractForeignDirectinvestmentinMalaysia.

• ToconfirmthegovernmentclassificationcodeforPPPprojectsthatcanprovidetheenergyefficiencyimprovements to government buildings.

• Createamandatoryprogramtoreplaceallstreetlampswithenergyefficientalternativessuchassolarpowered LEDs and to upgrade the traffic lighting system for low energy consumption.

• Studytheimpactofdemandresponsesystemstoreducepeakdemand.

• Provide the policy and incentives to introduce smart metering and associated advanced meteringinfrastructure and to promote the benefits of smart metering.

• Toconsidertime-of-usetariffmodelsfortheresidentialsector

Issues by Sector


5.3.3 Green Building and Sustainable Communities

Green Building and Sustainable Communities aims to embody the principles of sustainable development i.e. environmental responsibility, social awareness and economic profitability, in the siting, design, building, maintenance, operation and renovation of buildings. EUMCCI endorses the Green Building movement as a great opportunity for Malaysia to make and accelerate changes in construction practice and technology, to reduce the environmental impacts of the built environment while creating places that are healthier and more satisfying for the Malaysian society.

Over the last three years, Malaysia has experienced a concerted shift towards the development of green buildings. The demand continues to rise as environmental awareness grows and more companies embrace the practice of corporate social responsibility. Other drivers are governmental support in the form of fiscal incentives and the growing evidence of green building benefits.

The Malaysia Green Building Confederation (MGBC) is a not-for-profit, non-governmental organisation established in April 2009. It is supported by two professional organisations: the Malaysian Institute of Architects (PAM) and the Association of Consulting Engineers Malaysia (ACEM). In May 2009, PAM and ACEM launched the Green Building Index (GBI), a voluntary scoring method for residential (RNC) and non-residential new construction (NRNC) projects. GBI classifies construction projects in four categories i.e. Platinum, Gold, Silver or Certified, depending on the scores achieved. Evaluation is based on six key criteria: Energy Efficiency, Indoor Environment Quality, Sustainable Site Planning & Management, Material & Resources, Water Efficiency and Innovation.

The Non-Residential Existing Buildings (GBI-NREB) rating tool was launched in April 2010. To achieve GBI-NREB certification, old buildings need to improve their sustainability credentials after major renovations. 2011 saw the release of various green building assessment methods. In March 2011, Green Building Index Sdn Bhd released “GBI Township”, a tool that aims to facilitate discussions on how sustainable townships are planned, designed, built, operated and maintained. Core categories include: Climate, Energy and Water, Ecology & Environment, Community Planning & Design, Transportation & Connectivity, Building & Resources, Business & Innovation. The GBI Industrial tools for existing (GBI-IEB) and new constructions (GBI-INC) were also released in June 2011.

In November 2011, the Cabinet of Malaysia approved a “Green Neighbourhood and Low Carbon City” framework and assessment system. The new assessment system aims to address climate change effectively via urban planning system and was developed by Ministry of Energy, Green Technology and Water (KeTTHa) with support from Malaysia Green Technology Corporation and Malaysian Institute of Planners.

To increase certifications in the years ahead, the Malaysian Government has introduced incentives for building owners obtaining GBI Certification for buildings from 24 October 2009 until 31 December 2014. The incremental costs which qualify for tax exemption refer to the additional construction costs of a building, alteration, renovation, extension or improvement of an existing building. In addition, buyers who purchase GBI certified commercial buildings and residential properties from property developers are eligible for stamp duty exemption on the portion of the cost attributable to the acquisition of the GBI certificate. This incentive applies to sales and purchase agreements executed from 24 October 2009 to 31 December 2014.

Issues by Sector


EUMCCI supports the adoption and ongoing development of GBI as a market-based green building transformation system that meets Malaysia’s requirements. The transition to sustainable construction practices is as much a business opportunity as a crucial response to the urgency and importance of environmental concerns and could alter the face of the Malaysian construction industry for the better.

Issues• GreenbuildinginMalaysiafocusestoooftenonnewconstructionsratherthanexistingbuildings.Thisis

evident by the number of GBI certified renovations representing only 7% of the overall GBI certified projects despite the fact that old buildings represent the bulk of Malaysia’s commercial space

• AlthoughGBIhassectionsonIndoorEnvironmentQuality(i.e.daylighting,ventilation,filtrationsystems,and the selection of low-volatile organic compound products in the building process), the main emphasis remains on energy efficiency. Unfortunately, at times this is at the expense the occupant’s health and comfort. GBI also neglects focusing on the selection of products (furnishings, cleaning products, etc.) procured during occupancy, all of which impact the indoor air quality

• TheGBIisdevelopedspecificallyfortheMalaysiantropicalclimate,environmentalanddevelopmentalcontext, culture and social needs. However it neglects focusing on Malaysia’s specific sustainability concerns i.e. urban sprawl, deforestation, flooding, air and water pollution, the pedestrian network and highway traffic problems

• GBIisapowerfultoolinitsabilitytoguideandacceleratethegreenbuildingmarket.Specialattentionshould be taken in its application to ensure that the guidance and recommendations provided do not replace creativity in design and do not undervalue non-quantifiable sustainability domains such as society and human comfort

• Complicated,non-standardisedmeasurementandverification(M&V)ofenergysavingsdoesn’ttranslateto key decision makers, such as lenders, owners and tenants

• Thefinancial viabilityofgreenbuildingprojects isoftencompromisedby theprovisionof thevarioussubsidies for fossil fuels

• Improvingtheefficiencyofindividualbuildingsandisolateddevelopmentsrepresentsonlythetipofthegreen building “iceberg”. A stronger focus should be put on improving the sustainability of communities - especially communities in which Malaysians can work, shop, worship, learn and play near their homes; without having to drive long distances from residential areas to business districts, shopping centres, schools and other facilities

• TheGBIincentivescheme,whileprovidingtaxexemptionontheincrementalcoststoallgreenbuildingowners, is not sufficiently attractive for Gold and Platinum GBI buildings

• The building services sector represented by designers, engineers and business consultants has animportant role in green building practice; developing & disseminating information in passive design, resource efficient & clean technologies, healthy buildings and procurement of products & materials. However the GBI fiscal incentives cover only manufacturing and the supply chain (e.g. additional cost for materials), failing to mobilize R&D and capacity building

Recommendations• Providecomprehensivetrainingandexchangeofexperienceandresearchonsustainableurbandesign

building in higher education and for industry professionals, in order to ensure that this new market has the appropriate supply of skills and knowledge

• Exchange experience and knowledge of European rating standards and within the sustainableconstruction industry. Foster international co-operation between higher education institutions, including between the EU and Malaysian academic institutions. Take advantage of the enormous European knowledge in creating quality spaces, with over 2000 years experience in responsible urban planning

Issues by Sector


• ContinuouslyreviewtheexperiencewithGBIratingsandthepointallocationsfordifferentcategoriesinterms of their effectiveness

• ExtendtheGBItooltocoverrenovationsofresidentialbuildings

• Introducemandatoryenergycertificationforbuildings,givingtenantsandpurchasersaclearerideaofthe energy costs that they will face

• Enhance tax incentives for Platinum rated GBI buildings, to support green building R&D by thedevelopment of world class green building benchmark projects

• AcceleratethepaceofimprovingexistingbuildingsbymakingGBIincentivesapplicablealsototenantswho do not own the building but have incurred the expenses to transform the building into a GBI complied building

• Extend the GBI incentive scheme to include all incremental costs such as Environmental Design &Engineering Consultancy fees and GBI facilitator fees in order to mobilise R&D, innovation and capacity building in Malaysia

• Extendthegreenbuildingconceptstoanurbanplanningandsocialorganisationlevel;achievegreatersustainability by using a combination of local public policy, planning, design and technology

• AllowEuropeanprofessionalsintheconstructionsectorwithforeignqualificationstoregisterinMalaysiaand become shareholders and directors in their respective professional practices

• Increase environmental performance requirements for public buildings to set the benchmarkingparadigm for the construction industry. Define a roadmap for retrofitting all existing public buildings into the GBI Platinum standard

5.3.4 Waste Management (Anaerobic Digestion & Biogas)

Until recently, Malaysia has been the largest palm oil producer in the world (as at April 2012, Indonesia currently hold the position), on top of an extensive portfolio of agriculture & plantation economy. Equipped with over 400 palm oil mills processing oil palm, from raw fruit to downstream operations of refinery, with various oleo products being exported to Europe, the palm oil industry is not without its criticism by many parties especially on environmental issues; land degradation, clearing of forests as well as waste management.

One of the largest waste products from processing oil palm is the empty fruit bunches (EFB) as well as Palm Oil Mill Effluent (POME); an organic liquid discharge, high in Biological Oxygen Demand (BOD)/Chemical Oxygen Demand (COD) levels which cannot be released into waterways without prior treatment. BOD & COD in high levels mean that in competition with organisms which require the oxygen to survive, they will not be able to utilise it. Traditionally, POME is allowed to go through aerobic & anaerobic processes in series of open lagoons, where the byproduct of the process – methane, a greenhouse gas which is 21 times more potent than CO2 – is allowed to be released to the atmosphere, contributing to global warming.

In recent years, palm oil mills (POMs) have started to realize the potential in generating clean electricity via the capture of methane. Coupled with strict environmental discharge levels via new legislations, there have been more incentives to adopt Anaerobic Digestion (AD) and to harness the methane for energy security, also reducing reliance on the national grid.

It is also important to bear in mind that AD is not only limited to POME but all organic waste, including animal/farmwaste, agriculture (grassclippings,mulch), foodwaste,municipal solidwasteandsewage.This closed loop solution of waste management and renewable energy generation should see numerous benefits for the environment, community and energy security.

Issues by Sector


IssuesThere are numerous challenges and issues with waste management – even before we reach the process of AD and harnessing biogas for power generation. Many of those lie with the security of feedstock supply - not all feedstock is easily collated (eg. municipal solid waste) due to different jurisdictions of councils. Neither is it guaranteed in cases of POMs, which prefer to focus on their core revenue generation business of palm oil processing. There are also the upfront capital expenditure costs in building AD plants, which do garner a return of investment (ROI) but often are fraught with the duration of payback, on top of revenue streams being unrealistic with challenges such as low Feed-in-Tariff rates, and at times volatile, due to Carbon Credit Markets.

With the current electricity tariff rates being highly subsidised by the government, cost of electricity is relatively low resulting in manufacturing facilities not feeling the pinch of power cost. This also means the potential savings from generating their own electricity via AD are not as substantial as they would be, were energy prices not subsidised.

Despite legislations stipulating theBOD/CODdischarge level tobeof a very low level forPOMs,AD isnecessary to ensure the discharge levels can be met, but there is still the larger problem of enforcement to ensure these levels are adhered to. Operational, safety and health standards for renewable energy projects in this part of the world are still very low, which can be a stumbling block to the growth of a new industry. Incidents have occurred, with injuries and fatalities due to lack of controls and understanding of safe operational standards on such projects. For established industries such as Oil & Gas, such standards have been developed and enforced strongly to ensure the industry develops with safety as a main concern.

RecommendationsIt is clear that biomass and biogas energy generation is for ideal Malaysia with its abundance of feedstock. With the introduction of the Feed-in-Tariff (FIT) system, there are now more incentives to embark on AD projects. However, with the tariff rates still restricted by the (very) gradual increases by Sustainable Energy DevelopmentAuthority(SEDA)–thecurrentRM0.32/kWhisstillnotattractiveenoughforcompaniestoinvest in AD projects with the FIT being its only source of income. With no strong push factor on ROI, private businesses will be reluctant to invest, and with no legislation to mandate AD plants to be placed in mills or manufacturing and farm facilities, there is no anchoring factor for AD plants to be implemented voluntarily.

Should the FIT be increased to a rate where it makes AD projects more viable, and reduces the reliance on volatile funding means like carbon credits, private businesses will certainly be more willing to embark on AD projects. This is because there are many benefits associated: their energy security is secured, exercising their part of being environmentally responsible (which is beneficial from the corporate social responsibility point of view) and increases the value proposition for organic waste - what was previously a headache, is now a valuable renewable source of energy. Success stories in Germany and the UK have proven that this is viable, and Malaysia – a country rich in natural resources - can benefit fully from securing this energy source, as well as addressing the larger national agenda of carbon emission reduction and increased renewable energy mix.

For European industry firms, the operational health and safety standards have been long established and commonly practiced. This is something that should be transferred to the region to assist in the growth of new RE industry. New technologies and expertise are key catalysts to propel the industry forward and this is where members of EUMCCI can contribute.

Issues by Sector


5.3.5 Waste Management (Clinical Waste)

In Malaysia, Pathogenic and Clinical Wastes and Quarantined Materials are considered as scheduled Wastes and come under the legislation of the Environmental Quality. Clinical waste is also defined as any other waste arising from medical, nursing, dental, veterinary, pharmaceutical or similar practices, investigation, treatment, care, teaching or research or the collection of blood transfuse. The Malaysian Government has declared it a national policy that all clinical waste must be incinerated, making it compulsory for all hospitals and clinics to incinerate their clinical waste. The defined concessionaries are in charge of collection and disposal. Transportation costs for collection can be high in remote rural areas when the waste quantity is small. As such, sterilisation possibilities should be considered for inclusion in today’s national policy.

Concessionaries

A number of non-clinical services in government-run hospitals and clinics have been privatised. These services include clinical waste management.• FaberMedi-Serve-atKamunting,Perak

• Radicare(M)-atTelokPanglimaGarang,Selangor

• TongkahMedivest-atBukitRambai,Malacca

There are three sources of medical wastes generated in Malaysia from government hospitals and institutions, private hospitals and from private clinics.

Ashes handling

The disposal of ash generated from the incineration process at licensed, designated facilities can pose a problem. One of the primary threats from incineration is the form of the ash which is extremely fine and light and tends to be easily airborne and can be inhaled. The ash is contaminated with heavy metals, dioxins and PCBs. The huge sums invested into incinerators mean that the private companies are unwilling to consider alternative treatment technologies for the next several decades. The current system relies upon incineration to sterilise clinical waste. Incineration of medical waste, however, has proven to be a great public health threat if untreated. Globally, the tendency is to reduce incineration practices due to public sensitivity and increase the sterilisation share due to technological improvements and cost reduction. Today proper sterilisation processes are automatically recorded and assure traceability and security in remote areas. Malaysia has legally committed itself to a single treatment technology for the foreseeable future.

RecommendationAlthough it is commendable that the Malaysian Ministry of Health has taken a comprehensive approach to the medical waste question the approach lacks flexibility and so is unable to adequately respond to new information, techniques, or technologies that could encourage FDI from EU companies.

Newer, smaller and de-centralised solutions, facilities and comprehensive equipment are desired and are in Malaysia; these methods are however against Malaysian national law and policy which has authorised incineration only. Regulations for the new technologies and equipment should be introduced to control the liberalisation of sterilisation. Such a change will not affect the 3 concessionaries but will decrease the cost of medical waste disposal in remote areas, helping small waste producers.

Issues by Sector


5.3.6 Water

Comprehensive Water Policy

Currently, no overarching water policy exists for Malaysia. As a consequence, planning of water resources – from upstream catchments, to abstraction and treatment of water and wastewater – is not considered in relation to and against other needs. Integrated catchment management and water demand management are two strategic approaches to be included in a national water policy.

RecommendationEstablish a holistic and integrated sustainable water policy for Malaysia. This requires stakeholder engagement and political intervention.

Tariff review

Water is currently under-priced. A low water tariff has driven the perception that water is plentiful and cheap. Consequently, Malaysia has developed excessive and profligate habits due to the low water tariffs; and this is leading to water scarcity in some urban areas. This scenario is not sustainable for Malaysia moving towards developed nation status in 2020.

RecommendationWater tariffs should be reviewed and raised incrementally to reflect the importance and scarcity of this resource.

Reduction in non-revenue water (NRW)

Currently, NRW for Malaysia is approximately 40%.

RecommendationTo support a review of current water tariffs, a concerted effort is required by water utilities to improve their performance and reduce Non-Revenue Water (NRW). This will instill trust in the utility by the consumer. Water utilities play an important part in getting consumers to pay an increase in water tariffs. Malaysia should aim for developed country levels of 15%.

Faster corporatization of water utilities and inclusion of Sabah and Sarawak into Pengurusan Aset Air Berhad (PAAB) and Suruhanjaya Perkhidmatan Air Negara (SPAN) cover

The corporatization of the water utilities is very lengthy. As long as the task is not with all states finalized it will be difficult to unify tariffs and standards.

RecommendationEfforts should be made to simplify and expedite the process of corporatization and inclusion and homogenization of all state tariffs and standards.

Issues by Sector


Open public relation policy

There is currently a lack of operation and investment plans by utility companies available for public consideration.

RecommendationThe utility companies as well as PAAB have to create operation and investment plans. If these were publicly available, stakeholders could better serve the water industry with faster and better services.

Investment incentives

Lack of investment incentives and funds for clean water investors

RecommendationAs investors have often to build their own clean water supply resources investment incentives by MIDA would be beneficial – similar to those for investment into renewable energy resources.

More international competitive bidding in water procurement

The requirements for international companies to bid for contracts are as stringent in water procurement as in other business avenues for non-Malaysian business entities.

RecommendationA relaxing of the requirements for international companies will increase the competitiveness of the market, making projects cheaper and encouraging more foreign involvement with higher level technologies into the sector.

No centralized or coordinated mechanism to support water industry’s R&D needs and requirements.

Currently, in the water industry, R&D is undertaken at ad hoc nature and many companies are not large enough to support R&D practices at all, or to the standard required.

RecommendationCreation of mechanism to facilitate coordinated R&D for water industry as whole. It must be noted that discussions of this nature are being held by the Malaysian Water Association and Universiti Teknologi Malaysia (UTM).

Campaigns for saving water, conserving water catchment areas and cleaning up natural water resources

It is definitely necessary to create more awareness of the importance to keep water resources clean.

RecommendationTo create and implement a national education campaign to highlight the importance of clean water and conservation and maintainence of current resources.

Issues by Sector


5.4 Financial Services - Green Financing

The green sectors that have been the focus for EUMCCI under the Energy, Environment and Green Technology (EEGT) Committee comprises Renewable Energy, Energy Efficiency, Green Building, Waste and Water.

This position paper seeks to engage stakeholders across the board by leveraging on SMART (Specific, Measurable, Attainable, Relevant and Time-bound) measures that should be adopted and targeted to create incentives for developers and also mobilise private debt and equity capital towards green projects. It would also provide a framework for the first EU-Malaysia Green Financing Training Programme 2012 that will be conducted during IGEM 2012, a possible strategic roadmap for the coming 5 years and a comprehensive Lenders-Investors Handbook.

An Overview of Asia Pacific renewable deals by sector and country in 2011

The below seeks to give a snapshot of the 2011 renewable deals in the Asia Pacific region and features Malaysia alongside its regional neighbours.

Asia Pacific Renewable Deals by Sector

By value (US$m)

% share of total Asia Pacific deal value

Number of deals

% share of total Asia Pacific deal number

Biomass 1,971 43% 11 19%Wind 980 21% 15 26%Solar 899 20% 16 28%Energy Efficiency 373 8% 7 12%Hydro 193 4% 2 3%Geothermal 101 2% 3 5%Biofuels 94 2% 4 7%TOTAL 4,612* 100% 58 100%

Source: http://www.pwc.com/renewablesdeals

Asia Pacific Renewable Deals by Country 2011

By value (US$m)

% share of total Asia Pacific deal value

Philippines 1,716 37%China 982 21%Australia 683 15%Japan 579 13%India 357 8%Taiwan 176 4%Malaysia 58 1%New Zealand 42 1%Korea 17 <1%Thailand 3 <1%TOTAL 4,612* 100%

Source: http://www.pwc.com/renewablesdeals*Please note that the figures have been rounded up or down to the nearest million.

Clean energy is becoming more and more popular as a source of power to meet Asia’s growing needs. The long-term fundamentals are compelling as rising fossil fuel prices, combined with high volatility in recent

Issues by Sector


years, have sparked a greater worldwide interest in clean energy. The clean energy industry is growing exponentially and is expected to continue to grow over the next decade. Asian governments are priotising policy guidelines and incentives for achieving clean energy targets. Broad ranges of clean energy sub sectors provide in-built diversification. Clean energy in Asia is a rapidly growing infrastructure asset class with multi-faceted opportunities. Carbon credits provide additional hard currency revenues and further enhance projectreturns.

Current Regulatory and Green Financing Outlook in Malaysia

Green Technology Financing SchemeThe Green Technology Financing Scheme (GTFS), with a disbursement cap of RM1.5billion is a funding programme purposed for the uptake of improving Green Technology in Malaysia. The GTFS funds disbursed are used to cover 2% of the total interest or profit rate on funds secured from financial insitutions. In addition, the Government will provide a guarantee of 60% on the financing amount via Credit Guarantee Corporation Malaysia Berhad (CGC) with the remaining 40% financing risk to be borne by participating financial institutions (PFIs). Malaysia Green Technology Corporation has been appointed as the conduit for the GTFS application and applications were opened on 1st January 2010. The focus sectors under the GTFS and the eligible projects include (but are not limited to) the following:

Energy SectorEnergy Supply SectorPower generation and energy supply side management including co-generation by the industrial and commercial sectors

Energy Utilization SectorEnergy utilization sector and demand side management programmes

Building and Township SectorConstruction, management, maintenance and demolition of building

Water & Waste Management SectorManagement and utilization of water resources, wastewater treatment, solid wastes and sanitary landfills

Transport SectorPublic transportation infrastructure, “green” vehicles, and biofuels

Green Technology Finance Scheme ApplicantsThe GTFS application process is as follows:i) a technical project certification given by GTFS to successful applicants only;ii) successful applicants shall then proceed to submission of a financing application with Project Certificate

and its relevant documents to any participating financial institutions. The respective Financial Institutions will issue a Letter of Offer (LO) to the successful applicant; and

iii) thereafter a Guarantee Approval of 60% will be provided by Credit Guarantee Corporation Malaysia Berhad (CGC) together with a Letter of Guarantee to the Financial Institution concerned and the guarantee fee of 0.5% per annum to total guarantee, payable by the Applicant applies. Upon completion of financing documentation, the financial institution shall disburse the financing to the Applicant.

As at Dec 31st 2011, only 36 applicants out of 118 approval certificates issued by GTFS had obtained loan offers from the banks (9 local banks and 3 foreign banks). Amongst these successful applicants, 2 projects have been completed while the rest are either under construction or still at loan documentation stage. The current statistics on the approved loans in relation to the 36 applicants are as follows: 60% of the loan approvals are in the energy sector (project value RM0.7m-RM75m), 40% in the water and waste sector (project value RM2m-RM50m), 3% in the transportation sector (project value RM2m) while there are none for the building sector. Currently, Malaysia Green Technology Corporation has no record of private equity and venture capitals involved.

Issues by Sector


Source: Compiled and adapted from Green Technology Financing Scheme List as at 31 Dec 2011

Note:

1. Producer company: Legally registered Malaysian-owned companies (at least 51%) in all economic sectors

2. User company: Legally registered Malaysian-owned companies (at least 70%) in all economic sectors

Current Legislation and Regulatory FrameworkPursuant to national policy, Malaysia adopts a “precautionary principle” and “no regret” policy that allows for justified action to be taken to mitigate or adapt to climate change. Malaysia’s national policy and principles on sustainable development were introduced in the chapter on “Development and Environment in the Third Malaysia Plan (1976 - 1980)”.The Malaysian Government now seeks to harmonize the 10th Malaysia plan with the priorities of the New Economic Model (NEM). The sustainability dimension of NEM will require focus on natural resources, aligning Malaysia’s activities with the new concept of ‘Green World Order’. Malaysia realizes that its ecosystem services are becoming increasingly important and there is an urgency to position Malaysia as a major player within the global environmental governance and claimant to a substantial stake in the fund to mitigate the effects of climate change. There will be a need to produce an effective action plan that enables Malaysia to take advantage of the growing carbon market and green economy.

Malaysia has also adopted a pragmatic approach in dealing with climate change and environmental issues in line with the Rio Declaration. The following list of federal legislation relates to coping with climate change and environmental issues:• EnvironmentQualityAct1974

• EQ(ClearAir)Regulation1978

• EQ(PrescribedActivities)(EIA)Order1987

• NationalForestryAct1984

• FisheriesAct1985

• FisheriesMaritimeRegulations,1967

• Fisheries(MarineCultureSystems)Regulation

• TownandCountryPlanningAct1976

• PetroleumMiningAct1986

• PetroleumDevelopmentAct1974

• LandConservationAct1960

• NationalParksAct1980

GTFS Certified Green Projects 2010-2011

Green Sectors

35

50

00

10

20

30

40

50

60

6422

Waste & WaterSector

Energy Sector Building Sector

Producer

User

Transport Sector

19

Num

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Issues by Sector


Since then, there have also been the Energy Commission Act 2001, Solid Waste and Public Cleansing Act 2007 and Renewable Energy Act 2011 (RE) and the subsidiary legislations thereto are:• P.U.(A)383/2011:RenewableEnergy(CriteriaforRenewableResources)Regulations2011

• P.U.(A)384/2011:RenewableEnergy(AllocationfromElectricityTariffs)Order2011

• P.U.(A)385/2011:RenewableEnergy(Feed-InApprovalandFeed-InTariffRate)Rules2011

• P.U.(A)386/2011:RenewableEnergy(RenewableEnergyPowerPurchaseAgreement)Rules2011

• P.U.(A)387/2011:RenewableEnergy(TechnicalandOperationalRequirements)Rules2011

• P.U.(A)388/2011:RenewableEnergy(RecoveryofMoneysbyDistributionLicensee)Rules2011

• P.U.(A)389/2011:RenewableEnergy(AdministrativeFees)Order2011

Despite two deferments, the Sustainable Energy Development Authority Act 2011 (SEDA) on 1st December 2011 finally saw the launch of Malaysia’s feed-in tariff (FiT) scheme promoting renewable sources of energy. SEDA Malaysia is a statutory body under the Ministry of Energy, Green Technology and Water (KeTTHA) established under the SEDA Act 2011 (Act 726) to manage and administer the Feed-in Tariff (FiT) and the implementation of the Renewable Energy Policy and Action Plan.

Prior to the implementation of the FiT, all seven subsidiary legislations linked to the Renewable Energy Act had to be gazetted and nine Renewable Energy Power Purchase Agreements (REPPAs) agreed to the satisfaction of all parties involved. The RE Act is not applicable in Sarawak as the state has its own electricity ordinance. If Sarawak would like to join in the FiT, it would need to create its own RE Fund, and its own SEDA. According to SEDA, Bank Negara Malaysia has announced that renewable energy players can now apply for the Green Technology Financing Scheme using the Renewable Energy Power Purchase Agreement (REPPA) as collateral. SEDA is working with Bank Negara to allocate a bigger chunk of the money available to renewable energy players.

KeTTHA on the other hand will be coordinating the CORE (Committee for Oversight of RE) team. As green projects rely on knowledgeable lenders, KeTTHA has been tasked under Chapter 12 of the ‘Economic Transformation Programme, A Roadmap to Malaysia’ to run education seminars with financial institutions in 2011, to increase knowledge of green projects to boost levels of lending. These seminars are meant to focus on the payback structure of energy efficiency projects; measure, monitor and publicise environmental progress. To provide the basis for an environmental management annual report, KeTTHA will track Malaysia’s environmental impact and progress of the green technology sector in a database. By mid-2011, KeTTHA should be able to determine the scope of the database and the indicators that need to be collected as well as communicate roles and responsibilities to the relevant industry associations.

Maybank Clean Energy FundIn November 2011, it was announced that Malayan Banking Bhd (Maybank) and its Singapore unit Maybank MEACP Pte Ltd had launched a US$500mil (RM1.6bil) clean energy private equity fund. The Maybank MEACP Clean Energy Master Fund aims to invest in a diversified portfolio of clean energy projects in the Asia-Pacific region, focusing on China, India, Indonesia, Malaysia, Thailand, the Philippines, Vietnam, Cambodia and Laos. The 10-year fund will be jointly managed by Maybank Ventures (Maybank’s venture capital arm) and MEACP. It will focus on clean energy projects in sectors that include wind, solar, geothermal, small hydro, biomass, bio fuels and energy efficiency. Maybank Investment Bank reported that the first investment deal was expected to be closed in July 2012. The fund will be offered globally mainly to institutional investors, with a minimum investment amount of US$10mil (RM31.6mil). Maybank said it would invest US$50mil (RM157.8mil) in the fund, while institutions such as the Asian Development Bank (ADB) and International Finance Corp (IFC) would be the anchor investors. ADB will invest US$20mil (RM63.1mil) and IFC US$25mil (RM78.9mil) with a condition of its investment being the lower of US$25mil or 20% of the total amount invested.

Issues by Sector


Development Financial InstitutionsAside from commercial banks, development financial institutions such as Bank Pembangunan, SME Bank, Agrobank, Bank Rakyat, EXIM Bank and Bank Simpanan Nasional are the participating Financial Institutions (PFIs) committed under the GTFS. Bank Pembangunan for example reported that they had approved RM 69.3 million under the Green Technology Fund Scheme in 2010.

Mizuho Corporate Bank MalaysiaIn recent news in the Malaysian banking landscape, the establishment of Mizuho Corporate Bank Malaysia Bhd (MCBM) is expected to play a role in sharing their expertise and experience in environmental finance to Malaysia. Mizuho Corporate Bank has been actively financing cleantech projects globally, for example, a solar project developer in North America, a smart grid demonstration project in Hawaii and a wind farm project in South Korea.

Malaysia Debt Ventures BerhadVenture capitalists are also looking at supporting the growth of this sector. Malaysia Debt Ventures (MDV) has setup a RM300million fund to support green technology financing in seven segments: energy, transportation and logistics, agriculture and nutrition, environmental quality and safety, water and water treatment, industrial, and advanced materials.

Malaysian Venture Capital Development CouncilThe Malaysian Venture Capital Development Council (MVCDC) was established in January 2005 under the chairmanship of the Securities Commission, Malaysia (SC). Its members, who are representatives of the public and private sector, are appointed by the Minister of Finance on the recommendation of the SC. The Council acts as a platform to facilitate the development of the venture capital industry by coordinating the Government’s initiatives and incentives in charting the industry’s strategic direction. The Council also acts as a conduit for policymakers and industry players to discuss matters pertaining to the development of the industry.Toobtaintheirlatestdevelopmentsanddirectoryfor2011/2012,pleasevisithttp://mvca.org.my/index.php

Issues Raised by Business Industry

GTFS Applicants• 15 had their loan applications rejected by 14 local banks and 6 foreign-based banks but some are

reapplying to other banks. The banks had not stated the reasons for rejections directly to Malaysia Green Technology Corporation but based on feedback from the business industry the reasons are amongst others:a. Security provided by applicant is not sufficientb. The applicant’s business is a new start up with no track recordc. Applicants do not meet credit guidelinesd. The bank is unfamiliar with green technology which is viewed as high risk

Green Technology R&D and Commercialisation Applicants• The various segments of Green Technology Research & Development and commercialisation, as well

Renewable Energy projects particularly for micro scale projects < 100kW expressed the lack of creativity and innovation in funding, the over reliance on banks and the lack of platforms to showcase alternative funding opportunities.

• There is a need to mobilise current and existing corporate funds which have been allocated under Corporate Social Responsibility, that could finance the smaller cap green technology projects.

Issues by Sector


Photo Voltaic (PV) Industry Applicants• There is no available funding for small (1kWp =<5kWp) photo voltaic systems and both consumer &

banker are unaware of the benefits of the feed-in-tariff (FiT).

Key Issues Raised By Banks

Many banks have been reluctant to lend to green technology projects even though the applicants have received the Green Project Certificates from the Malaysia Green Technology Corporation (MGTC). Although it may be perceived that bankers are unsupportive of green technology, the local banks have expressed the issues encountered when processing funding applications from green technology.

• Akey issue facedbybanks is thecreditworthinessof theapplicants.Banksadopt thesamecreditevaluation policies and procedures for green technology projects as with the other sectors. Banks are looking at a balance of equity injection from the businesses as well as commercial viability of their green products or services. However, the business industry has been asking whether banks would also consider adopting different credit evaluation criteria to reflect the Greenfield investments that most green technology projects fall under. Banks also look at the capability of the applicant to service the loan and collectivity of the loan.

• AnotherissueraisedbythebanksisthattheGreenProjectCertificatesfocusheavilyonthetechnicalitiesof the green technology, rather than the financing viability of the project. For example, MGTC does not verify if the investment costs stated in the proposal are fair and reflective of the actual investment. Business industry feel that banks are required to provide funding once the Certificates are issued, but the banks also look at the cash flow projections, funding options, business plan, etc. There seems to be a mismatch between the information that the banks need versus the information that can be provided by the business industry.

• Banks also admit that they have a knowledge gap when it comes to evaluating green technologyprojects. There are limited benchmarks available and with the lack of a proven track record for a lot of these green technology projects, it deters the banks from providing funding to the business industry. Most banks do not have a dedicated “Green Desk” or internal experts to help evaluate these projects. Some banks also highlighted the lower risk appetite for funding green technology due to the limited information available and general understanding of the sector. Banks have also indicated the difficulties in training all their credit officers on green technology evaluation due to the number of officers involved and the need to educate the different levels from analysts to supervisors to credit committee members on the sector opportunities and risks.

• Further, there isa lackofacleargovernmentstructureandpolicies tosupport thegreen technologysector and as a result this inhibits the bank’s ability to assess the full value and impact of the projects. For example, the delay in establishing the feed-in tariff (FiT) and uncertainty around the returns on investments from FiT provide little comfort to the banks when assessing and approving loans.

Recommendations for Business Industry

GTFS Applicants• Do not rely only on GTFS and embed the green technology in mainstream business to increase chances

of loan approval. For example, hybrid cars in the automotive industry and green buildings in the construction sector.

• EUMCCI Green Finance Task Force in collaboration with key stakeholders and Banks can jointly assist applicantsbypreparingaHandbook/Checklistforapplicantsonwhatthebanksarelookingfor.Thiscould be uploaded on the GTFS website and via other key communication channels.

• Explore alternative funding such as VCs and PEs who may have higher risk appetite.

Issues by Sector


Green Technology R&D and commercialisation Applicants• LeverageontheCorporateSocialResponsibilityFundofcompaniesandworktogethertoinvestmore

money in projects which achieve mutual aims and objectives.

Recommendations for Banks• ForthePVindustry,bankstoconsiderrollingout“standard”sizedloansbasedonindustryrecommended

sizesfor1-5kWpsystems.These“standard”sizedloans+/-wouldallowbankersandclientstohavesome leeway to discuss costing and system sizes. The FiT can be paid directly to the Bank coupled with an undertaking by the owner in the form of a guarantee to supplement the same until completion of tenure (5, 7, 10 years based on banks normal tenures).

• EUMCCIandtheirEuropeanexpertswillbeworkingwithsome localbanksonthedevelopmentofagreen technology credit evaluation checklist to clearly indicate the documentation requirements and expectations from the banks in order to evaluate a proposal. This will help both the business industry understand the banks’ requirements, and the banks’ speed in evaluating proposals.

• Themarketwantsgovernmentstotakeastrongerstanceongreentechnologyandintroducepoliciesand regulations to support the industry. China has made green technology a national priority and introduced incentives and R&D programmes to drive growth. The Clean Energy Finance Act in the US provides federal backing to private capital markets to provide low-cost financing, including loans, loan guarantees and other forms of credit support for a range of technologies. Malaysia will also have to reassess other legal barriers, such as what happens to solar panels on rooftops when payments are defaulted? Does the bank go after the house owner or the “solar panel” owner? What can the banks do with these “defaulted” solar panels?

• Localbanksshouldalsoconsidersettinguptheirowngreendesksoroutsourcethegreentechnicalandfinancial evaluation to experts. This will allow them to better understand the opportunities and risks of the different technologies, the average rate of returns, and keep abreast with the latest developments in this rapidly changing industry.

• Somecountriesarelookingattheirdevelopmentbankstofundthissectortospurgrowth.TheBankofAmerica, for example, provides low-cost loans and grants to Community Development Financial Institutions to finance energy efficiency improvements. Malaysia may consider mandating the development banks to fund and support the growth of green technology in Malaysia. Malaysia could also consider setting up a Green Bank to finance green projects similar to the UK Green Development Bank.

• ToreplicatewhattheInternationalFinanceCorporation(IFC)hasbeendoinginChinai.e.theyestablisheda China Utility-based Energy Efficiency Finance Programme (CHUEE) which addresses three key opportunities to enhance green technology financing in China: (i) promote financing through guarantees – The IFC provides partial guarantees to local banks for their investments in power utility energy efficiency projects or equipment purchases (ii) use partners to identify opportunities – utility companies, energy management companies and energy efficiency suppliers act as commercial banks’ channel partners to recommend projects to bank loan officer (3) build capabilities – The CHUEE program contains a training element whereby banks can improve their skills in evaluating and monitoring environment investments.

• Thelocalbanksalsowelcomeco-fundingofgreentechnologyprojectswithotherinvestors(e.g.seed/angel investors, venture capitalists, private equities) to support the overall funding requirements of this sector.

• EUMCCI believes that the EU banks can transfer their experience and knowledge on the greentechnology sector to their Malaysian counterparts to elevate the awareness of the local banks on how to evaluate green technology projects. Thus, the EUMCCI plans to organize a Green Financing Training Programme where EU bankers can share the successes, failures and lessons learnt from deals that the

Issues by Sector


EU banks have considered and supported. This training will also include an Expert Transfer Session by European experts to train bank officers and consumers on (i) what types of funding can be available under this industry (ii) how money can be generated from FiT to repay loans and (iii) actual costs of PV system.

Recommendations for Government and Stakeholders• TosetupVC funds forMalaysiaGreenTechnologyCorporation to invest instartupcompanies (that

lacks equity capital).

• ToalsoconsiderextendingthecurrentGTFSprogrammeforanother1or2yearsastheschemewillendin 2012. As at 24 February 2012, only about RM607 million worth of financing has been approved out of the RM1.5 billion allocated.

• SettingupofagreentechnologyventurecapitalfundforMGTCtoinvestinviablestart-upcompaniesthat lack equity capital so as to improve their chances in obtaining bank financing

• ToconsiderworkingcloselywithIBFCLabuantosetupaLabuanMalaysianGreenTechFundinwhichVCs can provide funding based on the current 60% guarantee from the Malaysian Government including local commitment for matching sums that can be made available. To consider approaching some of the big corporate players who have committed to Corporate Social Responsibility (CSR) initiatives under the Green Technology sector.

• ToworkcloselywithBankNegaraMalaysiatosee ifbankscanallocateacertainpercentageoftheirloan portfolio to green financing. Thereafter, to draft the necessary implementation guidelines.

• TosetupseparatespecificgovernmentfundsforGreenTechnologyResearch&Developmentandstart-up commercialisation either by expanding existing funding programs or create a purpose fund for green technology. We cannot only use GTFS which is only partially offsetting the interest rates charged by banksbecausetheremustbeoutrightfunding,notloansforR&D/commercialisation.

• To establish a funding reserve for R&D/commercialisation distinct from the funding offered for F.I.Tproject applicants. There should be different credit evaluation criteria and application processes as well. This is because GTFS should not be expected to serve both segments.

• Toestablishfinancingfairsandmarketthemaggressively.Tousethemasaplatformtoinvitelocalandforeigninvestors/venturecapitalist/socialentrepreneurs.AnexamplewouldbetheIndonesia’sUSD16billion RE investment plan announced during the annual Green Investment Summit (GIS), 18-19 October 2011 at Nusa Dua Bali Convention Centre held in conjunction with the World Renewable Energy Congress. Indonesia with full support by the Indonesian National Energy Council, Ministry of Energy, and Coordinating Ministry of Economic Affairs was able to establish a platform to discuss and advance the state of financing for Clean Energy projects, to accelerate the development of projects in the South East Asian region. The chief aim of the GIS was to harness substantial financing to see through the successful development of Clean Energy projects in South East Asia.

• ToproposeasimilarenergycreditprogrammeastheUSAtobeestablishedinMalaysia.IntheUSA,theQualifying Advanced Energy Project Credit provides an investment tax credit of up to 30 percent of qualified investment in a qualifying advanced energy project. The total amount of credits allocated for this is US$2.3billion (under s48c of the Internal Revenue Code). The project could either be one that establishes, expands or re-equips a manufacturing facility for the production of a set of defined types of property. To qualify for this credit programme, the project must be certified in advance by the Internal Revenue Service by fulfilling a few criteria set forth. These credits are then reflected in the projected cash flow of the business, which is a key document to be included in financing applications.

• Toestablishregularseminarstoshowcasevariousfinancingmodelsfromaroundtheworld.

Issues by Sector


• ThedocumentsrequiredundertheGTFSmustincludesupportingdocumentsthatalsomeettheBank’scriteria to enable the applicants to be more prepared from the outset. To facilitate this, Malaysia Green Technology Corporation has to spearhead very specific programmes between Banks and Industry to agree on the sets of documents needed for specific green sectors.

5.5 Healthcare

Malaysia remains a relatively new market with strong perspectives for the pharmaceutical industry. The Malaysian pharmaceutical market is very dynamic: the total value in 2010 was €1.7bn and continues to grow.

The government has engaged in significant attempts to introduce administrative reforms in the healthcare system. However, the current healthcare environment is characterized by under investment and currently fails to meet the demand. The European pharmaceutical industry remains a key contributor to the economic growth of Malaysia and is committed to helping address these health policy objectives.

However, despite Malaysia’s commitments to the WTO, the research based pharmaceutical companies continues to face long-standing market access barriers and substandard intellectual property protection in Malaysia.

1Care

The Ministry of Health (MOH) is currently preparing the blueprint for 1Care – a national health financing scheme that aims to provide universal access to citizens of Malaysia. The initiative marks a significant reform to the current healthcare delivery that will impact the nation on various levels thus it will need careful assessment and implementation in order to preserve the honourable intention of improving access to better healthcare.

RecommendationsThe industry support initiatives that aims to improve the Malaysian healthcare system. The industry hopes to be always engaged as a partner to the MOH in such initiatives as we share the same goal of improving access to better healthcare in the country. Moving forward, the industry would like to see fair and transparent evidence - based listing, pricing and reimbursement decisions on health technologies by providing adequate compensations which commensurate with the effectiveness and value that innovation contributes to the patient outcomes.

Intellectual Propriety Rights of Pharmaceuticals

Regulatory Data Protection

The MOH Directive for Data Exclusivity was officially published in March 2011. Provision for protection period remains at effective from date of approval in country of origin up to 5 years for a New Chemical Entity and 3 years for a new indication. Due to the current regulatory approval timelines for pharmaceuticals by MOH, such provision will result in significant loss of the protection period. The Data Protection does not include biopharmaceuticals.

RecommendationsRegulatory Data Protection for pharmaceuticals need to be on par with international standards to continuously recognize and reward the considerable effort to bring innovation into the country e.g. the

Issues by Sector


effective period of data protection is to start from approval in Malaysia, not from country of origin. Industry would like the MOH to consider including biopharmaceuticals in the provision of regulatory data protection.

Patent Linkage

There is an ongoing disengagement between the patent and drug approval authorities during disputes on the patent status of pharmaceuticals leaving aggrieved innovators with a dilemma, resulting in undue delays, additional resources and unresolved legal discourse.

RecommendationsIndustry continues to seek for the establishment of an efficient and meaningful patent linkage system between the patent and drug approval authorities. An effective system of patent linkage could enhance the environment for innovative pharmaceutical development by:• providingtransparencyandpredictabilitytotheprocessforboththepioneerandthegenericcompany

• creatingamorepredictableenvironmentforinvestmentdecisions

• ensuringtimelyredressofgenuinedisputes.

• Conditions that allow better-informed and more efficient investment decisions can encourage newproduct introduction and development of life-saving inventions.

Protection and Enforcement

Patent

Registration of generic product is allowed prior to patent expiry of innovator products. However, there is a gap in understanding the patent law where sale of generic products is not allowed before patent expiry. As a result, innovators are sometimes facing the following issues prior to patent expiry:• unfairpromotionofgenericproducts

• unfaircompetition(sale)ofgenericproducts

The innovators often have to bring this to civil court, where the process is lengthy and costly. Having to compete with generic products before court decision will be a loss of business opportunities.

RecommendationsIndustry advocates an enhanced protection and enforcement mechanism for pharmaceutical products, e.g.amendmentofact toallowaneffectiveandstructuredenforcementguidelines/mechanismtoavoiddelay, additional burdens and resources for court cases.

The enforcement mechanism will help to curb unfair promotion and sale of generic drugs prior to:Patent expiry of innovator drugs• Courtdecisionsonpatentdisputes.

Counterfeit medicines

The industry applauds the new Pharmacy Act that recognizes the importance to penalize offenders for counterfeit medicines with the increased compound. However, there remains a great need to adequately resource the enforcement and legal systems to effectively exercise this law.

Issues by Sector


RecommendationDeterrent penalty for counterfeiting of medicines with the rapid passage of Pharmacy Act.

Halal Pharmaceuticals

MS 2424 was officially announced in 2011 as the official standards for halal pharmaceuticals production and certification. The guidelines suggest that the approved Halal pharmaceuticals can bear the halal logo in contrary to the current MOH directive that prohibits the affixation of this logo.

The affixation of the halal logo on the product box may raise the issue of conflicting options when less informed patients make a personal preference for halal medicines. This may compromise patient treatment or even incite a refusal to take medicines, particularly in those with chronic illness, over their physician’s recommended prescription.

There remains ambiguity in several areas:• Implementationofthisguidelinetowardpharmaceuticals-prescriptivemedicines.

• JurisdictionofthenationalIslamicauthorityJAKIMunderthisguidelineandhowitwillworkinpartnerwith the MOH who is the official governor of healthcare for the country.

RecommendationsThe Industry is concerned of possible implications that may arise in the government procurement procedures moving away from clinical consideration. The Industry is also concerned that companies participating in this voluntary measure for halal certification would be prioritized in procurement selection.

We recommend an express clause included to indicate that these Halal pharmaceutical guidelines are entirely voluntary, not mandatory, and hence applies only to companies participating on a voluntary basis only.

The industry recommends that the guideline and/or halal medicines not be used to discriminate othermedicines in government procurement and should not be a part of procurement criteria for selection.

The industry also recommends that MOH engages with other relevant healthcare professionals, particularly the clinicians, so as to ensure healthcare management is maintained.

The industry call for caution on the recommendation for halal logo affixation on medicines box as it may lead to non-compliance issue amongst patients.

Industry recommends a dialogue between all stakeholders on the guideline to effectively clarify its applicability and implications on healthcare.

Issues by Sector


5.6 Human Resources

EUMCCI continues to highlight two major issues affecting the labour market (i) insufficient supply of labour to meet the demands of the market and (ii) the lack of quality labour to meet the requirements of employers.

Insufficient supply of labour to meet the demands of the market

EUMCCI is very concerned with the labour shortage problem affecting its member companies, particularly in industries that are heavily dependent on foreign labour. With the government restricting the intake of foreign workers in a move to reduce Malaysia’s dependency on foreign manpower, and the slow legalisation process of foreign workers under the 6P program, many industries are faced with serious manpower issues, especially for jobs at the elementary level and unskilled labour category. This problem is further exacerbated by the unreliability of Malaysian workers.

RecommendationsFacilitate employers’ access to school leavers every year. This can be done through local Labour Offices, implementing a registration system for school leavers (post-PMR, SPM or STPM) who are unable to qualify for further education, particularly in the rural areas of the country. Commitment from the corporate sector can be gained in providing employment and the necessary skill training to this group. In the long run, this will help school leavers join the labour force quickly and efficiently.

Revive apprenticeships, vocational schools and technical training schemes for youth. For those who do not excel academically and do not qualify for tertiary or further education, this will be a good alternative for their future careers. Skills for the manufacturing and construction sectors, as well as hotel and restaurant industries could be taught under such schemes to help meet the labour demands there. Partnerships with companies in the corporate sector can be formed to provide the necessary practical training for students under these schemes.

Implement mini-internships for school students prior to their graduation to better prepare them for employment. A minimum period of two weeks can be considered and it can be carried out during the school holidays. Companies in the private sector can be encouraged to offer this program to students as a corporate responsibility commitment.

Increase the labour force participation rate of women, retirees and students by introducing less stringent and employer-friendly labour laws that encourage the hiring of these groups. The recent proposal of a higher retirement age is perhaps one of the government’s answers to addressing the labour shortage issue. In this respect, EUMCCI maintains that the proposed higher retirement age should not be mandatory but instead, flexibility should be given to employers to re-employ retirees up to a higher age and under less stringent employment laws.

Lack of quality labour to meet requirements of employers

To cope with their labour needs, many EUMCCI companies have been replacing foreign labour with Malaysian workers. Instead of providing much needed workforce stability, companies are generally having to cope with the unreliability and low competence of local hires. The most common complaint of employers is the lack of work ethics, i.e. unpredictable attendance, tardiness and breach of employment contract which make resource planning difficult on a daily basis.

Issues by Sector


In terms of competence, while many initiatives have been undertaken to prepare the younger generation to meet the demands of a knowledge based and technology intensive economy, the large pool of school leavers and fresh graduates that enter the labour market every year are still found wanting in certain areas. Poor verbal and written communication in the English language, lack of critical thinking and analytical skills seem to be the general observations of employers.

Another issue that employers are constantly having to battle is the trend of job-hopping. According to statistics released by the Malaysian Employers Federation (MEF) recently, the staff turnover rate of Malaysian companies is high with an average of 18.8% in the manufacturing sector and 20.8% in the non-manufacturing sector. Companies are having to pay high salaries to retain employees due to market forces, but employers are questioning if the skills, knowledge, experience and work ethics of workers have increased in tandem. The cost of labour is spiraling upwards but the return on investment is questionable.

EUMCCI’s position is that while employers should play an active role in developing the competencies of the workforce, greater efforts should be directed to the development of essential skills and to increase their employability prior to them entering the labour market.

RecommendationsIncrease the quality of the teaching of the English language in our country’s education system, focusing on grammar and verbal communication. English is a common business language and a higher level of proficiency is desired among our younger generation. For a large number of jobs, particularly in the service industry, employers need workers who can converse in decent English. Many job seekers now fail to meet the requirements in this area even during job interviews.

Make industrial training or attachment with companies mandatory for tertiary education students and introduce this concept at secondary level education in schools, as an extra-curricular activity which students can earn merit points from. This will better prepare them for the demands of the working environment when they join the labour force in the future.

Curb the job-hopping trend and rampant breach of contract incidents among workers by introducing a law that mandates a minimum term, e.g. one year, in contracts of service, with clear and enforceable penalties for both parties if breached. This is aimed at ensuring a greater stability in the workforce and preventing workers from abandoning their jobs with little or no notice to employers.

Revamp the education system to focus more on experiential and self-discovery learning among our school children and reduce instructional style teaching at all levels of education. Include syllabus that prepare them for the demands of the working environment, e.g. work ethics, personal discipline and commitment to excellence. Creative teaching methods such as workplace simulation, business games and role playing should be included in the system to inculcate awareness and develop skills for the workplace even at a young age.

Involve companies and employers in dialogues with the Ministry of Education to improve the country’s education system. EUMCCI applauds the recent announcement by the Deputy Prime Minister that the Education Ministry will be holding a nationwide National Education Dialogue series to obtain views from various stakeholders. EUMCCI stresses that it is imperative for the private sector and employers to be involved in this process.

In industries that critically require talents for the advancement of knowledge and capabilities in the country, for example in the IT and Communication industry, EUMCCI recommends that the hiring of foreign talents be made easier, and even encouraged for the purpose of knowledge transfer.

Issues by Sector


In summary, EUMCCI reiterates that labour supply and labour productivity in Malaysia are our main concerns and we maintain that the EUMCCI is committed to collaborative efforts with the Malaysian government in addressing these labour issues.

5.7 Information & Communication Technology

We are at the crossroads of communications and ICT today in Malaysia. Malaysia has reached a critical mass with over 60% household penetration for broadband and we are now aiming for 75% by 2015 which if we go by current indications, could be achieved earlier. Malaysian Communications and Multimedia Commission (MCMC) reports figures of over 123% mobile penetration per 100 of the population and population coverage of over 95% in 2011 Q2.

Customer experience matters more than ever. Over 80% of Customer Service Providers (CSP) named “improved customer experience” as their top priority. As a CSP, customer experience management is the key to driving loyalty, efficiency and revenue streams. Global mobile internet traffic will reach 43 exabytes by 2015, equivalent to 6.3 billion people on the planet downloading two digital books every day.

In Malaysia, the Economic Transformation Programme (ETP) recognises the pivotal role of communications in improving service sectors like healthcare and education. In order to achieve the goal of Gross National Income (GNI) contribution threefold from RM22.0 billion in 2009 to RM57.7 billion by 2020 within the 10 Entry Point Projects (EPPs), execution will be key. A combination of rolling out a well managed broadband facility, a conducive environment for application development, the advent of new enablers like Near Field Communications and Machine to Machine, the currently active role of government in supporting funding and development channels, (e.g. the Malaysian Creative Content Association) will bring an all round success factor to this industry. Whether it be Creative Content, E-Learning or Broadband For All, LTE and related services will be the underlying solution to implementing a high income society in Malaysia.

Furthermore, the Digital Transformation Programme (DTP), which also seeks to raise Malaysia’s GNI from the current 12.5% to 17% by the year 2020 will play a critical role in this industry.

EUMCCI ICT Trends & Recommendations

Green ICT

ICT industry must address its own impact on climate change

The sheer size and scale of the ICT industry creates a significant impact on climate change. At the same time, the industry also can also help to reduce the carbon footprint of other industries (Smart 2020 Report on Low Carbon Economy in the Information Age).

RecommendationsThe ICT industry needs to address its own carbon footprint through mitigation efforts e.g. via renewable energy and waste management. At the same time, through the convergence of the IT and telecommunications technologies, the ICT industry is well positioned to come up with solutions that can help to reduce the climate impact of other industries, e.g. video conferencing solutions and smart building management systems.

Issues by Sector


Partnership at all levels

Cross-sector partnership, whether public-private initiatives or cooperation between, for example, the energy and ICT sectors, is an important prerequisite to providing universal access to both power and ICT in an efficient, sustainable fashion.

Increased awareness of benefits will drive demand for green ICT solutions

There is a need for greater awareness of the benefits of green ICT solutions amongst operators, consumers and government, in order to drive demand for such products and services, and at the same time reducing the carbon intensity of Malaysian industries.

RecommendationEUMCCI ICT Committee to setup a collaborative discussion to raise awareness to Ministry level, with External Stakeholders MCMC, Ministry of Energy, Green Tech & Water (KeTTHA), SMEs, PEMANDU

Talent Development for the ICT Industry

ICT Talent Development

There is a growing need for highly skilled and certified professionals to meet the needs for a fast evolving ICT industry. The rising demand for tech talent in Malaysia is further accentuated by the announcement of global multinationals building their regional facilities in the country. The government in collaboration with the ICT industry need to address this growing trend e.g. by encouraging or incentivising partnerships between industry and local universities.

Nurturing ICT entrepreneurship

There is a need for programs to cultivate initiatives among local entrepreneurs to develop relevant and commercially viable content to leverage on the high quality ICT infrastructure e.g. high speed broadband, that is being rolled out across the country.

RecommendationEUMCCI ICT Committee to establish a dialogue session to develop a working paper with all stakeholders, MCMC, Universities, Multinationals & Large National Corporations, KeTTHA.

Cybersecurity

Focus on Online Child Safety

With more and more Malaysians getting connected to high speed internet, there is a need to recognise the risks and threats arising from this trend, e.g. corporate fraud, cyberterrorism, online child safety.

The ICT industry and government should work together to address this issue in a more comprehensive manner. At the moment, there is strong focus on corporate fraud and cyberterrorism, however, not much is being done in relation to online child safety. There is a need for appropriate laws and regulations that help to protect Malaysian children against online threats such as cyber bullying and cyber grooming.

Issues by Sector


RecommendationEUMCCI ICT Committee to initiate a closed door dialogue with MCMC, KeTTHA to push this initiative.

Further Areas Where EUMCCI can help – Bringing European experience to Malaysia

The EUMCCI will carry out a series of programs in the following areas to bring the business community closer together in Malaysia• SupportTowardsDigitalMalaysiaprogramme(includingtopicslikeBroadband&Sustainability)

• InternationalTrade

• Cybersecurity

• SupporttowardsinfrastructureprojectslikeGreaterKL

5.8 Logistics

Logistics is the economic backbone of the country, facilitating efficient and cost effective international trade and furthermore providing a competitive advantage for industries located in Malaysia. Malaysia’s logistics sector is also an important sector for its economy, contributing to 3.3% total GDP in 2011. Malaysia’s seaports have claimed a substantial market share of transshipment traffic for the South East Asia region, which was made possible through its strategic location in Asia, its logistics infrastructure and operational performance. Malaysia’s total cargo volumes were estimated at 495.29 million tonnes in 2011 with more than 90% of total freight traffic in 2011. Port Klang, Malaysia’s busiest container port, contributed 39.2% of total sea throughput in 2011 while Port Tanjung Pelepas contributed 22.7%. It has been forecast that the Malaysian logistics industry is expected to grow 10.3% to RM129.93 billion in 2012 from an estimated RM117.8 billion in 2011, due to strong government support on logistics-related development and economic growth fuelled by foreign investments in Malaysia. Furthermore, it is forecast to grow at a compound annual growth rate (CAGR) of 11.6% to reach RM196.5 billion in 2015 and RM203.71 billion in 2016 respectively. This is largely due to the import-export forwarding, shipping and airfreight related businesses, high technology and capital intensive projects under the 10th Malaysia Plan and Economic Transformation Program (ETP), which acts as a catalyst in creating opportunities for Malaysia’s logistics market.

The liberalisation programme under The Association of Southeast Asian Nations (ASEAN) starting in 2013 for the logistics sector will create an ASEAN Economic Community by 2015 (a single market), where ASEAN will be a region with free movement of goods, services, capital, investment and skilled labour. As the liberalisation of the various logistics services will commence from 2013, 2012 will be a critical year for Malaysia in preparation for the ASEAN Free Trade Agreement (AFTA). With an increase in importance and given they country’s strategic location in ASEAN, it is crucial to qualify and quantify Malaysia’s key strengths in logistics.

The EUMCCI 2012 Key Logistics Spots nationwide survey shows that Malaysia is particularly strong in the availability of general warehouse space, the accessibility and connectivity of logistics locations and the availability of logistics education. However, the areas in need of improvement are the transparency, efficiency and facilitating role of Government and ICT infrastructure.

For Malaysia in particular, the logistics sector, strengthened by capitalisation on the country’s competitive advantages (quality infrastructure, solid manufacturing and growing service industries, competitive pricing and introduction of ICT enhancements in numerous nodal points), could make Malaysia an attractive logistics hub in ASEAN.

Issues by Sector


Preparing the Logistics Sector for AFTA

AFTA brings a single market and production base, turning the diversity that characterizes the region into opportunities for business complementation and making the ASEAN a more dynamic and stronger player in global supply chains. It seeks to accelerate regional integration in priority sectors, such as air travel, automotives, e-commerce, electronics amongst others; to facilitate movement of business persons, free flow of skilled labour and talents, and to facilitate efforts to create zero tariffs on intraregional trade to create a fully integrated market. This also allows other Asian countries to provide logistic services (like transportation) in Malaysia and Malaysia to provide logistics service in neighbouring countries.

An outcome observed following the European unification, is that new logistics clusters emerged in various countries, based on static comparative advantages such as location and availability of land and dynamic advantages such as facilitating role of customs, subsidies and education. As other ASEAN countries such as Thailand and Vietnam strongly improve their logistics infrastructure and networks, Malaysia will face high competition from these manufacturing hubs in becoming an attractive proposition as a logistics hub under AFTA. The pertinent issue is this: what happens if the above is not addressed? Malaysia will receive less foreign direct investment (FDI) in regional distribution centres in comparision to other ASEAN countries, and may also lose revenue through the investment in neighbouring countries by Malaysian logistics companies to a greater degree than they invest at home.

Malaysia wants to attract local and foreign investment in Integrated Logistics Services under AFTA and would like to become an important hub for manufacturing and services. However, Malaysia will be up against the logistics sectors of neighbouring countries such as Thailand and Vietnam, which have been facilitated by their respective governments, who have been preparing their logistics sectors for AFTA for the last 5 years. Additionally, Singapore also has a strong logistics hub with growth targets, heavily supported by the Singapore government.

The question that needs to be addressed is how Malaysia can leverage its strong logistics infrastructure and logistics service providers to create a competitive advantage of the logistics sector in AFTA.

Issues• HighcostoflabourinMalaysiaascomparedtootherASEANcountriesandalackinavailabilityoflabour

that meets the demands of the logistics industry

• Regulatory functionofcustoms, leadstocomplexities inefficient thirdpartyandfourthparty logisticsoperations

• TheneedtostrengthenthecurrentICTinfrastructureinbothPeninsulaandEastMalaysia

• The need to heighten and reinforce transport and warehouse security in both Peninsula and EastMalaysia

Recommendations• To focusonstrengtheningandattracting international logisticsserviceproviders thatsupportexisting

key clusters of Malaysia, like in oil and gas and palm oil.

• ConductdialoguesessionswiththelogisticsindustrytopreparetheindustryforAFTA.

• Increaseemphasisoneducationandresearchinlogisticsandsupplychainmanagementtoincreasetheskills of the logistics sector.

Green Logistics

Green initiatives are becoming more and more important to importers from Asia and these initiatives are starting to be adopted by companies or authorities in Malaysia to develop sustainable logistics and mobility

Issues by Sector


strategies. The parties concerned are addressing environmental pollution, CO2 emission reduction, as well as the reduction of energy consumption and the use of renewable energy (e.g. wave, wind and solar).

Various countries have started with initiatives such as better warehouse design, use of natural light through warehouse roofing, use of recycled materials as building materials and finishing, solar panels to reduce energyconsumption,windturbines,useofLED/LVDlightsandcollectionofroofwater.ManycountriesinEurope have also started green transportation initiatives, by moving to cleaner fuels for their trucks (like bio-diesel or gas), promoting the use of lower polluting sea and river vessels instead of trucks, coordinated transport and starting in big cities, green city logistics schemes.

One of the criteria for foreign investment following the liberalisation of the ASEAN logistics sector will be the existence of and support for, green logistics. Singapore, Japan and Hong Kong have made already strong commitmentstoagreenlogisticsprogramandtheexistenceofinternationalGreen/ECOstandardssuchasUSGBC LEED 2009 (for green buildings) and ISO 14001 show that this is a way of thinking that will only continue. However Malaysia is currently lagging in this area, given that no commitments towards liberalising the postal and courier services under the Uruguay Round of AFTA negiotions have been made, therefore putting themselves behind neighbouring countries.

Issues• ToaddresstheexistinggreenincentivesgiventoMalaysiancompaniestostartadoptinggreenlogistics

and their expectations from the Malaysian government to realize the green initiatives;

• Toaddress thepotential forgreen logistics inMalaysiawhentherehasbeenashift tomoreoffshoremanufacturing and more frequent Just in Time (JIT) deliveries, resulting in negative impacts on ecological performance of supply chain

• ThecostseffectivenessofgreenlogisticsinMalaysia

• The lack of local support and spearheading of green logistics in Malaysia and a lack of primaryinfrastructure in place to develop green logistic solutions.

Recommendations• TheMalaysianLogisticsCouncil toestablishaGreenLogisticsTaskForceto tableandadvocatethe

green incentives for the Malaysian Government Budget 2013. Experience from Europe underlines the effectiveness of centrally administered monetary incentive schemes to boost policy compliance among the industry. This would be an efficient way of rapidly promoting green logistics and transport in the country.

• Toconducta surveyon theexpectationsofMalaysiancompaniesand toanalyse the variousGreenLogistics Models in order to ascertain and implement the most apt for the Malaysian landscape.

• Preparealongtermroadmapto‘goinggreen’thatfitsintherespectiveindustry’sbusinessmodel,andseeks to achieve a more efficient method in measuring carbon footprint and implementing diverse strategies to mitigate the environmental impact of operations and transport. Corporate environmental awareness can take various forms – from large scale procedural revisions to simple improvements to enhancements in efficiency (kilometres driven or loading capacity usage).

• ToorganiseatrainingprogramonGreenLogisticssimilartotheASEANMemberCountries(EALM)todeepen the understanding of the concepts and techniques of green logistics as well as the efforts being made by global companies in this field, enabling participants to upgrade their management capabilities to reduce environmental impact and improve the physical distribution efficiency of their company’s supply-chain.

• European experts could assist Malaysian companies in remodeling logistics processes in order toimprove an organisation’s cost effectiveness and lessen its environmental impact via EUMCCI’s Expert

Issues by Sector


Transfer Sessions. For example: the introduction of fuel cell forklifts and hybrid trucks in a fleet and the maximization of loading factors, surface utilization and redesigning the distribution network without comprising JIT deliveries.

• To integrate environmental values into corporate decision making processes and attributing them ahigher priority: the recently released Cone Cause Evolution Study eradicates any doubt as to the importance of Corporate Social Responsibility (CSR), such as environmental awareness. In the 2010 study, 85% of those surveyed said they had a more positive image of a product or company if it supported a cause they care about. Similarly, the Deloitte Consumer Purchase Decision Factors Study unveiled that growing numbers of consumers attribute a high importance to the eco-friendliness of a company when it comes to brand perception. This needs to translate into organisational management in general and in light of a globalising world, into a revised handling of logistics in specific.

• Malaysiancompaniesshouldconsideradoptingthenecessarytelematicssuchastheintegrateduseoftelecommunications and informatics to reduce their carbon footprint in the long run.

• Developmentof thecollaborationbetweentheMalaysiangovernment, thedomesticand internationallogistics industry and non-governmental organisations to advocate greener logistics nationwide.

Lack of integrated transportation strategy to cope with future demand and meeting environmental requirements

Issues• Demandfortransportgrowthisaresultofeconomicdevelopmentandpopulationgrowth

• Transportsectorinvestmentsarehighlycapital-intensivewithlongleadtime.

• Malaysia has someof thebest seaports, airports and roads inSouthEastAsia (railwayandpublictransport are however lacking somewhat).

• Thefuelsubsidiesaredrivingbehaviourtowardsindividualtransportincars.

• Thevariousmodesof transport (road,airandsea)are individuallygoodbutnotverywellconnected;overall transportation needs and environmental considerations are not well regarded. Possible underlying reason is the individual government agencies overseeing individual modes of transportation.

• Thearehugeeconomiclossesatanationallevelfromwaitingtimescausedbytraffic.

Recommendations• Malaysia needs conduct an integrated study to evaluate the transportation needs as a result of the

Economic Transformation Program and Malaysia’s goal to become a high income nation by 2020. The integrated study should evaluate what investments are needed and how investments are best channelled towards the most environmentally friendly transportation of both goods and passengers.

• A long term investmentstrategyacross thevariousmodesof transportcommitted tomeeting futuretransport demands in the most environmentally friendly manner.

• Reviewingsubsidyandincentiveschemestoensurethedesiredbehaviourisencouraged.

The above premises would be in line with statements made by the Honourable Prime Minister of Malaysia, Dato’ Sri Mohd Najib bin Tun Haji Abdul Razak that Malaysia will fulfil its pledge to achieve the 40% reduction in CO2 emission intensity by 2020 based on 2005 levels. Europe, as the global leader in green technology innovation, application and policy incentive schemes, can lend a helping hand to Malaysia in its process to go green, and not just logistically. Enhanced dialogue and policy exchange can greatly accelerate the national efforts in sustainable and renewable energy as well as promote the supply and usage of green technologies.

Issues by Sector


5.9 Oil & Gas

EU companies’ access and partnerships with PETRONAS

PETRONAS’ leading position, both in Malaysia and globally, affords it the privilege of being able to implement industry best practices that incorporate good governance, setting the stage for a more open and competitive business landscape.

While the implementation of iLINTAS (Integrated Licensing Information and Tendering Administration System) has greatly improved the process for potential vendors and partners to engage with PETRONAS, with the push for more foreign direct investment in Malaysia, it is timely for PETRONAS to accelerate its engagement with a greater sphere of organisations that could assist in its growth as a global player.

In the current economic climate, EU companies are increasingly looking to South East Asia as a region to invest in and grow their businesses. With competitiveness increasing within ASEAN itself, PETRONAS’ clarity and openness regrading the rules of stakeholder engagement and communications will fundamentally improve and pave the way for EU companies to have more direct access to and trade with PETRONAS; facilitating more open and direct bilateral trade and partnerships; leading to a potential increase in foreign investment in Malaysia.

Open and direct access

In many cases of engagement with PETRONAS, EU companies are encouraged to form joint ventures or partner with agents who have majority Bumiputera shareholding and the necessary licenses to enable to business engagement with PETRONAS.

EU companies would like to have the option to deal directly with PETRONAS without necessarily having to consider joint ventures and agents.

RecommendationWe believe that direct access to PETRONAS for EU companies in Malaysia would benefit all parties.

It is recommended that PETRONAS review the process and consider options to engage and conduct business directly with PETRONAS.

The current model of engagement could be developed to become a system with open access to increase economic efficiency and an appetite for more engagement and investment in Malaysia.

EUMCCI would be happy to engage with PETRONAS to consult and provide detailed feedback on improvements on the current processes.

Clarity and transparency of requirements and processes

Recent moves towards liberalising the economic model are greatly welcomed by the EU business community. While it is understood and respected that certain policies need to remain in place to ensure that the nation continues to grow according to plan, it is at times challenging for companies to identify and define the systematic details behind the requirements for a vendor to register with PETRONAS as well as the process by which this selection is made. This contributes towards uncertainties surrounding the rules of engagement with PETRONAS.

Issues by Sector


RecommendationIt is recommended that PETRONAS provide clear communications and consistent guidelines for potential vendors’ reference prior to the commencement of the registration and licensing process. Increased clarity and transparency around these requirements and processes would facilitate a deeper understanding of the rules of engagement and contribute towards a more effective and productive business ecosystem.

Website registration and multi languages for license application and approval process (Bahasa Malaysia and English)

We applaud PETRONAS for its development of the supplier registration process. The move away from eLaris to the new Registration of Suppliers (ROS) and Supplier Self Service (SUS) sites, which are mostly in English, is a great step forward for facilitating trade and investment with the international communities.

Note: As of January 2012, PETRONAS implemented 2 new systems to for Registration of Suppliers (ROS) and Supplier Self Service (SUS). Assessment of these new systems in relation to this issue is in progress.

RecommendationIt is recommended that PETRONAS continue its development of its one-stop site for registration and licensing as well as to provide all relevant documentation in English. For example, the current supplier declaration details are currently in Bahasa Malaysia and could be detailed in English as well. This will encourage and facilitate participation by a wider range of industry players, increasing the potential for technology transfer and foreign direct investment in Malaysia.

5.10 Wines and Spirits

The EUMCCI Wines and Spirits Committee is comprised of market leading companies engaged in the importing and selling of wines and spirits in Malaysia. The members represent more than 50 premium brands of wines and spirits that represent a significant proportion of wines and spirits imported and consumed in Malaysia.

The recommendations have been developed with the following objectives in mind:• IncreaseoverallGovernmentrevenuebyimprovingtaxcomplianceandreducingnon-taxpaidactivities

of counterfeit and contraband. Actual government revenue from excise tax in 2008 and 2009 was RM18.6 million and RM18.7 million, respectively. Industry intelligence suggest that the collection of Government revenue from excise should actually be about RM200 million per year

• Improveconsumersafetybybringingmorevolumesintolegallyregulatedandmonitoredchannels

• CompliancewithWTOrecommendationsontaxation(andinlinewithWHOandOECDbestpractices)

• ReinforcingMalaysia’simageasaleadingemergingeconomy

• FacilitatingnegotiationsofaMalaysia-EUFTA

• Removemarketdistortionsandencouragingfairtrade

• RespectfuloftheMuslimcommunityaswellasthepluralityoftheMalaysiansociety

• ConsistentwithresponsibledrinkingandMalaysia’spublichealthgoals.

Issues by Sector


Current Tariffs and Duty Structure and Market Distortions

Currently, there are 8 different import tariff rates for spirits and 4 different rates for wines. The current rates are a combination of unitary and specific taxes as can be seen :

Product Classification Import Duty

Spirits

Brandy and whisky 58 per litre

Rum, gin and vodka 55 per litre

Liqueurs and cordials

≤ 57° abv 93.5 per LPA

Other 64.5 per LPA

Other

Samsu (incl. Benedictine DOM) 26.5 per LPA

Arrack 20 per litre

Bitters 30 per litre

Other 0.5° <abv<1.14° 3 per litre

Other 64.5 per LPA

Product Classification Import Duty

Wine

Wine

Sparkling wine 23 per litre

Other wine 7 per litre

Other Fermented

Cider/perry 7 per litre

Rice wine 25.5 per LPA

Mead 23 per litre

Fruit juice wines 108.5 per LPA

The current excise structure has:• 13differentratesforwinesandspirits

• AcombinationofAd-Valorem,unitaryandspecifictaxes

• Thismakesitoneofthemostadministrativelycomplexregimeintheworld

• Thebulkofthevolume(over80%)fallsinonecategoryforwinesandspirits,makingtheexcisesystemunnecessarily complicated

Issues by Sector


The complex excise structure and the resulting high tax burdens encourages the proliferation of non-tax paid activities, i.e. contraband and counterfeiting. The very high taxation is creating an incentive for illicit traders to profit from avoiding tax by selling low priced alcohol to consumers. The high taxation is also encouraging the production of counterfeited goods. A recent survey suggests a 20% counterfeit rate in Malaysia, one of the highest in Asia.

A key principle in tax policy is equity. Similar products should be subject to similar taxation burdens. However, the rates vary greatly between similar and competing products. This also encourages consumption of poor quality spirits, such as cheap compounded hard liquor.

The current system is poor for the government because it is:• Inefficient-Government’srevenuelossandincreaseinnon-taxpaidactivities

• InconsistentwithWTOobligations-unequaltreatmentamongcompetingproducts

• InconsistentwithresponsibledrinkingandMalaysia’spublichealthgoals

• Unnecessarilycomplex-forbothCustomsandbusiness

Issues by Sector


Poor for consumers because it:• Creates risks for consumers - high incentives for smuggling put large volumes outside the normal

regulatory testing and monitoring system

• Forces consumers including tourists being less able to afford the quality of beverages they wouldnormally enjoy in other markets

Recommendations• GradualeliminationofimporttariffsonallwinesandspiritsinthecontextoftheMalaysia-EUFTA

• Theeliminationof import tariffswouldsignificantlyreducetotalburdenof taxationon legally importedgoods - reduce incentive for smuggling which will contribute to increasing government revenue

• TheconcessionwouldnotbecostlytoMalaysiabecause:• Minimalfiscal impact: import tariffs revenue for2008and2009wereRM15.2millionandRM16.2

million, respectively

• Aholisticreformoftheexcisetaxsystemthroughsimplificationandharmonizationofcurrentsystemby:

• Transforming the complex formula (ad valorem + specific/unitary) into a unique specific rate ofRM110 per LPA (litre of per alcohol)

• Thisratehasbeencalculatedtoensureoverallexcisetaxneutrality and will in fact increase the actual excise rate per litre on a majority of wines and spirits categories

• Immediateremovaloftaxstampsforallalcoholicbeverages

• Industryandgovernmentshareacommongoalinminimisingcounterfeitandcontraband

• UnfortunatelyTaxStampsarenotaneffectivesolutioninpreventingsalesofcontrabandandcounterfeitalcohol as the incentive is high for illegal operators to circumvent the system

• Thetaxstampsarenegativeforthegovernmentandbusinessesasthesystemis:

• Ineffectiveatensuringcomplianceandpaymentoftaxes

• CostlyandInefficienttorun

• Ineffectdiscriminatory,penalizinglegalbusinesses

• Theremovalofthetaxstampwillbeapositivereformtoincreaseadministrativesimplicityforindustryand for the government

• Industry iswilling toworkwith thegovernment tousealternative systems to monitor the market and reduce counterfeit and contraband

• For example cooperation on anti-counterfeit technologies, enforcement and prosecution and theimplementation of traceability systems

IP Rights, GI Protection and Traceability information

Recommendations:• StrongenforcementofIPRagainstcounterfeitedbrandedproducts

• FullprotectionofitsprincipallytradedgeographicalindicationsinMalaysia(asisbeinggrantedbyotherAsian countries - e.g. recognition recently granted for Scotch whisky in Vietnam, Thailand and China)

• Institute legalprotectionforproducers’voluntarytraceability information(i.e. lotcodesonproducts)–including specific sanctions in place for third parties who remove or tamper with such information. Such systems form part of producers consumer safety systems to enable product recalls, monitoring etc.

Issues by Sector


The recommendations would:• Improve the ease of doing business through simplifying and harmonising the current complex and

burdensome tax system for wines and spirits. It would also help reduce administrative burden and improve government efficiency. The basis of taxation on alcohol content is an easily determined objective criteria

• Ensureexcisetaxneutralperlitreofalcohol

• IncreasegovernmentrevenueonwinesandspiritsfromaboutRM38millionperyear(RM16milliononimport, RM19 million on excise, RM3 million on sales tax) to about RM230 million (RM200 million on excise and RM30 million on sales tax)

• Ensurestableandconsistentrevenuesovertimeasalcoholiccontentisfarlessvolatilethanvalue

• Reducethenon-taxactivitiesofcontrabandandcounterfeit

• EnsurethattaxonproductswithsimilaralcoholcontentwouldbethesameandthuscomplywiththeWTO principle of non-discrimination between local and imported products

• BeconsistentwithrecommendationofWHOtointroducespecifictaxesasawayofdecreasingharmfulmisuse of alcohol thus addressing health policy goals

• FacilitatenegotiationsundertheMalaysia-EUFTA.Marketaccessforwinesandspiritsisanimportantissue for many key EU Member States

• Ensurepositivespillovereffectsforthetourism,retailandrestaurantsectors

• Providegreatercertainty,transparencytogovernment,industryandconsumersandfacilitatebusinesses


Appendix


Appendix

Table A1.The Global Competitiveness Index 2011-2012 rankings and 2010-2011 comparisons© 2010 World Economic Forum

Country/EconomyGCI 2011-2012 GCI 2011-2012 rank

among 2010 countriesGCI 2010-2011 rank*

Rank Score

Switzerland 1 5.74 1 1Singapore 2 5.63 2 3Sweden 3 5.61 3 2Finland 4 5.47 4 7United States 5 5.43 5 4Germany 6 5.41 6 5Netherlands 7 5.41 7 8Denmark 8 5.40 8 9Japan 9 5.40 9 6United Kingdom 10 5.39 10 12Hong Kong SAR 11 5.36 11 11Canada 12 5.33 12 10Taiwan, China 13 5.26 13 13Qatar 14 5.24 14 17Belgium 15 5.20 15 19Norway 16 5.18 16 14Saudi Arabia 17 5.17 17 21France 18 5.14 18 15Austria 19 5.14 19 18Australia 20 5.11 20 16Malaysia 21 5.08 21 26Israel 22 5.07 22 24Luxembourg 23 5.03 23 20Korea, Rep. 24 5.02 24 22New Zealand 25 4.93 25 23China 26 4.90 26 27United Arab Emirates 27 4.89 27 25Brunei Darussalam 28 4.78 28 28Ireland 29 4.77 29 29Iceland 30 4.75 30 31Chile 31 4.70 31 30Oman 32 4.64 32 34Estonia 33 4.62 33 33Kuwait 34 4.62 34 35Puerto Rico 35 4.58 35 41Spain 36 4.54 36 42Bahrain 37 4.54 37 37Czech Republic 38 4.52 38 36Thailand 39 4.52 39 38Tunisia 40 4.47 40 32Poland 41 4.46 41 39Barbados 42 4.44 42 43Italy 43 4.43 43 48Lithuania 44 4.41 44 47Portugal 45 4.40 45 46Indonesia 46 4.38 46 44Cyprus 47 4.36 47 40Hungary 48 4.36 48 52Panama 49 4.35 49 53South Africa 50 4.34 50 54Malta 51 4.33 51 50Sri Lanka 52 4.33 52 62Brazil 53 4.32 53 58Mauritius 54 4.31 54 55Azerbaijan 55 4.31 55 57India 56 4.30 56 51Slovenia 57 4.30 57 45Mexico 58 4.29 58 66Turkey 59 4.28 59 61Montenegro 60 4.27 60 49Costa Rica 61 4.27 61 56Iran, Islamic Rep. 62 4.26 62 69Uruguay 63 4.25 63 64Latvia 64 4.24 64 70Vietnam 65 4.24 65 59Russian Federation 66 4.21 66 63Peru 67 4.21 67 73Colombia 68 4.20 68 68Slovak Republic 69 4.19 69 60


Appendix

Country/EconomyGCI 2011-2012 GCI 2011-2012 rank

among 2010 countriesGCI 2010-2011 rank*

Rank Score

Rwanda 70 4.19 70 80Jordan 71 4.19 71 65Kazakhstan 72 4.18 72 72Morocco 73 4.16 73 75Bulgaria 74 4.16 74 71Philippines 75 4.08 75 85Croatia 76 4.08 76 77Romania 77 4.08 77 67Albania 78 4.06 78 88Macedonia, FYR 79 4.05 79 79Botswana 80 4.05 80 76Trinidad and Tobago 81 4.00 81 84Ukraine 82 4.00 82 89Namibia 83 4.00 83 74Guatemala 84 4.00 84 78Argentina 85 3.99 85 87Honduras 86 3.98 86 91Algeria 87 3.96 87 86Georgia 88 3.95 88 93Lebanon 89 3.95 89 92Greece 90 3.92 90 83El Salvador 91 3.89 91 82Armenia 92 3.89 92 98Moldova 93 3.89 93 94Egypt 94 3.88 94 81Serbia 95 3.88 95 96Mongolia 96 3.86 96 99Cambodia 97 3.85 97 109Syria 98 3.85 98 97Gambia, The 99 3.84 99 90Bosnia and Herzegovina 100 3.83 100 102Ecuador 101 3.82 101 105Kenya 102 3.82 102 106Bolivia 103 3.82 103 108Benin 104 3.78 104 103Tajikistan 105 3.77 105 116Ethiopia 106 3.76 106 119Jamaica 107 3.76 107 95Bangladesh 108 3.73 108 107Guyana 109 3.73 109 110Dominican Republic 110 3.73 110 101Senegal 111 3.70 111 104Suriname 112 3.67 n/a n/aZambia 113 3.67 112 115Ghana 114 3.65 113 114Nicaragua 115 3.61 114 112Cameroon 116 3.61 115 111Malawi 117 3.58 116 125Pakistan 118 3.58 117 123Cape Verde 119 3.58 118 117Tanzania 120 3.56 119 113Uganda 121 3.56 120 118Paraguay 122 3.53 121 120Belize 123 3.52 n/a n/aVenezuela 124 3.51 122 122Nepal 125 3.47 123 130Kyrgyz Republic 126 3.45 124 121Nigeria 127 3.45 125 127Mali 128 3.39 126 132Côte d’Ivoire 129 3.37 127 129Madagascar 130 3.36 128 124Timor-Leste 131 3.35 129 133Zimbabwe 132 3.33 130 136Mozambique 133 3.31 131 131Swaziland 134 3.30 132 126Lesotho 135 3.26 133 128Burkina Faso 136 3.25 134 134Mauritania 137 3.20 135 135Yemen 138 3.06 n/a n/aAngola 139 2.96 136 138Burundi 140 2.95 137 137Haiti 141 2.90 n/a n/aChad 142 2.87 138 139

Source: The World Economic Forum


Appendix

Year Export ValueRM

(Billion)

Export Growth

Rate(%)

Import Value RM

(Billion)

Import Growth

Rate(%)

Total Trade Value

RM (Billion)

Total Trade Growth

Rate(%)

Trade Balance

ValueRM (Billion)

1991 94.50 18.60 100.83 27.4 195.33 23 -6.33

1992 103.66 9.70 101.44 0.6 205.1 5 2.22

1993 121.24 17 117.4 15.7 238.64 16.4 3.83

1994 153.92 27 155.92 32.8 309.84 29.8 -2

1995 184.99 20.2 194.34 24.6 379.33 22.4 -9.36

1996 197.03 6.5 197.28 1.5 394.31 3.9 -0.25

1997 220.89 12.1 220.94 12 441.83 12.1 -0.05

1998 286.56 29.7 228.12 3.3 514.69 16.5 58.44

1999 321.56 12.2 248.48 8.9 570.04 10.8 73.08

2000 373.27 16.1 311.46 25.3 684.73 20.1 61.81

2001 334.28 -10.4 280.23 -10 614.51 -10.3 54.05

2002 357.43 6.9 303.09 8.2 660.52 7.5 54.34

2003 397.88 11.3 316.54 4.4 714.42 8.2 81.35

2004 481.25 21 399.63 26.3 880.89 23.3 81.62

2005 536.23 11.4 432.87 8.3 969.1 10 103.36

2006 589.24 9.9 478.15 10.5 1,067.39 10.1 111.09

2007 604.30 2.6 502.04 5 1,106.34 3.6 102.26

2008 663.01 9.7 519.8 3.5 1,182.82 6.9 143.21

2009 552.52 -16.7 434.67 -16.4 987.19 -16.5 117.85

2010 638.82 15.6 528.83 21.7 1,167.65 18.3 109.99

2011 694.55 8.7 574.23 8.6 1,268.78 8.7 120.32

Source: Ministry of International Trade and Industry, Ministry of Finance, Malaysia

Table A2.Malaysia's Total Trade 1991 - 2011


Appendix

Year Export ValueRM

(Billion)

Export Growth

Rate(%)

Import Value RM

(Billion)

Import Growth

Rate(%)

Total Trade Value

RM (Billion)

Total Trade Growth

Rate(%)

Trade Balance

ValueRM (Billion)

1991 14.45 17.3 15.55 22.6 30 20 -1.11

1992 15.92 10.2 13.97 -10.2 29.89 -0.4 1.95

1993 18.13 13.9 15.12 8.2 33.25 11.2 3.01

1994 22.24 22.7 23.29 54 45.53 36.9 -1.05

1995 26.65 19.8 30.27 30 56.92 25 -3.63

1996 27.44 3 28.94 -4.4 56.38 -1 -1.5

1997 32.36 17.9 31.87 10.1 64.23 13.9 0.49

1998 47.55 46.9 27.62 -13.3 75.18 17 19.93

1999 51.56 8.4 29.55 7 81.11 7.9 22

2000 52.22 1.3 34.28 16 86.5 6.7 17.94

2001 47.35 -9.3 36.52 6.5 83.87 -3 10.83

2002 45.43 -4.1 35.28 -3.4 80.71 -3.8 10.15

2003 50.09 10.3 37.76 7 87.85 8.8 12.32

2004 60.68 21.1 47.89 26.8 108.57 23.6 12.78

2005 63.3 4.3 50.37 5.2 113.67 4.7 12.93

2006 75.53 19.3 54.62 8.4 130.15 14.5 20.9

2007 77.71 2.9 59.84 9.6 137.55 5.7 17.87

2008 74.8 -3.7 61.61 3 136.42 -0.8 13.19

2009 60.1 -19.7 50.77 -17.6 110.87 -18.7 9.33

2010 68.69 14.3 54.12 6.6 122.81 10.8 14.57

2011 71.95 4.7 59.97 10.8 131.91 7.4 11.98


Table A3.Malaysia’s Trade with European Union 1991 - 2011


Appendix

Table A4.Malaysia's Exports by Sector 2010 - 2011

Description2011 2010

ValueRM (Billion)

Share(%)

Change(%)

ValueRM (Billion)

Share(%)

Change(%)

MANUFACTURED GOODS 470.3 67.7 2 461 72.2 11.6Electrical & Electronic Products 236.5 34.1 -5.4 249.9 39.1 8.6

Chemicals & Chemical Products 47.2 6.8 16 40.7 6.4 23.7

Machinery, Appliances & Parts 23.6 3.4 11.1 21.2 3.3 12.6

Manufactures Of Metal 21.5 3.1 16.8 18.4 2.9 26.5

Optical & Scientific Equipment 18.8 2.7 2.4 18.3 2.9 38

Rubber Products 18.1 2.6 13.2 16 2.5 28.4

Wood Products 14.5 2.1 -2.2 14.8 2.3 4.8

Processed Food 13.5 1.9 12.6 12 1.9 11.6

Textiles & Clothings 10.8 1.6 15.9 9.3 1.5 4.4

Iron & Steel Products 10.2 1.5 20.4 8.5 1.3 -4.1

Manufactures Of Plastics 10 1.4 6.2 9.4 1.5 14

Transport Equipment 9.2 1.3 -1 9.3 1.5 -4.2

Jewellery 7.2 1 1.7 7 1.1 23.9

Non-Metallic Mineral Products 5.7 0.8 14.9 5 0.8 -4.9

Petroleum Products 3.6 0.5 6.2 3.4 0.5 20.6

Paper & Pulp Products 3.4 0.5 7 3.1 0.5 11.2

Beverages & Tobacco 3.1 0.4 11.5 2.8 0.4 13.9

Other Manufactures 13.5 2 13.8 11.9 1.9 5.3AGRICULTURAL GOODS 94.2 13.6 32.6 71.1 11.1 28.3Palm Oil 64.8 9.3 35.9 47.7 7.5 24.1

Crude Rubber 13.3 1.9 44.2 9.2 1.4 106.5

Saw Logs & Sawn Timber 5.2 0.7 -3.3 5.4 0.8 4.8

Other Vegetable Oil 3.2 0.5 27.3 2.5 0.4 20.4

Seafood, Fresh, Chilled Or Frozen 2.1 0.3 5.8 2 0.3 18.9

Live Animals & Meat 0.7 0.1 11.9 0.6 0.1 7.3

Vegetables, Roots, Tubers 0.5 0.1 4.7 0.5 0.1 7.3

Hides, Skins And Furskins, Raw 0 0 23.2 0 0 22

Cereal 0 0 35 0 0 83.9

Other Agricultures 4.3 0.6 39.3 3.1 0.5 22.7MINING GOODS 125.4 18.1 22.3 102.5 16.1 29.3LNG 50 7.2 29 38.7 6.1 33.5

Refined Petroleum Products 36.5 5.3 27.2 28.7 4.5 30.2

Crude Petroleum 32.9 4.7 6.1 31 4.9 21.3

Tin 3.5 0.5 50.4 2.3 0.4 87.9

Metalliferous Ores And Metal Scrap 1.2 0.2 52.7 0.8 0.1 55.1

Crude Fertilizers & Crude Minerals 1.1 0.2 20.6 0.9 0.1 -0.4

Other Mining 0.2 0 181.5 0 0 97.9OTHERS 4.7 0.7 11.9 4.2 0.7 -13.6Total Exports 694.5 100 8.7 638.8 100 15.6



Appendix

Table A5.Malaysia’s Imports by Sector 2010 - 2011

Description2011 2010

ValueRM (Billion)

Share(%)

Change(%)

ValueRM (Billion)

Share(%)

Change(%)

MANUFACTURED GOODS 447.8 78 4.1 430.3 81.4 19.9Electrical & Electronic Products 177.9 31 -6.1 189.4 35.8 18.5

Chemicals & Chemical Products 51.1 8.9 13.5 45 8.5 21.9

Machinery, Appliances & Parts 47 8.2 7 43.9 8.3 14.7

Manufactures Of Metal 32.9 5.7 13.2 29 5.5 33.7

Transport Equipment 31.3 5.4 10.6 28.3 5.4 16.3

Iron & Steel Products 24.8 4.3 16.6 21.3 4 19.2

Optical & Scientific Equipment 18.3 3.2 6.3 17.2 3.3 23.6

Processed Food 13.1 2.3 21.2 10.8 2 20.1

Paper & Pulp Products 6.6 1.2 -1 6.7 1.3 20.3

Textiles & Clothings 6.6 1.1 27.8 5.2 1 15.5

Manufactures Of Plastics 6.6 1.1 11.9 5.9 1.1 17

Non-Metallic Mineral Products 5.9 1 23.3 4.7 0.9 20

Rubber Products 5.8 1 33.4 4.4 0.8 33.4

Jewellery 4.3 0.8 24.5 3.5 0.7 183.7

Beverages & Tobacco 2.2 0.4 38.3 1.6 0.3 16.2

Petroleum Products 1.5 0.3 -33.3 2.3 0.4 38.1

Wood Products 1.5 0.3 6.2 1.4 0.3 21.5

Other Manufactures 10.6 1.8 8.4 9.8 1.8 2.6AGRICULTURAL GOODS 42 7.3 26.3 33.3 6.3 19.5Palm Oil 9.1 1.6 59.5 5.7 1.1 54

Crude Rubber 7 1.2 21.6 5.8 1.1 29.6

Cereal 6.1 1.1 18 5.2 1 -0.1

Seafood, Fresh, Chilled Or Frozen 2.4 0.4 20.2 2 0.4 8.2

Live Animals & Meat 2.2 0.4 14.5 2 0.4 16.6

Vegetables, Roots, Tubers 2.1 0.4 -3.5 2.2 0.4 23.8

Other Vegetable Oil 1.9 0.3 33.4 1.4 0.3 21.9

Saw Logs & Sawn Timber 0.7 0.1 10.2 0.6 0.1 11.9

Hides, Skins And Furskins, Raw 0 0 66.9 0 0 31

Other Agricultures 10.4 1.8 23.6 8.4 1.6 12.4MINING GOODS 71.8 12.5 30 55.2 10.4 46.8Refined Petroleum Products 34.1 5.9 27.4 26.8 5.1 75

Crude Petroleum 24 4.2 31.4 18.3 3.5 22.8

Metalliferous Ores And Metal Scrap 3.8 0.7 35.1 2.8 0.5 43.4

Crude Fertilizers & Crude Minerals 1.2 0.2 3.4 1.2 0.2 32.4

Tin 1.1 0.2 37.1 0.8 0.2 10.9

LNG 0 0 30365.3 0 0 -97.1

Other Mining 7.5 1.3 40.8 5.3 1 39.1OTHERS 12.6 2.2 25 10.1 1.9 -1.7Total Imports 574.2 100 8.6 528.8 100 21.7



Appendix

Table A6.Malaysia’s Exports To EU - 27 by Product Sector

Product Sectors2008 2009 2010 2011

Value RM (Billion)

Share%

Value RM (Billion)

Share%

Change%

Value RM (Billion)

Share%

Change%

Value RM (Billion)

Share%

Change%

TOTAL EXPORTS 74.8 100 60.1 100 -19.7 68.7 100 14.3 72 100 4.7

MANUFACTURED GOODS 63.2 84.4 52.4 87.2 -17 58.3 84.9 11.2 58.5 81.4 0.4

Electrical & Electronic Products 38.8 51.9 33.3 55.4 -14.2 35.8 52.1 7.5 32.7 45.4 -8.7

Chemicals & Chemical Products 3.8 5.1 2.5 4.2 -33.5 3.6 5.2 40.4 4.2 5.9 19.2

Rubber Products 2.9 3.9 2.5 4.2 -12.7 3.1 4.6 24.8 3.5 4.8 9.6

Optical & Scientific Equipment 2.3 3.1 2.2 3.6 -8.2 2.7 3.9 23.1 3.2 4.4 20.2

Machinery, Appliances & Parts 2.9 3.8 1.9 3.1 -34.3 2.4 3.5 29 2.6 3.6 8

Manufactures Of Metal 1.5 2 1.3 2.2 -11.8 1.7 2.5 31.2 2.5 3.4 43.7

Textiles & Clothings 1.5 1.9 1.2 1.9 -20.6 1.3 1.8 8.7 1.6 2.2 26

Transport Equipment 1.5 2 1.4 2.3 -10.3 1.4 2.1 5.2 1.5 2.1 7.5

Wood Products 2.2 3 1.8 3 -18.4 1.8 2.6 -2.5 1.4 2 -20.2

Manufactures Of Plastics 1.5 2.1 1.2 2.1 -19.6 1.3 1.9 2.8 1.4 1.9 5.9

Processed Food 1.1 1.5 0.7 1.1 -39.3 0.7 1 5.8 0.8 1.1 10.1

Iron & Steel Products 0.5 0.7 0.1 0.2 -76.3 0.2 0.3 60.6 0.3 0.5 69.1

Non-metallic Mineral Products 0.2 0.3 0.2 0.3 -21.2 0.2 0.3 5.5 0.3 0.4 76.4

Petroleum Products 0.2 0.3 0.1 0.2 -51.8 0.2 0.3 99.3 0.2 0.3 -2.7

Paper & Pulp Products 0.2 0.2 0.2 0.3 -3.1 0.2 0.2 -2.4 0.1 0.2 -7.8

Beverages & Tobacco 0 0.1 0 0 -59.6 0 0.1 141.8 0 0.1 5.6

Jewellery 0 0.1 0 0.1 -27.7 0 0 -14.1 0 0 -32.9

Other Manufactures 1.9 2.6 1.9 3.1 -2.6 1.8 2.6 -5.6 2.2 3.1 23.2

AGRICULTURAL GOODS 9.8 13.1 6.5 10.8 -34 9.2 13.4 41.6 11.9 16.6 30

Palm Oil 5.5 7.4 4.2 7 -23.2 5.3 7.7 24 6.9 9.6 31

Crude Rubber 2.6 3.5 1.2 2 -55.2 2.8 4.1 136 3.9 5.4 39.9

Saw Logs & Sawn Timber 1.2 1.6 0.8 1.4 -28.2 0.9 1.2 2.1 0.8 1.2 -2

Other Vegetable Oil 0.1 0.2 0 0.1 -44.3 0 0.1 14 0.1 0.2 35.1

Seafood, Fresh, Chilled Or Frozen 0.3 0.3 0 0.1 -84.3 0 0.1 61 0 0.1 -43.7

Vegetables, Roots, Tubers 0 0 0 0 7.4 0 0 -6.3 0 0 61.9

Hides, Skins And Furskins, Raw 0 0 0 0 54.2 0 0 239.9 0 0 124.8

Live Animals & Meat 0 0 0 0 5.3 0 0 14.5 0 0 -88.7

Cereal 0 0 0 0 23.6 0 0 -8.4 0 0 -100

Other Agricultures 0.1 0.2 0.1 0.2 -6.9 0.1 0.2 13.2 0.1 0.2 16.2

MINING GOODS 1.4 1.9 0.9 1.5 -37.9 0.9 1.3 4.4 1.2 1.6 25.9

Refined Petroleum Products 0.8 1 0.7 1.2 -6.3 0.6 0.8 -22.3 0.7 1 26.6

Tin 0.2 0.3 0 0.1 -63.6 0.3 0.4 235.2 0.5 0.6 53.9

Metalliferous Ores And Metal Scrap 0.4 0.6 0 0.1 -79.5 0 0.1 -7.3 0 0 -77.8

Crude Fertilizers & Crude Minerals 0 0 0 0 11.7 0 0 -11.7 0 0 30.3

Other Mining 0 0 0 0 ∞ 0 0 ∞ 0 0 -100

OTHERS 0.4 0.5 0.3 0.5 -22.6 0.3 0.4 -8.9 0.3 0.4 16.8



Appendix

Table A7.Malaysia’s Imports From EU - 27 by Product Sector

Product Sectors2008 2009 2010 2011

Value RM (Billion)

Share%

Value RM (Billion)

Share%

Change%

Value RM (Billion)

Share%

Change%

Value RM (Billion)

Share%

Change%

TOTAL IMPORTS 61.6 100 50.8 100 -17.6 54.1 100 6.6 60 100 10.8

MANUFACTURED GOODS 60.2 97.8 49.4 97.4 -17.9 52.8 97.6 6.9 58.4 97.4 10.5

Electrical & Electronic Products 23.9 38.7 17.6 34.7 -26 19.9 36.7 12.6 17.8 29.6 -10.6

Transport Equipment 5.8 9.5 5.3 10.4 -9.3 5.8 10.6 8.6 10 16.6 73.6

Machinery, Appliances & Parts 8.9 14.5 8.6 17 -3.6 8.2 15.2 -4.5 9.1 15.2 11

Chemicals & Chemical Products 6.5 10.6 6.5 12.8 -0.3 6.8 12.6 4.9 7.7 12.8 12.2

Optical & Scientific Equipment 3.1 5 1.8 3.5 -42.9 2.2 4 23.3 2.3 3.8 3.3

Manufactures Of Metal 2.1 3.5 1.5 3 -28.8 2 3.7 30.8 2.2 3.6 10.1

Iron & Steel Products 3.7 6.1 2.3 4.6 -37.5 1.7 3.1 -27.4 2.1 3.4 21.6

Processed Food 1.1 1.7 1.1 2.2 5.3 1.4 2.6 28.2 1.6 2.7 14.4

Paper & Pulp Products 1.2 1.9 1 2 -13.7 1.2 2.2 20.9 1.1 1.8 -8.1

Beverages & Tobacco 0.6 0.9 0.6 1.2 7.7 0.7 1.4 18.9 1.1 1.8 43.5

Non-metallic Mineral Products 0.5 0.8 0.5 0.9 -3 0.5 0.9 6.3 0.6 1 28.4

Manufactures Of Plastics 0.4 0.7 0.4 0.8 -8.7 0.5 0.9 25.5 0.6 1 23.8

Rubber Products 0.4 0.7 0.4 0.9 -0.5 0.4 0.7 -9.1 0.4 0.7 10.5

Textiles & Clothings 0.4 0.6 0.3 0.6 -26.3 0.3 0.5 6.1 0.4 0.6 16.8

Jewellery 0 0.1 0 0.1 -29.8 0 0.1 102.4 0.1 0.2 115.1

Wood Products 0.2 0.4 0 0.1 -69.2 0.1 0.2 32.3 0 0.1 -7.5

Petroleum Products 0 0.1 0.1 0.2 226.8 0.2 0.3 31.6 0 0.1 -74.1

Other Manufactures 1.3 2.1 1.2 2.4 -3.1 0.9 1.7 -23.3 1.3 2.1 34.2

AGRICULTURAL GOODS 0.4 0.6 0.4 0.8 9 0.5 0.9 20.2 0.6 1 23.4

Live Animals & Meat 0.1 0.2 0 0.2 -28.3 0.1 0.2 40.4 0.1 0.2 11.3

Vegetables, Roots, Tubers 0 0.1 0 0.2 37.3 0 0.2 6.3 0 0.1 -7.1

Other Vegetable Oil 0 0.1 0 0.1 -15 0 0.1 63.7 0 0.1 25.9

Saw Logs & Sawn Timber 0 0 0 0.1 33.4 0 0.1 22.4 0 0.1 45.5

Hides, Skins And Furskins, Raw 0 0 0 0 1957.9 0 0 236.6 0 0.1 108.9

Seafood, Fresh, Chilled Or Frozen 0 0 0 0 37.3 0 0.1 27.9 0 0 -1.9

Cereal 0 0 0 0 39.9 0 0 -3.9 0 0 -12.3

Crude Rubber 0 0 0 0 -100 0 0 ∞ 0 0 -15.9

Palm Oil 0 0 0 0 ∞ 0 0 ∞ 0 0 866

Other Agricultures 0.1 0.2 0.2 0.3 18.7 0.1 0.3 -2.9 0.2 0.3 38.4

MINING GOODS 0.3 0.5 0.4 0.7 27.6 0.3 0.5 -20.1 0.4 0.7 37

Refined Petroleum Products 0 0.2 0 0.2 -9.3 0 0.1 -13.1 0.2 0.3 128.9

Crude Fertilizers & Crude Minerals 0.2 0.2 0.1 0.2 -23.9 0.2 0.3 32.6 0.2 0.3 4

Metalliferous Ores And Metal Scrap 0 0 0 0.1 11.6 0 0.1 39.3 0 0 -23.8

Tin 0 0 0 0 740.6 0 0 245.2 0 0 -91.4

LNG 0 0 0 0 ∞ 0 0 106.6 0 0 -58.3

Crude Petroleum 0 0 0.1 0.2 155512.4 0 0 -100 0 0 ∞

Other Mining 0 0 0 0 -56.3 0 0 162.9 0 0.1 129.4

OTHERS 0.7 1.1 0.5 1.1 -22.6 0.5 0.9 -9.2 0.6 0.9 11.2



Appendix

COUNTRY

Exports ValueRM

(Million)

Export Share(%)

Imports ValueRM

(Million)

Import Share(%)

Total Trade ValueRM

(Million)

Total Trade Share(%)

Bal of Trade ValueRM

(Million)

AUSTRIA 264 0.38 1,477 2.73 1,741 1.42 -1,213

BELGIUM 1,905 2.77 2,006 3.70 3,911 3.18 -101

BULGARIA 163 0.24 37 0.07 200 0.16 126

CYPRUS 136 0.20 20 0.04 156 0.13 116

CZECH REPUBLIC 834 1.21 265 0.49 1,099 0.89 569

DENMARK 742 1.08 525 0.97 1,267 1.03 217

ESTONIA 89 0.13 9 0.02 98 0.08 80

FINLAND 1,840 2.68 716 1.32 2,556 2.08 1,124

FRANCE 7,110 10.35 6,258 11.55 13,368 10.88 852

GERMANY, FEDERAL REPUBLIC OF

17,347 25.25 21,342 39.41 38,689 31.49 -3,995

GREECE 342 0.50 55 0.10 397 0.32 287

HUNGARY 637 0.93 375 0.69 1,012 0.82 262

IRELAND 626 0.91 3,533 6.52 4,159 3.39 -2,907

ITALY 3,449 5.02 4,548 8.40 7,997 6.51 -1,099

LATVIA 109 0.16 17 0.03 126 0.10 92

LITHUANIA 58 0.08 53 0.10 111 0.09 5

LUXEMBOURG 186 0.27 41 0.08 227 0.18 145

MALTA 93 0.14 40 0.07 133 0.11 53

NETHERLANDS 20,219 29.43 3,398 6.27 23,617 19.22 16,821

POLAND 1,026 1.49 301 0.56 1,327 1.08 725

PORTUGAL 522 0.76 48 0.09 570 0.46 474

ROMANIA 246 0.36 76 0.14 322 0.26 170

SLOVAK REPUBLIC 290 0.42 56 0.10 346 0.28 234

SLOVENIA 109 0.16 46 0.08 155 0.13 63

SPAIN 1,924 2.80 1,034 1.91 2,958 2.41 890

SWEDEN 1,231 1.79 2,046 3.78 3,277 2.67 -815

UNITED KINGDOM 7,198 10.48 5,836 10.78 13,034 10.61 1,362

EU Total 68,693 100 54,159 100.00 122,852 100 14,534

Source: Department of Statistics Malaysia

Table A8.Malaysia-EU Trade Figures by Member StateYear 2010


Appendix

COUNTRY

Exports ValueRM

(Million)

Export Share(%)

Imports ValueRM

(Million)

Import Share(%)

Total Trade ValueRM

(Million)

Total Trade Share(%)

Bal of Trade ValueRM

(Million)

AUSTRIA 391 0.5 2,051 3.4 2,442 1.9 -1,660

BELGIUM 2,978 4.1 2,134 3.6 5,112 3.9 844

BULGARIA 200 0.3 79 0.1 279 0.2 121

CYPRUS 97 0.1 32 0.1 129 0.1 64

CZECH REPUBLIC 1,413 2 341 0.6 1,754 1.3 1,072

DENMARK 759 1.1 614 1 1,373 1 146

ESTONIA 186 0.3 9 0 196 0.1 177

FINLAND 1,009 1.4 939 1.6 1,948 1.5 70

FRANCE 8,068 11.2 10,631 17.7 18,699 14.2 -2,563

GERMANY, FEDERAL REPUBLIC OF

18,409 25.6 21,961 36.6 40,370 30.6 -3,552

GREECE 264 0.4 44 0.1 308 0.2 220

HUNGARY 1,248 1.7 527 0.9 1,775 1.3 721

IRELAND 581 0.8 1,689 2.8 2,270 1.7 -1,108

ITALY 3,608 5 5,046 8.4 8,654 6.6 -1,438

LATVIA 118 0.2 33 0.1 151 0.1 85

LITHUANIA 190 0.3 69 0.1 259 0.2 121

LUXEMBOURG 259 0.4 83 0.1 342 0.3 176

MALTA 86 0.1 35 0.1 121 0.1 51

NETHERLANDS 19,298 26.8 3,612 6 22,911 17.4 15,686

POLAND 880 1.2 420 0.7 1,300 1 460

PORTUGAL 509 0.7 58 0.1 567 0.4 451

ROMANIA 352 0.5 88 0.1 440 0.3 263

SLOVAKIA 325 0.5 98 0.2 423 0.3 227

SLOVENIA 101 0.1 47 0.1 148 0.1 54

SPAIN 1,936 2.7 1,211 2 3,147 2.4 725

SWEDEN 1,526 2.1 1,975 3.3 3,501 2.7 -448

UNITED KINGDOM 7,155 9.9 6,141 10.2 13,295 10.1 1,014

EU Total 71,947 100 59,968 100 131,914 100 11,979

Source: Department of Statistics Malaysia

Table A9.Malaysia-EU Trade Figures by Member StateYear 2011


Appendix

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Appendix A10.Manufacturing Projects Approved with EU-27 CountriesParticipation in 2011 by Country


Appendix

Project partners Enhancing the EU-Malaysia Dialogue and Business Cooperation in Services Sector

The Services sector has been identified by the Malaysian government as the engine of growth for future. The foreign direct investment is very low and there is scope for dialogue and business cooperation between European Union and Malaysia. EUMCCI together with its partners applied through call for proposal for a project funding under EU Outreach & Visibility Programme. The focus sectors in this project are Logistics, Environmental Technologies, Financial Services and ICT

The project is co-funded by 80% by the European Commission, with a total budget of €715,741 over a period of 3 years.

ActivitiesMeetings, dialogues with key stakeholders, technical seminars, panel discussions.• Industry focused: Logistics, Financial Services, ICT, Environmental

Technologies

• Function-focused: benefits of liberalisation, EU standards and bestpractises, market access and focus areas

• B2Bmeetingsfocusingonservicessector

Publications• Draftingofissuesintopositionpaperstobelaunchedatannualconference

• Publicationofreports/surveys/brochuresonspecificsectorstheprojectisfocusing

Aims1. Good relations and ongoing dialogues with various stakeholders2. Enhanced access for European companies to Malaysia through more

open sectors3. Enhanced access for Malaysian companies to Europe by adopting

European standards4. Overall EU visibility and awareness of main policies and trade issues

raised5. Trade and investment relations between Malaysia and EU enhanced and

increased


Appendix

Join as our Member!

Acting as a facilitator between the European and Malaysian business communities as well as relevant government ministries, official representations and other Chambers in Asia, EUMCCI’s main objectives are:

• TocontributetotradeandinvestmentflowsbetweentheEuropeanUnionandMalaysiaandfosterbusinesscooperation between these countries and Malaysia

• Toraiseissueswiththeauthoritiesandcontributetopolicyconsultations

• Tocollectanddisseminatekeymarketstatisticsandotherinformationontradeandindustrytoitsmembers

• Topromoteuniformityandclarityofrulesandpracticesconcerningcommerce,industryandtradeandacton particular issues that affect the European and Malaysian business and industrial relations

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The above objectives are realized through the many activities of the Chamber be it through participation in the 14 EUMCCI Industry Sector Committees and Working Groups or submission of your company’s issues to Memorandums of Ministerial Dialogues. Our members have access to a wide network of more than 1200 corporations in Malaysia, and be part of the ever growing European Business Organisation (EBO) networks worldwide. The monthly VIP Luncheons provide an excellent platform for high level exchange of views and opinions with the relevant agencies.

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Documents

EUMCCI Trade Issues and Recommendations 2012 · 2019. 4. 19. · EU-Malaysia Chamber of Commerce and Industry EUMCCI Trade Issues and Recommendations 2012 7 Corporate Social Responsibility