FMMComments onthe 2013NationalBudget

www.fmm.org.my

KDN NO: PP 16730/08/2012 (030376)

SEP/OCT 2012 VOL 5/2012BUSINESSin ACTION@FMM

Opening of Myanmar Market

Opening ofMyanmarMarket: NewBusinessOpportunities

MalaysianCompaniesUrged to CrossInvest inIndonesia

ComprehensiveApproach toHumanResourceIssues

Food PackagingRegulations inChina

2 5 7 8 14

2 SEP/OCT 2012

SPECIAL FEATURE

NEWS HIGHLIGHTS

EVENTS IN PICTURES

MARKET ALERTS

HAPPENING @ BRANCHES

NEW MEMBERS

PUBLISHED BYFederation of Malaysian ManufacturersWisma FMM No. 3, Persiaran Dagang PJU 9Bandar Sri Damansara52200 Kuala Lumpur.Tel: 03-6286 7200 Fax: 03-6274 1266 / 7288Email: webmaster@fmm.org.mywww.fmm.org.my

FMM has eight branches andtwo representative offices located inKedah, Penang, Perak, Selangor,Negeri Sembilan, Malacca, Johor,Eastern, Sabah and Sarawak.

Any material extracted from Business inAction @ FMM to be quoted or reprintedshould contain an acknowledgement toFMM or its acknowledged sources.

Editorial

ADVISORLee Cheng SuanChief Executive Officer

COMMITTEEMadeline LohGeneral Manager (Trade)

Ng Lee LeeSenior Manager, Int. Business Division

Florance S. GabrielAssistant Manager, Communications andPublications Unit

PRINTED BYThumbprints Utd Sdn BhdLot 24, Jalan RP3Rawang Perdana Industrial Estate48000 Rawang Selangor Darul Ehsan

FMM Comments on the2013 National BudgetThe Federation of Malaysian Manufacturers (FMM) supports the strong fiscalconsolidation measures to reduce the Federal Government deficit from 4.5% to 4%. Suchefforts should also be extended to lower the overall public sector expenditure. Ensuringthat government procurement is based on the value – for – money principle wouldcontribute further to fiscal prudence. FMM calls for more competitive and transparentbidding and a reduction in leakages and wastage to further reduce governmentexpenditure.

The reduction in subsidy for sugar is a step in the right direction and supported by themanufacturing sector. FMM would like to propose that in addition, price controls shouldbe removed and supplies should be liberalised. This would help to address the issue ofsmuggling of sugar. In furtherance of better prices for the rakyat, semi monopolisticpractices in the supply of basic essentials like rice and sugar should be liberalised.

The Government’s commitment to enhance public service delivery is also well received asit would improve Malaysia’s competitiveness. Education is an important contributoryfactor to competitiveness and any improvements to the quality of the education system iswelcome in particular the budgetary measures to improve pre-school education.

The additional 150 posts annually to the Malaysian Anti-Corruption Commission (MACC)to combat corruption would contribute to strengthening Malaysia’s ranking in theCorruption Perception Index and citizen’s trust in public institutions. Adequate financialresources should be provided including empowering the Commission to allocate theseresources at its own discretion. Going forward, the MACC should be given allocationsbased on a fixed percentage of GDP to provide surety of financial resources and to ensurethe agency’s independence.

TRADE & POLICY UPDATES

SEP/OCT 2012 3

Adapt to PhasingOut of EnergySubsidies andMarket-basedEnergy Pricing

Recognising the manufacturing sector’s role and contribution to thenational economy, favourable policies and various measures hadbeen implemented, sometimes at significant costs to the Governmentto shield the sector from the volatility of energy prices and otherexternal barriers.

These measures, however, are not sustainable and industry wouldbe affected by rising fuel prices if no serious efforts are made toimplement energy efficiency measures.

Past and on-going national Energy Efficiency (EE) programmes toassist industries include:

• Malaysian Industrial EE Improvement Project from 2000 to2007

• Labeling of industrial motors and campaigns for high-efficiencymotors

• Requirement to appoint energy manager for installationsconsuming 3 million kWh over a six month period

FMM would like to thank the Government for accepting thefollowing proposals namely:

• To extend the Green Tech Financing Scheme for anotherthree years; and

• To recognise intellectual property rights as collateral forfinancing to assist in SMEs access funding

• To reduce time bar for raising income tax assessment oradditional assessment from six years to five years.

FMM’s views on specific tax incentives are as follows:

• FMM welcomes the reduction in individual income tax by1%. However, the reduction in rate should have beeneffected across the board to provide relief also to themiddle class and knowledge workers with taxable incomesabove RM50,000 per annum.

• The review of the Real Property Gains Tax to curbspeculative activities in the real property market iswelcome, given the potential impact on the economy as awhole. Tax incentives to revive housing projects wouldrelieve affected house owners.

• The double deduction tax incentives to employers onchildcare allowances and for the provision andmaintenance of childcare centres would contributesignificantly to increasing the participation of women in theworkforce, which currently is low by internationalstandards.

• The extension of R&D allowances for commercialisation tothe non-resource based sector is well received bymanufacturers. However, an automatic double deductionincentive on R&D expenses would have been a more directand effective boost to innovation and R&D activities forcompanies.

• Tax incentives for angel investors are also expected toenhance innovation and investments in new areas.

• FMM welcomes the tax incentives for security control andsurveillance equipment and is of the view that they shouldbe extended to include RFID systems.

The above was released to press on September 28, 2012

“The manufacturing sector needs to adapt to changes takingplace in the local energy sphere vis-à-vis the gradual phase outof energy subsidies and changes in electricity tariff design asthe Government aims to achieve market-based energy pricingby 2015 to attract new players in the energy supply chain andhelp increase energy security”, said Dato’ Sri Peter Chin FahKui, Minister of Energy, Green Technology and Water (KeTTHA)at the FMM Conference on Energy Efficiency and Conservation2012: Competitive Edge for Manufacturers” on July 19, 2012.

P E C I A L F E A T U R ES

Panel discussion led by Dato’ Hj Mas’ut A Samah, FMM CouncilMember & Chairman of FMM Energy Management Committee (centre)

4 SEP/OCT 2012

continued from page 3

P E C I A L F E A T U R ES

• Fiscal incentives such as pioneer status, investment taxallowance, import duty, sales tax exemption

• Financial incentives i.e. Green Technology Financing Schemelaunched in January 2010 to support investments in EE andgreen technology.

The National Energy Efficiency Master Plan has outlined EEprogrammes for the industrial sector for the next 10 years namelyenergy audits, energy management, co-generation, EE revolvingfund, enhancement of cost-based fiscal incentive, performance-based fiscal incentives and consideration for tax exemptions forEE monitoring and verifying devices.

Sharing of EE experience“Nestle (Malaysia) Sdn Bhd has set environmental objectives for2012 for the energy, water, green house gases and solid waste,”said Murali Samudram, Nestle’s Corporate Engineer. Nestlestarted energy conservation with good maintenance and strongstandard routines to reduce technical downtime as well asspecific energy and water usage. Nestle also rationalised its

operation by reducing steam pressure from 10 bar to 8 bar in itsKuching plant leading to savings in diesel cost of RM442,000 ayear. It invested in new technologies such as variable speed drivefor its waste water treatment plant aerators, economizers forboilers, and replacing surface aerators with fine bubble diffusers.

Pahmi Mokhtar, Country Executive, GE Energy, Malaysia &Brunei shared the significant progress achieved in addressingthe challenges of cleaner, more efficient sources of energy,reduced emissions and sources of clean water by using itsunique energy, technology, manufacturing and infrastructurecapabilities to develop 74 ecomagination certified energyproducts and solution. It has created strategic alliances withvarious MNCs to help solve among others water sustainability,CO2 emissions and EE challenges.

UNIDO Industrial Energy Efficiency in the MalaysianManufacturing Sector (IEEMMS) National Project Manager, Ir DrK.S. Kannan was also on hand to brief participants on thebenefits to be gained from the on-going five year project fundedby UNIDO-GEF which focuses on energy management systemand system optimization.

YB Dato’ Sri Peter Chin Fah Kui, Minister of Energy, Green Technology and Water (2nd right) in a discussion with FMM President, Tan SriDatuk Yong Poh Kon (2nd left) and Committee members

FMM President, Tan Sri Datuk Yong Poh Kon presenting a token of appreciation to YB Dato’ Sri Peter Chin Fah Kui

SEP/OCT 2012 5

P E C I A L F E A T U R ESOpening of Myanmar Market: NewBusiness Opportunities

As Myanmar continues to open and develop its economy toattract more foreign direct investments (FDIs), investors perceiveMyanmar to have great potential because of its rich naturalresources, young labour force and proximity to some of theworld’s most dynamic economies, including China and India.

Chairman of Myanmar Industries Association, Zaw Min Winurged Malaysian companies to tap on the business opportunitiesin energy, oil and gas, mining, manufacturing, fisheries, forestryand tourism at the FMM Conference on Opening of MyanmarMarket: New Business Opportunities held on August 9, 2012.

The Ambassador of Myanmar to Malaysia, His Excellency U TinLatt officiated the Conference. In his address, he highlightedthat Myanmar has been implementing reform measures to builda matured democratic state, to sign ceasefire agreements withten ethnic armed groups and to transform the centralisedeconomy into a market-oriented economy. Myanmar has alsoenacted the Micro-Finance Act and adopted the managed floatexchange rate system. In addition, Myanmar is preparing toenact a new Foreign Investment Law to attract investments.

Other key speakers invited to the Conference were President ofMalaysia Myanmar Business Council, Chairman of FMM SMICommittee, Programme Director of ISIS Malaysia, ChiefRepresentative of Maybank Yangon Representative Office,Senior Officials of EXIM Bank and Executive Director of PDZHoldings Berhad. The Conference attracted over 140leaders/senior management from various industries.

The topics covered by the industry experts were Strategies toAccess the Myanmar Market, Overcoming the Challenges inRunning an Operation in Myanmar, Myanmar’s GrowthProspects, Evaluating Financing Options for Business Venturesin Myanmar, Credit Insurance for Exports and Investments inMyanmar and Shipping Options for Your Imports/Exports toMyanmar.

Zaw Min Win, Chairman of the Myanmar Industries Associationpresenting a paper at the Conference

Tan Sri Datuk Asmat bin Kamaludin FMM Council Member and Chairman of International Business Committee with the Ambassador ofMyanmar to Malaysia, HE U Tin Latt

6 SEP/OCT 2012

P E C I A L F E A T U R ES

The panel of speakers fielding questions from the audience

As a follow up to the Conference, FMM will be organizing a tradeand investment mission to Yangon from October 18 to 21, 2012in conjunction with Showcase Malaysia. The main objective ofthe trade mission is to facilitate Malaysian companies to exploreareas of collaboration with Myanmar businessmen. TheMyanmar Industries Association will organise business matching

meetings between their members and FMM trade missionparticipants. The participation fee for the trade mission isRM4,000. Eligible SMIs can claim RM4,000 from the MarketDevelopment Grant for this event. For further details, pleasecontact Ms Leong Soke Ching or Ms Sandy at tel: 03-62867200or e-mail: soke_ching@fmm.org.my.

Zaw Min Win, Chairman of the Myanmar Industries Association andFMM Council Member, John Lee

The participants who attended the seminar

continued from page 5

SEP/OCT 2012 7

P E C I A L F E A T U R ES

Dr. Wong Lai Sum, Chief Executive Officer, MATRADE delivering theKeynote Address

At the FMM Conference on Indonesia: Market Outlook & EntryStrategies held on September 6, 2012, the Chief ExecutiveOfficer of Malaysia External Trade Development Corporation(MATRADE), Dr Wong Lai Sum highlighted that the Malaysia-Indonesia bilateral trade is expected to be strong in the secondhalf of 2012. She added that Indonesia's gross domesticproduct growth would be robust at 6%, driven by the domesticdemand.

Businessmen from both countries were urged to cross-invest inthe forms of joint venture or collaboration. She further advisedthat due diligence should be carried out when seeking businesspartners in Indonesia and cautioned the investors to unravel intothe rules and regulations in Indonesia.

In his presentation, Karim Raslan, Chief Executive Officer, KRAGroup highlighted that Malaysian businessmen should considerinvesting in cities like Surabaya, Palembang, Semarang,Bandung and Balikpapan, based on the nature of theirbusinesses and also their preference for the environment.

He highlighted that some of the advantages Malaysians have forinvesting in Indonesia include its geographical proximity,similarity in language and lower labour cost.

However, investors should be prepared to face some challengessuch as lack of infrastructure including connectivity of roads

across the country, natural disasters and bureaucraticinefficiencies. He also advised investors to persevere and focuson building relationships with the locals.

Other key speakers invited to the Conference which wasattended by over 90 participants were Nick Gandolfo of theHongkong and Shanghai Banking Corporation Limited (HSBC),Angeline Suparto from Angeline Suparto Law Corporation,Winang Budoyo from CIMB Group Indonesia, M. Syuzairi fromthe Batam Investment Agency, Wan Salman Wan Sulaiman fromHalal Industry Development Corporation (HDC) and Ustaz MohdSuhaimi bin Mohd Yusof from Jabatan Kemajuan IslamMalaysia (JAKIM).

Among the topics discussed at the Conference were LatestUpdates and Outlook of Indonesian Economy, Legal Updates onSetting Up and Operating Your Business in Indonesia, BusinessOpportunities in Halal Industry in Indonesia and BusinessOpportunities for Malaysian Companies in Batam.

As a follow up to the Conference, FMM organised trade andinvestment mission to Surabaya and Jakarta from September24-27, 2012 to facilitate Malaysian companies to explore areasof collaboration with Indonesian businessmen in both thesecities.

A total of 28 companies participated in the trade and investmentmission.

Malaysian Companies Urged to Cross-invest in Indonesia

Karim Raslan, Group Chief Executive Officer, KRA Group presentinghis paper on “Opportunities and Challenges in Southeast Asia”

8 SEP/OCT 2012

E W S H I G H L I G H T SN

A total of 31 major Associations and Chambers of Commercerepresenting a wide cross section of the economy held acolloquium on July 24, 2012 to share concerns over recent andproposed changes to human resource policies and legislation.The Colloquium seeks to leverage on the strength of a commonplatform to reinforce the business sector’s collective views to theGovernment.

Comprehensive review necessaryWhile the Colloquium supported the Government’s initiatives toimprove the welfare of workers and new approaches to humancapital development, a comprehensive review of the entirehuman capital environment is necessary in order to achieve theeconomic and social targets set by the Government. Newapproaches to labour legislation and procedures are alsoneeded in line with the new human capital environment. TheGovernment should also exhibit equal determination to providebusiness sustainability in the light of global challenges.

Hasty implementation harms all stakeholders, includingemployeesFailing to provide companies with adequate time to readjusttheir labour procedures could ultimately harm businesses, theindustrial relations climate and reduce the effectiveness of

proposed changes and new approaches to human resourcedevelopment. Introducing new labour legislation without givingthe necessary time for companies to adjust only drives up costand may reduce competitiveness of industry.

Rigorous consultation with all affected stakeholdersneededWhilst the Ministry had conducted consultations with the privatesector at the policy development stage, unfortunately a numberof key issues raised by the private sector were not addressedand taken into consideration. The private sector is alsoconcerned that there has been inadequate consultation on thedetails for implementation. For example, the Minimum WagesOrder gazetted on July 16, 2012 had not fully addressed whatconstitutes minimum wages.

Conclusions of the ColloquiumTaking cognizance of the above, the Colloquium is strongly ofthe view that:

a. The setting of minimum wage levels should have fullyconsidered geographical and/or business sector differences.Instead, many companies are now struggling with addedcosts without any compensatory productivity gains. The hurryto gazette the Minimum Wages Order 2012 without finalisingall details had left many unresolved issues. Both employersand employees had expected the Order to provide a moredefinitive guideline to the restructuring of minimum wages.

b. The introduction of mandatory retirement age must beaccompanied by changes to industrial relations laws to bemore flexible and expeditious. Without a concurrent andcomprehensive amendment of these laws, the minimumretirement age policy fails to consider the need for companiesto manage their human capital and achieve productivity andcompetitive capabilities. Employers and employees have acomplementary role in business competitiveness andsustainability.

Private Sector Seeks ComprehensiveApproach to Human Resource Issues

Year of birth Retire atThose born in 1963 and younger 60 years

1962 59 years1961 58 years1960 57 years1959 56 years

A comprehensive review with adequate time for transition and rigorous consultation with all affected stakeholders before finalising thedetails for implementation are essential to minimise disruptions while optimising the effectiveness of new policies. Change cannot beexpected to take place within a short time frame. Setting a practical pace and reasonable timelines would ensure a more efficient andcompetitive industry for the mutual, sustainable benefit of both employers and employees as Malaysia transforms into a high income nation.

FMM President, Tan Sri Datuk Yong Poh Kon delivering the OpeningRemarks at the Colloquium

Proposed Phased Introduction of Minimum Retirement Age

SEP/OCT 2012 9

c. The business associations recommend a phased introductionto the Minimum Retirement Age legislation currently passingthrough Parliament. A staggered implementation of minimumretirement based on age could be introduced as follows:

The staggered approach would help to alleviate constraints onnew job creation. An immediate increase in retirement agefrom 55 to 60 would result in significant reductions in new jobopenings in existing businesses for the next five years sincecompanies would be compelled to retain nearly one millionworkers (assuming an average of 180,000 to 200,000workers retire each year). This could in turn cause a “humantraffic jam” in new job openings for youths.

d. Withdrawal of EPF savings should follow accordingly i.e. intandem with the employee’s retirement age. This is to providecertainty of retirement savings as well as confirmation on theage at which employees could withd raw their EPF funds.

e. The proposal to introduce “unemployment insurance” or“retrenchment relief fund” should be studied in greater detailand the relevant authorities should come forward withconcrete proposals setting out the impact of the proposal onindustry stakeholders and employees.

Moving forwardThe business community strongly believes that it is important tofocus on higher productivity as the focal point of its economicmodel, which would in turn lead to higher income. Developing alabour market that emphasizes and encourages productivitygrowth at all levels while taking into account employee welfareand industrial harmony should be the priority.

Therefore there needs to be further discussion with the privatesector in all these issues as it would affect the growth ofbusiness and the security of jobs. Specifically:

• The Minimum Wage Order should be complemented by adefinition of minimum wages as basic wage plus fixed andannualized variable remuneration. It is unrealistic to expectindividual companies to renegotiate and implement thesechanges before January 1, 2013 if the details are yet to befinalised.

• The minimum retirement age should be implemented on astaggered basis while industrial relations legislation isreviewed to be more flexible. The staggered approach wouldalso facilitate transitional arrangements including paralleltimelines for withdrawing EPF savings according to thephased retirement age.

• The unemployment insurance should not be consideredunless there is a parallel development to review thereplacement of the “termination and lay-off benefits” underthe Employment Act 1955. The proposed rate of contributionsand consequential benefits for all stakeholders must beexplained before further considerations.

Given the complexity and gravity of the situation, there shouldbe further and wider consultation with the business community.

The above was released to press on July 24, 2012

The Panelists facilitating the Colloquium

E W S H I G H L I G H T SN

10 SEP/OCT 2012

FMM coordinated the participation of ten Malaysiancompanies at Africa’s Big 7 and the South AfricanInternational Trade Exhibition (SAITEX) 2012 for the fourthyear in Johannesburg, South Africa from July 15 to 17, 2012.The Malaysian companies which participated in the exhibitionwere Astrico Corporation Sdn Bhd, Biofact Life Sdn Bhd,Flavor Inn Corporation Sdn Bhd, Hua Huat Manufacturing SdnBhd, Koko Budi Sdn Bhd, Matrix Flavors & Fragrances Sdn

Bhd, Oriental Food Industries Sdn Bhd, UKS Holdings SdnBhd, WMA Trading Sdn Bhd and AF Manufacturing Sdn Bhd.A total of 884 exhibitors from 41 countries participated in thefair which was attended by over 8,500 trade visitors. H.E.Kennedy Jawan, Malaysian Ambassador to South Africa andMasri Zohaini Idris, Economic Counselor of the MalaysianInvestment Development Authority visited the Malaysianexhibitors and provided tips on doing business in South Africa.

Malaysian Pavilion at Africa’s Big 7and SAITEX

Kamal Kamarudin (left), representative from Malaysian Palm OilCouncil Durban and H.E. Kennedy Jawan (right) , MalaysianAmbassador to South Africa

Malaysian exhibitors at Africa’s Big 7 and the Southern AfricanInternational Trade Exhibition 2012

A total of eight companies joined FMM for the first time in the22nd Taipei International Food Show held from June 27–30,2012. The Show is one of Asia’s most important food relatedtrade show for the Taiwan and Asian market.Over 1,000 exhibiting companies from all over the worldparticipated in the food fair which attracted more than 61,400visitors domestically and internationally. Among the Malaysiancompanies which joined the FMM Pavilion were Asia Soup &Sauce Manufacturing Sdn Bhd, Foodteller Sdn Bhd, Kum Thim

Food Industries Sdn Bhd, LKT Food Industries Sdn Bhd,Longson Food Products Sdn Bhd, Oriental Food Industries SdnBhd, Torto Food Industries (M) Sdn Bhd and WonderfulCreamery (M) Sdn Bhd. Food samplings of “Yee Sang”, durianice-cream, snacks and biscuits were distributed during theexhibition. Jamaliah Jamaludin, Trade Commissioner ofMATRADE Taiwan visited the Malaysian companies andassisted in the business matching arrangements for them.

Taipei International Food Show 2012

From left: Jamaliah Jamaludin, Trade Commissioner of MATRADETaiwan; C.H. Ku and Nic Tan, LKT Food Industries Sdn Bhd, DaphneChou, Project Manager of MATRADE Taipei

Malaysian Pavilion at the 22nd Taipei International Food Show

E W S H I G H L I G H T SN

SEP/OCT 2012 11

YM Raja Dato’ Abd Aziz bin Raja Muda Musa, FMM VicePresident and Chairman of FMM Customs Committee led a six-member delegation on a courtesy call on the new DirectorGeneral of the Royal Malaysian Customs Department, Dato'Khazali bin Haji Ahmadon July 26, 2012. FMM congratulatedDato' Khazali on his appointment as the new Customs DirectorGeneral replacing Dato’ Sri Haji Mohamed Khalid bin Haji Yusuf.Dato' Khazali was previously the Deputy Director General ofCustoms (Management). FMM expressed hope for acontinuation of the support and good working relationshipenjoyed with the Royal Malaysian Customs Department underthe new Director General’s guidance.

Courtesy Call on the New CustomsDirector General

The meeting noted the successful collaboration between FMMand Customs over the years which included the establishmentof a Customs Advisory unit in FMM in April 2011 that hasbenefited over 100 companies to date, nationwide trainingsessions to enhance the technical skills of Customs personnelorganised under the aegis of the FMM-Customs SmartPartnership programme and the formation of the Working Groupto study the establishment of a two tier Authorised EconomicOperator (AEO) programme to benefit SMEs. The DirectorGeneral agreed to consider the following recommendations byFMM to improve the Customs delivery system and speed cargoclearance:

• Proposal to tighten relevant sections (including Section 133and Section 135) in the Customs Act 1967 by instituting aminimum penalty to prevent fraudulent declarations of originin Customs documentation and declarations;

• Implementation of the RFID container seal system whichallows for auto-clearance of containers provided themanufacturers are not unduly burden by the above initiative.Any installation of the RFID system should be on a voluntarybasis. The beneficiaries of the system which include theforwarding agents, should absorb any costs relating to theimplementation of the system including the e-seal fees andnot pass them on to the manufacturers/shippers; and

• Request for scanners to be utilised at the ports or carry outpost importation audits at factory premises to reduce theunnecessary delays and congestion at ports caused by therecent Customs operation of 100% inspection of containers.

E W S H I G H L I G H T SN

The new Director General of the Royal Malaysian Customs Department,YBhg Dato' Khazali bin Haji Ahmad

The Royal Malaysian Customs Department offers over 35Customs facilities to facilitate import and export clearance andpayment of duties. In a recent FMM survey, it was observed thatbusinesses remained unaware of 50% of the Customs facilitiesavailable and only 30% of businesses utilised these facilities.

To enhance awareness and utilisation of such facilities, aSeminar on Customs Facilities: Facilitating Trade in a BorderlessWorld which attracted over 80 participants was organised on July10, 2012.

Speakers from the Royal Malaysian Customs Department,Customs Appeal Tribunal and MAMPU educated participants onCustoms facilities including the Customs Appeal Tribunal,Advance Customs Ruling, Ubiquitous Customs and theAuthorised Economic Operator. FMM’s Customs Advisor, ChooKim Foong from the Royal Malaysian Customs Department wasalso present to provide advisory services to participants of theSeminar.

Some of the key hightlights of the Seminar were as follows:

• AEO is a major standard under the Customs to Business Pillarof the WCO SAFE Framework of Standards to secure andfacilitate global trade. The Programme is a positive effort byCustoms to expedite clearance and increase efficiency. As thecurrent AEO system in Malaysia largely benefits multinationalcompanies, participants were supportive of the proposal todevelop a second tier AEO programme to benefit the SMEs;

• The discrepancy in Customs Classification Code is a recurringproblem in the industry. Manufacturers were encouraged toapply for advanced Customs Ruling to ensure acceptance ofthe ruling by all Customs stations; and

• The Royal Malaysian Customs Department would replace the17-year-old Customs Information System (SMK) with acomprehensive and sustainable electronic system known as'Ubiquitous Customs' (U-Customs).

Facilitating Trade Across Borders

12 SEP/OCT 2012

Africa’s Big 7, July 15–17, 2012

Food Taipei, June, 27–30, 2012

V E N T S I N P I C T U R E SE

Conference on Energy Efficiency and Conservation2012, July 19, 2012 Southern African International Trade Exhibition 2012, July 15–17, 2012

Forum Air Selangor 2012, June 12, 2012

SEP/OCT 2012 13

V E N T S I N P I C T U R E SE

Press Conference on human resource issues, July 24, 2012Seminar on Custom Facilities: Facilitating Trade inBorderless World, July 10,2012

Conference on Opening on Myanmar Market: New Business Opportunities, August 9, 2012

Human Resource Colloquium, July 24, 2012Courtesy call on the New Customs DirectorGeneral, July 26, 2012

14 SEP/OCT 2012

Regulations on food packaging in China will take effect fromJanuary 1, 2013, in a bid to guide the public in making foodchoices and to reduce the risks of chronic non-communicablediseases.

The Regulations will provide standard nutritional information onfood packaging labels, through which consumers can directlyidentify a product's nutritional structure and ingredients. TheRegulation indicates that content of four kinds of nutritionalelements, including protein, fat, carbohydrate and sodium, aswell as the calorie count should be labeled on the packages. Itstipulates specific rules on labeling other nutritional content,names and functions.

The regulations were first drafted in 2007, based on experiencesprovided by international food societies. China faces a severesituation of chronic non-communicable diseases, andinformation on the packages will help consumers avoid theintake of unhealthy elements, such as saturated fat andcholesterol, and increase the ingestion of dietary fibers.

According to the World Health Organization, 74.3% of countriesin the world have introduced regulations on food packaging anda transitional period has been established ahead of theimplementation of the regulations.

Food manufacturers are encouraged to adhere to theregulations which would be enforced by January 1, 2013.

Source: Xinhua, August 13, 2012

Updates on Tax Rates in Myanmar

Type of Taxpayer on Income Tax RateForeigners working for MFIL companies 10%Foreigners engaged under special permission in State-sponsored projects, 20%enterprise or any undertakingForeigners working for Non-MFIL Companies 15%National earning foreign exchange 10%Other IncomeForeigners > 35% or 5% to 40%Tax Rates for Capital gains:Resident 10%Non-Resident 40%

Type of Taxpayer on Income Tax RateCompany incorporated in Myanmar under Myanmar Companies Act 30%Myanmar Companies Act 30%Enterprises operating under Myanmar Foreign Investment Law 30%Foreign organisations engaged under special permission in State-sponsored projects, 30%enterprise or any undertakingNon-resident foreign organisation such as a branch of a foreign company > 35% or 5% to 40%Tax Rates for Capital gains:Resident Companies 10%Non-Resident Companies 40%

Income Tax On Companies

Income Tax On Individuals

China Food Packaging Regulations toTake Effect in 2013

R A D E & P O L I C Y U P D AT E ST

SEP/OCT 2012 15

The Branch organised a Workshop on “Understanding andHandling Sexual Harassment at the Workplace” on June 6,2012 which was facilitated by Heng Poh Suan, HumanResource Industrial Relation Advisor.

Among the topics covered were Section 8 (1B) of theEmployment Act 1955 which requires employers to inform theiremployees the reason for their refusal to investigate a sexualharassment complaint. If the reason given by the employer isunsatisfactory, the employee may lodge a complaint at theLabour Office.

Under the category of Physical Harassment, physical contactsuch as hugging, kissing, fondling and sexual assault areconsidered to be very serious offences. Employers are obligatedto take all complaints of sexual harassments seriously. Thepunishment must commensurate with the level of sexualharassment committed.

A meeting held on June 5, 2012 was co-chaired by the newDirector of Customs Pahang, Tuan Haji Sarip bin Abdul Taliband Branch Chairman, Dato’ Haji Mas’ut bin A. Samah.

Highlights of the meeting were as follows:

• Customs was in the midst of making improvements to theprocedure of bank guarantee redemption, where third partieswould be allowed to take the original copy as long as theycould provide authorisation letters from the company issuingthe bank guarantees;

• Companies were urged to appeal to the Customs AppealTribunal if they were not satisfied with decisions made byDirector of Customs;

• The new office of Customs Pahang in Indera Mahkota wouldbe fully constructed by September 2012 and operational byJanuary 2013. The Enforcement, Compliance Managementand GST Divisions would be maintained at the current office;

• The Director of Customs would be willing to give a six monthor one year blanket approval for scrap disposal which has noeconomic value;

• The Customs Department would accept the record of SAPsystem for the disposal of machines that are over 10 years butthis would be subjected to approval from the Treasury; and

• Companies were advised to look into ‘hanging documents’ in theSMK system or they would be penalised accordingly.

Customs Round Table Talk 2012

Understanding and HandlingSexual Harassment at Workplace

A P P E N I N G S A T B R A N C H E SHEastern/Malacca

Branch Chairman, Dato’ Haji Mas’ut bin A. Samah presenting atoken of appreciation to the new Director of Customs Pahang, TuanHaji Sarip bin Abdul Talib

Heng Poh Suan facilitating the workshop

16 SEP/OCT 2012

A P P E N I N G S A T B R A N C H E SH Penang/Negeri Sembilan

In continuous efforts to assist members to resolve their concernsand challenges, the Branch raised several issues with thePenang State Government and Federal Governmentdepartments. Representatives from the Branch met with theChief Minister of Penang, Lim Guan Eng, the State Exco forLocal Government, Traffic Management and Environment andthe Majlis Perbandaran Seberang Perai on August 29, 2012 tosubmit a memorandum objecting to any proposal to build anypetrol station at the land adjacent to the Prai Industrial Estates 1and 2. This is due to safety reasons as the industrial estateshouses about 25 chemical and gas factories. The other concernwas that siting petrol stations in the aforementioned locationwould add to the already bad traffic congestion during peakhours and festive seasons.

The memorandum also proposed the following:

• To turn the available vacant land on both sides of the PenangBridge toll plaza into bigger transit areas so as to ease trafficcongestion caused by the waiting factory buses/vans duringpeak hours; and

• To widen the side slip road from land beside the PenangBridge toll plaza to the junction of Jalan Perusahaan to easecongestion at the Seberang Jaya/Kulim interchange areas.

The Chief Minister assured the members that no approval wouldbe given in the interest of all concerned.

Meeting with Chief Minister of Penang

Chief Minister of Penang, Lim Guan Eng (centre) with the Branch Committee members

The Branch organised a luncheon talk with Yang DiPertua Majlis Perbandaran Seremban (MPS) and MajlisPerbandaran Nilai (MPN) Dato’Hj. Abd Halim bin Hj.Abd Latifon July 10, 2012. The Branch was led by its Chairman,Steven Aroki.

The purpose of the luncheon talk was to hand over aCertificate of Appreciation to MPS/MPN for their assistance inresolving members’ problems.

The following were also highlighted:-

• Companies were required to change the existing garbagebin to “taylor bin” which will cost an additional RM2,000per unit.

• New general waste collection fees imposed by SWMEnvironment Sdn Bhd. would be RM50/- per trip.

Luncheon Talk with Yang Dipertua Majlis PerbandaranSeremban/ Nilai

Steven Aroki presenting token of appreciation to Dato’Hj. AbdHalim bin Hj.Abd Latif, Yang DiPertua Majlis PerbandaranSeremban/Nilai

SEP/OCT 2012 17

A P P E N I N G S A T B R A N C H E SHSelangor/Johor

The dialogue session was organised by the Selangor StateGovernment on July 2, 2012. The FMM delegation was led byTan Sri Prof Dr James Alfred, Branch Chairman.

The Menteri Besar of Selangor, YAB Tan Sri Khalid Ibrahim, inhis opening speech explained that the dialogue session washeld to explain how the budget would be utilised.

In addition, the session would come up with proposals andideas which would be used as a basis for the State Governmentto formulate its budget for 2013.

Among the issues discussed that were of interest to themanufacturing community were the traffic congestion and thewater industry restructuring exercise.

Selangor Budget 2013 Dialogue

Selangor Budget 2013 Dialogue in progress

The Branch, led by its Chairman, Tan Sri Dato’ Prof Dr JamesAlfred, attended the Forum Air Negeri Selangor 2012organised by the Selangor State Government on June 12,2012. The main objective of the Forum was to briefparticipants on the updates and development of the watersupply issue in Selangor.

YAB Tan Sri Khalid Ibrahim, Selangor Menteri Besar gave theassurance that the water restructuring exercise would notresult in unreasonably high increase in the water tariff. He alsoassured that there would not be any water shortage problem inthe near future and would look into FMM’s proposal to providea subsidy for rain water harvesting at factories and homes.

Water Restructuring Exercise

YAB Tan Sri Khalid Ibrahim, Selangor Menteri Besar giving aspeech at the Forum Air Selangor 2012

On July 3, 2012, the Branch was invited to present a paper on “Proposal to Improve the Management and PhysicalInfrastructure in Johor Industrial Areas”. The meeting was co-chaired by YAB Dato’ Hj Abdul Ghani bin Othman, MenteriBesar of Johor and YB Dato’ Mukhriz bin Tun Dr. Mahathir,Deputy Minister of Ministry of International Trade and Industry.

The meeting was organised with the objective to coordinate theefforts of commercial and industrial development at the Federaland State Governments. The following proposals were tabled bythe Branch at the meeting:

• The need to reactivate State and District Industrial ParkManagement Committees

• To install traffic lights at the entrance to the Parit Raja Industrial Area

• To reduce the water tariff rate in Johor

• To improve the management of foreign workers’ hostels in Johor

At the meeting, the Johor State Investment Centre presented apaper on “Proposal to Establish the Electronic ManufacturingServices Hub in Johor’ while Iskandar Regional DevelopmentAuthority briefed on the demand and supply of human capital inIskandar Malaysia including its initiatives to address theshortage of human capital.

Facilitation and National Advisory Committee on Trade andIndustrial Meeting.

18 SEP/OCT 2012

The Branch organised a meeting with Tenaga NasionalBerhad (TNB) on July 11, 2012 to highlight the problemsfaced by members in the state.

The meeting was co-chaired by Haji Wan Kamizi bin WanIshak, General Manager of TNB Perak and Chew Boon Khooi,Chairman of FMM Energy & Utilities Sub-committee from theBranch.

The following were highlighted at the meeting:

• An electronics company had to compensate their customersUSD40,000 each, due to power interruptions in their factorywhich affected delivery dates.

• Another company in Kanthan Industrial Estate suffered ninepower interruptions from January to May 2912.

TNB gave the assurance that efforts were being taken toenhance the quality of the power supply.

Meeting with Tenaga NasionalBerhad

A P P E N I N G S A T B R A N C H E SH Perak

Issues being discussed at the meeting

Briefing on Green Technology

Dato’ Gan Tack Kong, Branch Chairman, delivering the welcomeaddress

With a total of 84 participants from 40 companies, the Greentechbriefing was held at the Kinta Riverfront Hotel on July 13, 2012.Industry leaders in Perak received first hand briefing frompractitioners of green technology.

After the Welcome Address by Dato’ Gan Tack Kong, BranchChairman, the briefing began with the first speaker, the Directorof Malaysia Green Technology Corporation, Syed Ahmad SyedMustafa who shared the benefits of green technology. He alsohighlighted that the manufacturing sector had been identified asthe second largest contributor of carbon emission after theenergy sector. One of the Government’s initiative to mitigate theimpact of climate change is the National Green Technology (GT)Policy, announced in July 2009. The Policy is specifically aimedat accelerating the growth of Green Technology contributions tothe national economy and promoting sustainable development.

The four pillars of the Policy include:

• Seeking to attain energy independence and promote efficientutilization

• Conserving and minimizing the impact on the environment

• Enhancing national economic development through the use oftechnology

• Improving the quality of life for all

The audience listened to Dr. Sufian Jusoh of Wing-M Chemical, acompany in Perak which had successfully used green technologyto safe energy cost. According to Dr. Sufian, an engineeringcompany in Ipoh which had used their system, was able to savethe energy cost for its dryer machine by up to 40%. Following hispresentation, many participants were keen to learn more aboutthe green technology and its suitability to their companies’operations.

SEP/OCT 2012 19

E W M E M B E R SN

ASM SpeedprintBenkert (Malaysia) Sdn Bhd

Bluescope Lysaght (Sarawak) Sdn BhdDareo Food Sdn BhdDIC Trading Sdn Bhd

DIEM DuroilDigitaldisc Master Technologies Sdn Bhd

E.U. Connector (M) Sdn BhdEverbest Soya Bean Products Sdn Bhd

Gajah Emas Industries Sdn BhdGunung Rapat Hiong Piah Sdn Bhd

Ordinary Members (July-August 2012)Gaharu Technologies Sdn BhdH&R Wax Malaysia Sdn Bhd

Herculean Food Industries Sdn BhdIncline Dynamics Sdn Bhd

Innoscience Manufacturing Sdn BhdKiong Gay Enterprise

KOM Technologies (M) Sdn BhdLubri Oil Corporation (M) Sdn Bhd

Loong Chai Trading Sdn BhdMohd Poad bin Bachik

Nosktahco Holdings Sdn Bhd

Nature Profusion Sdn BhdOKBB Sdn BhdPolyplas Sdn Bhd

SMT Technologies Sdn BhdSunrise Paper (M) Sdn Bhd

Tiger Casting Solution Sdn BhdTigges Fastener Technology (M) Sdn Bhd

UK'S Holdings Sdn BhdWing-M Chemical Sdn Bhd

WMA Trading Sdn BhdYollink Metal Machining Sdn Bhd

Affiliate Members (July-August 2012) eOneNet.com Sdn Bhd GSM Consultancy (M) Sdn Bhd Ronser Bio-Tech Sdn Bhd

New Members (May-June 2012)The FMM welcomes the following 36 new members into the organisation, 33 Ordinary Members and 3 Affiliate Members. The majority

or 28% are from Selangor, 19% from Penang and 17% from Perak, while the rest is from other states

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