MDBC NEW CONTACT NUMBER Dear Members and contacts, Please note that the new contact number for MDBC is 603 - 2163 4933. Our fax number has also changed and is now 603 - 2163 4934. Thank you, The MDBC Team

MUSTAPA: MITI TAKING PROACTIVE MEASURES TO ATTRACT FDIS The drop in foreign investments into Malaysia is not as bad as revealed by the Unctad World Investment Report (WIR) 2010 and changes are under way to ensure the country competes to attract high value-added investments. International Trade and Industry Minister Datuk Seri Mustapa Mohamed said net investments in the first quarter rebounded to US$1.41bil and exceeded that of the whole of last year and he had told the Cabinet that the ministry would be taking proactive measures to encourage more foreign and domestic investment. The WIR reported foreign direct investments (FDI) for Malaysia in 2009 fell 81% to US$1.4bil from US$7.3bil in 2008. Mustapa, who briefed reporters yesterday on the decline in investments, said the ministry was not disputing the FDI data reported by Unctad. “The numbers are important for many people and are correct,” he said, stressing that the net FDI number, however, did not paint the whole picture. He said that in 2009, Malaysia received US$9.4bil in gross foreign investments but foreign companies sent out US$8bil to their parent companies. Mustapa explained that since Malaysia no longer gave any incentives for low value-added, labour-intensive investments, those investments were now headed to countries in the region where the labour cost was cheaper. “If we were to bring those kinds of investments in, we will require more cheap foreign labour. We don’t want that kind of investments any more,’’ he said. In terms of outflow, Malaysian companies invested US$11.5bil overseas and repatriated US$3.3bil of the profits made abroad back home. Therefore the net FDI outflow from Malaysia was US$8.2bil. FDI globally fell by 37% last year as investors became more careful in making investment decisions. In a paper to the Cabinet that was made available to reporters, the International Trade and Industry Ministry (Miti) said FDIs fell in 2009 because foreign companies did not make additional investments, and instead repatriated the profits they made in Malaysia back to their parent companies which were then dealing with a global recession. It said Malaysia was also focusing on sizable investments that had high impact and high value-added and that the global recession saw companies adopting a wait-and-see attitude before making their investment decisions, especially those that involved a huge outlay of money from their end. Hindering the inflow of high value-added FDI into Malaysia was the slow growth of technological ability, lack of skilled manpower and the weak usage of research and development produced in labs, the Miti report said. The Cabinet was told that RM59.9bil worth of projects were approved in 2007, RM62.79bil in 2008 and RM32.64bil last year. In terms of implementation, RM30.07bil worth of projects got underway in 2007, RM23.75bil in 2008 and RM6.7bil last year. Projects approved need not necessarily get implemented in the year of approval but once they were started, the effects and benefits were felt in stages in later years, said Miti in the report. Miti said it would be taking proactive measures to encourage FDIs and domestic investment. Among the initiatives are the introduction of a focused approach to target specific high value-added and high technology sectors. It would encourage the services sector to be the driver of the economy and a corporatised Malaysian Investment Development Authority (Mida) would be empowered to negotiate directly with targeted investors and react in real-time to investment proposals to draw in fresh investments in the manufacturing and the services sectors. “It has to be a new Mida. It will focus more on domestic investments, engaging with the local chambers, looking at services,” Mustapa said. “Mida has to respond quickly, be more aggressive and customise incentives. “(In) the old days we could sit still and they (foreign investors) would come knocking on our doors. These days, it’s no longer business as usual. There is a greater sense of urgency in the new Mida. “There have to be radical changes. It has to be more private sector driven. The landscape has changed,” he said. Mustapa said the target of securing RM115bil worth of investments annually under the 10th Malaysia Plan was achievable. “When there are more opportunities locally, Malaysians will invest. We have to work harder to create more opportunities in Malaysia,” he said. Mustapa also said the root causes for the sluggish investments were being addressed by the Government Transformation Programme, the Economic Transformation Programme and the New Economic Model. - The Star

MIDA SET FOR REVAMP The Malaysian Investment Develop ment Authority (Mida) will be able to approve investments of up to RM1bil once amendments are made to the necessary Acts, said the Deputy Prime Minister. Amendments to the Promotion of Invest ments Act 1986; Income Tax Act 1967, and the Mida Act 1965 would be tabled in the next Parliament session in October, added Tan Sri Muhyiddin Yassin. This is part of the exercise to rebrand Mida, formerly the Malaysian Industrial Develop ment Authority - in order to complement the national effort to cut red tape and attract more foreign investment. Mida is the principal government agency responsible for the promotion and coordination of industrial and services development. “Mida is now in the process of being corporatised and is already being empowered to approve projects and investment incentives on a real time basis. “This will help investors get all the necessary approvals in the quickest possible time,” said Muhyiddin after having breakfast with the media yesterday. He added the Cabinet had approved the name change. Muhyiddin said the rebranding of Mida was also been done at the administrative level where a committee had been set up to approve applications. On education matters, Muhyiddin, also the Education Minister, said teachers trained in physical education, sports science and sports psychology were important for sports development in the country. “Many teachers are teaching only physical education and not sports,” he said, adding that countries good in sports had included sports in their curriculum with students wearing sports attire on a designated day as their uniform. When asked about the Opposition’s comment that Pakatan-governed states need not hold elections even if the Federal Government called for a general election, Muhyiddin said the Elections Commission had to look into the matter. Muhyiddin, who is on a four-day visit here, later visited the South Korea Education and Research Information Service and Hanam Information and Industry High School here to gain an insight into the Korean education system. - The Star

MAS IN RM2B ENGINE DEAL Malaysia Airlines (MAS) has picked Pratt & Whitney to supply 34 engines to power 17 of its new aircraft in a deal worth US$680mil (RM2. 2bil). The national carrier has yet to ink the agreement with Pratt & Whitney as both parties are still hammering out the finer details of the agreement. The signing is expected to be soon. The US$680mil was part of the list price of US$4.5bil that MAS would pay to buy 25 A330-300s and four A330-200Fs, the airline said in a statement yesterday. The order was placed in December last year. The estimated list price as stated in reports then was US$5bil (at an exchange rate of RM3.44 to US$1) for the entire order including the engines. Yesterday’s statement showed a US$500mil reduction. MAS explained that there were several reasons for this, such as the strengthening of the ringgit against the US dollar and the price of the freighter being lower compared with the passenger aircraft. However, the US$4.5bil may not be the final amount that MAS will pay for the orders; it is likely to be a negotiated price which MAS is not willing to reveal at this juncture. The A330 aircraft deliveries will be from 2011 to 2015. The 34 engines are for 15 passenger aircraft and two freighters. These aircraft will be used to serve the South Asia, China, North Asia and the Middle East markets. MAS managing director Tengku Datuk Azmil Zahrudin said in the statement: “We are happy with the performance and support for our A330 and B747 aircraft engines. We are confident that we will enjoy even better engine performance (in the future).’’ The statement said the A330-400 offered greater levels of economic efficiency, with lower fuel burn and maintenance cost. MAS chose the PW4170 and Advantage 70 engines for its 17 aircraft. MAS and Pratt & Whitney also plan to set up a joint-venture facility for engine nacelle repair in Malaysia. Now that MAS has chosen the engines, it has to decide in the near future whether to continue or cancel the order for six A380s. MAS’ plan for the A380 is for the long-haul routes but deliveries have been delayed three times. Azmil said recently that “there were plenty of aircraft available in the market and, hypothetically, MAS could consider Boeing’s 777-300 in place of the A380, if it were to cancel the order.’’ The airline is also slated to take delivery of the first of 35 B737s over the next few months. The aircraft should replace the older version of the 37 B737s. With all these orders in place, analysts feel that there was still room for MAS to place new orders especially for the Dreamliner B787, which finally landed for the first time outside the United States, at the Farnborough International Airshow in Britain on Sunday. The B787 is the latest generation of fuel-efficient aircraft. The B787 series can travel more than 15,700km and burns 20% less fuel than other planes. “It would need newer generation of airplanes going forward such as the B787 or A350,’’ an analyst said. Besides selecting the engine maker for the 17 aircraft, MAS has also decided to have winglets installed on all 35 B737-800 aircraft that it has ordered from Boeing. The first aircraft delivery is expected later this year and the deliveries will continue till 2013. A report from Farnborough quoted Aviation Partners Boeing CEO John Reimers as saying “we hope this is the first of many orders from MAS. Blended winglets will differentiate them from the aggressive low-cost market in the region and provide a visible cost advantage over their competition.’’ Blended winglets provide takeoff weight capability improvement of up to six tonnes from high altitude, hot and obstacle limited airports and, at the same time, reduce fuel and engine maintenance cost on normal operations. - The Star