Doing Business & Investing In Malaysia - Hong Leong Bank

Doing Business & InvestinginMalaysiaCHOONG Yin PhengGlobal Markets, Kuala Lumpur27th September 2018

Malaysia – your country of choice/ business destination Why? Where/ Which? How? Who?

Hong Leong Bank Berhad Strategically located3.2%Long run average 3.7%4.1%4.8%7.1%6.3%5.0%4.2%5.2%

Commendable & steady economic growth; above EM average5.7%5.5%

Well-contained inflation; below world and EM averages2.4%

Healthy Labour market - Ample Workers% YOY‘0005.7%

Relatively resilient financial markets

Financial markets – how does Malaysia fair?

Sound and well-capitalized banking system

Banking system – regional comparison

Ample foreign reserves and current account surplusesUS 104b

Competitiveness ranking - 2nd highest amongASEAN member countries; 22nd worldwideSource: IMD World Competitiveness Center

Ease of Doing Business – 2nd among ASEAN;24th worldwideReforms in gettingcredit, protectingminority investors,and trading acrossborderSource: World Bank

Cost of Doing Business - Relatively Low5.07%3.89%3.25%

Cost of Doing Business - Regional Comparison

FDI – on an upward trajectory

Total approved investment – dominated byservices sector

Key contributing sectors of the Malaysian economy

Hong Kong - Malaysia Trade TiesICs (65%)Semicond devices (9%)Computers (4%)Office machine parts (3%)Phones (3%)ICs (19%)Broadcasting equipment (9%)Telephones (6%)PCBs (5%)Computers (4%)

Malaysia ranks high in Chinese Belt & Road investment(US bn)

Property Investment – Always a favorite for HK ?Malaysia citizen& PRNon-Citizens &Non-PRCompaniesDisposal within 3 years fromthe date of property purchase30%30%30%Disposal in 4thyear20%30%20%Disposal in 5thyear15%30%15%Disposal in 6thyear andsubsequent year0%5%5%Disposal of propertySource: Global Property Guide

Foreign Exchange Administration Rulings (FEAR) :In and Out Both PossibleIncoming funds from abroad intoMalaysiaExportsNon-exports(services, loans, dividend etc)75% conversioninto MYR*25% FCA100% FCA* If client can provide documents (invoice) showing FC obligation, can keep the funds in FC up tothe amount stated in the documentsExample: US 100k incoming,(a) No import invoice(b) Import Invoice US 60kMYR(c) Import Invoice US 100k Client keeps 25% in FCA, 75% convert into MYRClient keeps US 60k in FCA, US 40k convert into Client keeps all US 100k in FCAHedging(a)Client is allowed to hedge import/ loan repayment (Bank sell USD) up to 6 months; beyond6 months need BNM prior approval(b)Client (exporter) is allowed to hedge (Bank buy USD) up to 6 months from shipment date;beyond 6 months need BNM prior approvalInstruction Letterfrom authorizedsignatoriesHK customerscan pay/ receivein MYR termsAppointed Overseas Office (AOO) –HLB Hong Kong

Opportunities from ASEAN HK FTA?Scope of the FTA: Trade in goods Trade in services Investment Economic & technicalcooperation Intellectual property Dispute settlementPotential benefits: Lower custom duties imposedby ASEAN and fewerrestrictions will help improveoverall competitiveness ofHong Kong in the internationalmarket Better and fairer investmentprotection Provide a platform for HK andASEAN to extend its marketreach Business opportunitiesoffered by Belt & RoadInitiative (BRI)Malaysia-specific agreement:1.Malaysia will eliminate customduties on 85% of tariff lineswithin 10 years; from as much as35% currently2.Products included: Apparel & clothing accessories Jewellry Machinery & electronics Watches & clocks Toys, games & sport requisites3. Malaysia will allow anaggregate foreign interest of upto 30% or RM10m (US 2.5bn) invalue on M&A and takeovers,double WTO commitment ofRM5m4. Malaysia will open urbanplanning and landscapearchitectural services, andmaritime freight forwardingservices

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Doing Business & Investing in Malaysia . . Cost of Doing Business - Relatively Low 5.07% 3.89% 3.25% . Cost o