Growth

In Support of
Opportunities
Malaysia’s engineering supporting industry which In addition, the country’s as well as the region’s
progressed in tandem with the country’s rise as a fast growing automotive and electrical & electronics
global player in manufacturing, currently consists of sectors; attractive fiscal and non-fiscal incentives;
the following distinct sub-sectors:- the country’s ideal geographic location; a vibrant
economy; a stable Government and local-
• Mould and Die
developed infrastructure, when taken together
• Machining equals one attractive proposition.
• Metal Casting
• Metal Stamping
• Heat Treatment
• Surface Treatment/Finishing
• Metal Fabrication
Having evolved from the servicing of equipment for
the resource and agro-based industries in the ‘60s
and ‘70s to playing a key supporting role during the
nation’s rapid economic progress in the ’80s and
‘90s, the industry is now positioning itself in the
direction of an enhanced role in the next phase of
Malaysia’s economic evolution. This scenario will
enable potential investors to favorably consider
Malaysia as an outsource destination.

1 Malaysia’s Engineering Supporting Industry


Robust Engineering Supporting Industry
Malaysia is an ideal destination for multinational
corporations (MNC) looking for outsourcing or
investment opportunities in the engineering supporting
industry.
• A Vital Link
Malaysia is linked to a vibrant manufacturing sector,
particularly in the electrical & electronics, computer
& computer peripherals; automotive & aerospace;
telecommunications and machinery manufacturing
sectors. As an outsource destination, we offer a
seamless link to these industries with vast
opportunities for structural and economic growth.
• Outstanding International Presence
Our engineering supporting industry has earned a
strong international recognition for its world-class
manufacturing standards. With the long-standing
presence of various MNCs within the country, we
possess the expertise and experience to be able to
supply products and services that are globally
competitive in quality, value and delivery time.
• Ideal Location
The ASEAN countries, with a combined population
of over 500 million and a collective GDP of US$750
billion, is a market with infinite potential growth. Our
location is not only an ideal base to gain entry into
the ASEAN markets but is also appealing to
companies with high value and low-cost strategies
looking to outsource effectively.
• A Choice Environment
Malaysia possesses the ideal environment for
foreign investors and companies looking for
outsourcing partners: political stability; strong
economic fundamentals; well-developed
infrastructure; English language proficiency; skilled
and productive workforce and quality of life.
Incentives for Growth
Malaysia has a corporate tax rate of 28% for both local
and foreign-owned companies. A wide range of tax
incentives are available to manufacturing companies in
Malaysia.
1. Incentives for Manufacturing Companies
• Pioneer Status – income tax exemption of 70%
to 100% on statutory income for 5 years, or
• Investment Tax Allowance of 60% to 100% on
qualifying capital expenditure incurred within 5
years
• Reinvestment Allowance of 60% on qualifying
capital expenditure for 15 years.
2. Incentives for High Technology companies
Incentives for High Technology companies
venturing into the design, development and
manufacturing of high technology intermediate
engineering products and services.
• Pioneer Status – income tax exemption of 100%
on statutory income for 5 years, or
• Investment Tax Allowance of 60% on qualifying
capital expenditure incurred within 5 years to be
offset against 100% of statutory income.
Malaysia’s Engineering Supporting Industry 2
 Mould and Die
Industry
Malaysia’s mould and die industry is recognised as
the leading engineering supporting industry in the
country. Over the last three decades, the mould & die
industry has experienced rapid growth in tandem
with the overall growth of the manufacturing sector.
The increasing incorporation of locally
manufactured parts and components has
significantly fuelled the demand for moulds and
dies. Malaysian companies have the capability to
manufacture most types of moulds, dies and
toolings to complement the manufacturing sectors.
The value of imports of moulds and dies
amounted to RM1.31 billion in 2004. Imports were
mainly from Japan, Taiwan, Germany, Singapore,
China, United Kingdom, USA and South Korea.
These imports were mainly very high precision and
complex toolings, for which opportunities exist for
new manufacturing ventures. Malaysia also exports
moulds and dies, which has shown an increasing
trend over the last five years.
The Government has initiated the setting up of the
Mould & Die Design Centre to provide additional Companies operating in Malaysia
boost to the development of the local mould & die The mould and die industry comprises about 400
industry. The Centre will provide R&D, design, companies involved in the manufacture of most types
technical consultancy, training and facilities rental of moulds, dies and tooling to complement the needs
services to the local mould & die industry and of the E&E, plastics, telecommunication, automotive,
manufacturing sector in general. machinery, rubber and other industries. Foreign
companies that have established operations in
Malaysia include A-FOSS Zeno (Japan), Meiki
(Japan), Fuji Dies Kogyo (Japan), Tylon
Manufacturing (Japan) and FICO Asia (Netherlands).
Prominent Malaysian companies include LKT
Precision Engineering, Sum Hing Engineering Works,
Topla Engineering (a Japanese-Malaysian joint
venture), D-R Engineering, Sun Tong Seng Mould-
Tech, H&L High Tech, HH Precision Mould and
Dynamic Mould.

Opportunities for the Mould and Die Industry

• The scope for the further development of the
mould and die industry in Malaysia remains bright
considering the high annual market demand and
significant imports of moulds and dies.
• Export opportunities to the ASEAN region is
expected to increase significantly with the ASEAN
Free Trade Area (AFTA) which came into force in
January 2003.
• Opportunities and a large market potential exist for:-
- high precision moulds and dies for E&E
industries
- large moulds and dies for the automotive and
plastic industries.
• High technology incentives for companies
venturing into the design, development and
manufacturing of trim & form dies, semiconductor
cavity/encapsulation moulds, suspension tooling
for hard disk drive parts, progressive tooling for
lead frames and fibre optic connector tooling,
advanced toolings and equipment for the
production of precision components, moulds,
tools and dies for the automotive industry.
3 Malaysia’s Engineering Supporting Industry
Machining
Industry
Malaysia’s machining industry is a total solutions provider to all the
machining needs of the country, with most companies attaining high
levels of technological capabilities and using state-of-the-art CNC
machine tools in their operations.
The machining industry in Malaysia can be classified into two
categories:
• Companies which provide machining services to other
industries on a jobbing basis.
• Companies which produce precision machined parts such as
jigs & fixtures, turned parts, shafts, pins, bushes and other
machined components.
Most of the specialised machining companies possess state-of-the-
art CNC machining centers and provide integrated machining
solutions (including sub-assemblies), working to machining
tolerances as low as 1 to 5 microns with turning diameters ranging
from 1 to 550 mm. A number of companies have diversified into the
design and manufacture of automation systems and equipment,
particularly for semiconductor, electrical & electronics industries.

Companies Operating in Malaysia

There are about 170 companies in operation, providing
machined parts and components and machining
services. Catering to a number of multinationals in the
domestic and direct export markets in the USA, Japan,
Singapore, UK and France are prominent Malaysian
companies like Upeca Engineering, Eng Hardware
Engineering, Paradigm Precision Components, TNH
Metal Engineering, PSO Precision Machinist and
Edaran Precision Industries. Foreign companies that
have established operations in Malaysia include Synturn
(S’pore), Swissmatic Precision Engineering (S’pore),
Kenseisha (Japan), Kobe Precision Technology (Japan),
Ohta Precision (Japan), Naito Asia (Japan) and Kuroda
Precision Industries (Japan).

Opportunities for the machining Industry

It is envisaged that the expansion of Malaysia’s
aerospace parts and components manufacturing
industries will lead to the increased demand for machined
parts and components as well as machining services.

Malaysia’s Engineering Supporting Industry 4

 Metal
Casting
Industry
The industry is divided into four main areas: -
• Foundries
• Die casting
• Magnesium Injection Moulding (Thixomoulding©)
• Investment casting
1. Foundry
The foundry industry in Malaysia over the last 50 years
has attained a significant level of technological
expertise in servicing the traditional industries of
rubber, tin and palm oil. Working with the local
engineering companies, the foundries have developed
their capabilities to re-engineer and adapt components
and sub-assemblies for imported machinery to suit
local conditions. Some of the more advanced
foundries today have automated casting facilities and
are producing castings to international standards for
export.
Companies operating in Malaysia
These include prominent Malaysian companies like
MMC Metal Industries, Yoonsteel, Hicom Engineering,
Lestari Casting and a foreign-owned company,
Metalock Castings (S’pore).
2. Die Casting
The die-casting industry in Malaysia is fast developing
as a major component supply source, supporting the
manufacture of computer, electrical appliances,
automotive components and hardware products. The
local companies have developed and acquired
adequate know-how and production capabilities in
producing die-cast components of very high quality
such as computer disc drive components, die-cast
parts for the domestic electrical appliances industry
and the electronics industry.
Companies operating in Malaysia
These companies are mainly foreign or joint-ventures
such as Hiroshige (Japan), Wincast Precision
Engineering (S’pore), Dynacast SPM (United
Kingdom), MMI Precision Manufacturing (S’pore),
MELCOM, Asahi Kosei (Japan), Kawamura (Japan),
Keseisha (Japan), Nakazawa Die Casting (Japan),
PDCI (S’pore), Jomon Technology (S’pore), Sansho
Giken (Japan) and Swanmet (S’pore).
injection moulding of net-shape
magnesium alloy parts, is
regarded as the most advanced way
of fabricating high quality, high
strength, high complexity and light weight
magnesium alloy parts and components to
precision tolerances. Parts and components presently
manufactured in Malaysia are for aesthetic, structural
and functional uses for the electronics,
telecommunication and automotive industries.
AB Technology is a local company which through its
intense R&D, has successfully integrated
thixomoulding© into a one-stop process centre for
magnesium alloy parts and components.
4. Investment Casting
Investment casting is a relatively new industry in
Malaysia, mainly supplying components of accurate
dimensional tolerances and complex shapes, normally
used in the aerospace, automotive and machinery
industries. There are four companies presently
producing precision investment casting mainly for the
export market. They are Rigel Metalcraft (Taiwan),
Swanmet (S’pore) and Malaysian-owned companies
Nostalgia Investment Casting and MMI Precision.
Opportunities for the Die Casting and Investment
Casting
With the further development of the local automotive
industry and increased demand for automobile parts
and motorcycle die-cast parts, there will be greater
demand for die-cast components especially in
magnesium alloy die-casting. Trends also indicate an
increase in demand for die-castings for the computer
and computer peripheral industry. This is expected to
stimulate growth in the industry.
Investment casting is fast becoming a basic
engineering supporting industry. It is expected that
more established foundries
would be seeking
technology and
joint-venture
partners to
diversify into
this field.

3. Magnesium Injection Moulding

(Thixomoulding©)
Malaysia is one of the few countries in the world which
has this facility. Magnesium injection moulding, which
is a revolutionary semi-solid process for high speed

5 Malaysia’s Engineering Supporting Industry

Metal Stamping
IndustryThe metal stamping industry is a well-established
industry in Malaysia, supplying stamped/pressed
parts to a wide range of industries, including the
electrical & electronics, automotive, industrial
machinery and equipment, precision measuring and
testing equipment. The industry has developed
significantly, in capacity and technical capabilities,
to serve the various market needs of multinational
corporations such as Matsushita, Sony, Hitachi,
Toshiba, Dell, Yamaha, Thomson, Philips and
Hewlett Packard.
The industry is now heading towards advanced
technologies and the provision of total solutions
including prototypes, moulds and dies and sub-
assembled components. The steady increase in the
demand for electrical and electronic products and
automotive components will continue to spearhead
the growth in the metal stamping industry in
Malaysia.

Companies operating in Malaysia

There are over 300 companies engaged in metal
stamping activities as technological advances and a
steady increase in demand continue to drive the
need for expansion within the industry. Prominent
Malaysian companies include Cybron TL
Manufacturing, Kris Components, Kein Hing
Industry, Wong Engineering and NH Metal
Stamping.

Opportunities for the Metal Stamping Industry

The industry is expanding and developing towards
high speed stamping, fine blanking and into the
manufacture of higher precision and miniaturised
parts. New projects are also encouraged in the
less developed states of the Eastern Corridor of
Peninsular Malaysia, Sabah and Sarawak.

Malaysia’s Engineering Supporting Industry 6

 Heat
Treatment
Industry
The heat treatment industry is expected to grow in
tandem with the development of the major industry
clusters of machinery and equipment, moulds and dies,
iron and steel secondary products and automotive
components. This industry offers services such as
continuous mesh-belt heat treatment; vacuum hardening;
carburizing; carbonitriding; nitriding; nitro-carburizing;
annealing; normalizing; and tempering for a diverse range
of metal products.
Heat treatment services for high carbon steel and alloy
steel products such as moulds and dies, critical parts for
bearings and automotive components are the latest
additions to the list of products already serviced which
include bolts, nuts, shafts, gears, pins and springs.
Companies Operating in Malaysia
Most of the companies in operation providing heat
treatment services are joint ventures with foreign
companies who supply both capital and technical know-
how support. Prominent companies in this industry include
Malaysian owned companies such as Upsilon Heat
Treatment Services, Belton Oriental Heat Treatment,
ProHeat Treatment Precision and foreign owned
companies such as Tohken (Japan), Umetoku (Japan) and
Yeh Chang Heat Treatment (Taiwan).
Opportunities for the Heat Treatment Industry
Expansion activities in the mould and die, as well as the
machinery and equipment manufacturing industries, and
production of downstream products of iron and steel,
secondary products, automotive parts and component
manufacturing offer good prospects for the growth of the
heat treatment service industry. Investments in new
ventures with state-of-the-art facilities that are also
environmentally friendly are encouraged especially those
incorporating the latest vacuum carburizing and vacuum
hardening technology.

7 Malaysia’s Engineering Supporting Industry Malaysia’s Engineering Supporting Industry 8

Surface Treatment /
Finishing Industry
The industry has the capability and capacity to cater for most of the requirements of the
manufacturing industry. These include a variety of plating operations such as batch and
continuous electroplating; precision electroplating; electroless plating; phosphating;
passivation; anodizing; chromating; electroplating for the semiconductor industry including
integrated circuits and lead frames; sinter plating and physical vapour deposition.
Malaysia is now focusing its efforts in establishing more modern plating plants with cutting-
edge equipment and technology, while upgrading current facilities to complement the
country’s heightened industrial efforts and environmental concerns. There is an increasing
demand for surface treatment services from the electrical and electronics, automotive,
aerospace and machinery components industries, thus opening up vast opportunities for
new ventures in this area.

Companies Operating in Malaysia

There are about 40 companies in operation in this industry
which include Malaysian owned companies such as AKN
Technology, Ampmas and Metal Polishing Industries and foreign
owned companies such as Mitek Kitamura (Japan), Dipsol
Chemicals (Japan), Ueda Plating (Japan), and Jiwei Industries
(Taiwan). Most of these companies are presently servicing the
needs of notable MNCs.

Opportunities for the Metal Surface Treatment/

Finishing Industry
The industry is now focusing on establishing modern plating
plants with the state-of-the-art equipment and technology for
high precision surface treatment and coating for the electrical
and electronics and aerospace industries. These will also have
to address the environmental concerns linked to the industry.

Malaysia’s Engineering Supporting Industry 8

 Metal Fabrication
Industry
Metal fabrication activities in which Malaysian
companies have developed world-class capabilities
can be classified into four categories; namely
fabrication for the offshore/onshore oil and gas
industry; building and civil construction fabrication;
fabrication of processing and manufacturing plants
and industrial machinery and equipment structures
and component fabrication.
Local companies undertake fabrication for the
offshore/onshore oil & gas industry which includes
fabrication works for the offshore oil drilling platform
requirements such as jackets, production modules,
platform decks, accommodation modules, line-pipe &
spool and related industrial onshore activities such as
petroleum refineries, petrochemical plants and
storage facilities.
In the building and civil construction fabrication
category local companies fabricate steel
superstructures for high-rise buildings, bridges,
flyovers, transmission towers and other infrastructural
facilities such as ports and airports.
In the processing and manufacturing plant fabrication,
companies undertake turnkey projects to build, install
and commission processing plants in the country.
As for the industrial machinery & equipment
structures and components fabrication category,
many companies have the capability to supply the
needs of the local machinery & equipment
manufacturing industry.
The metal fabrication industry in Malaysia is
considered a fairly established industry. In
the building and construction industry many
local fabrication companies have begun to
source for jobs outside Malaysia. As a result,
several local fabricators have gained
international recognition in this industry.

Companies Operating in Malaysia

Leading Malaysian companies which are
serving this sector include Malaysia Shipyard
and Engineering, Shin Eversendai
Engineering, Nam Fatt Fabricators, Wong
Heng Engineering, KKB Engineering and
KNM Process Systems.

9 Malaysia’s Engineering Supporting Industry

 An Opportunity
Not To Be Missed
Malaysia has much to offer to companies searching for
a strategic and cost effective engineering supporting
outsourcing destination. With its ideal location in the
heart of Southeast Asia, a mature and stable economy
backed by an integrated infrastructure, it is of little
surprise that foreign interest has been growing. There
is also the added benefit of government-backed
investment incentives.
The key to considering Malaysia as the region’s
engineering supporting outsourcing hub of choice is
the concept of value and quality. Foreign firms have
chosen to remain in Malaysia and many more are
looking for joint ventures or seeking to bring business
to the country simply because they enjoy promising
rates of return. Malaysia makes for an extremely
competitive destination for regional outsourcing of
engineering supporting services and the nation looks
forward to welcoming future investors.

Malaysia’s Engineering Supporting Industry 10

ASIA - PACIFIC EUROPE NORTH AMERICA
AUSTRALIA FRANCE UNITED STATES OF AMERICA
Director Director Consul (Investment)
Malaysian Industrial Development Authority Malaysian Industrial Development Authority Consulate General of Malaysia
Level 3, MAS Building 42, Avenue Kleber (Investment Section)
16 Spring Street 75116 Paris 550, South Hope Street, Suite 400
Sydney NSW 2000, Australia France Los Angeles, California 90071
Tel: (612) 9251 1933 Tel: (331) 4727 3689/6696 United States of America
Fax: (612) 9251 4333 Fax: (331) 4755 6375 Tel: (1213) 955 9183
E-mail: midasyd@bigpond.net.au E-mail: mida.paris@wanadoo.fr Fax: (1213) 955 9878
E-mail: lacamida@aol.com
JAPAN GERMANY, FEDERAL REPUBLIC OF
Director Director Director
Malaysian Industrial Development Authority Malaysian Industrial Development Authority Malaysian Industrial Development Authority
4th Floor, Aoyama 246 Building 6th Floor, Rolex Haus 226, Airport Parkway
5-6-26, Minami-Aoyama, Minato-Ku Dompropst-ketzer Str.1-9 Suite 480, San Jose
Tokyo 107-0062, Japan 50667 Cologne CA 95110
Tel: (816) 3409 3680/3681 Federal Republic of Germany United States of America
Fax: (813) 3409 3460 Tel: (49221) 124 008/ 009 Tel: (1408) 392 0617/8
E-mail: midatokyo@midajapan.or.jp Fax: (49221) 136 198 Fax: (1408) 392 0619
Website: www.midajapan.or.jp E-mail: mida.cologne@t-online.de E-mail: midasanjose@aol.com

Director ITALY Director

Malaysian Industrial Development Authority Consul (Investment) Malaysian Industrial Development Authority
3rd Floor, Takahashi Building Consulate of Malaysia John Hancock Centre, Suite 1515
5-9-3, Nishi-Tenma, Kita-ku (Investment Section) 875, North Michigan Avenue
Osaka 530-0047, Japan 4th Floor, Via Vittor Pisani,31 Chicago, Illinois 60611
Tel: (816) 6313 3121/3221 20124 Milan United States of America
Fax: (816) 6313 3321 Italy Tel: (1312) 787 4532
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Fax: (3902) 6698 4749 E-mail: mida@midachicago.org
KOREA, REPUBLIC OF E-mail: midamln@tin.it
Counsellor (Investment) Consul (Investment)
Embassy of Malaysia SWEDEN Consulate General of Malaysia
(Investment Section) Economic Counsellor (Investment Section)
17th Floor, SC First Bank Building Embassy of Malaysia 313 East, 43rd New York
100, Gongpyung-Dong, Jongro-Gu Karlavagen 37 New York 10017
Seoul 110-702 P.O. Box 26503 United States of America
Republic of Korea S-10041 Stockholm Tel: (1212) 687 2491
Tel: (822) 733 6130/6131 Sweden Fax: (1212) 490 8450
Fax: (822) 733 6132 Tel: (468) 791 7690/ 7942 E-mail: mida@midany.org
E-mail: midasel@chollian.net Fax: (468) 791 8761
E-mail: mida@malemb.se Director
PEOPLE’S REPUBLIC OF CHINA Malaysian Industrial Development Authority
Consul (Investment) UNITED KINGDOM 2, Oliver Street, Suite 1107
Consulate General of Malaysia Director Boston, MA 02109
(Investment Section) Malaysian Industrial Development Authority United States of America
Unit 807-809, Level 8 17 Curzon Street Tel: (1617) 338 1128/ 338 1129
Shanghai Kerry Centre, London W1J 5HR Fax: (1617) 338 6667
No.1515, Nanjing Road (West) United Kingdom E-mail: midaboston@aol.com
Shanghai 200040 Tel: 44 (20) 7493 0616
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Tel: (8621) 6289 4547/ E-mail: midalon@btconnect.com
(8621) 5298 6335
Fax: (8621) 6279 4009
E-mail: midash@online.sh.cn

TAIWAN
Director (Investment)
Malaysian Friendship & Trade Centre
8th Floor, San Ho Plastics Building
102, Tun Hua North Road,Taipei
Taiwan
Tel: (8862) 2713 2626
Fax: (8862) 2514 7581
E-mail: midatpe@ms18.hinet.net

Malaysian Industrial Development Authority

Block 4, Plaza Sentral, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur, Malaysia.
Tel: (603) 2267 3633 Fax: (603) 2274 7970
E-mail: mes@mida.gov.my Website: http://www.mida.gov.my
April 2006