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malaysia.ahk.de
July/August 2015
Vol 21, No.4 KDN PP 8818/3/2013
The Business Magazine of the Malaysian-German Chamber of Commerce and Industry
THE DEVELOPMENT OF THE
ISLAMIC FINANCE INDUSTRY
– TOWARDS BUSINESS GROWTH AND NEW GEOGRAPHICAL HORIZONS
Islamic Banking in
Malaysia: Industry at
Crossroads
KT Bank AG –
The First Islamic
Bank in Germany
The 4Cs of
Sustainability
in Asia
MGCC PERSPECTIVES
is published six times p. a. by the
Malaysian-German Chamber
of Commerce and Industry.
PUBLISHER
Datuk Muhammad Feisol bin Haji Hassan.
It is distributed free of charge to
members and qualified non-members
in Malaysia and abroad.
7
12
FOCUS
CONTENTS
THE DEVELOPMENT OF THE ISLAMIC FINANCE INDUSTRY
– TOWARDS BUSINESS GROWTH AND NEW GEOGRAPHICAL HORIZONS
FEATURE
ISLAMIC BANKING IN MALAYSIA: INDUSTRY AT CROSSROADS
KT BANK AG – THE FIRST ISLAMIC BANK IN GERMANY
THE JOURNEY OF MALAYSIA’S ISLAMIC FINANCE INDUSTRY
SOCIAL MARKET ECONOMY & DEMOCRACY WORLDWIDE
– THE CASE OF MUSLIM DOMINATED COUNTRIES
22 CSR COLUMN
THE 4CS OF SUSTAINABILITY IN ASIA
The Corporate Leviathan by Jayanthi Desan
24
32
36
38
46
48
42
54
LEGAL & INVESTMENT
MEETING TODAY’S SUPPLY CHAIN TRENDS AND CHALLENGES – PT. 2
THE PRINCIPAL HUB INCENTIVE, MALAYSIA
MALAYSIAN INSOLVENCY LAW
– A BRIEF CONVERSATION WITH RAVINDRAN ADVOCATES & SOLICITORS
ECONOMICS
EDUCATION AND TRAINING
EVENTS
GERMAN INSTITUTIONS
MEMBERS
TRADE FAIRS
MALAYSIAN-GERMAN CHAMBER
OF COMMERCE AND INDUSTRY
(171131-U)
Supported by the Federal Ministry of
Economic Affairs and Energy based on
a resolution of the German Bundestag.
Suite 47.1, Level 47, Menara Ambank
No. 8, Jalan Yap Kwan Seng
50450 Kuala Lumpur, Malaysia
Tel: 603-9235 1800
Fax: 603-2072 1198
homepage: malaysia.ahk.de
email: info@malaysia.ahk.de
*All opinions expressed in articles do not
necessarily reflect the views of MGCC.
EDITORIAL TEAM
Sabine Franze
Cheryl Sim
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4
EDITORIAL
No Room for Legacies
About Dynamics and Moving Forward
Over the past years, the Chamber has continuously expanded the range of services in
response to the growing interest of German companies in the Southeast Asian market.
We are now able to serve the enterprises during the complete timeline of their
commitment in Malaysia with our experienced and motivated team, especially
companies from the so called German Mittelstand (small and medium sized enterprises).
In addition, MGCC has established itself in the past few years in some strategic areas.
These include corporate social responsibility (CSR), environmental technologies,
renewable energies and energy efficiency as well as vocational training. The engagement
is based on business opportunities as well as on improvements of framework conditions
for international supply chains or the development of talents. My personal highlight is the
development of a dual vocational training in accordance with German standards in
industrial and logistics management which went into its second year in June 2015.
With a similar programme in mechatronics set to start in August/September 2015, we will
extend our engagement in the technical area. Special thanks go out to the companies,
which pioneer the programme, as well as to the Malaysian government, whose support
we are enjoying, and the training institutes willing to adapt their training concepts to
the dual approach.
Looking towards the future, we are encouraged by the long-standing attractiveness of
Malaysia as a business location for German companies. Next year Behn Meyer will
celebrate their 125th anniversary in the country. Many other companies can look back
upon many decades of successful engagement in Malaysia. Among them are a large
number of small and medium-sized companies. Over the past 10 years we have observed
a trend where low-cost manufacturing strategies were replaced by policies to establish a
market-access base in South-East Asia, acknowledging the dynamics and opportunities
of the region and complementing it by building up service, innovation and training
capacities.
To fully unlock the potential is, however, not solely in the hands of the private sector.
Open markets require political decisions and drivers. The ten member states of the
Association of South-East Asian Nations have laid down their intentions in the framework
of the ASEAN Economic Community (AEC) 2015 coming into force at the end of this year.
We are very much aware that AEC 2015 is work in progress and that we cannot expect a
fully integrated market on 1 January 2016. With regard to the free movement of goods
the AEC 2015 is well on the way towards a single market. However, the harmonisation of
standards, norms and administrative procedures, the mutual recognition of registrations
and licenses or the free choice of the country of employment – at least for skilled workers
and university graduates – still require considerable efforts.
The Chamber will continue its dialogue with the Malaysian government on continuously
improving the framework for doing business here and advise our members and clients
on business opportunities and how to take advantage of them. The choice of topic for
this issue also reflects our sensitivity for business areas, which might not easily come to
the mind of a German entrepreneur and which extends beyond Islamic banking to all
aspects of halal.
For me it is now time to say farewell. When you are reading these lines I will have taken
up a new assignment at the Federal Ministry of Economic Affairs and Energy in Berlin. I do
so with the good feeling that the dynamics of the Chamber is ensured by an able and
engaged team which will move things forward under the helm and in the good hands of
my successor, Mr Daniel Bernbeck.
Terima kasih and Auf Wiedersehen.
Alexander Stedtfeld
Executive Director,
Malaysian-German Chamber of Commerce and Industry
BOARD OF DIRECTORS
THOMAS ZIMMERLE
President
DATO’ ROBERT TEO KENG TUAN
Vice President
P. KANDIAH
Treasurer
ALEXANDER STEDTFELD
Executive Director
DATUK MUHAMMAD FEISOL HJ. HASSAN
FRANCIS LEE
IR. LEE SWEE ENG
LIM KHIANG HUA
MARTIN METZGER
PETER LENHARDT
PETER ZUBER
PHILIPP KERSTING
ROLAND FOLGER
WENDY LAU
WOLFGANG LAABS
YBHG TAN SRI DATO’ G.S. GILL
Thank you!
Mr Alexander Stedtfeld
We greatly value your commitment and contribution
to the Chamber for the past 7 years. We wish you best of luck and
success in your future endeavours and a good start in Berlin!
Heartfelt appreciation from all of us at MGCC:
Thomas
Lee Huang
Sabine
Peck Fah
Veeni
Michelle
Surayah
Saparin
Sherena
Sharifudin
Miriam
Katja
Shekila
Fairuz
Selina
Patricia
Johanna
Carmen
Victoria
Ravannia
Jaclyn
Mageswary
Yasmin
Cheryl
Wipha
Jenny
Josef
Cathrin
Ivy
Suitable for the occasion, in their weekly “Business Leader Column” where readers get a rare opportunity
to get some insight into the life and experiences of a business leader on a more personal level, SUNBIZ recently
published an interview featuring the views and thoughts of “our” Alexander Stedtfeld.
FOCUS
The Development of the
Islamic Finance Industry
– Towards Business Growth and
New Geographical Horizons
In the past five years, the global Islamic
finance industry has undergone solid
growth, recording a 17.3% Compounded
Annual Growth Rate (CAGR) between 2009
and 20141. Today, total global financial
assets of the Islamic financial industry
is estimated to be more than USD2tln2.
Beyond these headline numbers, the
industry has experienced transformative
changes, which supports the overarching
goal of Islamic finance as a more inclusive
and equitable financial system. The
evolution of regulations related to Islamic
finance and the ensuing product innovation
have boosted Islamic financial institutions’
(IFIs) ability to serve the economy through
Shariah-compliant instruments.
Several key themes that have emerged at
global level aspire greater drive for the
industry to expand its frontiers and tap into
new business and geographical horizons.
Of importance, the growth in Islamic
finance has attracted the attention of the
conventional banking industry and non-OIC
countries to tap into this growing market.
The interest of conventional institutions in
Islamic finance is part of its testament on its
universal appeal and propositions, especially
to tap wider investor and consumer base.
Furthermore, ongoing efforts are being
intensified at improving and harmonising
standards on regulatory, prudential,
accounting, legal and human capital
matters – setting the stage for a more
cohesive and sustainable Islamic financial
industry in the future.
MARKET BREADTH AND DEPTH:
EVOLUTION AND PERFORMANCE
These IFIs were mainly home-grown and
were supported by localised demand for
Islamic finance, and mostly regulated under
laws which had been designed for the
conventional finance industry. Meanwhile,
regulations governing the IFIs were
conducted on needed basis, and geared
towards domestic institutions only; most
institutions dealing with cross-border or
global Islamic finance standards only started
to gain traction in the late 1990s onwards.
Having begun as a nascent sector in the
1970s that predominantly focused on
Shariah-compliant banking systems, today
Islamic finance is a complete financial
system of its own that includes capital
market products and services such as
Islamic securitised assets (sukuk), Islamic
equities, Islamic investment funds, and also
Islamic insurance services (takaful). Apart
from existing key Islamic financial markets
in the likes of Malaysia and the GCC,
the industry’s growth gained stronger
footing in parts of Asia such as Turkey,
Pakistan and Bangladesh; and African
countries namely Kenya, South Africa and
Nigeria. Furthermore, advanced economies
such as the UK, Hong Kong, Singapore and
Germany have seen increased activity in
Islamic finance in recent years. At present,
the top Islamic finance jurisdictions by
assets are Malaysia and Saudi Arabia. Other
important markets include the UAE, Kuwait
and Qatar, as well as the highly-populous
domicile of Indonesia. In Islamic funds, key
financial centres such Jersey, Luxembourg
and the US are home to a significant share of
funds. More recently, the industry has
transformed into a more cohesive and
competitive system. Of significance, the
rapid growth of Islamic finance between
2009 and 2014 (post crisis period) has
been characterized by a deeper and
more comprehensive industry, a widening
investor and issuer base, improving
industry infrastructure (including regulatory
developments) and more cross-border
activity. The global Islamic finance industry
is gradually emerging as an important
component supporting international
economic and financial linkages. Islamic
financing facilities are increasingly being
used to fund various transactions including
cross-border trade financing, national
infrastructural and developmental projects,
supporting the international halal trade
industry and also facilitating foreign direct
and portfolio investments.
1
2
KFH Research, February 2015
KFH Research, February 2015
7
8
FOCUS
Total Islamic Finance Assets (2009 – 2018E)
a greater role in the mobilisation of funds for environment friendly
projects and infrastructure projects while addressing industry needs
for better liquidity management and capitalisation of IFIs.
2,500
2,124
USD (blns)
2,000
1,500
1,000
500
0
2009
2010
2011
2012
2013
2014E
Total global financial assets of the Islamic financial industry is estimated
to be more than USD2tln and characterised by:
i. Deeper and more comprehensive industry;
ii. Widening investor and issuer base;
iii. Increased cross-border activity; and
iv. Improving industry infrastructure (including regulatory development).
Source: KHF Research database.
A DEEPER AND MORE COMPREHENSIVE INDUSTRY
The Islamic banking market has reached greater depth, as evidenced
by rapidly growing market share vis-à-vis conventional institutions.
In some of the more advanced Islamic finance jurisdictions, Islamic
banking is set to gradually take the lead as the main banking sector
such as Saudi Arabia (where it represents 52% of the domestic
system’s banking assets) and Kuwait (45%). Similarly, Islamic banking
is rapidly gaining market share Bangladesh, Malaysia and Qatar
(17%, 22% and 25% respectively). These figures are encouraging,
and suggest that in countries with a large Muslim population, solid
Islamic finance infrastructure and intensifying competition amongst
IFIs, Islamic finance is likely to increase its market share in the
domestic financial system. In countries with predominantly nonMuslim populations, Islamic finance offers opportunities for
corporates and SMEs, in part due to its ethical value propositions.
300
60.0%
51.7%
45.5%
200
40.0%
150
30.0%
25.6%
23.9%
17.8%
12.1%
50
5.7%
4.9%
% share
USD (blns)
50.0%
100
20.0%
19.0%
9.6%
10.0%
Pakistan
Bangladesh
Indonesia
Bahrain
Turkey
Qatar
Kuwait
UAE
Malaysia
0.0%
Saudi Arabia
0
Assets (LHS)
Islamic Finance Innovations and Developments
(1970s - present)
1970/1980s
• Introduction of Islamic banks offering basic deposit and financing services.
1990s
• Improvements in banking services to expand into newer retail and corporate banking segments.
• Introduction of Islamic capital markets with listing of Islamic equity indices, introduction of Islamic
funds and the issuance of first corporate sukuk in Malaysia by Shell.
Top Islamic Banking Jurisdictions:
Assets* (LHS) and Market Share (RHS)
(end-2013)
250
The global primary sukuk market has witnessed several new and
innovative sukuk in recent times. Amongst these are sukuk with
perpetual tenures and Basel III-compliant sukuk. The increasing
popularity of perpetual sukuk reflects confidence in the sukuk
market as a long-term source of funds for key economic projects.
To date, sukuk with indefinite tenures have been issued by the
financial sector in the UAE, and the transportation and real estate
sectors in Malaysia. On another note, more Islamic banks are
turning towards issuing Basel III compliant sukuk instruments in
order to satisfy the revised capital standards. Since the issuance of
the world’s first Basel III compliant sukuk in November 2012, Islamic
banks in countries including the United Arab Emirates (UAE), Saudi
Arabia and Malaysia have issued such innovative sukuk instruments.
Overall, the global sukuk market is rapidly expanding its horizons,
and sukuk are increasingly becoming an attractive source of
alternative fund raising instruments. To date, a total of 30
jurisdictions have issued sukuk instruments (excluding offshore
jurisdictions), and this number is expected to grow further based
on recent success in new markets including South Africa, Senegal,
Hong Kong and Luxembourg.
Share of domestic banking system (RHS)
Source: Central banks, annual reports, KFH Research.
*DFI assets are included for Malaysia’s Islamic banking share
Product innovation in Islamic banking has been steadily progressing
since the 1970s. In the early days, the Shariah-compliant banking
sector offered mainly “plain vanilla” products such as basic deposit and
financing services for retail clients. In the 1990s, Islamic banking
expanded into more retail products while serving the corporate
sector as well. The turning point for Islamic banking occurred
sometime in the 2000s, when the existence of bigger banks
and clearer regulations supported its expansion into wealth
management, trade financing, structured products, and many other
new products. Similarly, other key Islamic finance segments such as
sukuk, funds and takaful had also expanded significantly in this
decade. In recent years, Islamic finance, including banking, has played
2000s
• Expansion of Islamic banking into various areas including wealth management, trade financing
structured products, investment banking, hedging instruments and corporate financial solutions.
• A full-array of Islamic capital market instruments in place including equities, Islamic bonds and asset
management.
• Takaful sector increasingly becoming focus of regulators to spur growth and innovation in the
segment.
2010s
• Islamic finance as an ethical financial system bridging the gap with the real sector and potentially
contributing towards global financial stability.
• Islamic finance new growth opportunities in:
– Environment-Friendly Projects
– Shariah-Complaint Risk Management
– Addressing Liquidity and Capitalisation of IFIs
– Infrastructure Projects
Source: MIFC Insights on “Innovations Drive Expansion of Global Islamic Finance Industry”.
Meanwhile, the size of the global sukuk outstanding in the market
has more than doubled in the past five years, from USD123.2bln in
2009 to USD300.9bln as at end-20143. A robust secondary market
enables more trading activity for secondary sukuk, and the greater
tradability of sukuk will further improve the cost competitiveness
of the instrument as a means to raise financing. Malaysia continued
to lead the secondary sukuk market, with USD172.8bln outstanding
amount as at end-2014, followed by Saudi Arabia at USD50.4 bln.
In terms of growth, Qatar and Indonesia recorded CAGRs of 55.6%
and 41.2% (from a relatively modest base) in sukuk outstanding in
the past five years4, supported mainly sovereign issuers and
issuances of infrastructure-related sukuk.
3
4
KFH Research, February 2015
KFH Research, February 2015
FOCUS
Global Sukuk Outstanding (2009 – 2014)
350.00
300.89
USD (bln)
300.00
9
Africa, Nigeria, Turkey and Maldives. The debut issuances by these
domiciles are mainly from sovereign issuers, who set a benchmark
to pave the way for future issuers from government-related entities
and the private sector.
250.00
Sukuk Issuance by Country (2014)
200.00
150.00
123.16
100.00
50.00
–
2009
2010
2011
2012
2013
2014
Malaysia
2.0%
Luxembourg
4.8%
Indonesia
3.5%
Source: IFIS, Zawya, Bloomberg, KFH Research.
Maldives
0.8%
Mauritius
4.5%
Bahrain
5.3%
Brunei
65.6%
Hong Kong
9.9%
Gambia
3.5%
Sukuk Outstanding in Seleted Jurisdictions (2009 and 2014)
200
180
160
Source: IFIS, Zawya, Bloomberg, KFH Research.
USD (bln)
140
120
100
80
60
40
20
0
2009
Malaysia
Saudi Arabia
Indonesia
Qatar
UAE
2014
Source: IFIS, Zawya, Bloomberg, KFH Research.
In the Islamic fund management industry, an ongoing innovation
include mechanism to improve returns through the introduction
of Shariah-compliant “Smart Beta” strategies. The Smart Beta
strategy became popular in the past three years, spurred by a
desire to diversify investment strategies in a challenging post-crisis
environment. Broadly, it involves weighting the investment
portfolio against fundamental business metrics such as sales,
earning, book value and other indicators, as opposed to weights
based on market capitalization5. These performance-based
weights are seen as a better gauge of returns, and is in line with
one of the main tenets of Islamic finance – which is to support real
activity. For investors, the diversification of investment strategies is
likely to support better returns.
Meanwhile, total gross takaful contributions are expected to
increase around USD26bln at end-20156. In the takaful sector,
Waqf-based takaful models have become more commonplace,
involving the utilization of a redistributive instrument to operate a
profit-sharing entity. This model is a workable example that may
resolve certain Shariah issues in pure Mudharabah and Wakalah
arrangements (for example, those concerning ownership); and has
been applied successfully in Malaysia, Pakistan and South Africa7.
In Pakistan, for example, all takaful companies operate on the basis
of a Wakalah-Waqf hybrid model. Participants’ contributions to the
Waqf fund are invested in safe Shariah-compliant investments and
returns are used for the benefit of the participants.
A WIDENING ISSUER AND INVESTOR BASE
The growth of Islamic finance activity has been supported by
increasing participation from a wide range of investors. This is
particularly evident in the sukuk market, where sukuk issuances in
2014 were from 19 different countries. This represents a doubling of
the sukuk issuer base by country, as only 10 countries had issued
sukuk in 2009. New entrants to the sukuk market in the past five
years include the UK, Hong Kong, Senegal, Luxembourg, South
Apart from a more diversified country base, the sukuk market has
seen more issuers from different sectors, especially in the leading
markets of Malaysia and Saudi Arabia. Globally, the main issuer of
sukuk are sovereigns as well as large infrastructure-building
companies in power and utilities, telecommunications and
transportation. The Malaysian market has also attracted issuers
from smaller but important sectors such as healthcare and
education. In Saudi Arabia, a USD133.3mln sukuk issued by retail
conglomerate Fawaz Alhokair Group marked a significant foray by
the sector into the sukuk market. Similarly, halal food producer Al
Marai of Saudi Arabi has also been active in the sukuk market – the
halal market represents a relatively untapped opportunity as sukuk
issuances would support end-to-end Shariah compliance of the
budding industry’s operations.
On another note, the sukuk market has attracted a wider investor
base for key sukuk issuances, especially for those denominated in
key global currencies such as the USD, and for sukuk issued by
established and highly-rated entities which are new to the sukuk
market such as the debut sukuk by Hong Kong. GCC issuers tend
to issue large infrastructure-related sukuk in USD, listed in major
financial exchanges such as in London, Ireland and Luxembourg
– allowing greater access to international investors. Elsewhere, the
Hong Kong sukuk had attracted almost 20% of investors from the
US and Europe.
INCREASED CROSS-BORDER ACTIVITY
International transactions in Islamic finance have intensified in
recent years, supported by clearer regulations, established IFIs
venturing abroad, multilateral support and the attractiveness of key
Islamic finance jurisdictions. In the Islamic banking sector, for
example, several large GCC IFIs such as Al-Rajhi Bank of Saudi Arabia
and Kuwait Finance House of Kuwait have set up operations in
Malaysia, Turkey and Pakistan. An Islamic bank of Bahrain has
established a presence in many countries including Jordan, Tunisia,
Sudan, Turkey, Bahrain, Egypt, Algeria, Pakistan, South Africa,
Lebanon, Syria, Iraq and Saudi Arabia8. The proliferation of large and
international IFIs in these domiciles creates healthy competition
amid greater transfers of expertise. In this regard, support from
multilaterals such as the IFSB has been imperative to allow more
cross-border transactions to take place; for example, the work of
IFSB takes into account Islamic finance operations dual-banking
system, which is the norm for these jurisdictions.
Towers Watson
KFH Research, February 2015
Swiss Re, KFH Research, February 2015
8
Bank’s website
5
6
7
10 FOCUS
Cross-border Activity in Islamic Finance
Source: KFH Research, February 2015.
The formation of the International Islamic Liquidity Management
Corporation (IILM) aimed to facilitate effective cross-border
Islamic liquidity management. The sukuk launched by the IILM
are considered important milestones in facilitating cross-border
finance flows amongst jurisdictions where Islamic banks operate.
Collectively, the various coordinated efforts and expanding
bilateral relationships between Islamic finance practising countries
are serving as a catalyst for expanding the outreach and growth of
the Islamic finance sector.
EUROPE: A RISING OPPORTUNITY FOR ISLAMIC FINANCE
In Europe, interest in Islamic finance has been reignited
following monumental sovereign sukuk issuances by the UK and
Luxembourg in 2014. The Islamic financial sector in Europe,
although small in size, has promising potentials to gain traction
given the fast expanding bilateral ties between European countries
and Islamic financial hubs of the GCC and Malaysia. Of particular
interest is the symbiotic relationship between Malaysia and the
UK. In year 2012, the countries agreed to double bilateral trade to
GBP8bln (MYR43bln) by 20169, and investors from both sides are
keen to continue exploring economic and financial opportunities.
The UK’s growing interest in Islamic finance is expected to
significantly complement the two jurisdictions’ existing economic
and financial linkages including facilitating business transactions
through Shariah-compliant means.
The prospects of the Islamic finance industry in Europe are broadly
positive and expected to be reinforced partly by a modest
economic recovery of the Eurozone and the greater European
Union (EU). Reduction in fiscal drag, accommodative monetary
policy and improving lending conditions may help sustain recent
gains in the European economic recovery process. Recent data
prints have allowed the GDP growth forecast for 2016 to rise
slightly. Greatly reduced tail risks have buoyed financial markets,
with marked compression in sovereign yield spreads in some
economies. Domestic demand in the Eurozone has stabilised, with
net exports also contributing positively. The EU is estimated to
have expanded 1.3% in 2014, while the Eurozone might have
grown 0.8%10. For 2016, the EU and the Eurozone are projected to
expand 2.1% and 1.9% respectively.
Recent developments in key European financial markets represent
promising potentials for the Islamic finance industry to gain deeper
traction in Europe. Historically, Islamic finance has progressed
gradually in Europe since its initiation in the early 1980s. The
momentum has picked up post global financial crisis in view of
Islamic finance’s sustained growth and increasing global traction.
The development of Islamic finance has been beneficial for multiple
stakeholders, both within and outside of the region. As such the
offering of Islamic banking products and services in Europe has
made it possible for the Muslim population and the halal sector in
the region to resort to Shariah-compliant financial services.
Although the overall magnitude of Islamic finance is still limited and
fragmented, Islamic banking and Islamic funds sectors have made
considerable progress in the region. Particularly, in recent years,
Islamic funds have been gaining greater interest, and several
European financial centres have taken a number of steps to facilitate
the sector. The sukuk market has also stepped into the limelight
recently owing to debut sovereign issuances by the UK – which
earned the spot of the first non-Islamic sovereign sukuk issuer in the
world – and Luxembourg. The sukuks by these countries have been
welcomed by the global Islamic finance community.
The share of Europe as a region in global Islamic finance assets
remains marginal. As of 1H14, the regional Islamic banking assets
(excluding those under Islamic non-banking institutions) accounted
for just 0.5% of the global Islamic total11. Islamic funds domiciled in
European jurisdictions fared slightly better, cumulatively holding
USD14.4bln in assets as of 15 December 2014 and accounting for
20% of the Shariah-compliant assets under management
worldwide12. On another more positive note, last year was notable
for the European sukuk scene, with the debut sovereign sukuk
issuances from the United Kingdom (UK) and Luxembourg.
ISLAMIC FUNDS IN EUROPE: STEADY GROWTH
Islamic funds domiciled in Europe held approximately USD14.4bln
in assets under management (AuM) as at 15 December 201413. This
accounted for about 20% of the global aggregate Shariah-compliant
AuM, up from 12% in 2012. Generally, the appeal of European
domiciles for fund managers lies in the attractive combination of tax
benefits, regulatory sophistication and operational efficiency. For
the benefit of Islamic fund managers, the financial regulators in a
number of European states – from Ireland to France to Malta – have
also issued guidelines facilitating the registration of Shariahcompliant investment schemes in their territories.
European Islamic Fund Assets by Domicile
(15 December 2014)
y-o-y, %
Europe: Real GDP Growth (2013 - 2016F)
European Union
Eurozone
Germany
Ireland
France
Italy
Luxembourg
UK
Source: Zawya, Bloomberg, Eurekahedge, KFH Research.
Office of The Prime Minister of Malaysia
European Commission
KFH Research
12
KFH Research
13
KFH Research
9
Source: European Commission.
10
11
FOCUS 11
SUKUK MARKET IN EUROPE: GROWING INTEREST
Europe’s very first sukuk programme was launched in 2004, through
a German federal state of Saxony-Anhalt. The following year, the UK
issued the region’s first corporate sukuk. In 2010, Europe’s second
corporate sukuk also came from the UK. The successive corporate
issuances of sukuk in Europe originated from France, Germany, the
UK and Luxembourg. In 2014, the UK and Luxembourg entered the
Islamic capital market with highly anticipated debut sovereign
sukuk issuances. These took the outstanding sukuk amount 112.2%
up from end-2013 to USD719.9mln as of 3Q2014, which accounted
for approximately 0.24% of the global sukuk outstanding figure14.
We expect a gradual growth in the number of sukuk issuances
coming out of Europe in the next few years, especially from
European corporates that may follow in the footsteps of sovereign
issuers and also because of European investors’ rising appetite for
alternative investment opportunities.
Europe: Historical Trend of Sukuk Issuances
700
632.02
USD mln
600
500
400
300
200
Going forward, the industry is expected to expand beyond the
USD3tln mark by 201815 and continue to evolve as an increasingly
significant part of the global financial system. The growing
participation of non-traditional Islamic finance domiciles in the US,
Europe and East Asia will spur greater interest and innovation in
Shariah-compliant financial services. The next five years will likely be
marked by continued transformation of Islamic finance to better
serve real economic activity in the global sphere.
257.6
Islamic Banks VS Conventional Banks
123
100
0
THE ROAD AHEAD
Islamic finance has come a long way from its beginnings in the
1960s. The industry has recorded double digit growth rates in all
four segments, and has expanded to several geographical regions
– including in the non-OIC countries. More importantly, the recent
expansion of the industry in the last five years have been more
meaningful, and marks the transformation of Islamic finance
into a more competitive and resilient industry. Reflecting the
growth and depth of the industry, Islamic finance has attracted a
widening investor and issuer base, as well as more cross-border
financial transactions. These development were well-supported
by improvements in the industry’s infrastructure, as regulatory
developments continued to keep pace with industry and
market demands.
2004
2005
9.97
31.59
2010
2012
Islamic Banks
Conventional Banks
1
The functions and operating modes of Islamic
banks are based on the principles of Islamic
Shariah.
The functions and operating modes of
conventional banks are based on fully
manmade principles (largely capitalism
theory).
2
It promotes risk sharing between provider of
capital (investor) and the user of funds
(entrepreneur).
The investor/lender is guaranteed of a
predetermined rate of interest or returns.
3
It also aims at maximizing profit but subject to
Shariah restrictions.
Unrestricted profit maximisation illustrated by
derivatives trading.
4
In the modern Islamic banking system, it has
become one of the service-oriented functions
of the Islamic banks to be a Zakat Collection
Centre and they also pay out their Zakat.
It does not deal with Zakat.
5
Participation in partnership business is
the fundamental function of the Islamic
banks. Understanding the venture is therefore
essential. Embedded know-your-customer
orientation.
Lending money and getting it back with
compounding interest is the fundamental
function of the conventional banks. Money is a
commodity and the motivation.
6
Islamic banks have no provision to charge any
extra money from the defaulters except for
compensation (typically such proceeds is
given to charity). Rebates early settlement at
the Bank’s discretion.
It can charge additional money (penalty and
compounded interest) in case of defaulters.
7
Due importance to the public interest/
maslahah. Its ultimate aim is to ensure growth
with equity.
Often, lenders/banks interest become the
forefront. It makes no effort to ensure growth
with equity.
8
For the Islamic banks, it must be based on a
Shariah approved underlying transaction.
For interest-based commercial banks,
borrowing from the money market is
relatively easier.
9
Since it shares profit and loss, the Islamic banks
pay greater attention to developing project
appraisal and evaluations.
Since income from the advances/loans is
fixed, it gives little importance to developing
expertise in project appraisal and evaluations.
Risks are transferable at a price (and
sometimes incremental).
10
Greater emphasis on the viability of the
projects.
The conventional banks give greater emphasis
on creditworthiness of the clients where credit
equals to ‘commodity pricing’.
11
The status of Islamic bank in relation to its
clients is that of partners, investors and trader,
buyer and seller.
Relationship is often defined as that of
creditor-debtor.
12
Islamic bank can only guarantee deposits for
deposit account, which is based on the
principle of al-wadiah, thus the depositors are
guaranteed repayment of their funds, however
if the account is based on the mudharabah
concept, client have to share in a loss position.
A conventional bank has to guarantee all its
deposits.
46.5
2013
3Q14
Source: IFIS, Zawya, KFH Research.
ISLAMIC FINANCE OUTLOOK IN EUROPE: OPPORTUNITIES
FOR MALAYSIA AND EUROPE
Overall, the economic and financial characteristics of the European
region enable several key growth areas for Islamic financial players
across the region, including: (1) growing trade and financial
linkages between the EU and the Organisation of Islamic
Cooperation (OIC) countries; (2) increasing preferences for ethical
financial solutions in the EU; (3) growing interest in developing the
halal food business sector in Europe; (4) need for an alternative
pool of liquid funds in the aftermath of the economic difficulties in
the conventional finance markets in recent years; and (5) increasing
governmental support for the Islamic financial sector in various
European jurisdictions. Since the inception of the Islamic finance
industry, a number of countries across the European continent have
implemented initiatives aimed at facilitating the inroad of the
alternative Shariah- compliant financial activities. Several regulatory
authorities in Europe have also forged linkages via cooperation
agreements with key Islamic finance jurisdictions such as Bahrain,
Malaysia, Qatar and the United Arab Emirates. Aside from regulators,
private sector organisations, including industry associations and
professional training institutions, have started exploring Islamic
financial business opportunities, including cross border ventures.
Following London’s hosting of the World Islamic Economic Forum
(WIEF) in October 2013, the Global Islamic Finance and Investment
Group (GIFIG) was established, with the aim of identifying key
global opportunities and challenges facing Islamic finance and
using its knowledge and expertise to create a global Islamic
finance market that supports growth and prosperity. The group
includes ministers, central bank governors, regulators and heads of
major Islamic financial institutions. The GIFIG’s inaugural meeting
was held in London in March 2014 and most recently in Kuala
Lumpur in February 2015. The structure of the EU single market
system is capable of spurring the future expansion of Islamic
finance businesses.
KFH Research
KFH Research, February 2015
14
15
Source: Malaysia International Islamic Financial Centre (2015). The Sustainable Financial System
– An Evolutionary Journey (accessed via http://www.mifc.com/).
Malaysia International Islamic Financial Centre (2015). Europe: A Rising Opportunity for Islamic Finance
(accessed via http://www.mifc.com/).
Mudzaffar Abu Bakar, Bank Islam (2010). Seminar on Islamic Finance, Broad Distinction between
Islamic and Conventional Banking (accessed via http://www.bankislam.com.my/en/Documents/shariah/
BroadDistinctionBetweenIslamicConventional.pdf).
12 FEATURE
Islamic Banking in Malaysia:
Industry at Crossroads
by Prof Emeritus Datuk Dr Mohamed Ariff, INCEIF
Malaysia is playing an iconic role in
Islamic banking, having been a
pioneer in the beginning and a
frontrunner in the global arena at
present. Malaysia has come a long
way since the first Islamic bank was
established in the country in 1983.
There are now five wholesome
Islamic banks, local and foreign, and
eleven Islamic subsidiary banks
owned by conventional banks, local
and foreign.
As is well known, Islamic banking operations
are driven by the shari’ah which defines the
nature and character of the deposits
mobilised and financing provided. Islam
prohibits interest (riba) and permits trade
(tijara). Accordingly, profits in Islamic
banking operations are derived from the
contract of trade (al-bai’), unlike the
conventional banks’ profits which are
derived largely from interest-bearing loans.
In Islam, it is business risk taking, and not
financial risk taking, that forms the basis for
profits. The al-bai’ principle is manifested by
an exchange of money with an underlying
asset, whereas a contract of interestbearing loan entails an exchange of money
for more money.
What legitimises profit in Islam is risk taking
(ghorm), effort (kasb) and responsibility
(daman). The shari’ah objective (maqasid
al-shari’ah) plays a critical role in determining
the legality of Islamic transactions, as it
insists that all transactions must have
positive impacts on general welfare. Seen
in this context, there is much more to
Islamic banking than the prohibition of
riba. Other prohibitions include ambiguity
(gharar), gambling (maisir), and bribery
(rishwa). All transactions must be transparent
based on mutual consent with offer and
acceptance (ijab and qabul) being free from
duress (ikroh).
Put in a nutshell, real sector connectivity and
risk sharing distinguish Islamic banking from
conventional banking. In Islamic banking, all
financial transactions must relate to the real
economy with no space for ‘financialisation’
or financing for the sake of financing. In the
Islamic paradigm, the financial sector is
inextricably linked to the real sector of the
economy, which means that the financial
sector would not exist on its own. In other
words, in the Islamic order, the financial
sector primarily functions as the facilitator
for the real sector.
While Islamic banks have demonstrated
that they are indeed different from their
conventional counterparts, there are
tensions between theory and practice of
Islamic banking. This may be attributed to
the perception that the Islamic products
are no different from the conventional
ones, going not only by the strong
resemblence between the two but also by
the prices charged for the products.
According to the Law of One Price, two
products bearing the same risk profile
must assume the same pricing.
The crux of the problem lies in the fact that
Islamic bank products are modelled after
existing conventional bank products. For
every conventional product there is a
corresponding Islamic substitute with
shari’ah compliance. Islamic banks offer
‘differentiated’ products by simply adopting
conventional risk and return profile, subject
to shari’ah constraints. Thus, the products
offered by Islamic banks, in the first stage of
evolution, are very similar but not identical
to that of conventional banks.
It is envisaged that Islamic banks, in
the second stage, would move away
from ‘differentiated’ (shari’ah-compliant) to
distinctly ‘different’ or ‘dissimilar’ (shari’ahbased) products that will have no bearings
on the current conventional products. The
third stage is a visionary one that would
unveil innovative ‘home grown’ products
based on research and development (R&D)
FEATURE 13
efforts. To embrace this mature stage,
Islamic banks will have to leap into a new
development trajectory, with risk and
reward sharing modes of financing in sync
with the lofty Islamic ideals.
It took several centuries for conventional
banking to evolve into what it is today.
Islamic banking has a long way to go
before it can reach its pinnacle. For now,
even after four decades, Islamic banking
is still in the initial stage of product
differentiation. All indications are that
Islamic banks are likely to remain stuck in
this infant stage for a much longer period
than previously thought, given the current
trends in the banking industry.
The history of Islamic banking in Malaysia
is chequered with several development
phases. It started off with a single
wholesome Islamic bank enjoying an
enviable ‘monopoly’ position devoid of
competitive pressures. The second phase
witnessed the emergence of Islamic
‘windows’ in many conventional banks,
amidst concerns that funds might get
mixed up in ‘common kitchens’. In the
third phase, more wholesome Islamic
banks, both domestic and foreign,
appeared on the scene. Finally, in the
fourth phase, conventional banks’ Islamic
windows were replaced by full-blown
Islamic subsidiaries, both local and foreign,
rendering the ‘common kitchen’ concern a
non-issue, although one may still argue
that the sharing of facilities by conventional
parents and their Islamic subsidiaries is
tantamount to using ‘common utensils’.
The banking industry in the country is
currently dominated by conventional
banks, with Islamic banks accounting
for roughly one-fifith. Islamic banks
established as subsidiaries of conventional
banks outnumber wholesome Islamic
banks. Clearly, there has been no level
playing field. For conventional banks could
do what Islamic banks could (through their
Islamic subsidiaries or windows), while
Islamic banks understandably cannot do
what conventional banks can (by design).
For instance, it is unimaginable for a
wholesome Islamic bank to own
conventional subsidiaries or windows.
Conventional banks continue to play a
predominant role in the Malaysian economy,
despite losing some market share to Islamic
banks. The share of conventional banking in
total deposits has declined from 92.5% in
2007 to 80.4% in 2012, while its share of total
financing has also fallen from 93.4% to
78.0% between 2007 and 2012. But, their
Islamic subsidiaries have taken up much of
the slack, as the latter’s share of the Islamic
banking industry assets has grown
from 48.7% in 2007 to 79.5% in 2012.
Islamic subsidiaries of conventional banks
accounted for 77.2% of Islamic deposits and
83.1% of Islamic financing in 2012.
The share of Islamic subsidiaries of
conventional banks in total bank deposits
has risen sharply from 3.8% in 2007 to 16.4%
in 2012, while that of wholesome Islamic
banks has increased only marginally from
3.8% to 4.8%. Likewise, the latter’s share in
total bank financing/loans has risen only
incerementally from 3.2% to 3.7% between
2007 and 2012, while that of the Islamic
subsidiaries of conventional banks has
jumped from 3.4% to 23.7% during the
same period.
Evidently, the wholesome Islamic banks
pale in comparison. Their market share of
the Islamic banking business has declined
steadily over the years. Their share of total
Islamic deposits has fallen from 53.4% to
22.8% between 2007 and 2012, while their
share of Islamic financing has also shrunk
from 48.9% to 16.9%. In terms of total Islamic
banking assets, the share of wholesome
Islamic banks has also fallen from 51.8% in
2007 to 20.3% in 2012.
With conventional banks having an
overwhelming stronghold as stakeholders
in the Islamic banking industry, the
chances are that Islamic banks owned by
conventional banks will continute to copy
their prarents’ products with shari’ah
compliance. The wholesome Islamic banks,
which compete with the conventional banks
and their Islamic subsidiaries, are likely to
simply follow suit. While there may be
nothing objectionable about all this from the
shari’ah point of view, the ensuing fixation on
shari’ah compliance is likely to scuttle the
industry’s commitments to climb up the
value-added chain. All this means that Islamic
banks may stay focused on producing
‘shari’ah-compliant’ products rather than
‘shari’ah-based’ products.
To be sure, the products
of Islamic subsidiaries of
conventional banks are no less
‘Islamic’ than that of wholesome
Islamic banks, as all of them
adhere to the stringent shari’ah
requirements and they are all
subject to uncompromising
oversights.
Nonetheless, one would still wonder if the
Islamic banks owned by conventional
banks are as zealous or passionate about
Islamic principles as the wholesome Islamic
banks. It is a moot question who would
take the lead in propelling the Islamic
banking industry to the next levels: the
former or the latter? They can do it together
only if they equally share the zeal. If not,
the onus will fall squarely on wholesome
Islamic banks, but the pertinent question
then would be whether they can call the
shots when they are hugely outnumbered.
That said, one must not lose sight of the
huge contributions conventional banks
have made to the development of Islamic
banking industry. In the mid-eighties,
when the outreach of Bank Islam Malaysia
was limited by its small branch network,
the conventional banks’ Islamic windows
were able to take the Islamic banking
facility to every nook and corner of the
country, thanks to their extensive branch
networks. The conventional banks’ interest
in Islamic banking, for whatever reasons,
was then a boon to the fledging Islamic
banking industry. Going foward, one may
wonder if the strong involvement of
conventional banks in the Islamic banking
industry would constrain its advancement.
As mentioned earlier, real sector
connenctivity and risk sharing are the
hallmarks of Islamic banking. The current
Islamic banking products are mirror
images of conventional products, shari’ah
compliance being the main differentiator.
While real sector connenctivity is manifest
in all these products, there is much
controversy over tawarruq munazam, a
substitute for the conventional personal
loan facility, as its real sector connectivity is
dubious, where commodities are bought
and sold on the spot, not for profit but for
the sole purpose of securing a bank loan.
There is very little risk-sharing activity
going on currently in the Islamic banking
fraternity as Islamic banks have been acting
in a risk-averting manner. Contrary to the
notion that risk sharing forms the bedrock
of Islamic finance, musharakah (profit
and loss sharing) plays an extremely
insignificant role in the portfolio of Islamic
banks. The problem lies on both supply
and demand sides. On the supply side,
Islamic banks are wary of high risks
associated with the musharakah mode,
while credible clients on the demand
side find musharakah a costlier option as
the cost of equity capital is much higher
than that of borrowed capital, and hence
the preference for bank loans instead.
14 FEATURE
Therefore, only high-risk firms with
questionable credentials would seek
musharakah arrangements, and hence the
high risk premium associated with such
systematic risks.
Islamic banks face an identity crisis.
Nowadays, the term ‘lenders’ and ‘financiers’
are used interchangeably, although there
is a difference: all lenders are financiers, but
not all financiers are lenders. Islamic banks
do not ‘lend’ but do provide ‘financing’. All
this begs the question: if Islamic banks are
not ‘lenders’, need they identify themselves
as ‘banks’ in the first place? Viewed in this
perspective, the term ‘Islamic bank’ is
arguably a misnomer if not an oxymoron.
By associating with the banking (i.e.
lending) business, Islamic banks may have
unwittingly boxed themselves into the
conventional banking mindset.
The above identity has led unfortunately to
unintended consequences. The perception
that Islamic banks are not really different
from conventional banks stems from the
fact that (a) Islamic bank products closely
resemble conventional bank products, (b)
Islamic banks follow conventional bank
benchmarks in product pricing and (c)
Islamic banks behave like conventional
banks with hardly any risk sharing.
Notwithstanding the confusion all this may
have caused among the clientele, Islamic
banks in reality are very different from
conventional banks.
The Islamic banking clientele
may be classified, based on casual
empiricism, into four categories:
the loyalists, the sceptics, the
pragmatists and the opportunists.
The loyalist accepts Islamic bank
products with no questions or
qualms.
The sceptic has doubts about the purity of
some Islamic bank products but is willing
to tag along, assuming that things will
improve over time. The pragmatist is
unsure of the purity of Islamic bank
products but willing to give the benefit
of the doubt on the ground that sin,
if any, would fall on the financier and not
the customer. The opportunist is either
indifferent or agnostic, subscribing to the
view that riba refers to usury and
not bank interest, and would switch freely
from one to the other depending on costs
and returns.
One would expect that there will be more
and more ‘loyalists’ and fewer and fewer
‘sceptics’ as Islamic banks transcend to the
next level and beyond. The fact that Islamic
banking is stuck in the first stage of product
differentiation for four decades suggests
that Islamic banks are either complacent
or caught in what may be dubbed as
the ‘shari’ah compliance trap’. To break out
of the impasse, Islamic banks should
first cease to be under the shadow of
conventional banking, which means that
they must set their own standards, norms,
best practices and benchmarks instead of
following the conventional peers’.
would meet customer needs at competitive
prices, and this will empover them to
distance themselves from conventional
banking.
Anecdotal evidence suggests that Islamic
banks are competing with conventional
banks rather than among themselves. This
‘head-on competition’ with conventional
banks may have led Islamic banks to
concentrate on Islamic substitutes (with
shari’ah compliance) for conventional
products and follow the conventional
benchmarks in product pricing. Thus, the
returns on deposits and financing costs of
Islamic banks are strikingly similar to that
of conventional banks.
At the same time, if they can cut costs
through efficiency gains, they should also
be able to share these with their clients in
the form of better returns and lower costs.
Conceivably, there may come a time
when there will be Islamic banks with
specialisations, such as Murabaha Banks,
Mudarabah Banks, Musharakah Banks, etc.
This way, Islamic banks may well create
a ‘new’ market of their own without
having to compete with their conventional
counterparts. Under this scenario,
competition with conventional banks, to say
the least, would be indirect, not head-on.
The ‘head-on’ strategy would enable
Islamic banks to target at wider audiences,
comprising both Muslim and non-Muslim,
while it forces them to be on par with
conventional banks in terms of ease of
access, product mix and competitive
pricing. This option, however, places
Islamic banks at a huge scale disadvantage
vis-a-vis their conventional couterparts in
terms of economies of scale and scope and
at the risk of being boxed into the ‘shari’ah
compliance’ mould.
In contrast, the ‘niche market’ strategy
would take Islamic banks closer to meeting
specific Islamic needs by targeting
primarily customers who care most about
shari’ah rulings. The focus of Islamic banks
would then be squarely on the Muslim
clientele, meeting their basic banking
needs and venturing into sophisticated
areas, such as asset development and
wealth management. The niche market
approach can still be inclusive enough to
appeal to the non-Muslims who care for
the ethical content.
The niche market strategy implies that
Islamic banks will compete less and less
with conventional banks and more and
more among themselves. This reorientation
will compel them to come up with
innovative shari’ah-based products that
If Islamic banks can sell a ‘better’ product,
there is no reason why they should not
charge a ‘higher’ price, as the customers
would not mind paying a bit more for a
better product, what more if these banks
can sell better products at lower prices. We
will not be able to see the best of Islamic
finance unless and until Islamic banks are
able to leapfrog from a compliance mode
to an innovative one.
Prof Emeritus Datuk Dr Mohamed Ariff
Abdul Kareem is Professor of Economics and
Governance at INCEIF. He is also Distinguished
Fellow at Malaysian Institute of Economic
Research (MIER) where he was Executive
Director between 1997 and 2009. He received
his PhD in International Economics from
University of Lancaster, UK (1970).
FEATURE 15
KT Bank AG – The First Islamic
Bank in Germany
Mr Kemal Ozan, Chairman of the Management Board of KT Bank AG.
Although the Islamic finance industry
has been growing rapidly around
the globe, it has been slow to gain a
foothold in Europe. In March this
year, Kuveyt Türk, the largest bank
in Turkey has successfully obtained
its license to provide full-fledged
banking services in Germany
and become the pioneer that
introduces interest-free banking
model in Germany. KT Bank AG, the
wholly owned subsidiary of Kuveyt
Türk with headquarters in Frankfurt
am Main has started its operation
since 1st of July 2015. We invited
Mr Kemal Ozan, Chairman of the
Management Board of KT Bank AG
to share the journey of the bank to
set its foot in the second largest
Muslim community in Europe.
Q: KT Bank AG is the first fully operational
Islamic Bank in Germany since the 1st of
July 2015. What drove KT Bank AG to set
up an Islamic Bank in Germany?
There is huge potential for Islamic banking
in the Eurozone. We decided to start
operations in Germany, as with a population
of 4.3 million Muslims, Germany is potentially
the biggest market for Islamic Finance in
Europe, commercial and retail. Net incomes
of Muslim households are currently less
than the income of German households but
estimated to rise in the future, and Muslims
also have a remarkable savings rate of
nearly double the national average – 18%
compared to 10%. The majority of Muslims
in Germany are comparatively young, three
out of four are between 14 and 49 years old.
Besides, 41% of the Turkish Muslims in
Germany consider themselves to be very
religious which makes them a potential
target group for Islamic Finance products.
Islamic banking model in Germany and in
the Eurozone. The KT Bank AG is thus a
deposit credit institution according to
German law and member of the
„Entschädigungseinrichtung
deutscher
Banken GmbH (EdB)“ which secures
deposits up to EUR 100,000. In July 2015, KT
Bank AG started transactions and fullyfledged banking services in its Mannheim/
Frankfurt and Berlin branches with a start-up
capital of 45 million Euro, targeting a
potential customer base of more than 4
million Muslims and millions of clients
interested in ethical banking.
Q: The Islamic Banking sector is considered
the fastest growing segment in the global
financial system. Britain and France
opened their doors to Islamic Bank years
back. Why did KT Bank AG choose to start
now in Germany?
We are not completely new in the German
market – we did our research on the market
potential in Germany since many years. We
are now starting our fully-fledged banking
services after years of pioneering work in the
German market. In fact, in 2004, our mother
company Kuveyt Türk Katılım Bankası A.Ş.
opened our German operation with a
representation office in Mannheim. Ever
since, the bank has been pioneering in
informing the German market about the
ethical and socially responsible Islamic
banking system. In 2010, a successful market
entry in Germany was accomplished after
acquiring the third-state deposit mediation
license. In October 2012, Kuveyt Türk Katılım
Bankası A.Ş. applied at the BaFin, the Federal
Financial Supervisory Authority, for a full
banking license. In March 2015, Kuveyt Türk
obtained its license to provide fully-fledged
banking services in Germany according to
the interest-free Islamic banking principles
and under the name of KT Bank AG. KT Bank
AG is the first Islamic bank that has been
fully licensed to operate its deposit and loan
business in Germany. With this license, KT
Bank AG is the pioneer that introduced the
Q: According to a news report, Islamic
Banking is growing faster in Britain and
France than in many Islamic countries in
the Middle East and Asia. What will drive
demand for Islamic Banking in Germany?
How does Islamic Banking benefit businesses
in comparison with conventional banking?
Only 5% of Muslims in Germany use Islamic
Banking products yet. In total, we estimate a
potential client base of 200,000 households.
Any country in the Eurozone is a potential
market for Islamic Banking, as our interestfree Islamic banking model is a valuable
enhancement of the conventional banking
industry. An Islamic bank like the KT Bank AG
is perceived that its products and services
are targeted to Muslims only; yet we cater
for all religions and to every customer. We
appreciate customers from all religions,
backgrounds or nationalities as long as they
can identify themselves with our Islamic
value system, which is represented in our
banking approach. The bank operates like a
trader that buys goods and sells them with a
profit margin, participates in projects and
their success. We create real values through
our asset-backed investment approach. Our
mission is based on an ethical business
model with Islamic values. Our ethical
criteria for exclusion are, among others: the
prohibition of investing in the production of
alcohol and its distribution, in prostitution,
16 FEATURE
in the tobacco industry, in pornography, in
the arms industry as well as in the pork
meat industry. We don’t speculate and
don’t invest in overindebted companies.
Our non-Muslim customers are attracted
by the SRI (Socially Responsible Investment)
edge that we as an Islamic bank provide.
Also, in the case of our German market
entry, there were no regulatory provisions
which would prohibit or intentionally
prevent Islamic financing products. It took
us a long, pioneering time to establish our
business model within the existing
regulatory framework. We have assumed a
pioneering role in providing information
about the ethical and socially responsible
Islamic banking system in the German
market and we were very well supported by
the relevant authorities in Germany. It was a
joint, sustainable effort and very challenging
throughout all these years.
Q: Islamic banking is considered new for
the German community. What are the
strategies to promote Islamic Banking
services in Germany?
When we announced that we have been
licensed by the Federal Financial Supervisory
Authority (BaFin) to offer full-scale banking
services in Germany in March 2015, the
media feedback was massive. It became clear
that the ethical components of Islamic
banking carrying Islamic values, which are
universal values, hit the nerve of the German
public immensely. As Islamic bank, we are
thus one of the ethical banks which are
coming into focus of the general European
public more and more. Our message is:
We are very client-focused, service-oriented,
technology-savvy and offer a comprehensive
portfolio of very interesting products.
Q: How do you see the future of Islamic
Banking Industry in Germany? Will you
consider opening more branches in other
European countries as well?
We started our operations in 3 German
cities: in Mannheim, in Berlin and in
Frankfurt. All 3 cities have strong Muslim
communities. Berlin is the capital and
Frankfurt is the financial capital of
Germany, so it made total sense to start
our operations from these 3 bases. This
year, we also plan to open a branch in
Cologne, as North-Rhine Westfalia also
has a huge Muslim population. We are
also planning for branches in 8 - 10 major
German cities in total and a network of
regional corner branches with 1 - 2 service
staff and cutting-edge service terminals.
After stabilising our German expansion, we
plan to move into other highly interesting
markets in the Eurozone, like the Netherlands
and France.
FEATURE 17
The Journey of Malaysia’s Islamic
Finance Industry
Bakal Haji was established for Muslims
going for their Hajj (pilgrimage to Mecca)
to save their money for their expenses
during the pilgrimage. This institution was
later merged with Pejabat Urusan Haji to
form Lembaga Urusan dan Tabung Haji,
now known as Lembaga Tabung Haji (Haji
Fund Board).
In 1983, the first Islamic bank in Malaysia
was established. A decade later, commercial
banks, merchant banks and finance
companies were allowed to offer Islamic
banking products and services under the
Islamic Banking Scheme (IBS).
Mr Muzaffar Hisham, the CEO of Maybank Islamic Berhad and Head
of Maybank Group Islamic Banking.
Islamic banks have been growing
rapidly for years. The World Islamic
Banking Competitiveness 2014 –
2015 report by E&Y shows that the
assets of Islamic banks grew at an
average of 17% per year between
2008 to 2012, which is two to three
times faster than the rate
conventional banks grew over the
same period. According to Reuters,
Malaysia has one of the world’s
largest Islamic finance sectors and
the authorities are keen to develop it
further. Generally recognised as a
pioneer in the Islamic banking
industry, the first Islamic bank in
Malaysia was established back in
1983. MGCC has conducted an
interview with Mr Muzaffar Hisham,
the CEO of Maybank Islamic Berhad
and Head of Maybank Group Islamic
Banking, to share his view of
Malaysia’s Islamic finance industry.
Malaysia’s Islamic financial industry has
been in existence for more than 30 years.
It all began in 1963 when an institution
called Perbadanan Wang Simpanan Bakal-
Maybank Group’s Islamic banking window,
together with other commercial banks in
the country made their debut in 1993
when the Interest Free Banking and Islamic
Banking Window was launched.
Beginning 2004, the Islamic financial
system in Malaysia was further liberalised
and banking groups were advised to
establish subsidiaries of Islamic commercial
banks. This has resulted in the
establishment of more Islamic financial
institutions in the country, including
foreign-based ones.
In 2014, the Islamic banking sector
accounted for 25.6 percent of the total
assets of the overall banking system, a
growth of 12 per cent, at RM625.2 billion
in 2014, almost doubled of RM351.2 billion
in 2010.
Foreign currency assets in the sector
also increased to RM27.7 billion, reflecting
the growing importance of cross-border
transactions in Islamic finance.
As for the Maybank Group, after operating
our Islamic banking services through a
window since 1993, the Group set up an
Islamic banking subsidiary and Maybank
Islamic Berhad commenced operations on
1 January 2008.
Since then, it has grown to become the
market leader. The industry itself has
grown tremendously well and has reached
a compound annual growth rate of 10 to
15 percent.
We are now the largest Islamic bank in not
just Malaysia but also in the ASEAN region,
with the largest distribution network.
Currently, Malaysia has a significant
number of full-fledged Islamic banks
including several foreign owned entities,
conventional institutions who have
established Islamic subsidiaries and also
entities who are conducting foreign
currency business. All financial institutions
are given permission to conduct both
ringgit and non-ringgit businesses.
Islamic finance in Malaysia has seen rapid
growth thanks to the clear and conducive
environment the authorities have put in
place. This has resulted in a robust
product innovation, a diverse group of
financial institutions from across the world,
a broad range of innovative Islamic
investment instruments, a comprehensive
financial infrastructure which adopts
global regulatory and legal best practices.
Malaysia has also placed a strong emphasis
on human capital development alongside
the development of the Islamic financial
industry to ensure the availability of
Islamic finance talent. All of these value
propositions have transformed Malaysia
into one of the most developed Islamic
banking markets in the world.
Rapid liberalisation in the Islamic finance
industry, coupled with a facilitative
business environment, has encouraged
foreign financial institutions to make
Malaysia their destination of choice
to conduct Islamic banking business.
This has created a diverse and growing
community of local and international
financial institutions.
18 FEATURE
Malaysia has put in place a great ecosystem
and the international financial institutions
should take advantage of this which can
help propel the growth of this industry
even more.
The strong growth of the Islamic bank
assets was driven by a combination of both
the demand and supply of the product and
services Islamic Finance has to offer.
The commitment by policy makers with
clear regulations has allowed the market to
grow and evolve to where it is. This is in
both the capital markets, eg. sukuk (Islamic
bonds) and also the retail market especially
the Small and Medium Enterprises (SME)
market space.
The demand by the Muslim community is
also rising as Islamic banking does not
allow interest charges and require ethical
investments. There is also a strong demand
from the non-Muslims and Maybank
Islamic for example is an epitome of this
successful business. Half of our client base
in Malaysia are non-Muslims.
As for us at Maybank Islamic, going forward,
we are excited about the new Islamic
Financial Service Act (IFSA) which is
aimed at promoting financial stability,
strengthening business conduct and
fostering consumers’ interest and protection.
The development of clear guidelines
from Bank Negara and the important
conversations currently taking place
throughout the spectrum of market actors
are significant signs the industry is
doing what is necessary to generate
forward progress.
To this end, we have launched our
Mudarabah Investment Account which is
a compliance requirement arising from
the IFSA and one that allows customers
to a potentially higher and stable returns
on their deposit accounts. In terms of
competition, we always welcome it. Healthy
competition brings out the best in us.
At Maybank Group, what we strive to do
as a group is humanising financial services
across Asia. Our four core values comprise
providing convenient access of the
banking services, fair terms and pricing to
our customers, to advise based on their
needs and our key differentiator, going to
the heart of community. These might
sound pretty straightforward but believe
me, it is with these core values that have
helped us to differentiate our services
and products. I believe if we continue this,
we can make a lot of differences in
the market place.
With competition, of course, comes
challenges. And looking at challenges from
a wider perspective, promoting crossborder business is one of them.
In the ASEAN region, and even linking to
Gulf Cooperation Council (GCC) countries,
policymakers must emphasise the
importance of reciprocal policy structures.
For example, all regional Islamic banks
should find clear rules if they want to
establish their institution within another
regional jurisdiction. ASEAN is the future,
this is where our market will be, and a
pragmatic approach to regional regulation
will benefit all parties and foster the growth
of Islamic Finance.
Additionally, in terms of Sharia-compliant
cross-border payments, Islamic Finance is a
young industry and there are challenges
relating to the lack of infrastructure for
these transactions. Established players,
such as Maybank Islamic, can take
advantage of our existing systems, but
for new entrants the necessary capital
investment can be quite high. Therefore,
the industry needs to invest in payment
systems and build the infrastructure.
I also see inroad growth in other key
markets like Singapore and Indonesia for
Islamic Banking and Finance.
Financial Background
For the financial year ended
December 31 2014, Maybank Islamic
achieved a record pre-tax profit
of RM1.6 billion, a commendable
growth of 11.8 per cent year-on-year.
Total gross financing shows
outstanding growth of 24.9% to
RM108.5 billion. As a result, Maybank
Islamic’s financing contribution to
Maybank Group’s total Malaysia loan
and financing has increased to 43.8%.
Maybank Islamic continues to sustain
its leadership position, with leading
market share in total assets, financing
and deposits with 30.1%, 32.7% and
24.9% respectively.
On a consolidated basis, total income
for Maybank Group Islamic Banking
has increased to RM3.3 billion, an
exceptional year-on-year growth of
16.4% with improved contribution
from international markets.
20 FEATURE
Social Market Economy & Democracy Worldwide
– The Case of Muslim Dominated Countries
by Thomas Volk, Konrad-Adenauer-Stiftung
From 25 – 26 August 2015 the
Konrad-Adenauer-Stiftung (KAS) in
cooperation with MGCC will be
organizing a conference on Islamic
Banking as part of the KAS project
“Social Market Economy and
Democracy Worldwide – The Case
of Muslim Dominated Countries”.
The social market economy, as a specific
economic and social order, is based on a
conception of man which is determined by
freedom and responsibility. Social market
economy became a guarantor for economic
development and social stability in Germany
and thereby a main pillar of public welfare.
By enabling participation, the institutions of
social market economy fulfill an important
function for democracy: fair competition
rules allow entrepreneurial activities, social
security guarantees participation in society,
and an educational system aiming equal
opportunities provides social mobility.
The project “Social Market Economy and
Democracy Worldwide – The Case of
Muslim Dominated Countries” initiated by
the German Konrad-Adenauer-Stiftung
(KAS) examines central institutions of social
market economy in Germany and in
different Muslim dominated countries
around the globe. It seeks to elaborate
commonalities and differences in order to
disclose links and to learn of each other.
In line with the project, end of August 2015 a
workshop on Islamic Banking will take place
in Malaysia in cooperation with the MalaysianGerman Chamber of Commerce and Industry
(MGCC). The objective of the workshop is to
gain insights into the principles and concrete
concepts of Islamic Banking. No other place
would be more suitable to talk about Islamic
Banking than Malaysia with its rich experience
and expertise in this field. Next to a general
introduction on the relevance of the banking
and finance sector for a functioning of (social)
market systems, the main aim is to learn
more about Islamic Banking and to elaborate
if this system would also be of interest for
the German and/or European market.
The first workshop of the series took
place in Senegal in February 2015 and dealt
with questions of competitive order as an
institution of the Social Market Economy.
Experts from institutions like the German
Competition Authority, the German
Monopoly Commission and the European
Central Bank were meeting counterparts
from Muslim dominated countries from
different continents such as from Djioubuti
and Senegal in sub-Saharan Africa, Tunisia
and Turkey in the MENA region as well as
from Indonesia and Malaysia on the Asian
continent and discussed about differences
and commonalities in the concrete field
of competitive order on an expert level.
It became evident that more important
than religiously or culturally inspired factors
in different Muslim dominated countries are
in the field of competitive order factors such
as an independent judiciary, the principle of
accountability, a fiscal discipline, checks and
balances between the state institutions as
well as a bureaucracy free of corruption.
Furthermore, a special emphasis was given
to questions on social cohesion and
social mobility. Repeatedly speakers
highlighted the fact that speaking of social
market economy as a finished concept
would be counterproductive in many
Muslim dominated countries; mainly
because the foundations for such a concept
are missing in many parts of the world.
Whereas the concept of social market
economy is based on individual freedoms
and the free powers of the market first,
in many countries (e.g. in Malaysia) the state
is still too much involved in economic
issues which eventually interferes in the
unfolding of markets.
The second workshop in Turkey in April
2015 dealt with questions of social
security and saw experts discussing the
basics of social security institutions in
Germany and different forms of social
security systems in the Muslim dominated
world. Of special importance was the
debate regarding different organisational
forms of the zakat institution.
As one of the five pillars of Islam, zakat is a
religiously connoted charity tax which every
believing Muslim should accomplish.
However, the zakat contribution is
organised differently within the Muslim
world. Whereas in Tanzania zakat is
collected on a local level by mosques and
distributed to needy people, BosniaHerzegovina has its own Zakat authority
which works independent of the state.
Other countries, e.g. Malaysia, organise
zakat on a federal level and collect this
religious contribution by state institutions.
Hence, a great variety of de facto practices
exist with regards to the collection of the
zakat charity tax.
Interestingly, social security is in most of
the Muslim dominated countries mainly
discussed in the field of pensions for
employees. A reliable system of social
security in the case of unemployment or
care dependency does not exist in a
number of countries. In that case, the
collective – meaning the family or clan
structures – gain higher importance.
In June 2015 the third workshop was
organised in Tunisia, focusing on
challenges and prospects for educational
systems and bringing again to light how
heterogeneous educational systems in the
Muslim dominated world are.
One of the problems in several countries
seems to be the fact that a certain culture
of educating academics is higher than a
culture of promoting vocational training.
In general, many countries seem to be
interested in specific German experiences
with vocational training and the cooperation
of scientific institutions, e.g. universities with
enterprises and small- and medium sized
companies.
Another important result of the workshop
on educational systems is the fact that early
child education in many countries still does
not exist on an organised level. Most of the
evaluated countries focus on early child
education on a private basis – mostly
conducted by the family – and do not offer
a state-organised early child education
system. Such a system, however, is according
to a newest German research project of
high importance in order to guarantee the
greatest possible degree of future prospects
and chances.
Thomas Volk is the Coordinator for Islam
and the Dialogue between Religions of
the Konrad-Adenauer-Stiftung. He studied
Islamic Studies, History and a GermanTurkish Masters Programme in Social Sciences
in Freiburg, Ankara, Berlin and Basel and
worked in the Headquarters of the Christian
Democratic Union of Germany (CDU).
Stunning Jetta
For the Bold and Stylish
Jetta Limited Edition Now Available in Malaysia from RM122,888
KUALA LUMPUR, 7 May 2015 – Volkswagen Malaysia celebrated the launch of its Jetta
Limited Edition at an exclusive Pop Up Party. To commemorate the launch, Volkswagen
Malaysia engaged local photographer Paulius Staniunas of ‘All Is Amazing’ fame, to create
photos that capture the boldness of the car. These photographs were exhibited all around
the event and will be used throughout the campaign.
The Jetta Sport sat majestically in the middle of the party giving guests a close up of the
updates. The Jetta Club Edition is equipped with window tint and a multimedia head unit
with navigation. The Jetta Sport Edition on the other hand comes with genuine
Volkswagen Zubehör Aerokit, which includes front under skirting, side under skirting, rear
under skirting and rear boot spoiler, SILEX 17” Alloy wheels, window tint and a multimedia
head unit with navigation.
Commenting about the launch of the Volkswagen Jetta Limited Edition, Mr. Armin Keller,
Managing Director of Volkswagen Malaysia said, “The Jetta Limited Edition, which comes
with 6 airbags and a complete makeover, proves to be a perfect blend of form and
function. With the genuine Aerokit installed, the Limited Edition takes on a bold presence
– undoubtedly enhancing the visual appearance.”
Only 500 units of the Jetta Club Edition and Jetta Sport Edition are available while stock
lasts starting from May 2015. Malaysian customers can book this model, available in Candy
White, Reflex Silver, Platinum Grey and Deep Black at the price starting from RM122,888 at
selected Volkswagen authorized dealerships in the Klang Valley.
For more information, please visit www.volkswagen.com.my
22 CSR COLUMN
The 4Cs of Sustainability in Asia
The Corporate Leviathan by Jayanthi Desan
By treating sustainability as a goal today,
early movers in Asia are developing
competencies that rivals will be hardpressed to match. That competitive
advantage will stand them in good stead,
because sustainability will always be an
integral part of development. The quest
for sustainability is transforming the
competitive landscape which will force
companies to change the way they think
about products, technologies, process and
business models.
CONTEXT
Companies in Asia have long realised that
the basic ecosystem that is cheap today
will be expensive tomorrow. Sustainability
is not the burden on bottom lines that
most business tend to believe. In fact, it
is becoming a touchstone for innovation.
It can provide a competitive advantage
in terms of products, technologies and
processes. There is a linkage between
geopolitical globalisation, connectivity,
inclusive growth and profitabillty that
Asian companies are coming to realise.
Indeed, the quest for sustainability has
already transformed the competitive
landscape in Asia. Industries at the start of
the supply chain are paying more to
harvest, extract and get access to primary
products. All sectors will have to pay more
to dispose waste. In many parts of Asia,
water is already scarce and expensive. The
natural buffers which reduce risks of
flooding and other disasters will need to be
replaced. These costs will be passed
downstream and transform the operating
context of business.
The rules of the game are changing.
As ecosystem services decline, the
framework conditions within which
businesses operate, customer preferences,
stockholder expectations, regulatory
regimes, governmental policies, employee
well-being and the availability of finance
and insurance-will change. New business
opportunities emerge as demand grows
for more efficient use of ecosystem
services for meeting needs or mitigating
impacts, especially in the new and
emerging markets of the developing world
where large populations are becoming
consumers. If you add 7 billion people in
the process of globalisation, it adds to the
urgency to the argument. An illustration of
the relevance and challenges of material
issues, such as nutritional needs of low
income consumers, the global water crisis,
reduction in packaging material and
sourcing of sustainable palm oil adds to
the urgency of the situation.
Sustainability in Asia also assumes greater
relevance in the context of innovation.
While it is valid to discuss sustainability as
an important driver in value creation,
CSR COLUMN 23
differentiation of products and services
will ultimately play a greater role in
shaping a company’s prospects in the
competitive consumer market. Increasingly,
that differentiation is the product of
sustainability-driven innovation.
In many cases, sustainability is then seen as
a game changer in Asia.
CONNECT
Today, sustainability driven innovation is
going beyond designing green products
and packaging solely on their inherent
virtue. For example, housing developers
tend to sell ‘green homes’ because it is what
they think consumers want. However, this
type of ‘eco bling’ is ending. Businesses in
Asia are realising that sustainability entails
improving business operations and
processes to become more efficient, with a
goal of dramatically reducing costs and
waste. It is also about insulating a business
from the risk of resource price shocks
and shortages. Taken together, these
enhancements can deliver business
benefits that go far beyond the bottom
line—whether it’s improving overall
carbon footprint, enhancing brand image
or engaging employees in a more
profound way.
The old paradigm for the Asian economies
– focused on throughput of resources,
consumption of products, limited
measures of prosperity and under-pricing
of externalities – is already being discarded;
the “new normal” and the path set out to
achieve it is defined by sustainability.
Relative to industrialised countries,
emerging markets have much less capital
locked into a fossil-fuel-based economy. It’s
often much cheaper to start from scratch
without all that stranded capital.
The challenge is to integrate sustainability
considerations in product and service
innovations. This is because sustainability is
not just about philosophy and practices.
Each company has a unique profile in
terms of specific market drivers that govern
its ability to be a sustainability high
performer. There needs to be clear
linkages between company strategy and
CR initiatives which is dependent on
change in attitudes, culture and leadership
as well as the adoption and refinement
of tools and methods. This also involves
converting top down leadership into
bottom up initiatives.
COLLABORATE
Sustainability on a broad scale isn’t about
scoring points or about star players. It’s a
rewrite of the rules and essentially the end
of any semblance of ‘coca-colonisation’
which refers to mono-cultural dominance.
While there are strategically rewarding
moves that individual companies can and
often should make with regard to
sustainability, sustainable production and
consumption will not be achieved by
the work of a single company. Rather, it
will require many companies innovating
and collaborating across value chains
and engaging consumers in a redefinition
of value.
This geography of collaboration will be
right of up the alley of Asian companies.
Progressive governments are increasingly
recognising the role of sustainability in
their national economies. In some
countries this is principally a matter of
securing future competitive advantage – in
Singapore’s vision of a bio-economy for
example, or in South Korea’s drive to
develop its international position in clean
tech, or in Malaysia’s decision to attempt to
become a clean energy hub. In some cases
it is a matter of survival, such as a means to
overcoming extreme water shortages and
associated food security challenges.
COMMIT
There are various tools for companies to
evidence and show commitment.
Stakeholders are increasingly recognising
that the value of an organisation goes far
beyond its financial statements. As a result,
sustainability reporting amongst listed
companies in Asian markets is on the rise.
Sustainability reporting enables companies
to measure and manage their CR indicators
effectively as well as set targets for
improvement. The Global Reporting
Initiative (GRI) has recently revised its
standards and the G4 is to date one of the
most comprehensive reporting standards
that takes into consideration issues of
materiality and boundaries. It also provides
clear linkages to various corporate
responsibility standards like the ISO26000.
GRI based report serve to provide a
common language for stakeholders to
evaluate companies, particularly investors.
Yet, for CR to be truly embedded, GRI based
reporting must be seen as a starting point
in the corporate responsibility journey and
not as an end game. To truly embody
and articulate value, companies must be
able to demonstrate that they have
integrated sustainable strategies across
environmental, social and governance
aspect. There is a need to end the cycle of
compliance reporting and focus on what is
most relevant to the creation of value and
the execution of business strategy.
Moving away from a compliance mindset
is particularly important for Asian
companies as sustainability provides a
great opportunity to create value. In
Malaysia for example, Islamic thinking is
influencing how sustainability is integrated
in a company, particularly through Islamic
Finance.
For creation of value and for companies to
actually benefit, a culture of CR needs to be
embedded within the DNA of Asian
companies.
Jayanthi is the Founder and Managing
Director of Synergio, one of Malaysia’s
leading sustainability strategy consultancies.
24 LEGAL & INVESTMENT
Meeting Today’s Supply Chain
Trends and Challenges – Pt. 2
by Daniel H. Goh, InvestKL
PREFACE
In the previous article, we covered how best-in-class companies
are redesigning their supply chains to manage costs to protect
shareholders value in a challenging economic climate. With
increased mobility in today’s globalised world, the competitive
landscape and environment is far more challenging. Thus, locating
strategic supply chain functions in a cost and tax efficient
jurisdictions location would provide a competitive edge for the
company to undertake various value-add and growth activities
across the region.
With an efficient supply chain in place where cost is managed well,
this ensures future access to capital which will be required to drive
future growth strategies. However cost is only one side of the
equation. When economic growth rates are declining, the issue at
hand is when and how to utilise one’s capital to invest in areas that
will continue to deliver growth. Companies who have clear
strategies to address this would be in a position to attract greater
levels of investments.
As such, in this article we look into:
• The next geographies for economic growth;
• The channels that are dominating the distribution of goods; and
• The supply chain strategies being employed by best-in-class
companies to grow their market shares in new emerging markets
PART 2: STRATEGIES FOR DRIVING GROWTH IN EMERGING
MARKETS
Growth Driven by Global Shift in Flows
In a recent McKinsey’s Quarterly publication - Harnessing the Power
of Shifting Global Flows, it forecasts a change in flow of trade and
finances driven by increased consumption in emerging markets.
While companies from advanced economies have expanded their
markets globally, the major source of revenue is still derived from
their home country and trade with other advanced economies.
Only 19% of revenue is realised from emerging markets.
Share of overseas and domestic revenues for multinational corporations,1
2013, % of total
Overseas
Domestic
Emerging
markets
19
Advanced
economies
32
Advanced
economies
49
For companies with headquarters in advanced economies largest 100 companies from the 2013 Fortune
Global 500 list that reported revenue by geographic segment in that year and had revenue from overseas
from overseas markets.
1
Multinational companies in advanced economies are missing out on the
opportunities arising in emerging markets*.
*Source: Mckinsey quarterly report – Harnessing the power of shifting global flows, Bughin, Lund &
Manyika, 2015.
However, trade in developing economies is predicted to continue
to swell and by 2025, it will represent 47% of global consumption.
Best-in-class companies employ growth strategies to address this
gap and position their supply chains to adequately address this
opportunity.
Stefan M. Selig, UnderSecretary of Commerce and International
Trade recently stated, “With 2.7 billion middle class consumers by
2030, the Asia-Pacific region is essential to economic growth.”
LEGAL & INVESTMENT 25
In 2016, the Internet users in Southeast Asia will be...
Middle Class Consumer Spending
Outer Ring: 2030 in trillions, USD (projected)
Inner Ring: 2009 in trillions, USD
28m
Asia Pacific
$32.9
$11.1
22m
43m
36m
11m
Europe
$8.1
$5.6
While increasing Chinese spending
tops the news, the East Asia Bureau of
Economic Research forecasts that
spending in India and Indonesia
will grow at similar rates.
$4.9
North America
$5.5
Sub-Saharan
Africa
$0.6
$0.4
$0.9
$2.2
21m
+571% GROWTH
17m
21m
4m
$1.5
80m
36m
Total 205m Internet Users
in “Big 6” SEA countries.
$3.3
Central/
South America
REGIONS
The growth of middle class consumer spending by 2030^.
Source: Star Management- Under Secretary Selig: “With 2.7 billion middle class consumers by 2030,
the Asia-Pacific region is essential to economic growth.”
^
The growth in emerging economies will be mainly driven by the
Asia Pacific markets increased consumption where the forecasted
growth of 571% will outpace projections for all other regions.
Besides the usual suspects of China and India, the ASEAN economy
of a US$ 2.5 trillion GDP, growing at a rate of 5 - 7% and a combined
population of 633 million present a formidable market for companies
seeking to expand globally.
The ASEAN economy is projected to strengthen further due to the
progress made on ASEAN Economic Community (AEC) which aims
to create an integrated regional economic hub. The AEC aspires to
create a single market and production base across its 10-member
countries by removing inter-region trade barriers. This creates future
opportunities for multinational companies to establish their regional
supply chain centres to manage activities from procurement right
up to distribution and returns from one single location which will
also be able to serve needs across the region.
#
Source: The ultimate guide to e-commerce statistics of Southeast Asia & Malaysia, Milo & Wong, 2013.
Supply Chain Priorities for Growth
Given the growth potential that Asia Pacific and ASEAN would
experience in the next 10 -15 years and also the untapped potential
of digital commerce channels in the region, most companies would
redesign their market penetration strategies and further develop
their digital capabilities. The supply chain function is not just an
effective avenue to manage overall delivered costs for a business
but also a strategic tool which can be used to break into new
markets and expand new channels. Let us look at the areas of
interests these supply chain companies are investing in, to further
their agenda in these new markets. In May 2015, the Economist
Intelligence Unit gathered insights from 400 executives in eight
emerging markets on the intention to strengthen their supply
chains. Three out of the eight emerging market economies reside in
ASEAN which includes Vietnam, Indonesia and Thailand.
One of the key questions was: In the next three years, where do you
expect to see growth in your emerging market supply chains?
In what areas of your company’s supply chain(s) in emerging markets do you expect
to see the most growth over the next three years?
Research & development
Growth Driven by Digital Channels
From the McKinsey quarterly report, cross border internet traffic has
grown by nearly 1,600% since 2005 and could increase almost eight
times further by 2025. In tandem with this growth, we see similar
trends with the digital economy. According to eMarketer, worldwide
business to consumer e-commerce sales will increase by 20.1% in
2014 to reach US$1.5 trillion and this growth will come primarily
from the online and mobile users which are rapidly expanding in
emerging markets. It also states that Asia Pacific will leapfrog North
America to become the world’s largest regional e-commerce market
with sales reaching US$525.2 billion in the region compared with
US$482.6 billion in North America. The potential for the digital
economy in Asia Pacific has yet to be fully realised although it
accounts for 46% of digital buyers worldwide, with only 16.9% being
the actual users out of the region’s population.
Product development
Sourcing/procurement including:
RAW materials
– Intermediate goods and parts
Manufacturing including:
Early and late stage
Assembly, including:
Early and late stage – Packaging
Product distribution, including:
Warehousing – Logistics
Customer service including:
Customer relationship management (RM)
– Aftercare/repair
Support operations, including:
HR – Finance & accounting
– IT/data management & analysis
0%
10%
20%
30%
40%
50%
Areas of growth in emerging markets supply chain
Ω
In the big six SEA countries – Indonesia, Singapore, Malaysia,
Thailand, Vietnam and Philippines, the internet penetration and
subsequent digital commerce reach is projected to grow from
114 million users in 2011 to 205 million users in 2016 according to
Euromonitor#. What this means for businesses seeking to grow in
ASEAN, especially in the consumer goods industry, is to incorporate
digital channels into their overall growth and supply chain strategy.
Source: EIU, “Chain Reactions – How trade between emerging markets is shaping global supply chain”,
pg 33, 2015.
Ω
The result from that question showed five top areas these companies
are focusing on growing, which are Product Development, Research
& Development (R&D), Product Distribution & Logistics, Sourcing/
Procurement and Manufacturing.
26 LEGAL & INVESTMENT
It is not surprising that Product Development and R&D, which go
hand in hand, topping the list. Breaking into the emerging markets
consist of more than just establishing sales and business
development functions in cities while relying on technologies and
product specifications which work back in the home countries.
Tastes and preferences change by region and are being influenced
more and more by millennials in those regions. As such, to remain
relevant, products and services would need to be tailored for the
regional markets, hence companies are investing in regional R&D
and product development outfits to cater for regional needs.
KEY TAKEAWAYS
• Emerging economies including ASEAN and Asia Pacific will
represent 47% of global consumption by 2025. However,
multinational companies from advanced nations which are
leading the globalisation trend only generate 19% of their
revenues from these markets today.
One of the key destinations for R&D activities in ASEAN is Malaysia.
In a WorldBank report, Malaysia’s R&D spending as a percentage of
GDP has risen steadily from 0.22% in 1996 to 1.07% in 2011π.
• Asia Pacific will leapfrog North America to become the world’s
largest e-commerce market but the potential is far realised as
only 16.9% of the region’s population are digital buyers today.
Global MNCs such as Panasonic, Sony, Shell Global, Ingress
Katayama and Agilent Technologies are undertaking R&D activities
in Malaysia, and Honda has recently announced to establish a R&D
centre in Malaysia by end of 2015.
• Best-in-class companies seeking to grow would consider
redesigning their supply chains to capture the potential of Asia
Pacific and ASEAN’s market and incorporate a digital commerce
channel strategy.
R&D Expenditure to the percentage of GDP
• Best-in-class companies are increasing their supply chain scope
to undertake key business functions such as Product Development,
R&D, Procurement, Distribution and Manufacturing within the
emerging markets they seek to grow in.
1.2
0.9
InvestKL, a special purpose investment promotion agency by the
government of Malaysia, provides end-to-end facilitation services
to multinational companies looking to establish regional
headquarters in Greater Kuala Lumpur for the ASEAN market.
InvestKL has facilitated many corporations to establish regional
outfits in Greater Kuala Lumpur including Schlumberger, SC
Johnson, Colas Rail, Oleon, Turner, International SOS and Epson.
0.6
0.3
0.0
1996
1998
1997
2000
1999
2002
2001
2004
2003
2006
2005
2008
2007
2010
2009
2011
Malaysia
Malaysia’s R&D spending has grown rapidly in recent yearsπ.
π
• The Asia Pacific region is projected to be the fastest growing
consumer spending market with a forecast increment of 571%
growth from 2009 through 2030.
Source: TheGlobalEconomy.com, Malaysia’s R&D expenditure.
Product Distribution and Logistics, Sourcing, Procurement and
Manufacturing came with almost equal emphasis. These are major
cost drivers and will have a large impact on the profitability of the
companies’ operations in ASEAN. These are some of the factors
which we have covered in the first article of this series.
Since most countries in ASEAN are still developing, operational
costs comprising of labour, utilities and raw materials are still
competitive. As such it would make sense for MNCs to undertake
both sourcing and/or manufacturing activities through
subsequent distribution within the region and optimise their
logistics costs by having all their key supply chain activities
regionalised.
A case in point for regionalised location for supply chain activities
is Malaysia where the strategically located country in ASEAN is
home to several regional distribution centres such as Vale,
Amway, BMW Parts, Xiaomi – managed by CEVA and Hoover
Container Solutions.
Should you wish to explore establishing a footprint in ASEAN to
grow your business, do get in touch with any of InvestKL’s Investor
Relations directors or visit InvestKL’s website for further details on
our services and testimonials from some of our clients.
Daniel H. Goh, Senior Manager of Advisory in InvestKL has 15 years
of business management experience in various multinational firms
across various industries including Electronics, Medical Devices, Timber
and Banking.
Disclaimer: The views and opinions expressed in this article are those of the
author and do not necessarily reflect the position of any organisations.
Examples of analysis performed within this article are only examples. The
situation is different on case to case basis as they are based only on very limited
and dated open source information. Assumptions made within the analysis are
not reflective of the position of any organisations in the region.
Discover Your Talent
Infineon Technologies (Malaysia) Sdn Bhd
Free Trade Zone, Batu Berendam, 75350 Melaka
Tel: +60 (6) 232 5266
www.infineon.com
28 LEGAL & INVESTMENT
The Principal Hub Incentive,
Malaysia
by Frances Po, PricewaterhouseCoopers Malaysia
A greater look at Malaysia as an investment and business hub in
Southeast Asia.
During the last couple of decades more multinational companies
(MNCs) have substantially increased their presence in Southeast
Asia. With rising pressure on their domestic markets and the
growing and consuming middle class in countries like Thailand
and Malaysia, Southeast Asia has become interesting as both a
manufacturer and market. Therefore companies have been
reviewing business models and started streamlining their
operations and functions, combining them in a regional
headquarter – or Principal Hub.
As principal structures are of increasing importance for German
and European MNCs when considering their approach for ASEAN
and Asia-Pacific, we would like to introduce to you the new
Malaysian principal hub incentive – and the rationales behind it:
In April 2015 the Malaysian government announced a new
customised incentive that would make Greater Kuala Lumpur (KL)
and other major cities in Malaysia more compelling for such MNCs
to locate their regional Principal Hub(s).
This incentive was developed in recognition of the evolving
economic and business landscape of Malaysia. After establishing a
successful manufacturing and operational base for MNCs in the
1980s to 2000s, the government recognised the importance of
moving up the value chain, particularly by growing the services
sector related to high technology, high value-add and knowledge
based activities.
Malaysia Economic Development Journey
Source: MIDA and PwC analysis.
The incentive is intended to complement:
The evolving global business model
Regional headquarters and supply chain models are evolving
globally, with more and more MNCs adopting the principal hub
structure. This structure enables companies to optimise resources,
build capacity and quicken decision making to deliver better
customer service and shareholder value whilst maximising
operational efficiencies.
ASEAN Economic Community (AEC) – ASEAN Integration
The implementation of AEC at the end of 2015 is expected to
foster closer economic collaboration between the members of
ASEAN, allowing companies to tap a market of US$2.5 trillion
(GDP) in 2014, with a growing population of over 600 million
people. Malaysia’s efforts will help in positioning the region from a
competitive business standpoint whilst ensuring balanced and
inclusive regional economic growth. Malaysia is well positioned to
help companies spring board to the region’s burgeoning markets,
with its well established regulatory framework, infrastructure and
business networks. InvestKL initiated a review of Malaysia’s existing
incentive schemes together with the Ministry of Finance (MOF)
and the Malaysian Investment Development Board (MIDA).
Together they developed a game changing enhancer, replacing
the existing incentives, to ensure Malaysia attracts the best MNCs
to expand and grow their operations in the region. This new
incentive for the establishment of Principal Hubs will be
implemented effective 1st May 2015. The Principal Hub incentive
will replace the existing International Procurement Centre’s (IPC),
Regional Distribution Centre’s (RDC) and Operational Headquarters
(OHQ) incentive schemes, which will officially be phased out.
LEGAL & INVESTMENT 29
How the Principal Hub works
By definition the Principal Hub is a locally incorporated company
that uses Malaysia as a base for its regional and global businesses
and operations to manage, control and support its key functions.
These include management of risks, decision making and strategic
business activities such as trading, finance, management and
human resource. The regional Principal Hub is structured such that
MNCs can be closer to customers and supply chains to improve
operational efficiency, and to promote product/service quality
and speed to market at a lower cost. The Principal Hub structure
also enables MNCs to better share resources and experiences
among group companies, thus allowing better integration and
harmonisation within the group structure to promote consistent
products and service standards to their markets.
Comparison between the Traditional Model vs the Principle Hub Model
The Principle Hub Structure
Source: InvestKL, Principle Hub incentive: Guidelines and criteria.
•
•
•
•
Source: InvestKL, Principle Hub incentive: Guidelines and criteria.
The following diagram depicts the inefficiencies of traditional
business models that have evolved over the years to more
centralised and efficient business models, with focus on
minimising risks and costs while increasing profitability from a
supply chain and operational efficiency perspective.
A Case Study
The A Group of Companies (“A Group”) is primarily involved in the
manufacturing of oleochemicals. Its presence in the Asia Pacific
region (including Malaysia) was previously restricted to
manufacturing bases and distribution centres.
“A Group” decided to establish a principal hub to expand its
presence in the Asia Pacific region on a large scale. Malaysia was
selected as the location for its principal hub, due to ready
accessibility to a multilingual, educated workforce, ready
infrastructure and competitive costs of doing business.
“A Group” retained its contract manufacturing base in Malaysia,
and established a separate entity (i.e. “PH Company”) in Malaysia
which performed the following activities:
• Branding and marketing;
• Strategic decision making (business development and regional
P&L management);
• Research and development;
Technical design;
Production control and inventory management;
Funding and liquidity management; and
Quality control and assurance.
To carry out the activities listed above, “PH Company” brought in
talent from its European headquarters, including 15 expatriate
employees across all divisions and recruited local talent, bringing
its total headcount to 80 employees. As the controller of “A Group”s
regional P&L, “PH Company” is required to assume the residual risk
associated with the Group’s value chain in the Asia Pacific region.
This necessitates a transfer of risks which was previously spread
out across the Group’s distribution arm to “PH Company”.
The following diagrams illustrate this shift:
Before “PH” Company
30 LEGAL & INVESTMENT
After “PH” Company
• Non-fiscal benefits
• Sharing of resources – services such as management, R&D, payroll,
accounting, logistics and quality control and technology can be
consolidated in one location.
• Streamlining the supply chain – by centralising strategic global
and regional functions, logistics, risks and their associated
revenue streams.
• Lower production and operation cost – companies can bring in
raw materials, components or finished products with customs
duty exemption into free industrial zones, licenced manufacturing
warehouses (LMW), free commercial zones and bonded
warehouses for production or repackaging, cargo consolidation
and integration before distribution to their final consumers for
goods-based companies.
With “PH Company”, “A Group” targets to achieve 100% growth
within five years from its establishment in the Asia Pacific region,
with a 150% increase in profit across the value chain due to
business process improvements and efficiencies achieved in
eliminating duplicative functions across its value chain and a
centralised approach to expanding its business in the Asia Pacific.
Benefits to Investors
• Fiscal benefits
An approved Principal Hub company is eligible for a 3–tiered
corporate taxation rate as follows:
3-tier corporate taxation rates
Source: MITI, Implementation guidelines under the Malaysian Budget 2015.
• Exercise control – no local equity/ownership condition.
• Recruit foreign talent – expatriate posts based on requirements
of applicant’s business plan subject to the policies on expatriates
at the time of application
• Improve cash flow and treasury management – foreign exchange
administration flexibilities that will be accorded in support of
business efficiency and competitiveness of companies under the
Principal Hub
The takeaway
The Principal Hub incentive offers an opportunity for MNCs to use
Malaysia as their base to expand their regional presence in Asia
while improving their operational efficiency. Through the Principal
Hub incentive, Malaysia hopes to position itself as playing a key
role in the integrated global supply chain of MNCs particularly in
areas where it has the competitive advantage.
Interested MNCs should start determining if it is appropriate for
their Asian growth strategy.
Incentive for the Principle Hub
Frances Po is a Senior Executive Director and
heads the international tax and M&A practice
at PwC Malaysia. Pauline Lum is an Executive
Director in Frances’ team. Jonas Bley is a
Senior Consultant in PwC’s Southeast Asian/
German Business Group. All three are based
in Kuala Lumpur. This article is a variation of
a booklet published by PwC Malaysia in
May 2015.
Disclaimer: The views and opinions expressed in
this article are those of the author and do not
necessarily reflect the position of any organisations.
Examples of analysis performed within this article
are only examples. The situation is different on case
to case basis as they are based only on very limited
and dated open source information. Assumptions
made within the analysis are not reflective of the
position of any organisations in the region.
* USD1 ~ RM3.60
Source: MITI, Implementation guidelines under the Malaysian Budget 2015.
LEGAL & INVESTMENT 31
Malaysian Insolvency Law –
A Brief Conversation with
Ravindran Advocates & Solicitors
Ravindran is a full-service legal firm providing legal solutions and support for its local and cross-border clients.
Litigation, family, IP, corporate and property matters are focal points of their practice. Ravindran lawyers also
work with various partners and alliances across the world to cater to the needs of working internationals.
Once an individual commits an act of
bankruptcy for a personal debt not less than
RM30,000, a bankruptcy petition may be
presented to Court by the petitioning
creditor. On the other hand, winding up
proceedings may be initiated against a
company if it is found to be unable to pay its
debts of RM500.
Genevieve Tan Gaik May, Partner of Ravindran Advocates & Solicitors.
If you are considering formally
investing in Malaysia, for example by
setting up a local company under the
Companies Act 1965, insolvency rules
and proceedings sometimes become
relevant long before your decision is
made. What do managers need to
know about Malaysian insolvency
law? In a brief conversation with
our member law firm Ravindran
Advocates & Solicitors, MGCC sought
to find out. Here’s what partner
Genevieve Tan Gaik May had to say.
Q: What are the relevant local laws on which
Malaysian insolvency rules are based?
In Malaysia, insolvency practice is governed
by the Bankruptcy Act 1967 and the
Bankruptcy Rules 1969 for debts owing by
individuals whilst the Companies Act 1965
and the Companies Winding-up Rules
1972 govern insolvency matters involving
companies.
Q: Which person or company can be
considered ‘insolvent’? When can insolvency
or bankruptcy proceedings be filed?
Q: How does one initiate insolvency
proceedings and who has the right to
do so?
Bankruptcy proceedings can be initiated
by individuals and companies against
another individual as bankruptcy laws
involve personal debts. Winding up
proceedings on the other hand involve a
situation where a company is unable to
pay debts to another company or an
individual in the course of its business.
Both have to be initiated by way of court
proceedings. Once insolvency proceedings
are initiated, an individual can be made
bankrupt or a company can be wound up.
Q: What is the general procedure of an
insolvency case and rough time estimate?
Bankruptcy proceedings and winding up
proceedings differ in its procedure and
conduct. The estimation of time for
completion is difficult to say as it may differ
depending on whether the insolvency
proceedings are contested.
Q: In Germany, an appointed ‘insolvency
administrator’ handles all relevant matters
in the insolvency proceedings of a company.
Who is in charge in Malaysia?
In Malaysia, insolvency matters fall under
the purview of the Director General of
Insolvency. The Director General of
Insolvency is a government appointed
official and he heads the Department of
Insolvency, Malaysia.
Q: What are the different creditor categories
and how are they satisfied?
There are secured creditors and unsecured
creditors. A secured creditor is a person or
institution holding a mortgage, charge or
lien on the debtor’s property as a debt
security. An unsecured creditor does not
hold anything of the debtor as security for
the money, loan or credit he provides. If you
are an unsecured creditor you will have to
institute legal proceedings to obtain a
judgement in respect of your debt.
Q: How are the different creditors managed?
All bankruptcy matters and its creditors are
managed by the Insolvency Department
whilst in a winding up proceedings, the
Creditor may appoint a private liquidator to
manage all affairs, failing which the Insolvency
Department will handle all matters.
Q: Can insolvency proceedings be appealed
and how so?
All insolvency matters are appealable. Your
legal counsel should be able to advise you
on your prospects on appeal.
Q: In Germany, there are certain elements
of an insolvency matter (such as undue
delay in payment) where criminal liability
can come into play. Is there an equivalent
in Malaysian law?
Insolvency laws in Malaysia are designed to
assist creditors in enforcing their rights.
However, there are specific provisions in the
Penal Code, the Bankruptcy Act and the
Companies Act that cover issues such as
criminal breach of trust and fraudulent trading.
This has been an interesting topic to speak
about. Thank you for this opportunity!
Should you require further information
on local regulations on insolvency and
bankruptcy, you may contact the law
firm directly. Should you wish to know
more about German insolvency or
bankruptcy proceedings, please contact
MGCC Corporate Services Department:
corporateservices@malaysia.ahk.de
32 ECONOMICS
www.gtai.com
Malaysias neuer
Fünfjahresplan soll
Wachstum bringen
von Rainer Jaensch
Kuala Lumpur (gtai) - Malaysia’s five years Wirtschaftswachstum, Business-Orientierung, sozialer Ausgleich
plan from 2016 to 2020 stimulates an und Umweltschutz lauten die Leitlinien / Von Rainer Jaensch
ambitious rate with 5 to 6 % economic Kuala Lumpur (gtai) – Malaysias Fünfjahresplan 2016 – 2020 gibt mit 5 bis 6%
growth. The main drive should come from Wirtschaftswachstum ein ambitioniertes Tempo vor. Der Hauptantrieb soll vom
the private sector. However, the public Privatsektor kommen. Aber auch die öffentliche Hand schiebt mit umfangreichen
sector pushes the growth with large Infrastrukturprojekten, vor allem auf der Transportschiene, das Wachstum an. Ziel ist es,
infrastructure projects, especially on the bis 2020 zu einem Hocheinkommensland zu werden und dabei die unteren
Einkommensschichten mitzunehmen. Hierbei sollen verstärkt Bildung und insbesondere
rail track. The aim is to become a high- Berufsausbildung helfen.
income country by 2020 and thereby take
the lower income groups up as well. This Malaysias 11. Fünfjahresplan – Ende Mai 2015 vorgelegt und Anfang 2016 beginnend –
shall be helped by reinforced education soll dem Land bis 2020 zum Status eines Hocheinkommenslandes verhelfen. Nach
mehreren Fünfjahresplänen gehe es nun darum, den Endspurt einzulegen, heißt es
and particular vocational training.
ehrgeizig von Regierungsseite. Auch wenn der neue Plan wenige Überraschungen bietet,
so enthält er doch wesentliche Leitlinien für die kommenden fünf Jahre. Premierminister
Najib formulierte nach der Planverkündung die “fünf Philosophien” der Regierung mit den
Worten: Für Wachstum, für das Volk, für “Business”, für Umweltschutz und für
Nationenbildung.
Von zentraler Bedeutung ist ein mittleres bis hohes Wirtschaftswachstum, das bei einem
realen Zuwachs des Bruttoinlandsprodukts von 5 bis 6% pro Jahr liegen soll. Nachdem der
obere Wert dieses Zielkorridors 2014 erreicht wurde, liegen die Prognosen für 2015 bei
höchstens 5%. Das Bruttonationaleinkommen pro Kopf soll am Ende der Zielperiode bei
54.100 RM liegen und damit Malaysia auf die Stufe eines Hocheinkommenslandes heben, so
der ambitionierte Plan der Regierung. 2014 lag das Pro-Kopf-Einkommen bei 35.949 RM.
Das Wirtschaftswachstum soll in Zukunft mit einer höheren Arbeitsproduktivität
einhergehen. Liegt diese nach offiziellen Schätzungen 2015 bei 77.100 Malaysischen
Ringgit (RM; fast 18.900 Euro; 1 RM = 0,245 Euro), soll sie bis 2020 auf 92.300 RM steigen.
Nachdem die Arbeitsproduktivität von 2011 bis 2014 um jahresdurchschnittlich 2,1%
zugenommen hat, legte sie 2014 um 3,5% zu.
Die öffentlichen Entwicklungsausgaben setzen die staatlichen Planer mit 260 Mrd. RM an
und damit 13% höher als im vorherigen Fünfjahresplan. Die Hälfte davon und damit 16%
mehr als zuvor sollen in Infrastrukturprojekte wie schnellere Breitbandnetze, Krankenhäuser
und die geplante Schnellzugverbindung von Kuala Lumpur nach Singapur fließen. Die
andere Hälfte des Budgets fokussiert vor allem die “weiche Infrastruktur” wie Bildung und
Berufsausbildung.
ECONOMICS 33
Das Volk wie auch die Umwelt sollen profitieren
Ein besonderes Augenmerk legt der 11. Malaysiaplan auf die
unteren 40% der Haushalte. Deren durchschnittliches Einkommen
soll sich bis 2020 auf mindestens 5.000 RM verdoppeln. Dazu
werde vor allem Bildung beitragen, insbesondere technische und
berufliche Ausbildung. Den unteren Einkommensschichten will
der Staat auch zu bezahlbarem Wohnraum verhelfen. Mit Hilfe von
Bauentwicklern sollen in dem Fünfjahreszeitraum über 650.000
solcher Wohneinheiten gebaut werden.
Die öffentlichen Investitionen werden hingegen nach den
staatlichen Plänen mit einem Zuwachs von 2,7% deutlich
schwächer wachsen. Sie bringen aber immer noch 131 Mrd. RM an
durchschnittlichen Ausgaben pro Jahr auf den Weg. Treibende
Kraft werden hierbei staatlich angebundene Unternehmen sein.
Einige große vom öffentlichen Sektor gestemmte Projekte sind
der Pengerang Integrated Complex in Johor mit dem RapidChemieprojekt, der Pan-Borneo-Highway und die Linie 2 der MRTStadtbahn im Großraum Kuala Lumpur.
Des Weiteren verspricht der Plan 99% der Bevölkerung (2015:
94%) behandeltes und sauberes Wasser sowie zuverlässige
Elektrizitätsversorgung. Auch sollen 95% der Wohngebiete
Anschluss an das Breitbandnetz erhalten und dieses zu niedrigen
Preisen nutzen können. Darüber hinaus will sich der Staat
bemühen, die Relation Ärzte pro Einwohner von 1:791 im Jahr
2011 auf 1:400 zu heben und für 1.000 Einwohner 2,3
Krankenhausbetten (2011: 1,9) zur Verfügung zu stellen.
Der Konsum der privaten Haushalte wird mit einem realen
jährlichen Zuwachs von 6,4% der zweite wesentliche
Wachstumsmotor sein. Angetrieben wird er vor allem von einem
stabilen Arbeitsmarkt, hohen Einkommen und fortgesetzten
staatlichen Unterstützungen für bestimmte Bevölkerungsgruppen.
Der Staat will sich hingegen bei seinem Konsum auf eine jährliche
Steigerung von 3,7% beschränken. Schließlich zielt er darauf ab,
das 2014 bei 3,5% des BIP gelegene Budgetdefizit bis 2020 auf null
zu drücken. Mit 31,4 Mrd. RM erwartet der Fiskus - unterstützt
durch die Einführung einer allgemeinen Umsatzsteuer im April
2015 - doppelt so hohe Steuereinnahmen wie im vorherigen
Fünfjahresplan. Die Abhängigkeit des Staatshaushaltes von den
Öleinnahmen soll auf 15,5% gesenkt werden, nachdem sie 2013
und 2014 bei rund 30% lag.
Die schwere Flutkatastrophe, die Ende 2014 große Teile des Landes
betraf, sei eine wichtige Warnung in Richtung Umweltschutz,
mahnte Najib. Um die Verbreitung von umweltfreundlichen
Produkten und Technologien zu fördern, werden “grüne”
Beschaffungskriterien der öffentlichen Hand eingeführt,
umweltfreundliche Bauvorschriften angewandt und die
Zertifizierung verstärkt. Auch soll der Anteil an erneuerbarer
Energie erhöht und das Flutwarnsystem verstärkt werden. Zudem
werden private Haushalte zur Mülltrennung ermutigt, um bis 2020
eine Recyclingrate von 22% zu erreichen.
Das Erreichen der von der Regierung gesetzten Ziele einschließlich
eines Wirtschaftswachstums von 5 bis 6% erscheint unabhängigen
Ökonomen ambitioniert. Zu den Schwachstellen zählen sie das
niedrige Exportwachstum, den gesunkenen Ölpreis sowie einen
Makroökonomische Ziele des 11. Malaysia Plans 2016 bis 2020
Reales Wirtschaftswachstum 5 bis 6%
Durchschnittliches reales Wachstum privater Investitionen 9,4%
Durchschnittliches reales Wachstum staatlicher Investitionen 2,7%
Durchschnittliches reales Wachstum des privaten Konsums 6,4%
Durchschnittliches reales Wachstum des staatlichen Konsums 3,7%
Durchschnittliches Wachstum des Exports 4,6%
Quellen: Eleventh Malaysia Plan 2016-2020; Economic Planning Unit, Prime Minister’s Department.
Die Landwirtschaft, die vom Arbeitskräftemangel besonders
betroffen ist, kann das anvisierte 3,5- prozentige reale
Wachstum nur erreichen, wenn sie intelligente Agar- und
Informationstechnologien einsetzt. Entsprechend werde die
Regierung zur Nutzung IT-basierter mobiler Technik ermutigen.
Wachstumstreiber und Schwachstellen des neuen Plans
Als wesentlichen Wachstumstreiber sieht die Regierung den
Privatsektor. Dessen Investitionen und Konsum werden weiter die
tragende Säule des Wirtschaftswachstums sein. Für die privaten
Investitionen erwarten die staatlichen Planer pro Jahr ein
durchschnittliches reales Wachstum von 9,4%. Dazu sollen nicht
zuletzt ausländische Direktinvestitionen beitragen, die sich
zunehmend auf höherwertige und wissensbasierte Tätigkeiten
fokussieren.
angespannten Arbeitsmarkt verbunden mit Fachkräftemangel.
Der Wunsch der Regierung, den Anteil der ausländischen
Arbeitskräfte bis 2020 auf 15% zu beschränken, scheint hierbei
auch nicht hilfreich. Zweifel an der Erreichbarkeit der
Wachstumsziele äußerte auch Malaysias früherer Premierminister
Mahathir bei einer Veranstaltung des Foreign Correspondent Club
of Malaysia. Die Fokussierung auf ein monetäres Ziel wie das ProKopf-Einkommen sei hierbei zu kurz gegriffen.
34 ECONOMICS
German Economy Returned
to a Growth Path
The German economy has recovered
more quickly than expected from
the cyclical lull in the middle of last
year. In their June Monthly Report,
Bundesbank economists write that
the economy has returned to a
growth path underpinned by
domestic and foreign demand. They
believe that domestic economic
activity is benefiting from the
favourable labour market situation
and the substantial wage increases.
Although foreign trade is currently
being hampered by dampening
global dynamics, it is simultaneously
being buoyed by the euro’s
depreciation and the strengthening
economic recovery in the euro area.
Moreover, Bundesbank economists
state that the world economy is likely
to regain momentum.
In this setting, Bundesbank economists
estimate that growth of 1.7% in Germany’s
real gross domestic product (GDP) this year
could be followed by a rise of 1.8% in 2016
and 1.5% in 2017. In calendar-adjusted
terms, this would be equivalent to
expansion rates of 1.5% in 2015 and 1.7%
in both 2016 and 2017.
Surplus in public finances remains
As Bundesbank economists see it, general
government is set to continue posting
surpluses of around 0.5% of GDP against this
backdrop. However, the economic upturn
and the ongoing decline in interest
expenditure are thought to mask the
generally expansionary stance of fiscal
policy. Consumer price inflation is likely to
accelerate, driven initially by the effect of the
euro’s depreciation against other major
currencies, while the upward pressure on
domestic costs should increasingly make
itself felt later on. As measured by the
Harmonised Index of Consumer Prices
(HICP), Bundesbank economists estimate
that inflation could rise from 0.5% this year
to 1.8% next year and 2.2% in 2017.
Excluding energy, HICP inflation would
climb from 1.2% in 2015 to 2.2% in 2017.
Compared with the December 2014
projection, the Bundesbank has significantly
raised its expectations for economic growth
for the current year in particular, while the
projection for inflation has been pared back
considerably. Key factors included the
plummeting crude oil prices and the
depreciation of the euro.
New instruments for measuring inflation
expectations
A further topic addressed in the Monthly
Report is expectations about future
developments in inflation, which are a key
indicator in assessing the effectiveness and
credibility of monetary policy. Inflation
expectations can be derived from survey
data or from financial market instruments,
such as inflation-indexed bonds or inflation
swaps. Bundesbank economists write that
expectations determined in this way are
often point forecasts and go on to outline
inflation options – a relatively new type of
financial market instrument which enable
market participants to go one step further
and derive risk-neutral or preferenceweighted probability distributions.
Banks’ marketable financial instruments
Furthermore, the Monthly Report focuses
on the marketable financial instruments of
banks. The launch of monetary union
enabled a narrowing of the gap between
banks’ market-based funding and traditional
deposit business, a development that was
buoyed by measures designed to promote
the financial markets as well as by the
process of European integration, the
Monthly Report states. Bundesbank
economists see the Eurosystem’s willingness
to accept many of banks’ marketable
financial instruments as collateral for its
refinancing operations as a hallmark of a
monetary policy operating framework
based on broad collateral eligibility and a
wide access policy offering a large number
of banks access to refinancing facilities in an
effort to promote equal treatment among
counterparties in the euro area.
They also believe that the refinancing
operations conducted by the Eurosystem
are essentially large-scale, short-term credit
operations for which banks need to hold a
sufficient stock of eligible assets as collateral.
The Eurosystem’s broad collateral eligibility
policy clearly sets it apart from many other
central banks, say Bundesbank economists.
Growing impact of regulation
Since the onset of the financial and
sovereign debt crisis more than seven years
ago, the Eurosystem has rolled out a wide
variety of measures to support the markets
for bank financial instruments. Its aim
has been to avert severe impasses in
the availability of collateral and their
destabilising effects on the markets while
simultaneously keeping its own risk control
measures at a sufficiently elevated level. But
no matter how much the Eurosystem
influences the design and use of banks’
marketable financial instruments, there is no
getting around the need for adjustments
within the banking sector, emphasise the
Bundesbank economists.
Source: Deutsche Bundesbank (accessed via http://www.bundesbank.de).
ECONOMICS 35
Economic and Financial
Developments in Malaysia in
the First Quarter of 2015
The Malaysian economy grew by
5.6% in the first quarter of 2015. The
global economic activity expanded
with divergent growth momentum
across economies in the first quarter
of 2015. While the US economy
registered broader improvements,
the economic recovery in the euro
area and Japan progressed at
a more gradual pace. In Asia, growth
was sustained by the continued
expansion in domestic demand.
The economy expanded in the first quarter
(at constant 2010 prices)
RM billion
Annual change (%)
300
6.3 6.5
250
7
5.6 5.7 5.6
6
5
200
4
150
3
100
2
50
The Malaysian economy registered a growth
of 5.6% in the first quarter of 2015 (4Q 2014:
5.7%), underpinned mainly by the private
sector demand. On the supply side, growth
was supported by the major economic
sectors. On a quarter-on-quarter seasonallyadjusted basis, the economy recorded a
growth of 1.2% (4Q 2014: 1.8%).
Private sector activity remained the key
driver of growth during the quarter. Private
consumption expanded at a stronger pace
of 8.8% (4Q 2014: 7.6%), supported by stable
labour market conditions and higher wage
growth. The strong private consumption
growth was also contributed by the flood
relief efforts early in the year, and the frontloading of household spending prior to the
implementation of GST. Private investment
recorded a growth of 11.7% (4Q 2014:
11.1%), underpinned by capital expenditure
in the manufacturing and services sectors.
Growth in public consumption improved in
the first quarter (4.1%; 4Q 2014: 2.5%), due
to higher growth in supplies and services
amid moderate growth in emoluments.
Public investment turned around to register
a positive growth of 0.5% (4Q 2014: -1.9%)
following higher capital spending by the
Federal Government.
0
1
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2011
2012
On the supply side, growth in the first
quarter was supported by the major
economic sectors. The services sector was
underpinned by growth in all subsectors,
particularly consumption-related subsectors. Growth in the manufacturing sector
was supported by stronger performance in
the export oriented industries, particularly
the electronics and electrical (E&E) cluster.
The construction sector was supported
mainly by the non-residential and residential
sub-sectors, while the mining sector
continued to record stronger growth amid
higher crude oil production. Meanwhile, the
agriculture sector contracted as a result of
lower palm oil production, arising from
flood-related disruptions.
Inflation, as measured by the annual change
in the Consumer Price Index (CPI), averaged
significantly lower at 0.7% in the first quarter
of 2015 (4Q 2014: 2.8%). The lower inflation
was mainly attributable to the decline in
prices in the transport category (-7.6%; 4Q
2014: 4.8%), following the downward
2013
2014
0
2015
revision of domestic fuel prices in January
and February amid lower global oil prices.
The trade surplus amounted to RM21.3
billion in the first quarter of 2015 (4Q 2014:
RM21.5 billion). Gross exports contracted by
2.5% (4Q 2014: +0.5%), reflecting mainly a
decline in the growth of commodity exports
and resource-based manufactured exports,
amid lower commodity prices. Gross
imports moderated to a marginal growth of
0.2% (4Q 2014: 4.6%).
The international reserves of BNM amounted
to RM389.7 billion (equivalent to USD105.1
billion) as at 31 March 2015. This reserve
level has taken into account the quarterly
adjustment for foreign exchange revaluation
changes.
As at 30 April 2015, the reserves position
amounted to RM392.4 billion (equivalent to
USD105.8 billion), sufficient to finance 8.0
months of retained imports and is 1.1 times
the short-term external debt.
Source: Bank Negara Malaysia (accessed via www.bnm.gov.my).
36 EDUCATION & TRAINING
Upcoming
Trainings by
MGCC
INTERACTIVE WORKSHOP: THE 6 HABITS OF A STRATEGIC
THINKER
The workshop “6 Habits of a Strategic Thinker” is designed to
explore a more profound understanding of being strategic. The
facilitator will delve into the conscious and sub-conscious mind
and demonstrate how this affects actions and creates the seeming
lack of strategic thinking. The interactive session will result in the
appreciation and understanding of new work habits.
Date: 20 August 2015, Thursday
Time: 10:00am – 5:00pm
Venue: Malaysian-German Chamber of Commerce and
Industry Office
Trainer: Ken Woo
Course Fee: RM300 per person
MANAGING DIFFICULT (CUSTOMER) SITUATIONS: MASTER
THE SERVICE SKILLS & MIND SET TO EXCEL IN CHALLENGING
SITUATIONS
The Managing Difficult Customer Situations course that outshines
many others – with the insights, expertise, fun and mindset
change that you have come to expect. We begin our course with
discussions – not slides. What are your most difficult situations?
What made them difficult? How did you handle them? How did
you feel? We understand that managing difficult situations is
much more than a set of techniques, we know that there is
important human psychology involved as well. Learning about
human behaviours, classifying the different types of difficult
situations, when to use empathy or affirmation, how to say no in a
proper way, valid and invalid escalations – these and more are
what the participants will learn, with the aim of dealing not only
with customers, but with all other people around you.
Date: 26 August 2015, Wednesday
Time: 9.00am – 5.00pm
Venue: Suite 03.19, North Block, Level 3 AmpWalk, 218 Jalan
Ampang, 55000 Kuala Lumpur.
Trainer: Daniel Ord
Course Fee: RM1500 per person (HRDF Claimable)
* Course fees stated above are subject to 6% GST.
For more information, please contact:
Patricia Chin
Head of MGCC Training Academy
Tel: +60-3-9235 1800 Fax: +60-3-2072 1198
Email: fuiyean.chin@malaysia.ahk.de
38 EVENTS
MGCC Breakfast Talk on New
Advertising Strategies
Advertising strategy is a campaign or tool developed by a business to encourage the
potential consumers to purchase their products or services. It is a very important tool
to determine whether a business will succeed or fail in their sales. A breakfast talk on
the topic of New Advertising Strategies was organised by MGCC on 4th June 2015 at
the MGCC office. 14 participants from different companies attended the event,
which aimed to introduce participants to global advertising and marketing in
developing business activities at the international level.
The invited speaker was Ms Andrea Henao, the partner of 360° Agency Berlin. Topics
that were presented during the Breakfast Talk included introduction and evolution of
global advertising, review of semantic and codes used per sector in advertising,
techniques and processes available in marketing to target potential consumers and
processes to reach potential consumers on a global and regional level, as well as laws
and regulations of Europe for trade and exports.
Ms Andrea Henao from 360° Agency Berlin.
It was an engaging session where all participants were actively raising questions to
the speaker, shared strategies with each other and discussed problems they faced
when developing advertising strategies.
MGCC Business Dialogue with
Wong & Partners
Malaysia’s efforts in combatting corruption have gained momentum in recent
months, as the local legislature is considering a revision of the Malaysian AntiCorruption Commission Act 2009 (“MACCA”) to prosecute companies for
corrupt actions of employees. In line with this, MGCC organised a business
dialogue with Wong & Partners on the topic of “Corporate Compliance on
Anti-corruption” on 11 June 2015 at the MGCC office. 10 participants from
various companies attended the dialogue session.
The speaker for the first session Mr Eddie Chuah, Senior Associate of Wong & Partners.
Speaker for the second session, Ms Chen Hong Sze, Associate of Wong & Partners.
Two speakers from Wong & Partners were invited to conduct the business
dialogue. Various related topics were discussed, including existing corruption
laws and the anticipated proposed changes, best practice in dealing with anticorruption compliance under the new proposed regime imposing corporate
liability, data privacy and some related subtopics.
EVENTS 39
Optima Pressformen GmbH & Co.KG,
Representative visit to Malaysia
Meeting the representative of Optima – from l. to r. Ms Victoria Chuah, MGCC Marketing Officer, Mr Thomas Brandt, MGCC
General Manager and Mr Jens Borghoff, Sales Director from Optima.
Since September 2014 MGCC has been cooperating with Optima
Pressformen GmbH & Co. KG on the Office-in-Office concept to
have a permanent contact in Malaysia.
Company and factory visit by representative of Optima - Mr Jens Borghoff.
Optima is a manufacturer of pellet dies, roller shells and other wear
parts for all types of pellet mills. The company is a leader in various
others fields including pellet and briquette machinery (i.e: sawing,
milling machinery and related parts and components).
The sales director from Optima, Mr Jens Borghoff visited Malaysia
at the end of June and MGCC arranged several business meetings
with potential local customers, especially those in the poultry feed
manufacturing industry.
MIAVIT AG
– Partner Search in Malaysia
MGCC organised and facilitated several business matchings from 30 June
to 3 July 2015 for Thomas Felske from MIAVIT Gmbh. MIAVIT GmbH is a
manufacturer of specialty feedstuffs and feed additives for all major animal
species – especially from poultry, cows and swines. The company produces
its own vitamin E powder and choline chloride, and is the market leader for
mineral and vitamin premixes on the German market. MIAVIT offers
products both in powder form and as liquids for drinking water application.
Their product range meets the needs of modern, environmentally friendly,
economically viable animal nutrition, and to a large extent is targeted
specifically for applications where preventive antibiotic use is either not
desired or prohibited. Today MIAVIT AG exports 50% of its production to
more than 70 countries worldwide.
Mr Thomas Felske (middle) of MIAVIT GmbH with MGCC staff, Ms Michelle Lim (left), Senior
Marketing Officer and Ms Yasmin Markam (right), Marketing Officer.
40 EVENTS
Sundowner
28 May 2015, Bridge Bar @ G Tower
From l. to r. Martin Metzger (Managing Director, YTL
Power Services Sdn. Bhd., MGCC Board Member),
Frederik Fabisch (Executive, C. Melchers GMBH & CO.),
Sven Schneider (Head of Corporate Strategic Planning,
SSIC Berhad).
From l. to r. Ramesh Supramaniam (Senior Manager,
Sales & Key Account Management, Schenker
Logistics), Patricia Chin (Head of MGCC Training
Academy, MGCC), Lionel Tan (Director, Head of Sales
& Key Account Management, Schenker Logistics).
From l. to r. Danny Wang (Business Development
Executive, ISI Control Sdn. Bhd.), Bernhard Schütte
(Chairman, Happy Water Sdn. Bhd.), Dr. Marco Tieman
(Chief Executive Officer, LBB International), Oswin Pepels
(Managing Director, Dachser Malaysia Sdn. Bhd.).
From l. to r. Caroline Leong (Executive, Trade Fair
& Student Travel, Corporate Information Travel
Sdn. Bhd.), Vicky Yap (Project Manager, Malaysian
Exhibition Services Sdn. Bhd.), Ezwan Effenddy B.
Abdul Wahab (Senior Sales Manager, Malaysian
Exhibition Services Sdn. Bhd.), Choi Chong Pau (Officer,
Trade Fair & Student Travel, Corporate Information
Travel Sdn. Bhd.).
From l. to r. Dunia Stapmans (Managing Director, The
European Taste Sdn. Bhd.), Klaus Stapmans (Managing
Director (CFO), The European Taste Sdn. Bhd.).
From l. to r. Paurus Nekoo (General Manager,
Malaysia Lufthansa German Airlines), Dr. Wolfram
Spelten (Counsellor for Economic, Commercial and
Environment Affairs, German Embassy Kuala Lumpur),
Daniel Schmidt (Managing Director, CompuGroup
Medical Malaysia Sdn. Bhd.).
From l. to r. Mohd Tarmizi (Chief Operating Officer,
AAA Fix it Sdn. Bhd.), Gabriel Gan (Corporate Manager,
Allied Pickfords).
From l. to r. Thomas Brandt (General Manager,
MGCC), Lim Khiang Hua Lim Khiang Hua (Managing
Director, SGL Group Malaysia, MGCC Board Member),
Alexander Stedtfeld (Executive Director, MGCC).
EVENTS 41
German Maritime
Delegation to
Malaysia
Delegates from the German maritime industry.
The Malaysian-German Chamber of Commerce and Industry with the
support of the Federal Ministry for Economic Affairs and Energy (BMWi) and
in partnership with the German Shipbuilding and Ocean Industries
Association (VSM) and the Association of Marine Industries of Malaysia
(AMIM) organised a German Maritime and Shipbuilding Industry Delegation
to Malaysia from 22nd to 26th June 2015.
A total of 10 delegates from Germany participated in the delegation. The aim
of the delegation was to further exchange knowledge and gain insights into
the Malaysian maritime and shipbuilding industry, introduce the German
know-how and expertise to the Malaysian maritime and shipbuilding
industry and to explore business potential with Malaysian maritime and
shipbuilding companies to foster strong business partnerships. Among the
delegates were representatives of German shipyards as well as the
representatives from the maritime supplies industry.
Maritime roundtable meeting with German delegates and the representatives from local
companies. From l. to r. Mr Thomas Brandt, MGCC General Manager, Mr Nazery Khalid,
Honorary Secretary-Association of Marine Industries of Malaysia (AMIM), Mr Alexander
Stedtfeld, MGCC Executive Director, Ybhg Tan Sri Dato’ Seri Ahmad Ramli B. Hj. Mohd Nor,
President of AMIM/Executive Deputy Chairman/Managing Director of Boustead Heavy
Industries Corporation Berhad (BHIC), Mr Martin Krautkraemer, representative of Federal
Ministry for Economic Affairs and Energy (BMWi), Malaysia/ASEAN-Member States.
MGCC also organised a maritime roundtable and business matching session
that was attended by 46 representatives from local companies in Kuala
Lumpur. The highlight of the business delegation was the visit to Sibu and
Miri for 4 days. A total of 67 business meetings were held in West Malaysia
and the region of Sarawak in East Malaysia with companies were interested in
the portfolio of the German Maritime leaders.
Maritime business matchings at Renaissance Hotel, Kuala Lumpur.
Site visit at Sibu Shipyard Industries.
Site visit at Muhibbah Marine Engineering Sdn Bhd.
Roundtable and business meetings with Miri Shipyard Association.
42 EVENTS
DE-Regional Meeting of AHKs Asia
Group photo of DE-Service team leaders from the Asia Pacific Region.
This year the DE-Regional Meeting of AHKs in the Asia region took
place in Manila from 4 to 6 June. The AHK in Manila is now one of the
chambers under AHKs network which consists of 130 AHK in 90
countries. During the meeting, the DE-Service team leaders
exchanged ideas of service portfolios, increase in over-the-border
AHK cooperation and shared their experience in handling projects.
The two-day event was also aimed at strengthening the network
among the DE-Services units of the AHKs in the region. Mr Thomas
Brandt, the General Manager and Head of DE-International
represented AHK Malaysia at the meeting.
First Worldwide AHK Meeting on
Membership
Mr Benjamin Leipold, Division Head of AHK worldwide – DEinternational, International Projects, DIHK e.V. (centre, front row) with participants from all around the globe.
Against the background of strengthening the potential of the
worldwide German chamber network and the cooperation among
and between AHKs, AHK Argentina has developed the idea of
organising the first global network meeting on the subject of
membership. The hands-on seminar with interactive workshop
modules took place from 24 – 27 June 2015 at DIHK in Berlin and
covered the topics of member acquisition and retention,
membership administration, sponsorship and events. Ms Sabine
Franze, Head of Communications and Ms Surayah Mohd Salleh,
Membership Officer, represented AHK Malaysia at the meeting.
EVENTS 43
MGCC’s 24th Annual
General Meeting
Dr Wolfram Spelten, the Counsellor for Economic, Commercial and
Environmental Affairs of German Embassy Kuala Lumpur as the
keynote speaker for MGCC’s AGM 2015.
Before the AGM starts…
Voting session in progress.
At MGCC’s 24th Annual General Meeting which took place on
16 June 2015 at The Majestic Hotel Kuala Lumpur, Mr Thomas
Zimmerle, CFO of Infineon Technologies (M) Sdn Bhd was elected
to succeed Mr Lim Khiang Hua, Managing Director of SGL Group
Malaysia as the President of the Malaysian-German Chamber of
Commerce and Industry (MGCC) for the term 2015 – 2017. Dato’
Robert Teo Keng Tuan, the Managing Partner of RSM Robert Teo,
Kuan & Co. was elected as Vice President succeeding Wolfgang
Laabs, the Managing Director of Schenker Logistics (M) Sdn Bhd.
The President and Vice President will change office at the AGM 2016.
During the AGM, members were informed about the Chamber’s
past activities and future plans by the Executive Director, Alexander
Stedtfeld and the chamber’s financial report was presented by Dato’
Robert Teo, the Chamber’s Treasurer.
It was the Chamber’s pleasure to have Dr Wolfram Spelten, the
Counsellor for Economic, Commercial and Environmental Affairs of
German Embassy Kuala Lumpur to speak on the current economy
conditions in Malaysia and Germany. He also shared some input on
the topic of ASEAN Economic Community.
44 EVENTS
EVENTS 44
Media Briefing Announces
Results of ASEAN Business
Climate Survey 2015
Reporters and cameramen in action.
From l. to r.: Mr Thomas Zimmerle, President of MGCC and CFO of Infineon Technologies (M) Sdn. Bhd.,
Mr Alexander Stedtfeld, outgoing Executive Director of MGCC.
The ASEAN Business Climate Survey was established in 2012 by
seven German Chambers of Commerce and Industry in the ASEAN
region that formed the German-ASEAN Chamber Network (GACN).
Since then, the survey is conducted every year among the
respective member companies in Indonesia, Malaysia, Myanmar,
Philippines, Singapore, Thailand and Vietnam. The objective is to
gain an overview of the business confidence, growth expectations
and investment in the ASEAN region.
40% have done better compared to last year and expect to
continue this strong run, especially on the sales side where 57% of
the respondents forecast an increase over the next 12 months.
The perceptions of companies based in Malaysia in general
correspond with those in the other six ASEAN countries. Although
as compared to 2014, the overall company situation is seen
weaker, in general German companies in Malaysia are still mostly
satisfied with the economic and company situation in Malaysia.
On 29 July 2015, the Malaysian-German Chamber of Commerce
and Industry announced the survey results during a media briefing
held at MGCC’s office, which was attended by representatives
from the local print and broadcast media. The media briefing
began with a presentation on the overall results of the business
situation and outlook of the ASEAN region by the chamber’s
Executive Director, Alexander Stedtfeld, followed by the corporate
perspective, highlighted by Thomas Zimmerle, the chamber’s
president.
German businesses in the ASEAN region judge the current
overall economic situation as satisfactory. In the run-up to the
ASEAN Economic Community (AEC) 2015, German businesses –
especially small and medium-sized enterprises – are increasing
their engagement in the region. Notwithstanding certain
cautiousness, the results of the survey reflect that ASEAN is
currently considered one of the most dynamic economic regions
in the world.
The majority of the respondents are satisfied with their company’s
overall present situation. The assessment by the companies of the
developments of the past year combined with the expectations
for the next 12 months show a strong market position. Around
More questions were raised by the media representatives after the press conference, especially on
Malaysian-German bilateral trade relations and investments of German MNCs in Malaysia.
EVENTS 45
Farewell Sundowner
28 July 2015, Marini’s on 57
From l. to r. Cheng Yaw Goh (Director of Business
Development Asia, DSC Software AG), Hew Wee
Chong (Director & Team Leader of Investor Relations,
Invest KL Corporation), Eddy Cheah (Director, SSCS
Global (M) Sdn Bhd).
From l. to r. Dato’ Robert Teo Keng Tuan (Managing
Partner, RSM Robert Teo, Kuan & Co., Vice President
of MGCC), P. Kandiah (Founder & Director, KASS
International Sdn Bhd, Treasurer of MGCC).
Tobias Amann (Managing Director, IKA Works (Asia)
Sdn Bhd), Kamarul Zaman bin Datuk Haji Abdul
Aziz (Senior Director Corporate Affairs & Business
Development, Volkswagen Group Malaysia),
Mohamed Aslam (Senior Manager Corporate Affairs &
Business Development, Volkswagen Group Malaysia).
From l. to r. Martin Metzger (Managing Director, YTL
Power Services Sdn Bhd, MGCC Board Member), Wendy
Lau (Managing Director, Transearch Wendy Lau, MGCC
Board Member), Wolfgang Laabs (Managing Director,
Schenker Logistics (M) Sdn Bhd, MGCC Board Member),
Thomas Zimmerle (CFO, Infineon Technologies (M) Sdn
Bhd, President of MGCC), Peter Lenhardt (Managing
Director, A. & H. Meyer Sdn Bhd, MGCC Board Member),
Choo Soong Loon (Liaison Officer, Corporate Services &
Accounting, Luther Corporate Services Sdn Bhd).
From l. to r. Katia Oetterich (Manager, Rödl & Partner),
Dr. Dirk Oetterich (Head of Office, Rödl & Partner).
From l. to r. Wiphaphan Khunkitti (Liaison Officer
Bilateral Trade & Invest, MGCC), Calvin Chan Guan Li
(Manager – Global Business Development, TMF Group),
Celine Chan (Managing Director, TMF Group), Yap Wai
Bing (Managing Director, TMF Trust Labuan Limited),
Daniel Bernbeck (Incoming Executive Director, MGCC).
From l. to r. Ernst Geyer (Managing Director, MAN
Diesel & Turbo Malaysia Sdn Bhd), K. Hermann Nagel
(Managing Director, Aviocon Aviation Consultancy),
Alexander Stedtfeld (Outgoing Executive Director,
MGCC), Rainer Jaensch (Representative of Malaysia,
Singapore & Brunei, Germany Trade and Invest GmbH).
From l. to r. Jaclyn Chan (Accounts Officer, MGCC),
Sherena Wong (Trade Fair Officer, MGCC), Heng
Lee Huang (Head of Administration, MGCC),
Lionel Tan (Director, Head of Sales & Key Account
Management, Schenker Logistics), Sven Schneider
(Head of Corporate Strategic Planning, SSIC Berhad),
Ramesh Supramaniam (Senior Manager, Sales &
Key Account Management, Schenker Logistics),
Datuk Muhammad Feisol Hassan (Chairman, LCTH
Corporation Berhad, MGCC Board Member).
46 GERMAN INSTITUTIONS
Doctorate in Germany
All over the world German higher education institutions enjoy an
excellent reputation. German degrees carry great prestige while
teaching and research provide key impulses for innovation and
progress. If you plan to do a doctorate in Germany, you can choose
between two different approaches: Individual doctorate or
structured doctorate programme. In the framework of the
individual PhD, you will do your research individually under one
German supervisor. The most important task is to find a German
professor who agrees to be your PhD-supervisor. For contacting a
German professor, you would need a short sketch of what you
want to do as your PhD-research topic. For a structured PhD
programme, research is done in a research “team” and under the
supervision of more than one Professor. Structured PhD
programmes are offered by universities and research organisations.
Doctoral candidates can apply for the following DAAD PhD
scholarships:
Research Grants
• Doctoral Programmes in Germany
• Bi-nationally Supervised Doctoral Degrees
(sandwich program)
A PhD student analyses his research data in the laboratory.
Deadline for the grants is 15 October 2015. Please visit our
website www.daadkl.org for more information on Doctorate in
Germany and scholarship offers from DAAD.
Come meet us during the upcoming Post Graduate Education
Fair 2015: 21 – 23 August 2015 (Friday – Sunday) MidValley
Exhibition Centre, Kuala Lumpur.
48 MEMBERS
Insurance Solutions for
Persons with Disabilities
Bosch Establishes
First Virtual Learning
Environment for National
Primary School in Penang
Celebrating 25 years of Bosch charity organisation Primavera,
a Virtual Learning Environment (VLE) was created for Sekolah
Kebangsaan Taman Senangan (SKTS). SKTS is the first national
primary school in Penang to have a VLE and they aptly named
it ‘21st Century Learning Space’. It was officially opened on
23 April 2015 by the Bosch Car Multimedia management team
from Germany and Penang.
From right: CEO of Allianz Malaysia Berhad Zakri Khir and CEO of Allianz Life Insurance Malaysia
Berhad Rangam reveal the 3 products during the event.
On 22 June 2015 Allianz Malaysia held a press conference to
share the Company’s insurance solutions for Persons with
Disabilities (“PWDs”). CEO of Allianz Malaysia Berhad and Allianz
General Insurance Company (Malaysia) Berhad (“Allianz
General”), Zakri Khir and CEO of Allianz Life Insurance Malaysia
Berhad (“Allianz Life”), Rangam Bir introduced three products to
the media, several NGOs and employees alike at Aloft Hotel,
Kuala Lumpur.
Bosch’s contribution of RM80,000 is for renovating and
equipping the classroom with VLE facilities such as computer
tablets and projector systems. This contribution supports
the Malaysian Education Blueprint 2013 – 2025 to scale up
the quality of learning across the country by leveraging
on Information and Communications Technology. Having
established a strong footprint in Penang, Bosch is pleased to be
able to contribute to the local community, not only from the
economic point of view but also in terms of social responsibility.
The first product, Allianz Ability Life is brand new and
underwritten by Allianz Life. It is a yearly renewable life insurance
plan. This product is designed exclusively for PWDs and comes
with affordable premium rates.
The other two products, Allianz Care Individual and Allianz
Individual PA are underwritten by Allianz General. These two
products are existing products which are now extended to
PWDs.
SKTS students striking a pose with the Bosch Car Multimedia team in their 21st Century Classroom
on April 23, 2015.
BNP Paribas Appoints New Head
of Country for Malaysia
BNP Paribas has announced the recent appointment of Philippe Aroyo as Head of Country
for Malaysia and Chief Executive Officer of BNP Paribas Malaysia Berhad.
Philippe Aroyo, Head of Country for Malaysia and Chief Executive
Officer of BNP Paribas Malaysia Berhad.
Philippe brings along with him a wealth of managerial experience and market knowledge.
Prior to this, Philippe has been the Head of Country for BNP Paribas United Arab Emirates
(UAE) since 2008. Philippe has been with the Group for 26 years. He first joined BNP
Paribas’ head office in Paris as a senior economist. In 1994, he moved on to join Inspection
Generale and was subsequently promoted to Head of Audit Teams. Philippe then held
senior positions in India and Senegal before being appointed Head of Country for Kuwait
in 2002. During his tenures as Head of Country in Kuwait and subsequently the UAE,
Philippe also held the esteemed role of Chairman of the section of the French Trade
Advisers for the respective countries.
MEMBERS 49
Dräger Expands Technology Portfolio
“The purchase expands our portfolio to include a key technology
with a promising future and strengthens the company’s strategic
position, especially for customers in the oil, gas and chemical
industries,” says Stefan Dräger, Chairman of the Executive Board of
Drägerwerk Verwaltungs AG. The technical planning and installation
of the system require significantly less time and effort than previous
solutions. GasSecure’s wireless system can be used for more than
one year without needing new batteries.
Lübeck-based company acquires GasSecure AS.
Dräger will buy the Norwegian company GasSecure AS for a
purchase price of between EUR 55 million and EUR 60 million.
GasSecure has a fully wireless optical gas sensor for hydrocarbons
and holds the corresponding intellectual property rights.
GasSecure AS will be integrated as a distinct subsidiary company of
the Dräger Group. All employees will continue to work at the Oslo
site. Their technological competence, expertise, entrepreneurial
spirit and customer intimacy is an enrichment for the whole Dräger
Group.
For more information, please visit http://www.gassecure.com/
Eco Galleria @ Eco Botanic
– Your Very Own High Street
in Iskandar Malaysia
Welcome to Eco Galleria – where high street meets the high life.
Inspired by Europe’s fashion centres, Eco Galleria transposes the
modern mall into a high street setting to offer a premier shopping,
dining and entertainment experience in a modern yet nostalgic
environment with strong British colonial echoes.
This integrated commercial development occupies 13.85 acres in
EcoWorld’s flagship development of Eco Botanic and comprises
retail, a hotel and boutique office suites. Key features include two
grand drop-off areas; two 422-inch LED screens flanking the grand
entrance; a charming English-style shopping arcade; 16,000 sq. ft
Courtyard Atrium which offers a large, flexible space for a range of
events and pedestrian-friendly environment with covered walkway,
linkway and Festival Street connections.
Eco Galleria.
Eco Galleria is located in Iskandar Malaysia, in the vicinity of key
commercial, educational, medical centres and business parks. It
also enjoys easy accessibility from Johor Bahru city centre and
Singapore. A high concentration of discerning expatriates and high
net-worth individuals provides pent-up demand for lifestyle
shopping in this area.
IKA®-Werke named “Top 100 Innovator” for Third
Consecutive Year!
IKA-Group representatives (from left), Marcel Stiegelmann and Erhard Eble (right)
accepts the “Top 100 Innovator” award from Mentor, Ranga Yogeshwar (centre).
IKA® Works Asia’s parent company, IKA®-Werke GmbH & Co. KG was honoured as
“Top 100 Innovator” and recognised as one of the most innovative companies in
Germany. On June 26th, the honorary “Top 100” award seal of approval for IKA’s
exemplary innovation processes was presented by Mentor, Ranga Yogeshwar.
Repeating their winning trend again in 2015, IKA®-Werke’s entrepreneurial vision
led the company to achieve second place in the Category for Companies With
Over 250 employees. The President and Owner, Mr René Stiegelmann takes pride
in the growing achievements of IKA Group. “Good ideas and its fast implementation
are a key competitive factor for us. Therefore we invest a lot of time and money in our
innovation management. As part of this, we rely on the wealth of ideas generated by
all our employees. To them my special thanks for the achievement of the TOP 100
Award”, explained Mr Stiegelmann.
50 MEMBERS
Stretching Intellectual Challenges through University
Collaboration Program
The Infineon Week 2015 was a series of specially designed 3-day
collaboration programmes for MMU Engineering & Information
Technologies (IT) students which included Factory Visit, Career
Talk & Alumni Sharing Session, Interview Session & Internship
Application as well as Innovative Project Competition & Poster
Presentation. This programme not only aimed at building
collaborations with academic pioneers who will discover and
drive the ways in which engineering and information technologies
will enrich the human experience for generations to come and to
be leaders but it also expands the industry knowledge base and
attracts premier students to help innovate and transfer
semiconductor technology to the commercial industry. Infineon
week 2015 marked the 6th and 3rd year of collaboration with
MMU and UTeM respectively.
A group picture with the students and management of Multimedia University.
International SOS Malaysia Operates
in New Office Premise
From left: General Manager of International SOS Malaysia,
Mr David Ng, Co-Founder and Group Chief Medical Director,
Dr Pascal Rey-Herme. YB Dato’ Sri Mustapa Mohamed and
Co-Founder, Chairman and Chief Executive Officer, Mr Arnaud Vaissié.
International SOS Malaysia is now operating from its new office located at KL Sentral. The
premise is also home to its South and Southeast Asia (SSEA) Medical Services Operational
Headquarters (OHQ), as well as its Global Corporate Shared Services (GCSS) Centre for Asia
Pacific. The opening ceremony, held on 4 June 2015, was officiated by Malaysia’s Minister of
International Trade and Industry, YB Dato’ Sri Mustapa Mohamed. The relocation of regional
and global operations was compelled by the blend of Malaysia’s world-class infrastructure
and talent availability, cost-competitiveness and ability to take the international best
practices and apply it to its uniquely local market. International SOS has 11,000 employees
across 92 countries serving 60 percent of the Fortune 500 companies as well as NGOs,
governments and educational institutions around the world. Currently, International SOS
staffs 400 employees in its Malaysian operations. The new office is located at B-15, Menara
NU, KL Sentral, 50470 Kuala Lumpur.
After the Earthquake: Logwin and Voith Transport Relief
Supplies to Nepal
Logwin organised an aid shipment to Nepal in May for which employees of
Voith GmbH had collected tents, blankets and medicines for people in the
quake-hit area. Logwin managed the logistics and is covering the entire
costs of transportation. This aid project is not the first time that the
technology group and the logistics service provider have collaborated – the
companies have been business partners for many years. “It went without
saying that we would support the project together with our customer,” says
Werner Sander, Branch Manager at the Logwin Air + Ocean site in Stuttgart.
“People in Nepal are more reliant on aid than ever before.” Logwin provided
14 x 100m² awnings since material is also needed for the construction of
emergency shelters. “The awnings are intended to give people a temporary
roof over their heads,” Werner Sander explains.
Tents, blankets and medicines – Logwin packed the relief supplies and organised
transport to Nepal.
MEMBERS 51
Malaysia Receives Its First DVB-T2
Signals from Rohde & Schwarz
Rohde & Schwarz Malaysia has successfully put on-air for MYTV Broadcasting Sdn Bhd the
first DVB-T2 digital television system in Malaysia – a major milestone in the country’s
television history. MYTV Broadcasting Sdn Bhd is the current concession holder to operate
National Digital Broadcasting project known as Common Integrated Infrastructure Project
(CIIP). The first systems were put in place in the states of Pahang, Kelantan and Terengganu
between April 27 and 29 this year. It is part of MYTV Broadcasting Sdn Bhd’s test phase
currently underway in the three states. The scope of work for this trial transmission project
included design engineering, procurement, installation, testing and commissioning of the
R&S®THU9 Liquid-Cooled Transmitter as well as combiner systems from RFS, our partner in
this project. With highly coordinated project and materials management, Rohde & Schwarz
Malaysia and RFS delivered all project scopes within 7 days upon confirmation from MYTV
Broadcasting Sdn Bhd.
R&S Transmitter system in Bukit Pelindong.
STAEDTLER Recognised as
One of the Most Trusted
Brands in Malaysia
TRUMPF at the CeBIT for
the First Time
As a partner of the global innovation platform CODE_n, initiated
by the GFT Group, TRUMPF represented at CeBIT this year for the
first time. Under the umbrella of CODE_n, startups and their
business models meet established industry and service
businesses. Together, they open up new opportunities for the
digitisation of the economy. Participation in Industry 4.0: An
important part of the exhibition concept: keynote speeches and
discussions by several TRUMPF representatives will speak on
topics such as “How will Industry 4.0 change manufacturing
systems engineering?” or “Manufacturing systems engineering
goes cloud: hot or not?” At the TRUMPF booth in the CODE_n
hall, visitors experienced Industry 4.0 live – and also be there
when “bits and bytes” are transformed in real time into a
customised product for visitor to take home.
Team STAEDTLER Malaysia at the prestigious Reader’s Digest Trusted Brand 2015 Award. Receiving the
award is CEO of STAEDTLER Malaysia, Mr. Christopher Huehn (second from right).
STAEDTLER Malaysia has once again been named the recipient
of the Reader’s Digest Trusted Brand Gold Award™ in the “Pencil”
category in Malaysia for 2015. STAEDTLER was identified as one
of the most trusted brands in Malaysia as voted by consumers.
The award was presented at the renowned Reader’s Digest
Trusted Brand Award gala which took place on June 16, 2015 in
Mandarin Oriental, Kuala Lumpur. Receiving the Reader’s Digest
Trusted Brand Gold Award™ in the “Pencil” category in Malaysia
for 2015 was Christopher Huehn, the CEO of STAEDTLER
Malaysia. STAEDTLER Malaysia also launched its latest exam
pencil, the Noris® 2B Triangular GRED PEPERIKSAAN pencil which
comes in four ‘lucky colours’ at one of the largest book fairs in
the country, the Bookfest@Malaysia 2015 organised by POPULAR
at the Kuala Lumpur Convention Centre from 11 – 19 July 2015.
TRUMPF CeBIT live demo for the first time.
52 MEMBERS
Charity with Community: Official Launch of Sekolah
Jenis Kebangsaan (Tamil) Bentong Canteen
Mr Thilo J. Westerhausen, Managing Director of Elektrisola
(Malaysia) Sdn Bhd had officially launched and handedover the
beautiful canteen to Headmaster Mr Radza Krisnan representing
the S.J.K. (T) Bentong.
Elektrisola spent a significant amount on this canteen project
because we are very much part of the local community since
almost 25 years ago.
Together with Elektrisola’s long term business partners: Mr Ng Hoi
Sang of Fah Sang Engineering Sdn Bhd, Mr Y. T Chong of Yin & Lan
Construction Sdn Bhd and Mr Ho Ten Pen of Weng Sang Power
Sdn Bhd, we made this project a success. They supported this
project by providing construction materials and labour at cost
only. We thanked them for their cooperation. This project was
supervised on budget and on time by Elektrisola’s recently retired
Senior Maintenance and Facility Manager, Mr Mohan Aroo.
Mr Thilo J Westerhausen cutting the ribbon and Mr Radza Krisnan standing beside him.
YOUR WORLD OF LOGISTICS
Freight Logistics
You know us from Europe …
… and in over 40 locations in Asia.
Our services
Airfreight
Projects
Ocean freight
High-Tech
Road transport
Digital Archiving
Warehousing
Chemicals
Transshipment
Pharmaceuticals
Value Added Services
Automotive
Contract Logistics
Port Logistics
Rhenus-Group
Turnover at the Rhenus Group tops € 4,1 billion, making it one of the
logistics service companies with global operations. Rhenus has business
locations at more than 390 locations worldwide and employs 24,000 people. Our business areas contract logistics, freight logistics, port logistics
and public transport stand for the management of complex supply chains
and innovative value added services.
We accompany you throughout:
No matter how far you go with your company, we will go with you on an
expansion path and break new ground.
Your Contacts
Holger Seehusen – Regional Director
Rhenus Logistics Asia Pacific Pte Ltd
Andreas Pistner – Regional Director
Rhenus Logistics Asia Pacific Pte Ltd
Email: holger.seehusen@ap.rhenus.com
Email: andreas.pistner@ap.rhenus.com
MEMBERS 53
MGCC Welcomes New Members
DSC Software AG
Dürr Technik GmbH & Co. KG
DSC Software AG lives up to its company slogan and spreads its
enthusiasm further: with clever solutions for SAP PLM. For
example with Engineering Control Center – ECTR – as an
integration platform and intuitive SAP cockpit for development
and design. With SAP Engineering Control Center interface to NX,
or with Factory Control Center – FCTR – for SAP-integrated
production planning and continuous CAD-CAM-DNC processes.
DSC solutions are used in many industrial branches worldwide:
from machine and plant engineering to the automotive industry,
from aerospace to electrical and process engineering. For more
than 30 years, manufacturers have been relying on the know-how
of the Karlsruhe integration specialists. It is no coincidence that
ECTR provides the basic technology for SAP Engineering Control
Center, the new integration platform for development teams and
systems engineering – as an essential component of the SAP
strategy according to the principles of Industry 4.0.
Dürr Technik is a member of the DÜRR group companies with
worldwide business partners and overseas offices. The head
office is located in Bietigheim-Bissingen in one of the most
innovative industrial regions in Germany. For over 50 years we
have manufactured compressors and vacuum pumps. This long
experience is offered to our customers today. An innovative
development department, highly modern production and a
quality certification, according to DIN EN ISO 9001, provide us
with the ability to satisfy our customers high demands.
Comprehensive consultation and continued cooperation with all
our customers is the foundation of our business. Developing
working partnerships with our customers ensures a perfect
finished product. Dürr Technik specialise in the production of
units for OEM applications. We develop and build complete
systems on a cost effective basis - everything supplied from one
source. From the modification of our standard units to the
complete design and construction of special units – almost
everything is possible. Design, function and performance are
achieved in close co-operation with our customers. For different
market segments Dürr Technik offer a wide standard range of
small oil-free compressors and vacuum pumps. We also specialise
in manufacturing tailor made products to meet individual
customer requirements.
Contact persons:
Mr Cheng Yaw Goh
Director
Business Development ASIA
Contact No: +60 11 3527 8168, +49 17 6654 36880
Email: ChengYaw.Goh@dscsag.com
Dipl. Wirtsch.-Ing. Prof. Dr.-Ing. Edwin Hettesheimer
Strategic Planning Advisor
Contact No: +49 (0) 151 2280 7260
Email: Edwin.Hettesheimer@dscsag.com
Am Sandfeld 17
D-76149 Karlsruhe
Germany
Tel : +49 721 9774 100
Fax : +49 721 9774 101
Email : info@dscsag.com
Web : www.dscsag.com
Contact persons:
Mr Karl Wäschle
Sales Director
Pleidelsheimer Str. 30
D-74321 Bietigheim-Bissingen
Germany
Tel : +49 (0) 7142 90 22 0
Fax : +49 (0) 7142 90 22 99
Email : office@duerr-technik.de
Web : www.duerr-technik.eu
Mr Dave Ryan A. Buaron
Fifteen years international working experience in the Philippines, Vietnam and Malaysia, with
backgrounds in digital marketing and marketing communications, education management, training,
workflow processes, external relations and liaison as well as social media strategy. Currently connected
with Cempaka Schools Malaysia as a Special Projects Officer-Community Manager. I was instrumental
in a more coherent digital media strategies through content creation, online reputation management,
creation of corporate social media and email policies, community management, public relations as
well as lecture on social media for students and teachers. I hold a Bachelor of Science in Business
Administration (Major in Marketing) degree from the University of the Philippines, and expecting a
Diploma in Digital Marketing from Chartered Institute of Marketing (United Kingdom). The main reason
for joining MGCC is to reach out and engage a wider network of like-minded executives to exchange
ideas and share opportunities.
c/o Cempaka Schools Malaysia
Persiaran Awana
Taman Cheras Permata 2
43200 Cheras
Selangor
Tel
: +60 3 9076 8400
Mobile : +60 16 397 5625
Email : ryan@cempaka.edu.my
54 TRADE FAIRS
BIOFACH AMERICA
17 – 19 September 2015: Baltimore USA
All Things Organic
From 17–19 September 2015, the Baltimore
Convention and Exhibition Center will once
again become the meeting place for the
international organic products sector. Then,
BIOFACH AMERICA – ALL THINGS ORGANIC,
will be opening its doors. At the organic
products trade show held parallel to the
Natural Products Expo East, companies from
all over the world will be presenting organic
raw materials and products from the food
and non-food sector. Over 1,200 companies
are expected, around 150 of them
specialising exclusively in organic products
along with over 22,000 visitors. In terms of
internationality too, BIOFACH AMERICA –
ALL THINGS ORGANIC has a great deal to
offer. For the first time, visitors can expect
a Polish pavilion, while Argentina is
represented with a pavilion once again.
Applications from the Netherlands, Italy,
France, Turkey as well as Great Britain have
also been received. This healthy trend is
a result of the positive performance by
the American organic products market.
According to the annual study conducted
by the OTA (Organic Trade Association),
sales of organic foodstuffs in 2014 reached
around 39 billion US Dollars. That is 11%
more than in 2013. Already held the day
before the event, workshops and the
communicative Harvest Festival will get
people in the mood for the 3-day show.
Adam Andersen, Natural Products Group
Show Director: “We are delighted to present
the whole range of natural, ecological and
healthy products once again in the fall. In
my opinion, the unique mood at BIOFACH
AMERICA – ALL THINGS ORGANIC is strongly
linked to the direct environment and
surroundings of the event: Baltimore is not
only a city with a rich culture and history.
The inhabitants are also very hospitable and
open-minded. Every year they look forward
to the trade visitors from all over the world
and put in a lot of effort to make the event
an unforgettable experience for everyone.”
market trend is a giant opportunity,
particularly for European organic products
companies seeking to establish themselves
in the USA. I am therefore particularly
delighted at the first-time participation by
Polish exhibitors. BIOFACH AMERICA – ALL
THINGS ORGANIC is the ideal platform for
the international organic exchange.”
For years now we have been very pleased
with the developments on the American
organic products market. According to the
Organic Industry Survey conducted by the
OTA (Organic Trade Association), in 2014
Americans spent 39.1 billion US Dollars on
organic food. That is a growth rate of 11.3%
compared to 2013. At 14%, the largest
increase in sales in the last six years was
recorded by biological non-food products,
such as eco-textiles, bio-degradable
packaging and natural cosmetics. Here, the
increase in organic sales is independent of
income and size of household. 90% of all the
Southern and West-American households
surveyed purchase organic products at least
from time to time. With sales of 13 billion US
Dollars, in particular organic fruit and
vegetables are very popular with the
consumers. According to the OTA study, just
as recently as 1997, organic products were
regarded as niche articles. Today, eco
products account for 5% of the USA’s food
market worth a total of around 780 billion
US Dollars. Katharina Neumann, Project
Coordinator at BIOFACH AMERICA – ALL
THINGS ORGANIC: “The OTA study once
again confirms Americans’ increasing need
for high-quality foodstuffs. Not only
Argentina has returned with a pavilion. This
This year the supporting conference
programme will be covering the following
theme sections: Natural in the Media,
Ingredient Reform, the “Future of” Series,
Non-GMO, Trends and Growth and Natural
Economics. There is eager anticipation,
among others, of the keynotes from bestseller author and system critic Dylan
Ratigan and from agriculturalist and author
Joel Salatin, who with his unmistakably
humorous style, is actively supporting small
farms and a regional food-supply system.
The keynote from Michele Simon, by trade a
lawyer in food law, will in turn pick up the
theme of food marking and policy.
Already on the day before the fair opens, 16
September 2015, this will be complemented
by diverse tours. One highlight is the Farmto-Store Tour, in which the participants visit
farms, processing companies and stores
marketing regional products.
For more information, please contact:
Ms Michelle Lim
MGCC Senior Marketing Officer
Tel: +603-9235 1800 Fax: +603-2072 1198
Email: michelle.lim@malaysia.ahk.de
TRADE FAIRS 55
CERAMITEC 2015
20 – 23 October 2015: Munich, Germany
Hotspot for the Ceramics Industry
The international key trade show for the entire ceramics industry,
from classic ceramics and raw materials through powder
metallurgy and technical ceramics, will be held from 20 to 23
October 2015 on the exhibitions grounds of Messe München.
Just like its previous editions, ceramitec 2015 will be accompanied
by a top-class supporting programme. The ceramitec Forum in
hall B1 will once again serve as a platform for the transfer of
knowledge and know-how, for research and development.
Attendance at the specialist lectures and panel discussions will be
free of charge. The lectures are offered with simultaneous
translation in German and English.
The first day of the trade show, Tuesday 20 October 2015, will start
with a panel discussion. The Powder Metallurgy Day is scheduled
for Tuesday afternoon, followed by the Heavy Clay Day on
Wednesday and the Technical Ceramics Day on Thursday.
The Career Day of the Network of Young Professionals will be
integrated into ceramitec for the first time on Friday 23 October
2015. This is a joint initiative of the Koblenz University of Applied
Sciences, the Expert Fachmedien GmbH, the Deutsche Keramische
Gesellschaft (DKG) and ceramitec 2015. The aim is to foster the
networking of companies from the ceramics industry with training
and research centers as well as students, graduates and young
professionals.
In addition, the Supporting Programme of ceramitec 2015 will
once again be the platform for transferring knowledge and
expertise for scientists and developers as well as for highly qualified
professionals. On the “Day of Technical Ceramics” visitors will have
the opportunity to gather information on aspects of Industry 4.0 in
the ceramics sector and on the major materials groups in the field
of technical ceramics. In lectures on additive manufacturing in
ceramics and on innovations involving ceramics components in
mechanical engineering, well-known experts will provide insights
into the industry’s future.
The range of products and services displayed at ceramitec includes
literally all relevant areas. It shows state-of-the-art technologies
from industry, research and development, making ceramitec the
competence and technology center for the entire spectrum of
ceramics applications.
In 2015, ceramitec will be characterized by a further enlargement
of the segments of “Technical Ceramics” and “Powder Metallurgy”,
even though the conventional segments covering raw materials,
heavy clay ceramics, fine ceramics and refractory ceramics will
continue to be in the limelight. In this way, the trade show offers its
exhibitors and visitors a very wide range of products and services
as can only be found at ceramitec.
For more information, please contact:
Ms Sherena Wong
MGCC Trade Fair Officer
Tel: +603-9235 1800 Fax: +603-2072 1198
Email: sherena.wong@malaysia.ahk.de
56 TRADE FAIRS
fairs&more
Go Global with US
July – August 2015
For further information on Trade Fairs, please contact MGCC
Tel: (+60)3 9235 1800 Fax: (+60)3 2072 1198
E-mail: info@malaysia.ahk.de
World’s Leading Trade Fair for Electronics
Development and Production
10 – 13 November 2015
(Munich, Germany)
The IT Security Conference
and Corporate Networking
1 – 2 September 2015
(Sao Paulo, Brasil)
European Trade Show for Packaging,
Technology, Processing and Logistics
29 September – 1 October 2015
(Nürnberg, Germany)
Where Beverage Meets Technology
15 – 18 September 2015
(Chicago, USA)
The IT Security Expo and Congress
06 – 08 October 2015
(Nürnberg, Germany)
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Endorsed by:
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