Mongolia is an independent republic in East Asia, strategically located between China and Russia. The population of Mongolia is 2.8 million. The capital city is Ulaanbaatar. Other major cities include Darhan and Erdenet.

Since the early 1990s, Mongolia has been moving towards a market-based economy. In 2005, its Gross Domestic Product (GDP) amounted to US$5.272 billion while its GDP per capita was at US$1,900. In that same year, Mongolia’s GDP (real growth rate) was recorded at 6.2%.

A pristine and relatively untouched natural environment is what sets Mongolia apart from the rest of the world. It is a country endowed with natural mineral resources like oil, coal, copper, molybdenum, tungsten, phosphates, tin, nickel, zinc, fluorspar, gold, silver and iron. Its economy however, is traditionally based on agriculture and livestock breeding. Mongolia’s main local agriculture products are wheat, barley, vegetables and forage crops – in addition to livestock such as sheep, goats, cattle, camels and horses.

The burgeoning local industries that investors may be interested to consider include agriculture, exploration industry (coal, oil and gas, uranium, thorium ore, iron ore), food production, knitting industry, fur processing, leather processing, timber production, fuel production, production of chemical products, metallurgic industry, production of electricity, steam and water supply, water treatment and construction industry.

The country’s major exports include copper, apparel, livestock, animal products, cashmere, wool, hides, fluorspar and other nonferrous metals. Mongolia’s export partners include China, Canada and the USA.

Machinery & equipment, fuel, cars, food products, industrial consumer goods, chemicals, building materials, sugar and tea account for most of Mongolia’s imports. Its import partners include Russia, China, Japan, South Korea and Germany.

At present, Malaysia’s exports to Mongolia by product sectors are electrical & electronics products, processed food, paper & pulp products, beverages & tobacco, rubber products, non – metallic mineral products, manufactures of metal, chemicals & chemical products, wood products, manufactures of plastics, palm oil and other vegetable / animal fats & oil.

MIDA and MASSA organized a seminar on “Doing Business with Mongolia” recently. For more information on doing business with Mongolia, contact us at: mail@massa.net.my. Alternatively, log on to www.investmongolia.com

A Country Overview
Zambia is a landlocked southern African country. Its neighbours are the Democratic Republic of Congo, Tanzania, Malawi, Mozambique, Zimbabwe, Botswana, Namibia and Angola. Its abundant natural and land resources make it a country with excellent potential for investment.

Although Zambia is geographically located within the tropics, its high altitude has an enormous influence on its climate. The weather here is defined by three distinct seasons: the cool season, starting from April to August, with temperatures ranging from 10 to 26 degrees Celsius; the hot & dry season from August to November (with temperatures during this period reaching up to mid 40s degrees Celsius) and the warm & wet season from November to April. Zambia has abundant annual rainfall averaging between 508 and 1270mm.

A former British colony, Zambia attained independence and became a republic in 1964. Today, Zambia has a population of 11.5 million people with over a million of them living in the capital of Lusaka, a sprawling modern city and the commercial hub of the country. Other notable Zambian cities are Ndola and Kitwe. Zambia has one of the highest urban population rates in the African continent with 38% of the people living in urban areas. Zambia’s official language is English, although it is said that more than 80 languages are spoken across the country. The main religions practised here are Christianity, Islam and Hinduism.

Arguably the most popular tourist attraction in Zambia is Victoria Falls – one of the greatest natural wonders of the world – located along the Zambesi River at the southern border of Zambia.

Travelling to Zambia is easy and convenient as the Lusaka International Airport receives regular flights from Johannesburg, Nairobi and London. Principal airlines which ply the Zambian route are Air Zambia and South African Airways. There is also another international airport in Livingstone.

There are a number of international hotels in Lusaka which offer world-class business and conference facilities. The eclectic selection of restaurants found here also reflects the city’s diversity. With its varied cultural and leisure offerings, the city provides the perfect backdrop to investors from all over the world. Other investor-friendly aspects of Zambia are good energy resources and an adequate transportation network.

The Zambian Economy
Zambia has an open, market-based economy and an active private sector. As part of the government’s economic reform programme, various initiatives have been put in place to encourage private participation in the economy and improve the country’s investment climate. Continued efforts in the last decade to strengthen the country’s finances have also contributed to improved economic stability and growth.

In 2004, Foreign Direct Investment (FDI) reached a total of US$123 million. Zambia’s Gross Domestic Product (GDP) in 2005 was estimated at US$10.63 billion and the GDP per capita then was US$900. It also registered an economic growth (GDP real growth rate) of about 5% in that year.

Mining is the most important industry sector in the Zambian economy and represents the largest share of the country’s total GDP and 75% of export earnings. Agriculture also contributes significantly to the country’s economy as it accounts for over 80% of employment.

Current Export & Import Activities
Although the mining sector is the backbone of the Zambian economy and the major source of foreign exchange, other non-traditional local industries have emerged and contributed to growth, jobs and income in rural and semi-urban areas. These include construction, foodstuffs, beverages, chemicals, textiles, fertilisers and horticulture.

The country’s main exports are copper and cobalt, electricity, tobacco, flowers and cotton. Major export partners include Switzerland, South Africa, the United Kingdom, the Democratic Republic of Congo, Tanzania and Zimbabwe. Zambia’s major import partners are South Africa, UK and Zimbabwe. Machinery, transportation equipment, petroleum products, electricity, fertilizer, foodstuffs and clothing are among the key items that are imported into the country.

Currently, Malaysian exports to Zambia comprise electrical & electronic products, rubber products, manufactures of metal, chemicals & chemical products, manufactures of plastics and palm oil.

The local agriculture products grown in Zambia are corn, sorghum, rice, peanuts, sunflower seed, vegetables, flowers, tobacco, cotton, sugarcane, cassava (tapioca), coffee, cattle, goats, pigs, poultry, milk, eggs and animal hide.

Business and Investment Opportunities
The Zambian government encourages private investment in all major industry sectors including mining, agriculture, manufacturing, tourism and energy. The open market trade and investment conditions offer a great investment environment for Malaysian investors. There are various investment and tax incentives to attract investors, some of which are sector-specific. In 2006, all agencies involved with the promotion of investment and trade support in Zambia were brought under the authority of a one stop-shop for investors: the Zambia Investment Center (ZIC). Investors will be able to find abundant investment opportunities in industries such as agriculture, manufacturing, services, tourism, mining and construction, among others.

Some examples of investment opportunities based on specific industry sectors are in the Agro-industry: horti-floriculture, tobacco-processing, cotton-ginning, crop production for the processing industries; Manufacturing: consumer goods; and Tourism: holiday accommodations, managed safaris and organised adventure tours like white-water rafting.

At a recent MIDA & MASSA seminar held in conjunction with the visit of a high level Zambian delegation led by Hon. Dr Situmbeko Musokotwane, the Deputy Cabinet Secretary, Government of Zambia and Chairman of the Presidential Steering Committee of “Triangle of Hope”, potential investment projects in the following sectors were highlighted, i.e:- Agriculture, Tourism, Transportation, Finance, Education, Manufacturing, Mining, Services, Energy and Construction.

Members who are keen to know more about investing in Zambia can contact MASSA at:
mail@massa.net.my. Alternatively, log on to www.zic.org.zm

Sources: Government of Zambia
Zambia Investment Centre,
World Bank

The Malaysia-Singapore Third Country Business Development Fund is co-founded by the two countries. The fund allows Malaysian and Singaporean enterprises to cooperate and jointly identify investment and business opportunities in ‘third countries’, outside of Malaysia and Singapore. The fund aims to encourage Malaysian and Singaporean enterprises to expand their business operations in the global arena.

QUALIFYING ACTIVITIES

Pro-active Searches

Joint Missions

SECTORS

CRITERIA FOR ELIGIBILITY

The local professional services sector is expected to benefit immensely from the new Professional Services Export (PSE) Fund, which was launched by the Malaysian Government under the Ninth Malaysian Plan (RMK9). Through the PSE Fund, a total of RM150 million in funds have been allocated to assist the professional services sector to become more export oriented – further underlying the Government’s commitment towards this sector.

The PSE Fund is seen by many as a key initiative to encourage the export of professional services and strengthen the presence of the Malaysian professional services sector in the global arena. But above all, the Fund is poised to enhance Malaysia as a competitive and dependable supplier of professional services.

At a glance, the Fund’s main objectives are:
– To encourage Malaysian professional services providers to bid for overseas projects.
– To expand the exports of professional services, through enhancing visibility and increasing awareness of
the expertise of Malaysian professional services providers in the global market.
– To brand the Malaysian professional services industry as internationally competitive, competent and reliable.
– To gather market intelligence through feasibility and related studies, assist Malaysian companies in their
bids for overseas projects as well as create new markets for Malaysian technologies and products.

The PSE Fund falls under the purview of the Ministry of International Trade and Industry (MITI) and is managed by the Malaysia External Trade Development Corporation (MATRADE). In her speech during the launch of the Fund, Datuk Seri Rafidah Aziz, Minister of MITI, emphasised that the specific purpose of the Fund is to extend the global outreach of Malaysian professional services providers.

The introduction of this Fund is also in line with the objectives of the RMK9 and Third Industrial Masterplan (IMP3) which is to boost the contribution of the non-government services sector in the economy. Non-Governmental services accounted for 50.5% of the country’s Gross Domestic Product (GDP) in 2005. Under the IMP3, the sector is expected to grow at a rate of 7.5% over the next 15 years, to reach 59.7 per cent of the GDP by 2020.

Datuk Seri Rafidah Aziz also said that the projections are certainly achievable given the comprehensive strategies and policy measures that are in place to promote growth in the following eight targeted services sub-sectors as identified in the IMP3:

The Malaysian professional services providers that stand to benefit include accountants, auditors, architects, agriculturists, banking & finance professionals, economists, engineers, IT consultants, surveyors, lawyers, management consultants and medical & healthcare professionals.

Mechanics of the PSE Fund
The PSE Fund provides grants to professional services providers to meet the costs of preparing and submitting tender bids for eligible overseas projects. Grants secured from the PSE Fund are not for the purposes of carrying out / implementing the project.

There are 2 types of grants: 
a. A Matching Grant is offered to Malaysian professional services providers to meet 50% of the costs of preparing and submitting tender bids for eligible project studies. These include feasibility studies, privatisation studies and studies relating to project formulation and project management.

b. A Conditional Grant is offered to meet 50% of the costs incurred by Malaysian professional services providers for tender bids relating to the preparation and submission of tender bids for ‘Design’, ‘Design-Build’, ‘Design-Build-Operate’ and ‘Design-Build-Operate-Maintain’ projects.

These projects generally involve Malaysian professionals being engaged by an entrepreneur or contractor, the principal, bidding for a particular project. In such a case, Malaysian professional services providers applying for a Conditional Grant must provide a copy of an agreement with the principal or other documentary evidence to support their grant applications. The award of this grant is subject to the condition that reimbursement of the approved grant expenditure items by the PSE Fund can only be made in the event of the principal not winning the tender bid.

The difference in the grants is to cater to the wide scope and nature of international projects. Grants could be secured to support a Malaysian firm or a consortium representing a number of Malaysians in a single bid.

Future Opportunities
Apart from enhancing the chances of success for Malaysian professional services providers in the bidding process for overseas projects, the PSE Fund would also serve as a catalyst to generate significant increase in the export of Malaysian goods and services, especially in new emerging markets. Establishing and enhancing long-term relationships and vital contacts with their local counterparts could create new avenues for Malaysian exports.

Companies participating in foreign tenders through the assistance of the Fund could provide timely market intelligence to assist already exporting Malaysian companies with their bids for overseas projects and/or those seeking to export their services overseas.

It is hoped that those who take advantage of the PSE Fund would further strengthen the already good reputation of Malaysian professional services providers in various targeted countries in ASEAN and OIC. The PSE Fund would also serve to assist in positioning Malaysia’s professional services and downstream activities as the preferred choice by the host country, if the development project goes forward.

Ultimately, the country is likely to benefit from the Fund as the multiplier benefits and the forward linkages
generated by the Fund are likely to have a positive impact on the economy.

For more information, please refer to www.matrade.gov.my

There are huge opportunities for investment in the tourism sector of Malaysia. The Malaysian government is totally committed to the development of this sector. Over the last 12 years, extensive promotional campaigns have been engineered both locally and overseas to attract tourists from around the world. Despite the economic slowdown, the tourism industry remains strong. Today, Malaysia is one of the most popular tourist destinations in Asia. In 2005 alone, the industry accounted for a total of RM31 billion in foreign exchange earnings from over 16.4 million tourist arrivals.

Malaysia’s continuous efforts to improve the quality of tourism services and infrastructure play an important role in attracting foreign investors to this sector. The government’s many initiatives, which are undertaken by its official tourism promotional board Tourism Malaysia, have also resulted in tremendous growth in the industry’s supply and demand chain – thus, creating potential investment opportunities in many areas, from retail and services to hospitality and travel.

A Truly Malaysian Experience
The most distinct and charming aspect of Malaysian tourism is the country’s cultural and natural heritage. While cultural and historical tourist attractions can be found in destinations such as Malacca and Penang, eco- and agro-tourism activities are more popular in the east coast of Peninsular Malaysia, and Sabah and Sarawak in East Malaysia.

Besides sightseeing, other activities that are attracting tourists to Malaysia include shopping, leisure and business-related events. Global sporting events like the Sepang F1 Grand Prix, Le Tour de Langkawi and the Raja Muda International Regatta are also drawing in a significant number of foreign tourists into the country.

Domestic tourism is also another important part of Malaysia’s tourism industry. In 2005, Malaysians alone made 16 million tourism trips in the country. In that same year, the number of domestic hotel guests was recorded at an astounding 29 million. The growing interest in domestic tourism can be attributed to rising household incomes, the improved quality of life among Malaysians, as well as the corporate retreats, family-friendly resorts and recreational camps burgeoning at various tourist destinations around the country. Investment opportunities abound in these areas for both local and foreign companies.

Flying High 
The state-of-the-art Kuala Lumpur International Airport (KLIA) is a major gateway into South East Asia. The airport currently handles flights for over 40 international carriers. These include British Airways, KLM, Japan Airlines, Emirates, Lufthansa, Northwest and many others.

Despite rising global fuel prices, air fares remain relatively stable in Malaysia. The local air routes are serviced mainly by national carrier Malaysia Airlines and Asia’s largest budget airlines Air Asia. With the introduction of this low-cost carrier, there are now more travel options to various local destinations, especially East Malaysia. The healthy competition between these airlines has facilitated in the growth of tourist arrivals by providing competitive air fares to all.

World-Class Accommodations
Some of the world’s leading hotel brands are already in Malaysia – including Hilton, Marriott, Shangri-La, Sheraton and Westin. However, with the tourism boom still gaining momentum in Asia, there is great potential for investors to come in. The occupancy rate of hotels is consistently high for popular tourist attractions such as Kuala Lumpur and Genting Highlands, especially with a steady flow of tourists from neighbouring countries such as Singapore and Thailand.

A Shopping Haven For Tourists
With an endless variety of goods and competitive prices, Malaysia is a glorious haven for shoppers, local and international alike. From massive shopping malls and hypermarkets to ethnic stores, exclusive boutiques and duty free shops, Malaysia has all the attributes to make it the preferred shopping destination in the region.

For the international shopper, the biggest highlight of the year will probably be the Malaysian Mega Sale Carnival, an event organised by the Ministry of Tourism, Tourism Malaysia and the Shopping Malaysia Secretariat. Held twice a year, the Mega Sale Carnival is an exciting one-month showcase of promotions, bargains and discounts of up to 70% on a wide variety of products, brands and services at shopping complexes and malls across the country. During this period, tourists can take advantage of concessions on room rates, F&B, entertainment outlets as well as transportation & travel packages.

2006 is fast coming to a close and we are looking forward to a busy 2007. The last quarter of 2006 was no less eventful. MASSA received visitors from Zambia, Malawi and Mongolia. These visits coincided with our Cross Border Investment (CBI) seminar series and thus provided opportunities for our MASSA members to network.

As a resource partner under the Malaysian Technical Corporation Programme (MTCP), MASSA had the opportunity to link up with participants from South-South countries who came for training under this programme. 4 such events were held in this quarter and MASSA was privileged to establish ties with the 36 countries that were represented by the participants.

MASSA and the French CCE organised yet another luncheon talk featuring the Thales Group. Mr Jean-Baptiste Ollivier, the Managing Director and Corporate Country Director for Malaysia and Brunei, gave an interesting insight into critical information systems for defence, aerospace and civil security applications. MASSA will continue to bring members updates on leading-edge technologies and invite corporate leaders to share their business insights.

The MATRADE and MASSA mission to Sudan, Kenya and Tanzania in November 2006 was a success. Participants were confident that some of the contacts will soon materialise into business deals.

For the coming year, we have a number of events planned including a business mission to Zambia and Mauritius. We hope to make one or two more stops in the African continent during this mission which is tentatively scheduled for March 2007.

In February 2007, UN-TICAD will be organising the 4th Africa-Asia Business Forum (AABF IV) in Dar es Salaam, Tanzania. MASSA will be coordinating the Malaysian participants. Please look out for details on these events and more in your weekly emails and/or faxes.

Overall, this year has been a productive one and we owe it to the active involvement of MASSA members and their participation.

We would also like to record our appreciation to our sponsors who have made the four publications of our newsletter for 2006 possible.

It is with great anticipation that we herald in another year and we in the Editorial Team wish all of you Season’s Greetings and a Happy & Profitable New Year.

Hamidah Tun Ghafar
Editor

Malaysia has achieved significant progress in developing its economy, despite the difficult and volatile external environment in recent years. Challenges remain resulting from persistently high crude oil prices, rising global interest rates and increasing competition from China, India and other emerging regional economies.

In spite of this, Malaysia’s growth in 2006 has been broad-based, led by the services, manufacturing and agriculture sectors. Our economy is also buoyed by the continuing strong domestic demand and expanding trade-related activities.

Going forward the economic growth momentum in 2006 is expected to continue into 2007 at a stronger pace as domestic economic fundamentals continue to strengthen.

As our Government is committed to the roll-out and implementation of the 9th Malaysian Plan (9MP), the private sector should actively pursue the business opportunities arising from the initiatives of the Government in areas such as the modernising of the agriculture sector and the services sector particularly the ICT, Tourism, Education, Health and Banking sectors.

I would like to thank the Malaysian Tourism Board for the contribution of their article on Visit Malaysia Year 2007. MASSA is pleased to join hands with our Government to promote this campaign for 2007.

MASSA is also grateful for the continuing Government support, especially from MITI, MIDA, MATRADE and the Ministry of Foreign Affairs and our Malaysian diplomatic missions in the developing countries.

To all MASSA members and the Executive Committee members of MASSA, I thank you for your valuable participation and contribution to the Association and wish you and your family Season’s Greetings and a successful 2007.

TAN SRI DATO’ AZMAN HASHIM
President

Mongolia is a land-locked country with a small population of 2.8 million and a thriving market-based economy. Although Mongolia currently enjoys stable economic growth and moderate inflation, Foreign Direct Investment (FDI) is vital to ensure the continuous economic development of the country. Because of this, the Government has taken the necessary measures to make sure that all sectors of the Mongolian economy are open to foreign investors and that foreign investment is protected from nationalization or expropriation.

The priority sectors for attracting foreign investment into the country, as identified by the Government of Mongolia, are food & agriculture, tourism, light & heavy industries, infrastructure, ICT, construction and energy.

Mongolia is abundant with natural mineral resources such as gold, copper, uranium, coal, molybdenum, phosphor, and oil. Not surprisingly, its largest industry is mining. Mongolia also holds the distinction of being the world’s second-largest producer of cashmere with a global market share of 30%. With its relatively untouched natural environment and well preserved nomadic culture, Mongolia is an extraordinary tourist destination.

Mongolia offers many competitive advantages to investors including access to two large markets, namely the neighboring resource-rich Siberian region of Russia and China, the fastest growing economy in the world. Investors will also appreciate its stable political environment and an investor-friendly legal framework that secures foreign investors’ rights regarding invested assets and capital.

A land rich in tradition and culture, Mongolia has extensive natural resources, from rich mineral resources to raw materials of animal origin raw materials.

The cost of doing business in Mongolia is also one of the most competitive in the region with inexpensive raw materials and operating & manufacturing costs that are significantly lower than that of the other nations. Likewise, the rental rates of industrial premises and office space are also considerably low. In terms of labour, Mongolia has a young and educated population which adds up to a ready and highly competitive workforce.

Another attractive investment feature is that all FDI is protected by the Constitution of Mongolia and the Foreign Investment Law along with the international treaties and agreements to which Mongolia is bound. As Mongolia is a full member of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group, its investors are eligible for risk insurance through MIGA.

The Mongolian government offers an unparalleled investment package for both local and foreign investors. So this is a great opportunity for Malaysian investors to tap the hidden potential of this unique country. MASSA will be organizing a business mission to Mongolia from June 26 – 29 2007. Join this mission to tap on the abundant business opportunities in Mongolia. For more information on doing business in Mongolia, log on to:

Investment & Export :
www.invesmongolia.com & www.exportmongolia.net
National Statistics Office of Mongolia :
www.nso.com
Mongolia Tourism Board :
www.mongoliatourism.gov.mn
Government Organizations of Mongolia :
www.pmis.gov.mn
Privatization & Restructuring Guidelines for 2005 – 2008 :
www.spc.gov.mn/english/index.htm

The Malaysian Government views the development of a strong and dynamic SME sector as an important economic agenda. A total of 550,704 business enterprises responded to a census undertaken in 2005. The results indicated that 99.2% of the business establishment in Malaysia are SMEs, of which 80% are micro enterprises. The census also showed that SMEs provided jobs for over 5.6 million workers and accounting for 56% of total employment. In spite of that, SMEs’ contribution to the economy is only 19% of total export value and 32% of gross domestic product.

Bank Negara Malaysia (Central Bank of Malaysia) is the Secretariat for the National SME Development Council. The Council had taken several key initiatives to promote the development of SMEs including strengthening the enabling infrastructure for SME development, building SMEs’ capacity and capabilities and improving the access to financing by SMEs.

Major Initiatives for SME Development
The 2007 National SME Development Blueprint has identified programmes that will be implemented. These include:

1. Programmes to build capacity and capabilities of SMEs – focusing on entrepreneur and human capital development, marketing and promotion, and provision of advisory services to SMEs;
2. Enhancing SMEs’ access to financing;
3. Strengthening the enabling infrastructure to further support the growth of SMEs e.g. through the provision of business premises, factories and workshops for SMEs in the rural areas, establishment of centres for product packaging, distribution and marketing.

Enhancing Awareness and Information Available to SMEs
The inaugural SME Annual Report 2005 was launched in August 2006. This report contained a comprehensive review on the status and performance of SMEs and highlights major programmes of the Government to promote SME development.

A virtual portal (www.smeinfo.com.my) was launched in January 2006. SMEs accessing this portal would be able to access information on Government programmes, financial products, training programmes and tips on how to start and manage a business. It also contains the SME Business Directory, a platform for SMEs to advertise and showcase their products. This year, new value added services will be introduced, that is, an SME Bulletin Board and the SME Financial Product Directory.

Establishment of the SME Business Adviser Network (SME-NET)
To enhance and strengthen the ability and quality of advisory services provided by the agencies and financial institutions, the SME-NET, a one-stop web-based directory in the SMEinfo Portal was established. Advisory services required by SMEs are in areas such as product development, technology adoption, business and financial management, marketing and promotion. The SME-NET connects SME business advisers and experts and highlights specific areas of expertise, thus enabling advisers to leverage on each other resulting in high quality and better delivery of advisory services to the SMEs.

Marketing and Promotion of SMEs’ Products and Services
An SME Marketing Committee, an inter-Ministry Committee chaired by the Ministry of International Trade & Industry, has been established to develop a comprehensive marketing strategy and implementation approach to effectively market SME’s products and services.

Source: Bank Negara Malaysia