MEETING MINUTES OF THE TH

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					               MINUTES OF MEETING OF THE 12TH
       NATIONAL PROFESSIONAL SERVICES EXPORT COUNCIL
                          (NAPSEC)


Date                  :     21st July 2005 (Friday)

Time                  :     10 a.m. – 1.00 p.m.

Venue                 :     Bilik Mesyuarat Perdana
                            MATRADE, Tingkat 7,
                            Wisma Sime Darby,
                            Kuala Lumpur

Chairman              :     Y.Bhg. Datuk Merlyn Kasimir
                            Chief Executive Officer, MATRADE

                            Y. Bhg. Dato’ Esa bin Mohamed
                            Board of Architects Malaysia


Members Present

Y.Bhg. Tan Sri Dato’ Ir. Md. Radzi bin Mansor
Board of Engineers Malaysia (BEM)

Y.Bhg. Dato’ I. Dorairajoo
Professional Services Development Corporation (PSDC)

Y.Bhg. Datuk N. Arumugam
Malaysian Medical Association (MMA)

Ir. Henry E. Chelvanayagam
Association of Consulting Engineers Malaysia (ACEM)

Dr. Choe Tong Seng
National Pharmaceutical Control Bureau
Ministry of Health




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Ms. Mary Artylan Fernandez
Ministry of Finance

Mr. Aminuddin Bashah
Malaysia Export Credit Insurance Berhad (MECIB)

Ms. Tan Pei Ing
Institution of Architects Malaysia (PAM)

Mr. Nik Mohd Hasyudeen Yusoff
Malaysian Institute of Accountants (MIA)

Hajjah Ungku Anna Hj. Ungku Mohamed
Malaysian Professional Centre


Member’s Representatives

Ms. Sariah Abdul Karib
Construction Industry Development Board (CIDB)

Mr. M. Nagarajan
Ministry of International Trade and Industry (MITI)

Y.M. Raja Mazwin Raja Awi
Professional Services Development Corporation

Mr. Azhan bin Mohd Yasin
Ministry of Foreign Affairs

Mr. Khoh Joo Bee
Ministry of Works Malaysia

Mr. Murad Ali Abdullah
Bar Council Malaysia

Mr. Kenneth Goh
Bar Council Malaysia




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Ms. Nurika Sari Abdullah
Association of the Computer and Multimedia Industry Malaysia (PIKOM)

Mr. Amiruddin Abd. Satar
Association of Private Hospitals Malaysia (APHM)

Mr. Mardi Simon
Bank Negara Malaysia


Also Present

Mr. Noharuddin Nordin
Deputy Chief Executive, MATRADE

Mr. Zakaria Kamarudin
Director
Services and Product Promotion Division, MATRADE


NAPSEC Secretariat

Ms. Rusiah Mohamed

Mr. Too Kia Hong

Mr. Ahmad Shanizam Ab. Ghani

Mr. Azrul Ezwan Ahmad Zaini


Absent with Apology

Y.Bhg. Dato’ Syed Jamal Syed Jaafar
Ministry of Works Malaysia

Y.Bhg. Dato’ Wan Mohamad Mukhtar Mohd. Noor
Lembaga Perancang Bandar Malaysia




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Ir. P.E. Chong
Institution of Engineers Malaysia (IEM)

Ir. M C Hee
Institute of Engineers Malaysia (IEM)

Dr. Chong Su-Lin
Association of Private Hospitals Malaysia (APHM)

Mr. Ooi Say Chuan
Ministry of International Trade and Industry

Ms. Harvinder Kaur
Economic Planning Unit (EPU)

Tuan Haji Zakaria Hashim
ZL Management Services Sdn. Bhd.

Mr. Eric Ooi Yew Hock
Institution of Surveyors Malaysia (ISM)

Mr. Marzunisham Omar
Bank Negara Malaysia




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1.   INTRODUCTION

     1.1   The Chairman welcomed NAPSEC members and their
           representatives to the 12th meeting of the council.

2.   ADOPTION OF MINUTES OF THE 11TH NAPSEC MEETING

     2.1   The meeting adopted the minutes of the 11th NAPSEC meeting
           with following amendments:

           2.1.1 Paragraph 3.3.3 and 3.3.4 - both paragraphs to be
                 deleted.

3.   MATTERS ARISING

     3.1   OIC Trade Forum from 20 - 24 June 2005

           3.1.1 The meeting was informed that both the 30th IDB Board of
                 Governors’ Meeting scheduled from 22 - 24 June 2005
                 and the OIC Trade Forum scheduled from 20 - 24 June
                 2005 were successfully hosted and organized at
                 Putrajaya Convention Centre (PICC).

                                                  For information

     3.2   Survey Form by PSDC

           3.2.1 The meeting was informed that the survey conducted by
                 PSDC with the cooperation of UPM would take a long
                 time before the results are obtained.

                                                  Action: PSDC

     3.3   Construction Opportunities in Sri Lanka

           3.3.1 CIDB informed the meeting that they have not received
                 any feedback from Sri Lanka on the extension of the
                 MOU which had expired in September 2004. In view of
                 this, CIDB did not wish to pursue this matter.



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      3.3.2 The Colombo-Katunaye Expressway project was called
            for pre-qualification in May 9, 2005. CIDB had
            disseminated the notice for pre-qualification to relevant
            Malaysian contractors.
                                                Action: CIDB

3.4   Construction Mission to Senegal

      3.4.1 The meeting was informed that an MOU was signed to
            register our interest in the Dhakar-Theiss Highway
            project. However, the feasible stretch of the Dhakar-
            Theiss Highway has been tendered out. In view of this,
            Malaysian contractors were no longer interested in the
            project since the project would be no longer viable.

      3.4.2 In this regard, CIDB was uncertain in receiving fund from
            IDB to finance the project.

                                                 Action: CIDB

3.5   Construction Project in Iran

      3.5.1 The meeting was informed that the CIDB’s report on
            feasibility of undertaking railway project through
            countertrade mode of payment has been completed and
            to be sent to Iran.
                                              Action: CIDB

3.6   Mission to Manila

      3.6.1 The meeting was informed that CIDB had received a
            letter from Asian Development Bank (ADB) in Manila
            dated 9 March this year, inviting Malaysian contractors to
            participate in the redevelopment project in tsunami-
            affected countries. Currently, there are 8 companies
            including consultants that have shown interests in
            providing their services in this project.

                                                 Action: CIDB

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3.7   Construction projects in India

      3.7.1 The meeting noted that in the recently concluded mission,
            Y.B. Dato’ Seri Samy Vellu only visited Punjab and not
            Delhi. Following up on this visit, Ministry of Works was in
            the process of signing an MOU with the Punjab State
            Government. However, it is not appropriate for a Federal
            Government to have any MOU with a State Government.
            In this regard, Ministry of Works is seeking Cabinet’s
            approval to resolve this matter.

      3.7.2 The meeting was also informed that for 2004, only one
            project was awarded to a Malaysian company in India
            worth RM19.67 million. However, in recent months, there
            has been an increase in the number of projects awarded.
            Currently, five projects were awarded to Malaysian
            companies valued at RM 2.053 billion.

      3.7.3 The meeting was also informed that the National
            Highways Authority of India (NHAI) has identified 17
            contractors which have not been able to carry out their
            work satisfactorily. Considered as “non-performing’
            contractors, these companies will not be awarded any
            more projects in the future. However, they were allowed
            to complete the ongoing projects. Out of these 17
            contractors, 4 were from Malaysia.

      3.7.4 As a follow up, CIDB will organize a meeting with these
            four Malaysian companies to gather more information on
            the reasons for their “non-performance”. If the reasons for
            non-performance were not solely of the faults of the
            Malaysian companies, CIDB through the Ministry of
            Works will need to take it up with the relevant Indian
            authorities.

                                                Action: CIDB




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3.8   Y.A.B Prime Minister’s Visit to Pakistan

      3.8.1 The meeting was informed that highway projects have
            been identified in Pakistan and 4 Malaysian consortia
            were in the process of undertaking the projects’ feasibility
            studies.
                                                 Action: CIDB

      3.8.2 The meeting was also informed that arising from the call
            for privatization of Pakistan Telecom, several Malaysian
            companies have expressed interest in the bidding
            submission. However, after doing the due diligent,
            Malaysian Telecom group did not submit their bid to the
            Pakistani Government because the initial offer price was
            too high.
                                                For information

3.9   Assistance To Malaysian Contractors

      3.9.1 The meeting was informed that recently, the cabinet has
            approved the formation of a special unit headed by
            Y.Bhg. Tan Sri Zaini (the former DG of JKR) which will be
            responsible for providing direction and facilitating exports
            of construction services abroad.

                                                For information

3.10 CITYSCAPE 2005

      3.10.1 The meeting was informed that this year MATRADE will
             participate again in the CITYSAPE 2005 to be held in
             Dubai, UAE from 17-19 September 2005. Six (6)
             Malaysian companies will participate in the show. For
             more      effective    presentation, MATRADE      has
             collaborated      with PAM in designing the Malaysian
             Pavilion.

                                                For Information



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     3.11 Jabal Omar Project in Mecca, Saudi Arabia

           3.11.1 The meeting was informed that the project is already
                  ongoing and the letter of award has been given to
                  KLCC. Mobilisation of workers has also taken place in
                  batches. Y. Bhg. Dato’ Esa himself would be going to
                  Dubai in July to follow up on the project. Sheikh Abdur
                  Rahman Fakir is scheduled to visit KL on the 8th of
                  August 2005 to meet Prime Minister and former Prime
                  Minister.

           3.11.2 The meeting was also informed that, as far as Mecca
                  Development was concerned, a lot more projects are in
                  the pipeline. Therefore it was a timely move by the
                  government to set up the special unit under Y.Bhg. Tan
                  Sri Zaini in helping contractors to get together to prepare
                  them for exports of their services overseas. Thus, this
                  project can be seen as a window of opportunities for
                  Malaysian construction sector to aggressively venture
                  abroad especially in the Middle East markets.

           3.11.3 The meeting was also informed that Turkey is the main
                  player in the construction sector in the Middle East.
                  Turkey has a lot of potential in construction services,
                  building materials and manufacturing expertise. In this
                  regard, Malaysian contractors are urged to network with
                  Turkish companies in order to tap their expertise in
                  these areas.
                                                   For information

4.   DISCUSSION PAPERS

     4.1   Discussion Paper 1: “Capacity and Capability Building of
           Professional Services by PSDC”

           4.1.1 In the Capacity and Capability Building of Professional
                 Services (C & C), there are three objectives which
                 Malaysian companies should focus on whilst equipping

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          themselves to be global players. The three objectives
          are:

             To remain internationally competitive
             To be competitive by being cost effective
             To be competitive in the Third World market through
              sharing their aspirations and understanding their
              needs.

4.1.2 The paper highlighted a few main challenges that need
      to be addressed by the professional service providers
      like being sole proprietors, use of referrals for company
      selection, no buffer from copyright or patent protection,
      quickly outdated market information and lack of
      marketing skills in exporting their services overseas.

4.1.3 The meeting noted that a major challenge is the financial
      capacity of professional service providers. Malaysian
      professional service providers face stringent financial
      requirements with high ceilings as a market entry
      condition, which they cannot meet owing to their limited
      access to financial resources. This places them at a
      disadvantage in comparison to globally operating
      international firms.

4.1.4 It was also noted that in 2003, Malaysia was the 29th
        largest exporter of global commercial services totaling
        US$12.8 billion (RM48.64 billion). For the same year,
        Malaysia was also the 28th largest importer of global
        commercial services, valued at US$16.4 billion
        (RM62.32 billion).

4.1.5 The meeting also noted that the discussion paper had
      emphasized more on arithmetic progression approaches
      rather than the geometric progression approaches. Both
      approaches are actually required for building capacity
      and capability of Malaysia’s professional services.

4.1.6 While it is good for the country to be liberal progressively
      under the spirit of WTO, there is a need for Malaysia to

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       be cautious in her policy. This is because the capacity of
       the Malaysian professional service providers are small
       compared to professional firms of developed countries.
       In this regard, they are not in the position to negotiate
       especially with matured countries like Japan. In view of
       this, progressive liberalization on professional services
       have to be initiated by the government while inputs can
       be provided by the professionals.

4.1.7 It was proposed that large Malaysian MNCs like
      PETRONAS and GLCs which are backed by the
      government, need to help in promoting Malaysian
      professional service providers in all their international
      projects.

4.1.8 According to the Malaysian Bar Council, the legal
      profession needs to be insulated first to promote its
      12,000 lawyers. One of the ways to promote Malaysian
      professionals is by creating a Publishing House for
      Professionals and then market professional publications
      to the world. An example was given in the case of
      Singapore where reports are regularly published to
      promote legal cases, lawyers and judges.

4.1.9 In building professional capacity and capability, there is
       a need to enhance the perception and credibility of
       Malaysian professional service providers. This can be
       achieved through promotion, publicity and branding. In
       this respect, Malaysia may wish to learn from the
       Singapore’s experience.




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      4.1.10 According to the Malaysian Institute of Accountants,
             Malaysian professional associations have traditionally
             been regulatory-focused rather than business-focused.
             With the addition of borderless knowledge and
             technology, professionals need to change to keep up
             with the needs of clients and global competition.

                                                 For Information

4.2   Discussion Paper 2: “Feasibility Studies Fund: A Joint
      Preliminary Proposal on the Selection Criteria for
      Feasibility Studies by MATRADE & PSDC”

      4.2.1 It was noted that there are four components in the
            feasibility studies:
                Technical, economic & financial feasibility of
                  infrastructure & development projects
                Selection of targeted markets
                Identifying related services
                Establishment of integrated data compilation and
                  market intelligence

      4.2.2 The meeting noted that on the qualifying criteria for the
            feasibility studies, technical and financial capacity plays
            an important role. The meeting took note of the following
            proposals:

           For technical capability, the qualifying criteria are:
               10 years of working experience in the related field
               Familiar with foreign market
               Staff are capable
               Company has good work culture
               Evidence of company’s capability

           For financial capacity, the qualifying criteria are:
              Sufficient paid-up capital
              Letter of support from financial institution


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               Impressive audited account

      4.2.3 The meeting was also informed that to be a senior
            engineer, an engineer must have at least ten years of
            working experience to qualify the person for the post.

      4.2.4 The meeting noted that the proposed Selection Criteria
            would be considered once the fund is approved under
            RMK9.

                                      Action: MATRADE and PSDC

4.3   Discussion Paper 3: “2006 Budget: Tax Proposal for
      Services Sector by MATRADE”

      4.3.1 The meeting was informed that currently the incentives
            that are available for the services sector are:

             a.   Double deduction for promotion of export of
                  services
             b.   Double deduction for promotion of export of
                  professional services
             c.   Double deduction for promotion of export of higher
                  education
             d.   Tax exemption on stamp duty and real property
             e.   Tax exemption on the value of increased exports of
                  services.

      4.3.2 The meeting was further informed that under 2005
            budget, the government has increased the limit of
            Market Development Grant (MDG) previously from
            RM60,000 to RM100,000. At the same time, the scope
            of MDG has also been extended to cover expenditure
            for attending negotiations regarding Mutual Recognition
            Agreement (MRA), expenses incurred in setting up of
            representative offices overseas and participation in trade
            missions by local professionals.

      4.3.3 As for 2006, MATRADE, through MITI, had proposed
            another set of incentives for Treasury’s consideration.

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                The proposed incentives with regard to services sector
                are:

                  a.   The cost of traveling overseas be extended to cover
                       Trade and Investment Mission organized by MITI,
                       Specialised Marketing Missions organized by
                       MATRADE, Specialised Trade Missions organized
                       by Trade and Industry and Professional Service
                       Associations and Industry related international
                       conferences overseas
                  b.   Double deduction on expenses incurred on
                       payments for registration of patents, trademark and
                       products overseas.
                  c.   Double deduction for promotion of brand names for
                       services companies.

           4.3.4 To further discuss the types of incentives that should be
                 given to the service providers for next year’s budget
                 proposal, Treasury will arrange for a focus group
                 meeting to discuss on this subject matter. Relevant
                 associations will be informed of this meeting by
                 Treasury.

                                                    For information

5.   INFORMATION PAPERS

     5.1   Information Paper 1: “Regional and Bilateral Free Trade
           Area Arrangements – Impact on Services Sectors by MITI”

           5.1.1 It was noted that under Regional Free Trade Area,
                 (FTA) ASEAN region will be transformed into an ASEAN
                 Economic Community (AEC) by 2020 and there will be
                 free flow of goods, services and investment. However,
                 services sectors that are to be liberalized earlier by 2010
                 are air travel, e-ASEAN and healthcare. To facilitate
                 mobility, Mutual Recognition Arrangements (MRAs) for
                 engineering services has been finalized for signing in
                 December 2005. Other areas where MRAs are being



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       developed include nursing, architecture, accountancy
       and surveying.

5.1.2 Other regional FTAs that Malaysia currently pursued are:

            ASEAN-China
            ASEAN-India
            ASEAN-Japan
            ASEAN-Korea
            ASEAN-Australia and New Zealand

5.1.3 Malaysia’s involvement in bilateral FTA include:

            Malaysia-Japan
            Malaysia-New Zealand
            Malaysia-Australia
            Malaysia-India

5.1.4 Challenges and issues faced by professional services
      that were discussed include:

         Increased competition from lower cost countries
         Ability to market services in developed FTA-partner
          countries i.e Japan, Australia, and New Zealand.
         Addressing      impediments      to  movement    of
          professionals
         Approach/priority under each FTAs – mobility of
          professional vs commercial presence or both
         Mutual Recognition Arrangements – priority areas
         Language proficiency requirement to practice
         Residency requirement

5.1.5 In meeting these challenges, professional bodies need to
      undertake domestic capacity and capability building
      including promoting joint ventures to market their
      professional services abroad.

                                         For Information



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5.2   Information Paper 2: “Report on the Specialised Malaysian
      Construction Services Marketing Mission to Jakarta,
      Indonesia, 20-23 March 2005”

      5.2.1 The members were informed that the construction
            mission to Jakarta, Indonesia was jointly organized by
            MATRADE in collaboration with CIDB mainly to explore
            the opportunities in the construction industry in
            Indonesia besides promoting Malaysian construction
            services to the country.

      5.2.2 The mission was held in conjunction with the Trade and
            Investment Mission to ASEAN countries (Myanmar,
            Laos, Thailand and Indonesia) led by YB. Minister of
            International Trade and Industry. The mission was
            participated by 39 members representing 32 companies.

      5.2.3 Briefings on regulations on doing business in Indonesia
            and opportunities that available in the construction
            sector were given by the Indonesian officials.

      5.2.4 Some of the opportunities identified for services sector
            include:

               Roads – required investment: US$24.9 billion
               Telecommunications         –   required    investment:
                US$17.6 billion
               Housing development – Indonesia requires 800,000
                units of houses on yearly basis
               Water resource management – Indonesia requires
                an investment of US$5 billion to provide clean water
                to its population which include the distribution of
                clean piped-water to consumers.
               Power –        Indonesian government requires an
                investment of US$28 billion to provide adequate
                electricity supply to the population by 2015.




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      5.2.5 From the feedback received, Indonesia provides
            abundance of opportunities in the construction sector.
            However, some of the obstacles and constraints that
            have to be faced by our Malaysian companies are land
            matter, high cost of land acquisition and bureaucratic
            red tape.
                                                  For Information

5.3   Information Paper 3: “Report on the Specialised
      Construction Services Marketing Mission to Kuwait and
      Oman, 9 – 16 May, 2005”

      5.3.1 The mission was led by Y.B. Dato’ Ahmad Husni
            Mohamad Hanadzlah, Deputy Minister of International
            Trade and Industry and was jointly organized by
            MATRADE and CIDB. There were 11 members
            representing 9 companies participated in the mission.

      5.3.2 In Oman, the meeting noted that in bidding for
            international tenders, foreign companies are not
            required to have a local partner. In addition, a foreign
            company which desires to participate in local tenders
            need to be locally incorporated and allowed to hold 70%
            equity of the company established.

      5.3.3 Another plus point to be considered in doing business in
            Oman is that the country offers tax exemption up to 10
            years and non-taxation on personal income.

      5.3.4 Considering that there are Malaysian professionals
            based in Kuwait and Oman especially in oil and gas
            sector, a data base on these Malaysian professional
            should be maintained. They can serve as important
            source of information and intelligence.

                                              For Information




                              17
     5.4. Information Paper 4: “Market Alerts”

           5.4.1 Five (5) market alerts were tabled during the meeting:

                  a.   Opportunity in Desalination and Power Projects
                       in Saudi Arabia.

                  b.   Construction        Sector   Opportunities      in     GCC
                       Countries.

                  c.   Dubailand      –       Emirate’s      Premier        Leisure
                       Destination.

                  d.   New Financial Centre & Construction Projects              in
                       Qatar.

                  e.   Dubai Light Rail Projects.

           5.4.2 These market alerts have been distributed earlier to
           relevant service institutions and providers.

                                                          For Information

6.   OTHER MATTERS

     6.1   Economic Cooperation Among OIC Member Countries in
           the Services Sector

           6.1.1 Pursuant to the 30th IDB Board of Governors’ Meeting
                 and OIC Trade Forum held in June this year, the
                 Cabinet proposed that Malaysia pursues cooperation
                 programmes that can be used to strengthen and
                 intensify trade and economic activities of OIC member
                 countries.

           6.1.2 In this regard, two projects involving the professional
                 services have been proposed to MITI for consideration.
                 PSDC is the implementer of both projects. The two
                 projects are:



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                  a.   Exchange Program For Young Professionals for
                       OIC Member Countries

                  b.   Information Exchange For Professional Service
                       Providers

           6.1.3 Funding for these programmes can come from the
                 MTCP as well as other sources to ensure
                 implementation of the programmes.

                                                   For Information

     6.2   Professional Services Export Promotion Programmes 2006
           by MATRADE

           6.2.1 The meeting was informed of the Services Promotion
                 Programmes to be organized by MATRADE in 2006.

           6.2.2 Most of these programs will be coordinated together with
                 the relevant Malaysian organizations and institutions.

           6.2.3 Members of NAPSEC are encouraged to provide further
                 inputs to the programmes by end of September this
                 year.

                                                   For Information

7.   CONCLUSION

     7.1   The Chairman thanked NAPSEC members and the
           representatives for their attendance, views and suggestions
           during the meeting. The meeting was adjourned at 1.00 p.m.




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