PRE-INDUSTRIAL COLLABORATION PROGRAM AGREEMENT SIGNING CEREMONY

BETWEEN TECHNOLOGY DEPOSITORY AGENCY & THALÉS

AN INDUSTRIAL COLLABORATION PROGRAMME (ICP) INITIATIVE BY THE MINISTRY OF FINANCE MALAYSIA

 

SPEECH BY

YB TUAN LIM GUAN ENG, FINANCE MINISTER

1 JULY 2018 | Celestica Malaysia Sdn Bhd, Kulim Hi-Tech ParK,  Kulim, Kedah

 

 

 

YB Tan Kok Yew, EXCO Member for the Kedah state government

His Excellency Frederic Laplanche, French Ambassador to Malaysia

Yang Berbahagia Dato’ Zailani Safari, Chief Executive Officer of TDA

Mrs Frederique Miller, Vice President South East Asia, Thalés

Mr Yong Chong Chin, Vice President, Malaysia and Singapore Operations, Celestica Malaysia Sdn Bhd

Distinguished guests, senior management and officers from respective ministries, agencies and private sectors.

Members of Media

 

Ladies and Gentlemen,

A very good morning, selamat sejahtera and Salam Harapan.

  1. I would like to thank Thalés, Technology Depository Agency (TDA) and Celestica for inviting me to this event that highlights yet another success story in the history of Industrial Collaboration Program (ICP) implementation in Malaysia.
  1. I am pleased to learn this event came after a thorough negotiation between TDAand Thalés. The Malaysian ICP Executive Committee (MIEC) in 2016 gave the green light to Thales to initiate their subcontracting program for its In-Flight Entertainment (IFE) screen production in Malaysia to Celestica while allowing the venture to earn ICP credits. The value of the subcontract is estimated to be RM447 million,but the subcontracting program itself will see more than 2 billionworth of products made in Malaysia by 2022.
  1. ICP was one of the major parameters for award consideration.Malaysia, Kedah especially, was selected as the sub-contracting destination, beating India and Thailand.

Ladies and Gentlemen

  1. The implementation of ICP, which is an offset programme, brings value for money to the local economy through facilitation by Technology Depository Agency (TDA). TDA is an agency under the Ministry of Finance Malaysia (MOF) mandated to implement the Industrial Collaboration Programme (ICP) Policy and Guidelines. ICP was previously applicable only for defence-related procurements but beginning 2011, the offset policy has been widened to include non-defence procurements. The ministry has also embedded ICP as a mandatory requirement for every strategic government procurement. Among the objectives outlined in the policy is to build a sustainable and competitive local industryvia participation of local players, including the SMEs, in the global supply chain.
  1. Currently, TDA manages88 ICP Programmes and 441 ICP projects worth RM69.3 billion. These programmes and projects have triggered 4 billion worth of ICV (or ICV Credit Value). Out of the RM28.4 billion, RM7.9 billionICV has been implemented. TDA is actively identifying and negotiating the balance of the ICP programmes to be implemented in Malaysia.
  1. The ICV is generated based on the level of impact and effectiveness of ICP Project in enhancing local capability. For every ringgit spent on government procurement done through this programme should get Malaysia multiple returns in the form oftechnology transfer, human capital development, quality investment, job creation, technical enhancement and global market access for local companies.

Ladies and Gentlemen

  1. The Pre-ICP Agreement to be signed today is Thalés’ commitment to manufacture, assemble and testairborne displays for the latest generation of Thalés IFE here in Kulim, Kedah. Celestica Malaysia Sdn Bhd is Thalés’ local partner in this venture.
  1. Thalés and Celestica will deliver 27% content localisation by2021, and 32% by 2023. While these figures are encouraging, the Government of Malaysia through TDA hopes Thalés would increase the ratio to 60% by 2023.
  1. Meanwhile, TDA projects 450 jobs will be created annually for the next 5 years. These jobs include direct, indirect and induced employments.
  1. The pre-ICP engagement is a novel platform used by the Government of Malaysia to attract more Foreign Direct Investment (FDI) from giant multinational companies. It is based on voluntary business approach by the interested company without having the Government committing any public financial resources.
  1. The Malaysian Investment Development Authority have approved a total of 8 manufacturing projects in Kedah for the first quarter of 2018, which collectively were valued at RM506 million (US$131 million). Of this, 84.2% were foreign investment. For the whole of last year in the state, 5 billion manufacturing investment was approved, of which 45.8% were of foreign origins.

Ladies and Gentlemen

  1. This Thalés-Celestica engagement in particular has multiple benefits:
    1. It provides opportunities to Malaysian companies to participate in Thalés Global Supply Chainand be exposed to new cutting-edge systems.
    2. It creates new commercial and industrial opportunities around Kulimin the long-term.
    3. It fosters the Electronics and Electrical industry in Malaysia
    4. It identifies industrial domains deserving further technical and technological development.
  1. Lastly, I would like to express my deepest appreciation to Thalés for these ICP deliverables that would benefit Malaysia. Thank you to Celestica as well for hosting this signing ceremony. Last but not least, I would like to congratulate TDA for this initiative and hope there will be more great ICP programmes coming through the pipeline.

Thank you.