Benefits of Making Business in Malaysia | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN MALAYSIA WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN MALAYSIA WWW.MERGERSCORP.COM

4. Country Overview Malaysia is a Southeast Asian country occupying parts of the Malay Peninsula and the island of Borneo. It's known for its beaches, rainforests and mix of Malay, Chinese, Indian and European cultural influences. The capital, Kuala Lumpur, is home to colonial buildings, busy shopping districts such as Bukit Bintang and skyscrapers such as the iconic, 451m-tall Petronas Twin Towers. Malaysia is divided into 13 states and three federal territories, with Kuala Lumpur as the capital and Putrajaya as the seat of the federal government. The official language of Malaysia is Bahasa Malaysia, and the currency is the Malaysian ringgit (MYR).

5. Executive Summary Malaysia, located in Southeast Asia, is separated by the South China Sea into two non-contiguous regions: the Peninsula Malaysia region bordering Thailand (i.e. West Malaysia) and the Malaysia Borneo region bordering Indonesia and Brunei (i.e. East Malaysia). Over the last 50 years, Malaysia has developed from a primary commodities exporter to a strong industrial base for foreign electrical and electronics multinational corporations. As an oil and gas exporter, Malaysia has profited from higher world energy prices, but the government recognises the need to reduce the dependence on petroleum as the main source of revenue.

6. Introduction – Doing business in Malaysia In the World Bank’s global Doing Business 2018 report, Malaysia ranked 24th on ease of doing business among the 190 economies covered in the survey. Malaysia is a member of the Association of South East Asian Nations (ASEAN) which is predicted to become the fourth largest single market by 2030. It’s also one of the world’s top locations for offshore manufacturing and service based operations. Multinational corporations from more than 40 countries have invested in over 5,000 Malaysian companies. For Malaysia, reforms relating to getting credit, protecting minority investors, and trading across borders were noted as making it easier to do business.

7. Conducting business in Malaysia requirements, tax structure etc. There are two common business entities for foreign investors: • locally incorporated company or • foreign-owned company. Foreign investors can setup a sole proprietorship or partnerships in Malaysia with the condition that they have permanent residency (“PR”) in Malaysia. Apart from the options above, foreign investors can also choose to register their business as either the private limited company, or a Labuan company, or a representative office. There are several different types of business entities available in Malaysia. Every business entity has its own compliance

8. Taxation in Malaysia The Malaysian tax system is territorial. Residents and non- residents alike are taxed on their Malaysian-sourced income while foreign-sourced income is usually not taxed even in the case of resident and/or local firms. Non-resident companies are taxed at a 24% flat-rate, regardless of their capital. The common corporate tax rate in Malaysia is 25%. In general, corporations are taxed on income derived from Malaysia with the exception for banking, insurance, air transport or shipping sectors. Taxable income comprises all earnings derived from Malaysia, including gains or profits from dividend, interest, royalty and land trading business or other earnings.

9. Trade Malaysia is the 19th largest export economy in the world and the 25th most complex economy according to the Economic Complexity Index (ECI). In 2017, Malaysia exported $263B and imported $197B, resulting in a positive trade balance of $66.4B. In 2017 the GDP of Malaysia was $314B and its GDP per capita was $29.4k. The top exports of Malaysia are Integrated Circuits ($55.7B), Refined Petroleum ($18B), Office Machine Parts ($11.1B), Petroleum Gas ($10.1B) and Palm Oil ($9.9B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Integrated Circuits ($37.3B), Refined Petroleum ($15.5B), Crude Petroleum ($4.62B), Broadcasting Equipment ($3.51B) and Office Machine Parts ($3.47B).

10. Banking in Malaysia The structure of the Malaysian financial system has evolved to become less fragmented through consolidation and rationalization. The evolution started when the government took measures to strengthen Malaysia's banking system following the regional financial crisis in mid-1997. The country’s central bank, Bank Negara Malaysia (BNM), directed the merger of Malaysia's local banking institutions into ten anchor banks, which was completed in 2002. The Malaysian banking sector consist of 27 commercial banks (including 19 licensed foreign banks), 11 investment banks, 18 Islamic banks as well as non-bank financial institutions. Affin Bank – A wholly owned subsidiary of Affin Holdings Berhad (AHB).

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com