History of Cocoa

Cocoa's Journey to Malaysia Cocoa, the nectar of the gods and even the cocoa tree's botanical name, 'Theobroma cacao' translated from the Greek means "food of the gods" has a history rooted in the mists of time as far back as 1662. In the early days, the native belief that cocoa tree was of divine origin and resulted in a holy ritual being performed whenever cocoa trees were planted. Cocoa has successfully conquered all countries and continents of the world in just over 500 years since its first discovery in the ancient civilization of the Mayas and Aztecs in South America. In South America, the Aztecs considered the beverage a royal drink served in ceremonial golden goblets. The Mayas of the Yucatn and the Aztecs of Mexico cultivated cocoa and the Aztec emperor Montezuma is said to have regularly consumed a preparation called chocolatl, a mix of roasted cocoa nibs, maize, water and spice. The cocoa tree soon began to appear in Spanish colonies some 20 years after it had been brought back by the early explorers. However, the processing of cocoa beans began in earnest, but under a veil of secrecy in monasteries. Chocolate was restricted to nobility and the recipes were kept secret for nearly 100 years. Hernando Cortez brought back the first cocoa and chocolate drink recipe to the Court of King of Spain in 1528. Gradually a transformation began. Cane sugar was added. Newly discovered spices such as vanilla and cinnamon were also used as flavourings. Then chocolate spread, to France in 1615, the UK in 1650s and in America in 1755. There was no looking back. Cocoa and chocolate took America and the world by storm. Today it is the most popular and most relished flavour in the world. Cocoa was first introduced to South East Asia in 17th century by the Spanish. The Spanish brought the cocoa from Latin America to the Philippines in 1670. Then, it was believed that the cocoa tree was later brought to Indonesia and Sabah in the early 18th century. In Malaysia, the first cocoa planted area was found in Melacca in 1778. Subsequently, the cocoa planting was started in a plotted area at Serdang Agriculture Station and Silam Agriculture Research Center, Sabah. The earliest cocoa commercialization started between 1853 to 1959 where cocoa types Amelonado was first planted at Jerangau, Terengganu. The planted area was 403 hectarages. Cocoa trial was further undertaken at Serdang, Cheras, Kuala Lipis and Temerloh between 1936 to 1940. However, cocoa was only actively planted after world war II. Cocoa officially came to Quoin Hill, Tawau, Sabah in 1960. From then on, there was no turning back to cocoa fever.

Malaysian Cocoa Industry

Cocoa has been commercially planted in Malaysia since the 1950s while cocoa processing began in the 1970s. Most of the planting areas are situated in Sabah, but most of the grinding and manufacturing are based in the Peninsula. Over the years, the planting sector has been slowing down, but the processing sector has seen tremendous growth. Currrently, Malaysia is the fifth largest cocoa processor in the world. Malaysian cocoa products (such as cocao butter, cocoa powder and chocolate) are exported to over 80 countries. One of the special characteristics of Malaysian cocoa butter is the high melting point, which is beneficial for chocolate products in warm countries. The products are of good quality, accepted by many and with Halal certification. Cocoa can be found in beverages, cakes, confectionary, and chocolate. Malaysia also produces her own brands of handmade chocolate with exquisite taste such as Durian Chocolate, Pineapple Chocolate, Tongkat Ali Chocolate and Ginger Chocolate. Many can be found in airports, shopping malls and places of interest.

The Malaysian Cocoa Board as the custodian of the Malaysian Cocoa Industry works on making the industry well integrated and competitive in the global market. Please visit www.koko.gov.my for more information.

Cocoa Processing

Spilling the Beans on Cocoa The cocoa beans is the seed of the cocoa tree (Theobroma cacao). The cocoa tree produces cocoa pods. The cocoa pods are harvested when fully ripe and their colour has turned to fully yellow or orange. Harvested cocoa pods are brought to a convenient place and usually a kept for about a week prior to splitting. After splitting the fresh and wet cocoa beans are extracted. The wet cocoa beans are taken to the processing centre or factory for fermentation for 5 days in a shallow box at a dept of between 25cm to 38cm. During the fermentation process, a complex chemical changes take place and the chocolate flavour is developed. The beans are turned once on a third day of fermentation. On the sixth day, the fermented beans are taken out for drying in the sun or a hot air dryer to a moisture content of between 6 and 7.0%. Using a hot air dryer, a 3-day drying schedule at a temperature of 50 to 55C is recommended. It is during this stage that the brown colour develops and further flavour development occurs. The dried cocoa beans are either graded and packed in new jute sacks to a nett weight of 62.5 kg for export or roasted and ground to produce cocoa liquor which is cocoa mass in semiliquid, non-alcoholic form. This is then pressed to obtain cocoa butter and cocoa cake. The cocoa cake is then ground to form cocoa powder. Each stage in the processing of cocoa alters its chemistry. During the production of cocoa powder, roasting of the beans occurs, prior to roasting the beans can taste bitter and acidic. The roasting process alters the beans to make them less acidic and improves the flavour. The cocoa powder is also used as a principal ingredient in a rich variety of foods and beverages making cocoa truly one of nature's most versatile products. These natural products from cocoa beans are then mixed with different proportions of milk and sugar to form chocolate. During chocolate production, a conching process is undertaken in which chocolate paste is pounded to form a smooth paste. This process also reduces the bitterness of chocolate and improves its flavour and texture.

The Cocoa Processing Chain

COCOA PRODUCTS IN MALAYSIA There is a variety of cocoa end products which include cocoa butter, cocoa powder and chocolate. Malaysia has got its own range of handmade chocolates which includes Durian Chocolate, Pineapple Chocolate, Tongkat Ali Chocolate and Ginger Chocolate. (Source: http://visitorsguide.com.my/about-malaysia/10-malaysian-cocoa-industry-)

MALAYSIA COCOA PRODUCT 2006/2007

STATE Peninsular Sabah Sarawak Total Malaysia Production

(Source: Malaysia Cocoa Board)

PRODUCTION (tonnes) 21,871 11,474 1,835 35,937

COUNTRY Ivory Coast Indonesia Ghana Nigeria Brazil Cameroon Ecuador Dominican Republic Papua New Guinea Malaysia Colombia Mexico World(estimate)

PRODUCTION (tonnes) 1,265,000 455,000 341,000 180,000 124,000 126,000 81,000 45,000 41,000 25,000 38,000 35,000 2,855,000 (Source: International Cocoa Organization)

COCOA, GHANAS BLACK GOLD

Ghana is one of the top cocoa producing countries in the world, Ghanas cocoa has been coined their Black Gold. The revenue has improved the economy and lives of cocoa farmers. Chocolate manufacturers all over the world want to be associated with Ghanas cocoa because it is amongst the best in the world. Ghanas secret to unique and premium quality beans lies in their excellent traditional methods of drying their cocoa beans. Furthermore, Ghana maintains high quality standards with the cocoa beans going for quality control for over three times.
(Source: Cocoamarketing)

According to statistics, the cocoa industry is continuously growing and improving the economy of countries as well as the lives of people.

There are over 5-6 million cocoa farmers all over the world. 40-50 million people depend on cocoa as their source of income. 3 million tonnes of cocoa is produced worldwide. The market value of cocoa is $5.1 billion. Africa, Asia, Central America and South America are the leading cocoa producers. 70% of cocoa comes from West Africa.

Source: World Cocoa Foundation)

http://www.mccd.com.my/producers.html

Uses Of Cocoa There are two principal ways in which chocolate are used:
Moulding This is the process in which tempered chocolate is deposited in warmed polished metal or plastics moulds, then cooled by passing through a cooling tunnel to give rapid setting and good appearance. Good tempering will ensure that the cocoa

butter will shrink in the mould and demould cleanly. In general metal moulds may be more effective in that cooling can be transmitted readily through the chocolate surface. Good mould design and moulding procedure, however, should minimise this potential problem and enable the full benefits to be derived from plastics, i.e. lightness, quietness in operation and flexibility which assists in demoulding. Combination moulds are now available in stainless steel with polycarbonate carriers which give the best of all worlds, but at extra cost. Enrobing This is the process in which centres are passed through a curtain of tempered chocolate and over a chocolate bottoming device to coat the bases. Sometimes the product is 'double' enrobed to ensure extra coating if the centre is especially vulnerable to external influences, or to complete covering of awkward surfaces. In these instances the first coating may not require to be well tempered provided it is set before the second coating is applied. The property of shrinking and cooling of cocoa butter, essential for moulding, must be taken into account in enrobing. If enrobed centres cool too rapidly the chocolate could crack but on the other hand if it cools too slowly it could end up discoloured and soft - in either case the problem might not be apparent at the packaging stage and only emerge when the pack is opened.

Introduction
Biotechnology is the use of biological processes or organisms for the production of materials and services of benefit to humankind. Biotechnology includes the use of techniques for the improvement of the characteristics of economically important plants and animals and for the development of micro-organisms to act on the environment. The term modern biotechnology is used to distinguish recent, research based activities includes a range of techniques from recombinant DNA technology, molecular and cellular biology, biochemistry and immunology through to information technology. Gene technology is a specific subset of biotechnology, the scientific manipulation of living organisms, especially at the molecular genetic level, to produce new products, such as hormones, vaccines or monoclonal antibodies. Biotechnology is a powerful enabling technology, with applications that have the potential to revolutionize many industry sectors including agriculture, forestry, fishing, pharmaceuticals and health, chemicals, textiles, food processing, environmental industries, energy and mining. COCOABiotech was established in 2002. This centre aims to implement research and development cocoa biotechnology program. Alongside with cocoa industry country necessity, biotechnology cocoa research activity will include agro-biotechnology, food biotechnology, industrial biotechnology and pharmaceutical biotechnology. The COCOABiotech Centre of Excellence will help establish Malaysia as a regional and world centre for cocoa biotechnology innovation and application. The development and application of critical technologies for cocoa biotechnology commercialization and major collaborative projects will be a primary focus of the Centre. SWOT ANALYSIS
STRENGTH WEAKNESS OPPORTUNITIES THREATS - Research focus program on - A need for enhanced - Growth and diversification -Lack of understanding cocoa administrative appreaciation of the biotechnology of biotechnology industry issues by the public of resources required to - Wide use of ICT support biotechnology research and development - A highly qualified expertise and variety of interests - Government who understand the need to - Inadequate and aging facilities & equipment to - Increasing awareness of biotechnology workforce issues in legislative and executive government - Competing biotechnology interest groups - Competing facilities,

support the biotechnology program - Strong collaborative researchers interactions based on close mentoring relationships in laboratory - An extensive grants program supporting research, human resource development, joint ventures with industry and government - An annual biotechnology symposium featuring world renowned speakers and research presentation with published proceedings - Proximity to major university - UMS, UiTM - Situated in major cocoa growing areas

meet the additional needs - A lack of awareness regarding the practice of science in the public and private sector - Inconsistent or nonexistent administration policies - Inadequate funding to achieve our stated goals and objectives - Low number of higher degree biotechnology - Inadequate public relations activities - Poor English language communication by supporting staff - Inadequate article journals - Infrastructure and work environment not conducive to support programs and activities - Lack knowledge and experience staffs

offices

human resource and other needs

- The biotechnology industry as a place for organization - different philosophies sabbaticals and student on training vs. internships education - The oppourtunity to increase entrepreneurial activity - Expertise that biotechnology industry finds of value - Industry as a source of equipment, supplies and advisors - Take advantage of technologies for remote access to instrumentation - Collaboration research program with national and international institutions - Pooled genetic diversity - need to adjust type and level of biotechnology technology to the current needs of the industry - Staff turnover and loss of expertise - Increasing aging staff - Continuing decline of cocoa growth - Lack of technologies and products - Public concern on GMO issues

STAKE HOLDER ANALYSIS

NAME OF STAKE HOLDER Cocoa Industry Government Ministry of Primary Industry Top management Director Employee Suppliers Consumers NGOs EXPECTATIONS New technology and continuous services Compliance to regulations Growth and development of cocoa industry Growth and development of cocoa industry Technology development and services Good salary and benefit Prompt payment High quality and low cost of cocoa products Friendly environment POWER Complain Enforcement Review Review Review / resign Low productivity Stoppage supplies Boycott, sabotage Lobying

VISION To be the premier technology development and service center for cocoa biotechnology MISSION To develop new technologies and provide services through capacity building, innovation and excellent services

VALUES Integrity & Ethics We do what's right and demand honesty, maintenance of confidentiality and adherence to professional standards of excellence. Continuous Improvement We consistently question the status quo and seek opportunities for improvement. At the same time, we strive for a stimulating work environment open to learning, curiosity and innovation. Sense of Urgency Our orientation demands that we address issues and requests immediately, reasonably and comprehensively. Open Communication We share information, expertise and experience. At any given moment we may be students, mentors, teachers or consultants. Initiative & Reward We encourage resourcefulness, conscientiousness and leadership from each employee. We reward excellence in performance. Teamwork Sound strategy and creative implementation require diverse talents working in unison. Best Value for our clients depends on everyone's cooperation and mutual support. Ownership We operate with a sense of ownership for the Board and for responsibilities entrusted to us by our clients and shareholders.

Objective By 2015 to improve average farm yield by 20% through leading edge biotechnology and to reduce operating cost by 20%
By 2010 to develop molecular marker technology and transgenic plants that will allowed breeders to create superior cocoa trees for farmers By 2015 to develop specialty cocoa trees such as for high butter, high flavor, unique flavor, high antioxidant level By 2015 to diversify & improve the quality of cocoa products (including already fermented & dried inferior beans) with new technologies at reasonable cost By 2015 to develop new product through discovering novel & useful bioactive compounds from cocoa tree & associated microbes in the cocoa environment at reasonable cost By 2005 to develop new research center with excellent infrastructure & facility to support biotechnology innovation and services in good working environment Establish & strengthen collaboration with national & international biotechnology centres & build relationships for technology development partnerships. Ensures that potential risks from the introduction of genetically modified organisms are accurately assessed & are managed effectively.

Develop capacity-building programmes to enhanced management skills & high quality researchers with competently delivers effective & equitable technology & services in cocoa biotechnology by 2010.
Strategy and Activities Research and Development - Encourage continuing R & D in cocoa biotechnology that will give dramatic impact on cocoa industry. - Develop new technologies and stimulate commercialization of research finding for entrepreneurship in biotechnology industry of cocoa Infrastructure - Ensure an effective scientific base and make strategic investments in R & D to support biotechnology innovation, the regulatory framework and economic development

Research Collaboration - Develop biotechnology collaboration and stronger linkages with local and international organizations and industry - Support needs of other institutions and industry on human resource development, equipment and infrastructures Access to Biological and Genetic Resources - Develop appropriate documentation, management and access protocols - Address issues of access to biological resources within cocoa growing countries, including through regulations under the Environment Protection and Biodiversity Conservation Act 1999. Human Resources Development - Develop, attract, motivate and retain high quality researchers, particularly in those fields that has strong capacities to commercialise research outcomes. - Improve management of research, intellectual property and technology. - Monitor emerging skills needs in the biotechnology sector and develop appropriate responses. Strengthening Intellectual Property Management - Analyse biotechnology IP management needs of researchers, technology managers and other stakeholders, and support development of pilot programs to address these needs. - Promote opportunties for research and industry groups to share experiences in IP management from innovation through to commercialisation. - Identify impediments caused by R & D lead times and regulatory delays that may affect the effective patent life of biotechnology innovations. Environmental Risk Management and Risk Assessment - Establish a framework and a methodology for risk management and risk assessment. - Identify priorities for an environmental risk management and risk assessment program. - Monitor and evaluate any impacts. GMOs and Ethical Issues - Improve public awareness and understanding of biotechnology through open, transparent communications and dialogue. - Strengthen and enhance ethical standards and existing approaches to ethical issues.

RESEARCH PROGRAMS
1. AGRO-BIOTECHNOLOGY

Objectives

By 2015 to improve average cocoa farm yield by 20% and to reduce operating cost by 20% through leading edge biotechnology. By 2010 to develop molecular marker technology and transgenic plants that will allow breeders to create superior cocoa trees for farmers.

By 2015 to develop specialty cocoa trees such as for high butter, high flavor, unique flavor and high anti-oxidant level.

Strategies

Continue and initiate research on the genome, transcriptome, proteome and metabolome including bioinformatics. Continuing research on genetic engineering of cocoa. Refine techniques for micro-propagation, somatic embryogenesis and regeneration. Develop micro-biochemical technique for analyzing cocoa embryos.

Programs

Tissue Culture Genome Analysis Cloning Sequencing Fingerprinting Mapping Gene Expression Microarray Single Nucleotide Polymorphism (SNP) Express Sequence Tag (EST) Proteomic Analysis Genetic Engineering

Projects

Identification of Amplified Fragment Length Polymorphism or Single Nucleotide Polymorphism molecular markers for smooth, hard & shiny pods surfaces, dwarf tree, high flavour, high phenolic compound, high butter (triacylglycerol), high proline (drought resistant). Employ modern molecular and biochemical analysis techniques to enhance desirable traits such as smooth, hard & shiny pods surface, red color pods, dwarf tree, high flavour, high phenolic compound, high butter (triacylglycerol), high proline content (drought resistant). Characterizing and exploiting genetic diversity of Theobroma cacao. Genetic mapping and quantitative trait loci analysis for resistant to fungal diseases, insect pests, yield and flavor. Refinement of a genetic transformation system for cocoa. Genetic engineering of cocoa for resistance to the pod borer moth. Genetic engineering of cocoa for fruit abscission. Genetic engineering of cocoa for drought tolerance. Genetic engineering of cocoa for enhanced photosynthesis. Genetic engineering of CPB insect for autocidal death. Sequencing and profiling of vicilin-like globulin proteins in Malaysian cocoa beans. Development of in vitro technology - tissue culture and micro-propagation techniques. Development of secondary somatic embryogenesis and regeneration procedures. Develop procedures for the micro-analysis of triacylglycerol, polyphenols (including tannin), methylxanthines and storage proteins.

Performance Indicator

Complete fingerprinting of cocoa germplasm in our collection. Construction of a genetic linkage map containing thousands molecular markers and quantitative trait loci for vascular streak dieback and black pod disease resistant, CPB resistant clones, high flavour, butter, phenolic compound, proline and yield. Cocoa pod borer resistant cocoa clones. Clones that abscise mature pods. Drought tolerant cocoa clones.

Enhanced photosynthesis cocoa clones. Efficient somatic embryogenesis and plant regeneration procedure. Robust micro-propagation and tissue culture techniques. Accurate measurement of triacylglycerol, polyphenols, methylxanthines and storage proteins from small amounts of material.

Benefits and Impact

2.

Higher income for farmers, cocoa processors, and exporters Higher prices for our higher quality cocoa products, especially liquor and powder Increased production on less land and with less input Decreased pesticide contamination of our cocoa products Environmental and human health benefits due to reduced pesticide usage Increased domestic supply for our cocoa processors Reduced importation of expensive agrochemicals, especially insecticides Increase productivity by shortening breeding time and by reducing farm labor costs Superior planting materials released to farmers more quickly and at lower cost Reduce cost of clonal propagation Reduce labor, land, and cost of breeding Kit for breeders to identify seedlings with superior adult traits Reduce pesticide use, increase yield, increase butter content, improvement of any trait Additional knowledge-based skills for Research Officers

FOOD-BIOTECHNOLOGY

Objectives

By 2015 to diversify and improve the quality of cocoa products (including already fermented and dried inferior beans) with new technologies at reasonable cost. By 2010 to investigate the use of helpful bacteria, called probiotics, to control dangerous micro-organisms in cocoa based products. By 2010 to improve the safety and healthy of cocoa based products. By 2010 to develop kit for screening of quality bean through metabolome analysis.

Strategies

Development of cocoa tree based products for the food and health industries. Improve cocoa flavour, enhanced flavour notes (nutty, fruity, etc.), high antioxidant (polyphenol), high cocoa butter content, harder cocoa butter and long shelf life of cocoa products. Develop kit for screening of quality bean. Develop superior probiotic strains to tolerate oxygen in order to develop new health based probiotics functional food products. Supplementing the diet from cocoa with probiotics to prevent the colonization of harmful bacteria. Milk chocolate with Lactobacillus or bifidobacteria.

Programs

Metabolome Analysis Tree with high butter, high/low caffeine, high polyphenol (antioxidant), high cocoa flavour, high flavour note (nutty, floral, fruity) Food Safety Analysis Biotechnology Product Development Nutraceutical Probiotic / Prebiotic

Cocoa bean quality

Projects

Metabolic engineering to improve cocoa flavour and butter. Optimization of processing from harvest to drying. Use of enzymes and microorganisms for conversion of raw cocoa materials to improve cocoa based products. Molecular modeling to improve the properties of cocoa butter. Development of kit for screening of quality bean. Ingredient improvement. Shelf life improvement. Characterization of peptides formed during fermentation of cocoa beans. Enzymatic food grade lipases for the production of Omega-3 chocolate. Applications of rice bran lipase-catalyst-specificity and its potential on cocoa butter Development of flavonoid enriched cocoa products. Probiotic strain selection and characterization of strain using molecular biology techniques. Viability and survival studies in different cocoa based foods. Application of probiotic cultures to cocoa based foods.

Performance Indicator

New products Semi finished products (cocoa butter, liquor, powder) from beans, product from other cocoa tissues perhaps jam and jelly from cocoa pod gum and finished products (herbal chocolates, beverages, couverture, confectionary). Cocoa with high cocoa butter and flavour. Improved new products and processes to meet consumer preferences and nutritional needs. Probiotic products

Benefits and Impacts Improve the quality of our cocoa products Increase value of our cocoa products Reduce importation of bad / inferior of cocoa beans Development of tree with high butter, high/low caffeine, high polyphenol (antioxidant), high cocoa flavour, high flavour note (nutty, floral, fruity) through metabolome Food safety

3.

INDUSTRIAL AND PHARMACEUTICAL BIOTECHNOLOGY

Objectives

By 2015 to develop new products through discovering novel and useful bioactive compounds from the cocoa tree and associated microbes in the cocoa environment at reasonable cost. By 2020 to exploit cocoa waste as commercial value products.

Strategies

Discover and characterize novel and useful bioactive compounds, bio-pesticides from the cocoa tree and associated microbes in the cocoa environment. Develop methods to efficiently purify these compounds. Devise methods to increase the level of these compounds possibly by breeding, metabolic engineering or culturing in bio-reactors. Study the biochemical pathways leading to their synthesis.

Creation of plants which provide proteins of pharmaceutical values. Exploitation of cocoa waste to commercial value products.

Programs

Pharmaceutical Product Development Discovery of anti-microbial compounds from cocoa Microbiology Novel Product Development Endophyte Entomopathogenic microorganisms Beuvaria bassiana, Baculovirus Microbial culture collection Enzyme Technology Lipase, esterification - to modify fatty acid profile of cocoa butter Management of Cocoa Waste pod (turning to food eliminate tannin, methylxanthine) cocoa shell dietary fiber

Projects

Extraction and identification of novel secondary metabolites and bioactive compounds, synthesis and use. Discovery of microorganisms such as fungi, bacteria or algae in cocoa environment and/or during fermentation that produce novel metabolites and compounds for agriculture and pharmaceutical use. Isolation and characterization of compounds with antimicrobial activity. Isolation and characterization of compounds with human physiological activity. Modification of fatty acid profile of cocoa butter Elimination of tannin and methylxanthin in pod husks as animal food

Performance Indicator

Screen 100 compounds from cocoa trees and associated microbes for antibiotic, bio-pesticide and human physiological activity. Improving upon compounds found to have anti-microbial, bio-pesticide or human physiological activity.

Impact and Benefits New anti-microbial compounds Natural and safe biological control of cocoa pests and diseases Commercialization of enzymes from cocoa and microbes Additional income for small holders Environmentally friendly waste elimination

Research Projects Pest resistant cocoa via invitro technology and genetic transformation: 1. Development of in vitro technology Pest resistant cocoa via invitro technology and genetic transformation: 2. Development of a genetic transformation system Pest resistant cocoa via invitro technology and genetic transformation: 3. Genetic engineering of cocoa for resistance to the pod borer moth

Pest-resistant cocoa via in vitro technology and genetic transformation: 4. Refinement of a genetic transformation system Pest-resistant cocoa via in vitro technology and genetic transformation: 5. Development of a secondary somatic embryogenesis procedure Genetic engineering of cocoa for fruit abscission Identification of cocoa molecular markers for gental mapping and quantitative trait loci analysis for vascular streak dieback disease Characterizing and exploiting genetic diversity and quantitavie traits in cocoa germplasm In Vitro Culture of Theobroma cacao Isolation and characterization of antifungal compound/protein from microorganisms antagonistic to Phytopthora palmivora the causal agent of black pod disease in cocoa.

Malaysia: Tariff Rate on Cocoa Beans and Products

S.I.T.C REV.3 HS Code Description 072.100.000 1801.00.000 Cocoa beans, whole or broken, raw or roasted 072.500.000 1802.00.000 Cocoa Shells, husks, skins and other cocoa waste Cocoa paste, not defatted. 072.310.000 1803 1803.10.000 -Not defatted 1803.20.000 -Wholly or partly defatted 072.400.000 1804.00.00 -Cocoa Butter, fat and oil 072.200.000 1805.00.000 Cocoa powder, not containing added sugar or other sweetening matter 073.100.000 1806 Chocolate and other food preparations containing cocoa: -Cocoa powder, containing added 1806.10.000 sugar or other sweetening matter 1806.20.000 -Other preparation in blocks or slabs weighing more than 2 kg or in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a : -Chocolate confectionery in blocks, slabs or bars -Other 073.301.100 1806.31 -Other, in blocks, slabs or bars: 1806.31.100 -Filled : 1806.31.900 Chocolate Other 073.309.100 1806.32 -Not Filled : 073.309.900 1806.32.100 Chocolate 1806.32.900 Other 073.900.000 1806.90.000 Other
EL*: Required export permit issued by Malaysian Cocoa Board

Unit of Sales ASEAN Quantity Import Export Tax IL/EL CEPT tonnes Nil Nil Nil EL* 0% kg Nil Nil Nil 0%

10 % kg kg kg kg 10 % 10 % 10 %

Nil Nil Nil Nil

Nil Nil Nil Nil 5% 5% 0% 5%

kg

10 %

Nil

10%

5%

kg

15%

Nil

10% 10%

5%

kg

15%

Nil

5%

kg

15%

Nil

10%

5%

kg kg kg kg kg

15 % 15% 15 % 15 % 15 %

Nil Nil Nil Nil Nil

10 % 10 % 10 % 10 % 10%

5% 5% 5% 5% 5%

FE*: Fully Exempted

Subcription :
Malaysia : RM30.00 / Year (2 Issues) including postage & handling Overseas : RM50.00 / Year (2 Issues) including postage & handling. Any inquiry regarding subcription, please direct to: Director General Malaysian Cocoa Board 5th, 6th & 7th Floor, Wsima SEDCO Lorong Plaza Wawasan, Off Coastal Highway Locked Bag 211 88999 Kota Kinabalu Sabah.
Attn. : Market Dev. & Techno-Economy Division

Tel : 088-234477 Fax : 088-239575 / 253037

1. Malaysian Cocoa Grinders Technical information on the types of cocoa products produced by Malaysian cocoa grinders are available in Malaysia Cocoa Grinders and Product Specifications Directory. The Directory is available upon request. The complete addresses of the cocoa grinders in Malaysia are also available in our Websitehttp://www.koko.gov.my/industry/directory For further information please visit our website athttp://www.koko.gov.my/industry/directory or contact the following persons: Ms. Maznah Abdul or Ms. Theodora Sebastian.

2. Chocolate and Confectioneries in Malaysia The complete addresses of the chocolate and confectioneries in Malaysia are available in Malaysian Cocoa Board Website http://www.koko.gov.my/industry/directory. For further information please visit our website athttp://www.koko.gov.my/industry/directory or contact the following persons: Ms. Maznah Abdul or Ms. Theodora Sebastian.

Incentives for Manufacturing Sector][Incentives for Agricultural Sector]

1.1 Main Incentives for Manufacturing Companies The major tax incentives for companies investing in the manufacturing sector are the Pioneer Status and the Investment Tax Allowance. Eligibility for Pioneer Status and Investment Tax Allowance is based on certain priorities, including the level of value-added, technology used and industrial linkages. Eligible activities and products are termed as "promoted activities" or "promoted products". (See List of Promoted Activities and Products - General) (i)Pioneer Status A company granted Pioneer Status enjoys a 5-year partial exemption from the payment of income tax. It pays tax on 30% of its statutory income*, with the exemption period commencing from its Production Day (defined as the day its production level reaches 30% of its capacity). Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company. * Statutory Income is derived after deducting revenue expenditure and capital allowances from the gross income. Applications for Pioneer Status should be submitted to the Malaysian Industrial Development Authority (MIDA). (ii) Investment Tax Allowance As an alternative to Pioneer Status, a company may apply for Investment Tax Allowance (ITA). A company granted ITA is entitled to an allowance of 60% on its qualifying capital expenditure (factory, plant, machinery or other equipment used for the approved project) incurred within five years from the date the first qualifying capital expenditure is incurred. The company can offset this allowance against 70% of its statutory income for each year of assessment. Any unutilised allowance can be carried forward to subsequent years until fully utilised. The remaining 30% of its statutory income will be taxed at the prevailing company tax rate. Applications should be submitted to MIDA. 1.2 Incentives for High Technology Companies A high technology company is a company engaged in promoted activities or in the production of promoted products in areas of new and emerging technologies (See List of Promoted Activities and Products - High

Technology Companies). A high technology company qualifies for: i. Pioneer Status with income tax exemption of 100% of the statutory income for a period of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or ii. Investment Tax Allowance of 60% on the qualifying capital expenditure incurred within five years from the date the first qualifying capital expenditure is incurred. The allowance can be utilised to offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. Applications should be submitted to MIDA. The high technology company must fulfil the following criteria: i. The percentage of local R & D expenditure to gross sales should be at least 1% on an annual basis. The company has three years from its date of operation or commencement of business to comply with this requirement. ii. Scientific and technical staff having degrees or diplomas with a minimum of 5 years experience in related fields should comprise at least 7% of the company's total workforce. 1.3 Incentives for Strategic Projects Strategic projects involve products or activities of national importance. They generally involve heavy capital investments with long gestation periods, have high levels of technology, are integrated, generate extensive linkages, and have significant impact on the economy. Such projects qualify for: i. Pioneer Status with income tax exemption of 100% of the statutory income for a period of ten years; Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or ii. Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within five years from the date the first qualifying capital expenditure is incurred. This allowance can be offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. Applications should be submitted to MIDA. 1.4 Incentives for Small and Medium Companies Small and Medium Enterprises(SMEs) Effective from the year assessment of 2009, for the purpose of imposition of income tax and tax incentives, the definition of SMEs is reviewed as a company resident in Malaysia with a paid up capital of ordinary shares of RM2.5 million or less at the beginning of the basis period of a year of assessment whereby such company cannot be controlled by another company with a paid up capital exceeding RM2.5 million. SMEs are eligible for a reduced corporate tax of 20% on chargeable incomes of up to RM500,000. The tax rate on the remaining chargeable income is maintained at 25%. Small Scale Manufacturing Companies Small scale manufacturing companies incorporated in Malaysia with shareholders' funds not exceeding RM500,000 and having at least 60% Malaysian equity are eligible for the following incentives: i. Pioneer Status with income tax exemption of 100% of the statutory income for a period of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or ii. Investment Tax Allowance of 60% on the qualifying capital expenditure incurred within five years. This allowance can be offset against 100% of the statutory income for each year of assessment. Any unutilised

allowances can be carried forward to subsequent years until fully utilised. A sole proprietorship or partnership is eligible to apply for this incentive provided a new private limited/limited company is formed to take over the existing production/activities. To qualify for the incentive, a small-scale company has to comply with one of the following criteria: i. The value-added must be at least 15%; or ii. The project contributes towards the socio-economic development of the rural population. The company shall carry out the manufacture of products or participate in activities listed as promoted products and activities for small-scale companies (See List of Promoted Activities and Products - Small Scale Companies) Applications should be submitted to MIDA.

1.5 Incentives for the Machinery and Equipment Industry 1.5.1 Incentives for the Production of Selected Machinery and Equipment Companies undertaking activities in the production of selected machinery and equipment, namely, machine tools, plastic injection machines, plastic extrusion machinery, material handling equipment, packaging machinery, robotics and factory automation equipment, specialised/process machinery or equipment for specific industries, and parts and components of the mentioned machinery and equipment, are eligible for: i. Pioneer Status with income tax exemption of 100% of the statutory income for a period of ten years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or ii. Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within five years from the date the first qualifying capital expenditure is incurred. This allowance can be offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. Applications should be submitted to MIDA. 1.5.2 Additional Incentives for the Production of Heavy Machinery Existing locally-owned companies that reinvest in the production of heavy machinery such as cranes, quarry machinery, batching plant and port material handling equipment, are eligible for the following incentives: i. Pioneer Status with income tax exemption of 70% on the increased statutory income arising from the reinvestment projects for a period of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or ii. Investment Tax Allowance of 60% on the additional qualifying capital expenditure incurred within a period of five years. The allowance can be offset against 70% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. 1.5.3 Additional Incentives for the Production of Machinery and Equipment Existing locally-owned companies that reinvest in the production of machinery and equipment, including specialised machinery and equipment and machine tools, are eligible for the following incentives: i. Pioneer Status with income tax exemption of 70% on the increased statutory income arising from the reinvestment projects for a period of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

ii. Investment Tax Allowance of 60% on the additional qualifying capital expenditure incurred within a period of five years. The allowance can be offset against 70% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

1.6 Incentives for Automotive Industry 1.6.1 Incentives for Automotive Component Modules or System New and existing companies that undertake design, R&D and production of qualifying automotive component modules or systems are eligible for: i. Pioneer Status with income tax exemption of 100% of the statutory income for a period of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or ii. Investment Tax Allowance of 60% on the qualifying capital expenditure incurred within five years from the date the first capital expenditure is incurred. The allowance can be offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. The qualifying modules or systems are front corner modules, rear corner modules, instrument panel modules, struts and absorbers and spring assembly modules, bumper modules, front cross member modules, function integrated door modules, fuel tank modules, seat modules, pedal modules, door trim modules, floor console modules, tyre and wheel modules, wiper systems, exhaust systems, audio systems, heater ventilation airconditioning systems, power and signal distribution systems, alarm systems, seat belt systems, exterior lighting systems, body in white modules, engine management systems, safety systems, telematics, navigational systems, engine fuel injection systems,brake systems, airbag systems and vehicle intelligence systems. 1.6.2 Incentives for the Manufacture of Critical and High Value-added Parts and Components for the Automotive Industry Companies undertaking the manufacture of selected critical and high value-added parts and components for the automotive industry are eligible for: i. Pioneer Status with income tax exemption of 100% of the statutory income for a period of ten years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or ii. Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within five years from the date the first qualifying capital expenditure is incurred. This allowance can be offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until they are fully utilised. The qualifying critical and high value-added parts and components for the automotive industry are as follows: tranmission systems; brake systems; airbag systems; and steering systems. The qualifying critical parts and components supporting the manufacturing of hybrid and electric vehicles are: electric motors; electric batteries; Battery Management System; inverters; electric air conditioning; and air compressors.

Applications recived by 31 December 2014 are eligible fo these incentives.

Applications should be submitted to MIDA. 1.6.3 Incentives for the Assembly or Manufacture of Hybrid and Electric Vehicles Companies undertaking the assembly or manufacture of hybrid and electric vehicles are eligible for: 100% Investment Tax Allowance or Pioneer Status of 10 years Customized training and R&D grants 50% exemption on excise duty for locally assembled/manufactured vehicle or provision under Industrial Adjustment Fund (IAF) 1.7 Incentives for the Utilisation of Oil Palm Biomass Companies that utilise oil palm biomass to produce value-added products such as particleboard, medium density fibreboard, plywood, and pulp and paper are eligible for the following incentives: (i) New Companies a. Pioneer Status with income tax exemption of 100% of the statutory income for a period of ten years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or b. Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within a period of five years. The allowance can be offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. (ii) Existing Companies that Reinvest a. Pioneer Status with income tax exemption of 100% of the increased statutory income arising from the reinvestment for a period of ten years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or b. Investment Tax Allowance of 100% on the additional qualifying capital expenditure incurred within a period of five years. The allowance can be offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

1.8 Additional Incentives for the Manufacturing Sector (i) Reinvestment Allowance Reinvestment Allowance (RA) is given to companies engaged in manufacturing*, and selected agricultural activities that reinvest for the purposes of expansion, automation. modernisation or diversification of its existing business into any related products within the same industry on condition that such companies have been in operation for at least 36 months effective from the year of assessment 2009. The RA is given at the rate of 60% on the qualifying capital expenditure incurred by the company, and can be offset against 70% of its statutory income for the year of assessment. Any unutilised allowance can be carried forward to subsequent years until fully utilised.A company can offset the RA against 100% of its statutory income for the year of assessment if the company attains a productivity level exceeding the level determined by the Ministry of Finance. For further details on the prescribed productivity level for each sub-sector, please contact the Inland Revenue Board (see Useful Addresses - Relevant Organisations) The RA will be given for a period of 15 consecutive years beginning from the year the first reinvestment is made. Companies can only claim the RA upon the completion of the qualifying project, i.e. after the building is completed or when the plant/machinery is put to operational use. With effect from the year of assessment 2009, company purchasing an asset from a related company within the same group where RA has been claimed on that asset is not allowed to claim RA on the same asset. Assets acquired for the reinvestment cannot be disposed off within a period of five years from the time of the reinvestment and effective from the year of assessment 2009. Companies that intend to reinvest before the expiry of its tax relief period, can surrender their Pioneer Status

or Pioneer Certificate for purpose of cancellation and be eligible for RA. Applications for RA should be submitted to the Inland Revenue Board (IRB), while applications for the surrender of Pioneer Status or Pioneer Certificate for RA should be submitted to MIDA. *With effect from year of assessment 2009, manufacturing activities will be given a more specific and clear definition under Schedule 7A, Income Tax Act 1967. (ii) Accelerated Capital Allowance After the 15-year period of eligibility for RA, companies that reinvest in the manufacture of promoted products are eligible to apply for Accelerated Capital Allowance (ACA). The ACA provides a special allowance, where the capital expenditure is written off within three years, i.e. an initial allowance of 40% and an annual allowance of 20%. Applications should be submitted to the IRB accompanied by a letter from MIDA certifying that the companies are manufacturing promoted products. SMEs are eligible for the following incentives: ACA on expenses incurred on plant and machinery acquired in the year of assessment 2009 and 2010. This allowance is to be claimed within one year that is in the year of assessment the asset is fully acquired. This incentive is effective for the year of assessment 2009 and 2010; and SMEs are not subject to the maximum limit of RM10,000 for capital allowance on small value assets effective from the year of assessment 2009. Applications for ACA should be submitted to the Inland Revenue Board (IRB). (iii) Accelerated Capital Allowance on Equipment to Maintain Quality of Power Supply In order to reduce the cost of doing business companies which incur capital expenditure on equipment to ensure the quality of power supply, are eligible for Accelerated Capital Allowance (ACA) for a period of two years which allows the companies to write off the capital expenditure within two years, i.e. an initial allowance of 20% and an annual allowance of 80%. Only equipment determined by the Ministry of Finance is eligible for the ACA. Applications should be submitted to IRB. (iv) Accelerated Capital Allowance on Security Control Equipment Accelerated Capital Allowance (ACA) is given on security control equipment installed in the factory premises of companies licensed under the Industrial Coordination Act 1975. This allowance is eligible to be claimed within one year.Effective from the year of assessment 2009, this allowance is extended to all business premises. Security control equipment which are eligible for the allowance are: Anti-theft alarm system; Infra-red motion detection system; Siren; Access control system; Closed circuit television; Video surveillance system; Security camera; Wireless camera transmitter; and Time lapse recording and video motion detection equipment.

Applications submitted to the IRB from the year of assessment 2009 to 2012 are eligible for this allowance.

(v) Incentive for Industrialised Building System Industrial Building System (IBS) will enhance the quality of construction, create a safer and cleaner working environment as well as reduce the dependence on foreign workers. Companies which incur expenses on the purchase of moulds used in the production of IBS components are eligible for Accelerated Capital Allowances (ACA) for a period of three years. Applications should be submitted to IRB. (vi) Tax Exemption on the Value of Increased Exports To promote exports, manufacturing companies in Malaysia qualify for: A tax exemption on statutory income equivalent to 10% of the value of increased exports, provided that the goods exported attain at least 30% value-added; or A tax exemption on statutory income equivalent to 15% of the value of increased exports, provided that the goods exported attain at least 50% value-added. To further encourage the export of Malaysian goods, a locally-owned manufacturing company with Malaysian equity of at least 60% is eligible for: A tax exemption on statutory income equivalent to 30% of the value of increased exports, provided the company achieves a significant increase in exports; A tax exemption on statutory income equivalent to 50% of the value of increased exports, provided the company succeeds in penetrating new markets; A full tax exemption on the value of increased exports, provided the company achieves the highest increase in export in its category. Claims should be submitted to IRB. (vii) Group Relief Group relief is provided under the Income Tax Act 1967 to all locally incorporated resident companies. Effective from the year of assessment 2009, group relief is increased from 50% to 70% of the current year's unabsorbed losses to be offset against the income of another company within the same group (including new companies undertaking activities in approved food production, forest plantation, biotechnology, nanotechnology, optics and photonics) subject to the following conditions: a. The claimant and the surrendering companies each has a paid-up capital of ordinary shares exceeding RM2.5 million; b. Both the claimant and the surrendering companies must have the same accounting period; c. The shareholding, whether direct or indirect, of the claimant and the surrendering companies in the group must not be less than 70%; d. The 70% shareholding must be on a continuous basis during the preceding year and the relevant year; e. Losses resulting from the acquisition of proprietary rights or a foreign-owned company should be disregarded for the purpose of group relief; and f. Companies currently enjoying the following incentives are not eligible for group relief: Pioneer Status Investment Tax Allowance/Investment Allowance Reinvestment Allowance Exemption of Shipping Profits Exemption of Income Tax under section 127 of the Income Tax Act 1967; and Incentive Investment Company With the introduction of the above incentive, the existing group relief incentive for approved food production, forest plantation, biotechnology, nanotechnology, optics and photonics will be discontinued. However,

companies granted group relief incentive for the above activities shall continue to offset their income against 100% of the losses incurred by their subsidiaries. Claims should be submitted to the IRB.