Wednesday, November 25, 2009

Singapore private sector pumps $1.1b into Iskandar Malaysia

Manufacturing SMEs account for bulk of investment, says Mah in Parliament

Iskandar Malaysia has attracted RM2.64 billion, or some S$1.1 billion, in manufacturing investments from Singapore’s private sector since 2006.

National Development Minister Mah Bow Tan said that this sum comes from the 178 manufacturing projects with Singapore participation which have been approved by Malaysia from 2006, when the Johor economic zone was first launched, till May this year.

‘Singapore is among the top three investors in Iskandar Malaysia,’ said Mr Mah, in a written response to MP Ho Geok Choo’s question in Parliament on local investments in the project and issues discussed at the 5th meeting of the Joint Ministerial Committee (JMC) for Iskandar Malaysia (IM) on Nov 4.

To enhance transport connections, key to developing business links, the JMC agreed at that meeting to ‘double the number of cross-border bus services by January 2010′, Mr Mah said.

He jointly chairs the committee, set up in 2007 to promote bilateral cooperation on IM, with Malaysia’s Minister in the Prime Minister’s Department Nor Mohamed Yakcop.

While the JMC’s sub-groups have been working on transport and immigration clearance, and promoting joint tourism development and environmental cooperation, ‘the private sector has actively seized the economic opportunities that IM presents’ too, Mr Mah said.

Most investments from Singapore have been in manufacturing, particularly those by small and medium enterprises (SMEs), he noted. The majority are in the business of producing plastics, electronics or electrical goods and fabricated metal products.

Manu Bhaskaran, economist and CEO of Centennial Asia Advisors, was not surprised at the large proportion of SME manufacturers investing in Iskandar. ‘In fact, that is exactly the role that Iskandar can play,’ he told BT, since costs are higher in Singapore, although an SME with limited resources is less likely to be able to move its operations far.

It is beneficial to Singapore too, that local companies have the option of relocating manufacturing operations to IM, rather than further afield.

‘The proximity makes it more likely that they will then still keep their headquarters in Singapore,’ Mr Bhaskaran added.

In the written reply, Mr Mah said that local companies in sectors other than manufacturing, such as healthcare services and real estate, ‘have also been actively exploring investment opportunities in IM’. Parkway Holdings plans to set up a hospital in IM, while another Singapore healthcare player, Health Management International, has a hospital already in operation there.

Mr Bhaskaran expects Singapore’s investments in IM to climb, but noted that the development region is still ‘in its early stages’, and issues such as recent concern over the impact of multiple top management changes on investor confidence, lingering concern over Johor’s crime rates, and accessibility from Singapore, will need to be addressed.

Some of these issues have been looked into by the JMC. The JMC’s 5th meeting also noted that ‘fast track’ lane access with the Malaysian Automated Clearance System was extended to all frequent travellers to Malaysia in September.

A study was also commissioned to assess the feasibility of developing nature sites in IM and Singapore’s Sungei Buloh Wetland Reserve as a joint tourism destination. Environmental agencies on both sides are exchanging expertise in areas such as river cleaning, Mr Mah said.

Earlier this month, the JMC said that it would form a new work group to study the joint development of an iconic economic project in IM, proposed by both countries’ prime ministers in May. The JMC will next meet in the first half of next year.

Source: Business Times, 25 Nov 2009

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