Published: September 17, 2012
By ZAZALI MUSA
zaza@thestar.com.my
JOHOR BARU: Johor is in a good position to attract more multinational corporations (MNCs) based in China to relocate their operations to Iskandar Malaysia.
South Johor SME Association chairman Teh Kee Sim said the Johor state government and the Iskandar Regional Development Authority (Irda) had to work faster to attract these MNCs.
He said many of the MNCs, especially those from the coastal cities, were seriously considering leaving China due to the higher operating costs in the republic.
Teh:
‘China is no longer a cheap place for manufacturing activities unlike a
decade or two ago when many MNCs from all over the world were rushing
to relocate their operations there.’
“China is no longer a cheap place for manufacturing activities unlike a decade or two ago when many MNCs from all over the world were rushing to relocate their operations there,'' he told StarBiz in an interview.
Teh was asked to comment on the recent survey by the American Chamber of Commerce in Singapore which showed that a growing number of US companies planned to move part of their operations to South-East Asia in the next two years.
Although no reasons were given why US firms have become more interested in reducing their reliance on China, the rising cost of doing business there was seen as the main factor.
Malaysia and the Philippines were the top choices for expansion followed by Vietnam and Thailand with Indonesia in the last spot.
“The higher cost of doing business are not only eating the profit margins of the MNCs but also the Chinese small and medium-sized enterprises,'' he said.
Teh said many of the companies badly affected by the increase in costs of doing business were those operating in Fuzhou, Guangzhou, Nanning, Shanghai and Shenzhen.
He said they were contemplating either a shift of some or even their entire operations to countries in South-East Asia.
Singapore factor: Johor’s (foreground) close proximity to Singapore is an added advantage for MNCs
Teh, who just returned from a two-week business trip to China, said feedback from the business associates of South Johor SME Association there showed that Johor was their top choice to relocate their operations.
“In fact, I've just played host to a company involved in the halal food processing activities from Guangzhou at the Pasir Gudang industrial area,'' he said.
Teh said the Chinese company would be investing about RM15mil in Pasir Gudang to produce halal food mainly for export to the Middle East.
He said during his two weeks' stay in China, there were several news reports that 90 Chinese companies had already relocated to Myanmar and an American MNC in Nanjing was retrenching thousands of its workers.
“This is something that was unheard of before in China and we must entice the MNCs and even Chinese manufacturers to relocate to Iskandar Malaysia,'' said Teh.
He said the Johor and Irda must be more aggressive and proactive to attract them and should not take their time as other countries in the region were also aggressively courting the MNCs.
Teh said if the Chinese companies were willing to invest in Myanmar, which only recently welcomed foreign investors, Malaysia must take notice.
He said Johor Baru's close proximity with Singapore was an added advantage in attracting the MNCs, not only those in China but all over the world to invest in Iskandar Malaysia.
“By investing here, they have the best of both worlds with Singapore as an international trade and financial centre and having a competitive cost in Malaysia,'' added Teh.
He said this would also speed up the Government's plans to further develop, strengthen and position Johor to be a leasing manufacturing services (EMS) hub in Malaysia.
Teh lauded the move as it would not only reaffirm Johor as one of the preferred destinations for manufacturing-related activities in the country but also a leading EMS hub in the region. He said Johor had established itself in the electronics and electrical manufacturing activities for years and now was the time to bring it to the next level.
“By moving up the value chain, Johor can attract more capital-intensive and high-technology investments to the state,'' said Teh.
Meanwhile, Irda chief executive officer Datuk Ismail Ibrahim said while the manufacturing sector was still relevant to Iskandar Malaysia, it has to move up the value chain.
He said manufacturers involved in labour-intensive activities should look at other countries which have a large pool of workers and Malaysia's manufacturing sector could no longer remain labour-intensive.
Since 2006, the manufacturing sector took the top spot in Iskandar Malaysia with RM32.7bil in investments, with the property sector coming in second with RM29.80bil.
Investments in other sectors include utilities (RM9.52bil), government (RM7.31bil), petrochemicals (RM5.10bil), ports and logistics (RM3.74bil), tourism (RM2.03bil), education (RM1.55bil), healthcare (RM1.60bil), creative (RM0.40bil) and others (RM1.69bil).
“We always work closely with the Federal and Johor governments to attract investments that could create economic spills-over for Iskandar Malaysia,'' said Ismail.
He said Irda also had good relationship with the SMEs in Johor, including having business matching between them and the major local and foreign investors.
Ismail said two areas in Iskandar Malaysia a 323.74-ha site in Sedenak and Senai Hi-Teck Park spanning 404.68ha have been identified for the EMS hub project as they were located near to logistics and port facilities.
He said Irda would facilitate the development of the EMS hub by providing talent supply, training and re-skilling, efficient utilities supply, incentive and etc.
“The most important thing is to ensure that Iskandar Malaysia remain attractive as an investment destination regardless of what the global economic situation is,'' said Ismail. He said not only MNCs and SMEs from China have expressed their strong interest to invest in Iskandar Malaysia but also those in Europe, Japan, South Korea and Singapore.
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