The Association of Small and Medium Enterprises (ASME) has scrapped a plan to build an industrial park for SMEs in Malaysia’s Iskandar region. However, ASME said it was looking into other ways to help SMEs cope with rising costs in Singapore.
Over the past year, many business groups in Singapore have organised trips to Iskandar to explore expansion and relocation opportunities.
In December 2012, the ASME announced plans to develop an industrial park in Iskandar. However, the proposal has met with a cool response.
ASME said 23 Singapore firms expressed interest in the development late last year, but added that it will need commitment from at least 50 businesses in Singapore before the project can proceed.
Chan Chong Beng, president of ASME, said: “The reason why we pulled back this idea was that the interest from the SMEs was not very strong… Some of them think that it’s too much for them, it’s too expensive for them to go in.”
Given that there are no shortage of industrial properties in Iskandar, ASME said developing an industrial park may not be the best way for the organisation to help its members.
Instead, it plans to set up a one-stop service centre to help relocating SMEs on issues such as company incorporation, business licenses, banking, manpower, and customs clearance.
Mr Chan said: “Initially, we thought that it was a good thing for us to rally all the SMEs to go over. But as it progressed, we find that there are a lot of risks for us to be involved.
“Also, a lot of government-linked companies are having their investments there. So we’re actually talking to them. I said ‘look, can you do something specially (for SMEs) like the flatted factories, suitable for the smaller SMEs?'”
Analysts said some SMEs are waking up to the idea that moving to Iskandar may not be a quick fix solution to their woes.
Song Seng Wun, a regional economist with CIMB Research, said: “Land cost has gone up by easily three-and-a-half to four times, over the last two years. Labour cost is an issue, if you can find them. So problems which they are facing here in Singapore — though not as acute in Iskandar — they are also being asked to face and deal with as well.”
Still, based on a report by PricewaterhouseCoopers, Singapore is among the largest foreign investors in Iskandar, with cumulative investments of S$2 billion since 2006.
According to the Malaysian Investment Development Authority, more than 300 Singapore companies have set up a manufacturing presence in the Iskandar Development Region.
Source : Channel NewsAsia – 17 Aug 2013