Singapore firms remain upbeat about Iskandar

Despite lingering concerns about shrinking cost advantages and a lack of skilled labour in Iskandar Malaysia, the developers of a new industrial estate have said the special economic zone remains a compelling choice for Singapore companies to expand or relocate to amid land and manpower constraints at home.

Nusajaya Tech Park will be the latest addition to the Iskandar economic infrastructure when its first stage is completed in 2016.

The industrial estate is already drawing strong Singapore interest, said Mr Manohar Khiatani, chief executive of Ascendas, which is jointly developing the project with Malaysia’s UEM Sunrise.

“Out of our first soft launch of ready-built facilities, 40 per cent have been pre-committed — a large proportion of them by Singapore-based companies,” Mr Khatiani told TODAY at the groundbreaking ceremony yesterday. “When this park is eventually completed, I expect it’ll have a good mix of Singapore companies — which will take up a big proportion — as well as Malaysian and international companies.

“The tech park takes advantage of the relative strengths of Singapore and Malaysia. Singapore is a small country with scarcity of land, but the Asian market is still growing. It makes sense for Singapore companies to have a location close by that can accommodate the space and scope for expansion activities.”

Similarly, Minister for Trade and Industry Lim Hng Kiang highlighted the potential of Iskandar and encouraged Singapore businesses to consider shifting there if they want to develop operations overseas.

“The proximity between Singapore and Iskandar Malaysia provides the opportunity for investors to position their full value chain of business and manufacturing functions across both locations, hence spurring the development of complementary industries. With the right mix of industries and enhanced connectivity, there is potential for both countries to develop a seamless economic space,” he said.

A S$1.5 billion joint project that is 60 per cent owned by Ascendas, the 210ha Nusajaya Tech Park will be developed in three phases over nine years, with the first phase set to be completed in 2016.

It will offer a mixture of freehold ready-built factories and land plots for built-to-suit developments for about 200 companies in sectors such as precision engineering, clean manufacturing and logistics. The average price is RM380 (S$147) per square foot (psf). In comparison, the cheapest JTC factory space for the Business 1 category is priced at about S$406 psf.

Yet despite such attractively-priced industrial land, Iskandar has yet to see a sizable cluster of Singapore companies, which remain concerned over issues such as a lack of skilled labour, incomplete infrastructure and poor security.

Mr Philip Tan, ASEAN vice-president of Singapore-based YCH Group, agreed that it may take a while for Iskandar to gain further traction with Singapore companies, but felt the economic zone will eventually grow to its potential as the hub of choice for local businesses.

The regional supply chain solutions provider yesterday signed a memorandum of understanding with Nusajaya Tech Park to explore establishing an advanced supply chain facility. YCH is very keen on the partnership, Mr Tan said.

“At the end of the day, there will be challenges, one of which is the difficulty in getting skilled labour. There’s always a trade-off — lower costs versus other issues that we need to address,” he said.

“But I’m sure these issues are being addressed by the Malaysian authorities and, once they are, Nusajaya Tech Park — as well as Iskandar Malaysia — will be very attractive to Singapore companies.”

Ascendas’ Mr Khiatani is similarly upbeat: “The Singapore-Iskandar story remains very compelling — that’s why we’re here. As is the case with every story, there will be ups and down, but we are confident about the growth of Iskandar, and that Singapore businesses and economy will be able to benefit from it.”

Source : Today – 13 Jun 2014

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