CEO: RM95.5bil committed investments in Iskandar

06 Aug 2012 The Star

JOHOR BARU: Interest in Iskandar Malaysia from both domestic and foreign investors still remains strong since its inception six years ago despite current uncertainties in the global economic growth.

Iskandar Regional Development Authority (Irda) chief executive officer Datuk Ismail Ibrahim said therefore, more efforts were needed to continue attracting new investments to develop Iskandar Malaysia.

“The party is not over yet and we (all stakeholders) have to work harder to ensure Iskandar Malaysia stays attractive and relevant in today’s highly-competitive market conditions,” he said in an interview with StarBiz.

Iskandar Malaysia is the country’s first economic growth corridor launched on Nov 4, 2006, spanning 2,217 sq km, three times bigger than Singapore.

It is divided into five flagship development zones JB City Centre, Nusajaya, Eastern Gate Development Zone, Western Gate Development Zone and Senai-Kulai.

According to Ismail, from 2006 to June 30, 2012, Iskandar Malaysia had received RM95.5bil cumulative committed investments in various sectors with RM41.35bil or 43% already realised.

Of the total, RM58.95bil or 62% were from domestic investors.

Since 2006, the manufacturing sector took the top spot with RM32.71bil, with the property sector came in second at RM29.80bil.

Investment 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).

Ismail said Iskandar Malaysia last year managed to record RM15.3bil investments of its projected RM15bil target. This year, it is looking at a RM20bil target.

Asked whether the target could be achieved given current global economic uncertainties, he said: “It is achievable based on the achievements by Iskandar Malaysia on a year-to-year basis.”

In the first six months of 2012, Iskandar Malaysia had secured RM10.67bil new investments. Therefore, it would not be impossible to achieve this year’s target, he added.

“There are several investments from the Asean region, Japan and Europe this year but we cannot reveal the investors’ names and the amount for now,” he said.

Meanwhile, Ismail admitted that the journey ahead would not always be smooth sailing given the many obstacles and challenges.

However, he believes that behind every dark cloud, there is a sliver lining.

He pointed out that uncertainties in the economic outlook in the eurozone and the United States would have an adverse impact on foreign investments in Iskandar Malaysia.

However, on the positive side, Asia particularly Malaysia, is somewhat insulated based on the increasing percentage of investments by domestic investors which were up 62% as of June this year.

“Domestic investments helped to cushion the drop of foreign investments into Iskandar Malaysia,” he added.

Ismail also said Irda did not specifically segregate its investor centric strategies to foreign or domestic; instead it aimed at value proposition strategies and incentives to attract investors.

“By never discriminating between domestic and foreign investors, Iskandar Malaysia will be able to spread the cake and avoid being dependent on just a selected few.”

Ismail pointed out that the way forward was to attract more high value-added and low carbon investments in order to transform Iskandar Malaysia into an international metropolis under its Comprehensive Development Plan (CDP 2006-2025).

He said Irda was looking at investments averaging between RM15bil and RM20bil yearly from 2011 to 2015, up from RM10bil to RM15bil targeted from 2006 to 2010, and from RM20bil to RM25bil from 2020 to 2025.

“However, these numbers will be reviewed from time to time in view of the ever-changing global investment climate and competition from other economic corridors worldwide,” added Ismail.

He stressed that the target of RM382bil investments must be achieved by 2025, in order for Iskandar Malaysia to succeed as outlined in the CDP.

Following the slowing growth in the eurozone and the United States, Irda would focus on countries within the region such as China, India, Indonesia, Japan, South Korea and Singapore.

He pointed out that it was most important to ensure Iskandar Malaysia remained attractive as an investment destination regardless of the global economic situation.

“We will continue to benchmark our propositions against other investment destinations while carrying out the best practice of providing one-stop advisory and facilitating process to investors.

“At the same time we will continue to offer customised incentives to investors that invest in high value-added projects in Iskandar Malaysia.”

He also said while the manufacturing sector was still relevant to Iskandar Malaysia, it had to move up the value chain as the country’s manufacturing sector could no longer remain labour-intensive.

Ismail, meanwhile, lauded the Government’s plans to develop and transform Johor into a leading electrical manufacturing service (EMS) both in Malaysia and regionally.He said the two areas in Iskandar Malaysia Sedenak (323.74ha) and Senai Hi-Tech Park (404.68ha) were the right choices for the hub given their strategic locations near the logistics and ports facilities.

Ismail said Irda would facilitate the development of the EMS hub by providing talent supply, training and re-skilling, efficient utilities supply and incentives.

While the manufacturing sector remained important and relevant to Iskandar Malaysia, Irda would also focus on education, health, tourism, services and oil and gas (O&G) sectors.

“We are looking at attracting more O&G investors in the next three years with at least RM5bil investments yearly out of the yearly RM20bil investment target,” added Ismail.

With Petronas’ Refinery Petrochemicals Integrated development (Rapid) project in Pengerang already in the picture, Ismail said Irda would be looking at getting involved in the project “as much as possible.”

Although Pengerang in Johor’s southeast was not part of Iskandar Malaysia, both Pengerang and Iskandar Malaysia could actually complement each other, he added.

The RM60bil Rapid complex with the proposed 300,000 barrels per day crude oil refinery is larger than the combined capacities of Petronas’ existing refineries in Malacca, Terengganu’s Kertih and Gebeng in Pahang.

“Both Iskandar Malaysia and Rapid are projects of national interests and not only for Johor, so it is only logical for us to work closely with Petronas,” he said.

According to Ismail, Irda was also promoting the O&G sector in Tanjung Pelepas in the Eastern Gate Zone and Tanjung Langsat in the Western Gate Zone.

He said all three locations in the south Johor represented synergistic cooperation that would help accelerate the plan to transform Johor into a new leading O&G hub in the region.

“With Pengerang expected to bring in about RM100bil in investments from the O&G-related activities from now until 2016, there will be spillover to Tanjung Pelepas and Tanjung Langsat.”

He added that Johor’s close proximity to Singapore with the improved bilateral ties between Malaysia and Singapore were added advantages.

Singapore is the largest foreign investor in Iskandar Malaysia with RM4.5bil investments as at December last year.

Ismail said many Singapore companies were keen to invest in the manufacturing and services sectors such as education and healthcare.

Irda and the government-backed investment holding company, Iskandar Investment Bhd, are the two bodies tasked to promote and develop Iskandar Malaysia.