Sunday, October 17, 2010

Warmer S'pore-M'sia ties give Iskandar a boost

http://news.asiaone.com/News/The%2BB...11-241780.html

(SINGAPORE) Singapore investments in the Iskandar Malaysia development region in south Johor have surged since May, mirroring the increased interest of local companies in Malaysia as a whole.

Ismail Ibrahim, chief executive of Iskandar Regional Development Authority (IRDA), told The Business Times in a recent interview that investment commitments by Singapore companies in Iskandar Malaysia came to RM221 million (S$92 million) in the January-May period. In June, an additional RM519 million rolled in, taking the total for the first half of this year to RM740 million.

Since then, the upward trend has continued and at least one source has placed preliminary January-August figures at a cumulative RM1.7 billion.

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Mr Ismail explained that the sharp increase was due largely to renewed bilateral relations between both countries.

'In the past, investments from Singapore were more piecemeal. But since both governments now encourage bilateral relations, the interest from Singapore has become more systematic and grown in a big way,' he said.

'The resolution of the long outstanding POA (Points of Agreement) between Singapore and Malaysia marks a new era in bilateral relations between the two countries which bodes well for the development of Iskandar Malaysia.

'This is further evidenced by a significant increase in enquiries from Singapore-based companies seeking to know more about opportunities in Iskandar Malaysia.

'We now receive Singaporean delegations and business missions almost every week - most recently from the Singapore Business Federation and the Singapore Chinese Chamber of Commerce & Industry.'

Indeed, soon after Malaysian Prime Minister Najib Razak's visit to Singapore in May and the announcement of the resolution between the two countries, there was a flurry of interest with 88 Singapore-based companies visiting the Iskandar region.

One sector of particular interest is education. Education@Iskandar Sdn Bhd (EISB), tasked to develop Iskandar Malaysia's EduCity project in Nusajaya, recently signed agreements with Singapore educational outfits Raffles Education Corporation and the Management Development Institute of Singapore (MDIS).

MDIS inked a deal with EISB on June 28 to buy a 12.1 hectare plot of freehold land in EduCity to set up its second overseas campus. MDIS's proposed campus - five times larger than its Singapore campus - is expected to cater to 10,000 students by the end of the third phase of its development in 2023.

In the interim, it is targeting an enrolment of 2,000 students when the first phase of its campus is completed in 2013. This number will rise to 5,000 by the completion of the second phase in 2018. Sources say that MDIS's investment is estimated to be RM300 million over the 10-year period.

Raffles Education, another investor, is doing a feasibility study for a campus in EduCity, including the launch of Raffles University in the first phase of its development.

The proposed Raffles University will be built on a 26.3 ha plot of land and aims to enrol 5,000 students within its first five years. Raffles Education's investment is reported to be about RM200 million over the next five years.

Raffles Education announced the incorporation of a wholly owned subsidiary in Malaysia known as Raffles Iskandar Sdn Bhd in June, signalling that the proposed plans are likely to go ahead.

Mr Ismail said that, besides education providers, Singapore manufacturers are also investing in Iskandar Malaysia. These include electronics companies exploring developing facilities to manufacture components.

Singapore companies also have a presence in the services sector. One example is Health Management International's Regency Specialist Hospital. Mr Ismail hopes to attract more interest in this sector as well as companies in the financial services and tourism business.

The surge of Singapore investments in Iskandar Malaysia mirrors the overall expansion of inflows into Malaysia. Recent data released by the Malaysian Industrial Development Authority (Mida) shows that, as at July, the Malaysian authorities had approved 62 projects from Singapore manufacturers with investments totalling more than RM925 million.

This is a substantial increase from the previous year. For the whole of 2009, investments from Singapore companies in the manufacturing sector totalled only RM582 million.

Mr Ismail is optimistic that the bullish trend will also be reflected in Iskandar Malaysia.

'We are on track to receive record Singapore investments in IRDA this year, but we will not be shocked if there is a significant increase in these inflows in subsequent years too,' he said confidently.

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