Selangor reaches out as competition closes in

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PETALING JAYA: Selangor’s credential as the most developed state in Malaysia helped it clinch tantalising investments in the past but Johor, Penang and even Negeri Sembilan are nipping at its heels.

After a recent trip to four major industrial areas — the Port Klang Free Zone (PKFZ), the Selangor Halal Hub in Pulau Indah, the Selangor Science Park 2 and Cyberjaya — Selangor executive councillor for investment, industry, commerce and transportation Datuk Teng Chang Khim told pressmen that the state needs to ensure its momentum of attracting investors is maintained.

He noted that last year had posed a challenge for the state to keep pushing to raise its investments.

Although Selangor approved 153 factory projects from January to July last year, the most compared with other states, its total investment value of RM4.58 billion was far lower than that of Johor, which approved 116 factory projects with a total investment value of RM18.66 billion. In the same period, Penang approved 95 projects with a total investment value of RM4.62 billion.

Out of the total RM4.58 billion worth of investments from January to July this year in Selangor, RM1.89 billion was contributed by foreign investors, while the remaining RM2.7 billion was from locals.

Teng said the service sector is the strongest industry underpinning the growth of Selangor’s gross domestic product (GDP).

“Almost 56% of Selangor’s GDP comes from the service industry but the service sector must be based on manufacturing. So we have to maintain our strength in the manufacturing sector,” he said.

Towards that end, he said the state is mulling whether to draw guidelines that will underline a specific quantum for the maintenance and upgrading of these industrial areas.

Teng said once a respective state government-linked company (GLC) sets up an industrial area, the maintenance and upgrading of its facilities are surrendered to local authorities.

“We are now working on the sum and whether it should come from state or local authorities, because local authorities are collecting assessment fees,” he said.

Teng said the state government is working with different state GLCs, including the Selangor Development Corp (PKNS), Central Spectrum (M) Sdn Bhd and Permodalan Negeri Selangor Bhd (PNSB) on how these industrial areas can be packaged to attract investors to the state.

Another aspect is to solve long-standing issues faced by the state’s industrial parks and working on a plan to fast-track process for investors such as development plans.

“I met with some investors who are having trouble with land applications, land use, land conversion and zoning problems. We are now working with all agencies to see whether we can have a fast-track process for investors,” he said.

PKFZ has tenants like Cargill Incorporated for the processing of palm oil and Visco Corporation, but its office blocks, a hotel and its convention area are largely empty. This, however, is expected to change with the entrance of a Chinese company to lease its convention centre in the first quarter of 2015.

The 300-acre (121.4ha) Selangor Halal Hub, on the other hand, has some 80 acres unoccupied. Its developer Central Spectrum Sdn Bhd is determining whether to sell the land — valued at some RM2 million per acre — to interested buyers or set up factories before leasing the facilities to companies.

Central Spectrum chief executive officer Mahmud Abbas admitted that when the halal hub was first mooted by then prime minister Tun Abdullah Badawi, it was a rough sketch of an idea.

“It was a purely political decision. Not much thought was given to it. Investors wanted to know what was so special about the hub and then we realised that what we were missing was a halal ecosystem,” said Mahmud.

He said the company spent about two to three years researching and brainstorming ways to create the ecosystem, hence the consideration of setting up factories and leasing them out.

“There is a limited number of players whom you can invite but the potential benefit is huge,” he said, adding that the halal trade amounted to US$3 trillion (RM10.86 trillion) globally.

He also said the road leading to and out of Pulau Indah is heavily congested, and a solution is needed for this as investors find it difficult to transport products in and out of the area.

Despite this, the Pulau Indah Industrial Park, where the Selangor Halal Hub is located, is thriving with a gross development value of RM1.793 billion. There are also plans being discussed to set up a mixed development, Laguna Park, on 1,000 acres in the next five years or so.

 

This article first appeared in The Edge Financial Daily, on February 4, 2015.