Irda chief: SMEs gain much from Iskandar

  • Business
  • Monday, 16 Sep 2013

JOHOR BARU: Small and medium-sized enterprises (SMEs) in Iskandar Malaysia have benefited immensely from the development in the economic growth corridor since its inception in 2006.

Iskandar Regional Development Authority (Irda) chief executive officer Datuk Ismail Ibrahim said that Iskandar had brought economic opportunities and benefits to them and not only to big investors and companies.

He said Irda had never sidelined the SMEs under its comprehensive development plan (CDP), which runs from 2006 to 2025, to transform Iskandar into an international metropolis.

“Perhaps, the media are focusing too much on big names or big investors in Iskandar. Hence, many perceive that they (the SMEs) are on the loosing end,’’ Ismail told StarBiz.

He said Irda would continue to work closely with the SMEs in South Johor including having business matching between them and the major local and foreign investors in Iskandar.

Ismail said, at the same time, the SMEs must think beyond the box and look at ways to transform themselves to keep abreast with the changes and developments taking place in today’s business climate.

“We can only do this much; it is up to the SMEs to adapt and adopt as we cannot start telling them what to do and what not to do,’’ he said.

Ismail said Irda welcomed all investors, regardless of their size, and that the most important thing was Iskandar and its residents would benefit from their presence in the long run.

He said many multinational corporations (MNCs) and SMEs from Europe, China, Japan, Singapore, South Korea and Taiwan had shown strong interest in investing in Iskandar.

Ismail said local SMEs would definitely benefit as they could work closely with their foreign counterparts in terms of technology transfer and exploring new export markets.

There were more than 26,000 SMEs in Johor at the end of 2008 and 65% of them were located in Iskandar.

“Local SMEs should not regard the presence of the MNCs and foreign SMEs as a threat to them but more like opening windows of opportunities,’’ he said.

Ismail said the SMEs supplying parts and components to MNCs under the vendor system would benefit as manufacturing was one of the main economic activities in Iskandar.

From January to March this year, Australia, Singapore, Switzerland, the United Kingdom and the United States were the five countries that registered the highest amount of investments in the manufacturing sector.

The electrical and electronics, petrochemicals and oleochemical, food processing and agro-based sectors posted the highest cumulative committed investments of RM43bil.

“SMEs will remain the backbone of the country’s economy as they have been around for years, supporting the big companies and MNCs,’’ he said.

Ismail noted that several of the listed companies from Johor started as SMEs and through perseverance and hard work had now emerged as multi-million dollar entities.

South Johor SME Association chairman Teh Kee Sin hoped the state government and Irda would be more aggressive and proactive in attracting China MNCs to relocate their operations to Iskandar.

“Many of the MNCs, which had relocated their operations to the republic 15 to 20 years ago, are now considering to leave China due to several factors,’’ he said.

Teh said feedback from its business associates in China showed that many of the MNCs, especially those in the coastal cities, were considering leaving the country due to high operating costs.

He said China was no longer as attractive as in the early days when the country started opening its doors to foreign investors as it was no longer cheaper to operate there.

“We have to start courting them (the MNCs) to relocate to Iskandar or else Johor is going to loose to other countries like Indonesia and Myanmar or even the Philippines,’’ Teh said.

He said Johor’s proximity to Singapore was an added advantage to attract them to relocate to Iskandar due to better air and sea connectivity and Singapore’s position as an international trade and financial centre.

Teh, who is also the SMI Association of Malaysia national president, said local SMEs needed to change their mindsets and be more export-oriented instead of being too dependent on the domestic market.

He said they needed to expand their horizon and reduce their dependency on Europe and the United States and start looking at countries in the Asia-Pacific as their potential export destinations.

“Among the countries that local SMEs should look at are Brazil, China, India, Indonesia, the Middle East, Russia and South Africa,’’ Teh said.

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