SMEs urged to change their mindset in order to benefit from Iskandar Malaysia

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  • Thursday, 31 Jan 2013

THE Iskandar Regional Development Authority (Irda) had never sidelined small and medium enterprises (SMEs) in the development of Iskandar Malaysia.

Its chief executive officer Datuk Ismail Ibrahim said in fact, the presence of the multinational corporations (MNCs) in Iskandar had benefited many, including local SMEs.

He said Irda will continue to support the SMEs but it can only do so much — the rest actually comes from the SMEs themselves, including changing of their mindset and the way of doing businesses.

Presently, there are 69,030 SMEs in Johor, the third largest in the country after the Klang Valley and Penang and 70% of them are operating in Iskandar.

Ismail talked with MetroBiz on the topics related to the SMEs and the opportunities available for them in Iskandar.

MetroBiz: How have SMEs in South Johor benefitted since the inception of Iskandar Malaysia on Nov 4, 2006?

Ismail: We believe that the SMEs have benefitted a lot from the development in Iskandar and will continue to benefit as the economic growth corridor progressing in years to come.

We have been, since the beginning bringing in catalytic projects as well as investments of huge amount in order to bring about demand and the clustering and the establishment of the SMEs in support of the big projects or businesses that’s coming into Iskandar.

For example when Pinewood Studios wants to invest in Iskandar, it can only establish itself as a core business which is to focus in film making activities.

But, there is a lot of business opportunities that required to support the industry (anchor activity) for example film production requires support services — including laundry, costumes designing, catering, carpentry, personal limousine services, security services, scouting for talents, stuntmen or extras for a film.

So, you can imagine the amount of business opportunities or job creations created from just a single core investment. We anticipate that for every catalytic project that comes in, it will definitely create demand for support services.

In this respect, what we can say based on the economic scenario and the growth that is happening in Iskandar, there is huge potential and opportunities for the SMEs to grow in Iskandar especially the local SMEs.

What are the efforts taken by Irda to develop and assist SMEs in the development of Iskandar?

We strongly believe that the SMEs contribute greatly and significantly to the development process of Iskandar.

Irda acknowledges the challenges faced by them. In view of that, we become the conduit for SMEs to gain access to what it is in store for them.

We have been working closely with the relevant agencies responsible for the development of the SMEs in Iskandar based on a two-pronged approach. Firstly, we provide training in the form of skills and up-skills, awareness and to build the capacity and ability for the SMEs to participate in the development of Iskandar.

Secondly, organising business matching programmes and focus group discussions or events designed to facilitate the SMEs to grab the opportunities available from the catalyst projects.

The networking session is not only to inform the SMEs on the opportunities of business on the sectors development but also the grants, incentives as well as other facilities which will assist them in their growth.

Engagement with them is a continous process, the only difference is sometimes it is done directly through a third party – a third party here refers to an event organised by the relevant agencies such SME Corp.

Which economic sectors that our SMEs should focus in tandem with the progress made in Iskandar?

The oil and gas (O&G) that is going to be the “sunrise industry” in the region due to the current development in Rapid, Pengerang, and they must capitalise on it.

One can always argue on this perspective — Pengerang is not part of Iskandar region, it is in Kota Tinggi but we at Irda do not necessarily look at ourselves operating only within Iskandar.

For many years, we always look beyond Iskandar into Singapore, so what is the difference when we look at Pengerang as well as Kluang, Pontian and beyond and further in Desaru.

To us the most important thing is how we in Iskandar could probably contribute to the growth of these areas for the common benefit.

As far as Iskandar and Irda are concerned, we are actually working very closely with the people that involve in the development of the districts which are adjoining Iskandar including Kota Tinggi where Pengerang and Desaru are.

We have Tanjung Langsat and Tanjung Bin in Iskandar that will complement the O&G activities in Pengerang.

The services industry is another sector in Iskandar that local SMEs by now should be familiar with as we are promoting tourism, healthcare and educational activities.

It does not require a huge capital layout and that is why Irda has been working closely with the vocational schools and institutions to produce semi-skilled and skilled workers for the service sector.

With Johor planning to be a leading electronic manufacturing services (EMS) hub, how can our SMEs look at that?

Electrical and electronics have always been the main contributors of Johor’s growth as well as Iskandar but we also want to see the activities moving up the value-chain. To have this core (E&E) works well for us, we definitely have to strengthen ourselves to that position by developing Johor into an EMS hub.

We want to bring capital-intensive and high-technology investments into Iskandar rather than labour-intensive activities that depends largely on foreign workers.

Our SMEs have their ways to adapt to the changes – we will continue to assist them, create ability and making them relevant in the fast changing world.

To remain small or move up the value chain is purely a business decision, we should not force them (SMEs) to change for the sake of changing.

There must be reasons why they are willing to move up or join forces to create more stable and stronger SMEs — joining together will be a good idea for our SMEs to change the landscape and compete in the business world.

Do you see the presence of the MNCs and foreign SMEs especially from Singapore giving threat to our SMEs?

We do not feel that the presence of the MNCs and foreign SMEs especially from Singapore is giving direct threat to our local SMEs based on two key strategic reasons.

First, an MNC, regardless from whichever country, many not be able to operate fully on their own, thus they require support from the whole value chain. Therefore, the cheapest option is to first access local SMEs to support their industry.

Secondly, it is very challenging for any SME from any country to set up a full facility in a foreign country due to limited financial resources, human resources and location to name a few.

Therefore, due to the strong “entry barrier” SMEs into Malaysia, local SMEs would continue reaping opportunities from MNCs coming not only from Singapore but from all over the world.

The influx of MNCs from Singapore or other countries provide alternative market access to locals SMEs.

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