Industrial parks in Malaysia – time to think-out-of-the-box An opinion by Datuk Stewart LaBrooy

Industrial parks in Malaysia – time to think-out-of-the-boxPosted on June 26, 2014

An Opinion



[GBP Note:  the first part of the article provides historical background.  Click here for full article in ]

There is renewed interest now by industries wanting to return to Malaysian shores.

The difference today is that these industries are much more high-tech in nature and very different to those that arrived over 30 years ago.

The reason for this change of heart is the rapidly changing technology and demographics globally.

Thailand has built its industrial base successfully over the last two decades by attracting a large number of industries to set up their Asean manufacturing bases there. It is now Asean’s largest industrial powerhouse with a skilled workforce in place.

They created the Industrial Estate Authority of Thailand (IEAT) which currently manages 28 industrial estates. Investors have a choice of many locations and sensible pricing as land purchases are controlled.

Recently, the IEAT launched an initiative to make the 28 estates it manages eco-industrial estates.

Vietnam was the second economic miracle when they leveraged on its cheap and skilled workforce to open up several new industrial estates in the country to attract investors to set up their manufacturing operations there.The IEAT governor invited the German Technical Cooperation Organisation to support development of a programme that will begin with four estates as pilot sites. The authority will seek to extend learning from changes in these pilot sites to the other 24 estates that fall within its domain as well as other new estates.

They initially looked to Singapore for help, and in 1996, established the Vietnam Singapore Industrial Park (VSIP) – a joint venture between Becamex IDC Corporation and a Singapore consortium led by Sembcorp Development.

They now have a large selection of locations for investors to choose from.

However, the instability of the recent regional political events – a military the coup in Thailand and the burning of factories in Vietnam, have rattled investors’ confidence and they are now looking at other locations in Asia including Malaysia for their expansion.

Malaysia has a huge advantage over our neighbours in that we have a stable political system, excellent infrastructure, skilled workforce, solid financial system and an absence of floods, typhoons and earthquakes.

Yet, we still seem to be losing out to Indonesia and the Philippines which have far inferior infrastructure to support large industrial ventures.

In short, we would like to encourage investors to come to Malaysia but we don’t have any products to house them.

Our existing facilities are full and land prices are becoming prohibitive to make economic sense to develop new ones.

We hear of industrial land transactions coming in at RM80 per sq ft to RM100 per sq ft – at these prices it just doesn’t make economic sense.

Isn’t it time then that we look hard at reinventing our own industrial estates to attract foreign and local investors together with comprehensive training centres for workers? We really need something like the IEAT over here where the last mile is also delivered to the client – in terms of real estate.

We have a huge opportunity in developing the next generation of industrial estates catering to the next wave of industries that would like to invest here.

In Johor alone, the relocation of many industries from Singapore is on the cards – but there is still a woeful shortage of products they require.

This is because developers have a habit of selling off industrial lots to investors in small plots who then sit on it to make money from speculating on the land.

Otherwise, most industrial developments comprising a collection of semi-detached factories that have very little practical utilisation for the end user may end up empty.

Foreign companies are now very environmentally conscious and would be attracted to investing in well-planned and managed industrial estates with eco-friendly features.

State governments should take note and focus on allocating land for the purpose of replicating the Shah Alam of the 21st Century.

They should look at teaming up with industrial specialists to design, execute and market such projects. However, all is not lost – we do have some great parks – although they are limited in size.

The last remaining park of any note is the Batu Kawan Industrial Zone run by the Penang Development Corporation where they have the foresight not to sell to speculators but rather to end users.

Land price is fixed at RM35 per sq ft here – a far cry from the prices quoted in Johor or Selangor, and is proving to be popular.

It’s time we took a hard look at the future of our industrial development and take urgent steps to allocate more resources and land to the development of tomorrow’s industrial parks and return Malaysia to the top of the table where it deserves to be.

>> Datuk Stewart LaBrooy is the chief executive officer of Axis REIT Managers Bhd.


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