Economic corridors need to develop rapidly to keep up with the Greater KL region

08 November 2011 , By The Star

THE five economic corridors initiated under the Ninth Malaysia Plan to bridge development imbalances throughout the country have certainly been pushing forward the country's economic growth through public-private partnerships (PPP) .

However, more could be done if the corridors leveraged on each others' growth. That was the call for action from a few economic corridor chief executives and industry leaders at the International Investor Economic Corridors Roundtable on Tuesday.

The roundtable, organised by business and investor publication International Investor, was attended by Prime Minister's Department PPP Unit director-general Datuk Seri Dr Ali Hamsa, Northern Corridor Implementation Authority (NCIA) chief executive Datuk Redza Rafiq, Iskandar Malaysia federal commissioner Datuk Benjamin Hj Hasbie, East Coast Economic Region Development Council (ECERDC) chief executive Datuk Jebasingham Issace John, Regional Economic Development Authority chief executive Datuk Amar Wilson Baya Dandot as well as Sabah Economic Development and Investment Authority chief executive Datuk Dr Mohd Yaakub.

The private sector and government-linked corporation participation came from Pinewood Iskandar Malaysia Studios chief executive Michael Lake, Malaysian Resources Corp Bhd (MRCB) chief executive Datuk Mohamed Razeek Hussain, OM Holdings executive chairman Low Ngee Tong, UEM Land Sdn Bhd director of finance Mohd Zakir Omar and International Investor country publisher Cory D'Abreo.

Reflecting the sentimentof the participants, Ali Hamsa agreed that the momentum for the corridors should be maintained so that they would not fall behind the country's capital city.

“Although we have five corridors, the most thriving area of the country, which is the Greater KL region, is also developing rapidly. We can't slow down when Greater KL is growing very fast or else we would need to play catch-up,” he said.

He noted that there needed to be more discussions with the private sector and the best way for the country to bring forward developments was through PPPs.

NCIA chief exective Redza pointed out that with PPPs moving the cogwheels of development, there was a “tectonic shift from purely profit-motivated agenda to ethical governance and corporate leadership in industries”.

“As we build the country, there is an emergence of ethical cooperation through the collaboration between the government and private sectors,” he says, adding that “we (now) have clauses that compel the corporates to do things for society”.

MRCB's Razeek added that the implementation of the corridors was paving the way for many opportunities for the private sector.

“In my opinion, without the NCIA, ECERDC and Sarawak Corridor of Renewable Energy, the development level in those areas would not reach where it is now because the facilitation role of the authorities has been really good,” he says of the government support for the individual corridors.

He added that: “As far as the corridors are concerned, we are essentially talking about infrastructure development which would be impossible for private sector to undertake alone.”

He also said that “the only way MRCB has been able to tap into Penang central was through the facilitation fund with which the government is supporting the corridor development”. Razeek echoes the Prime Minister's quote that (collaboration between the corridors and private sector) was the purest form of PPP.

“No way the private sector can undertake corridor-type development alone because it will be very expensive and exhaustive without the support of the federal government through the corridor authorities,” he says, recalling the time MRCB's light was almost put out when building the KL Sentral transportation hub during the 2008 recession.

Having highlighted his support for the corridors, Razeek added a caveat to the situation stating that the national population of 27 million migth not be enough to sustain the demand for all corridor plans.

“The issue is whether we have sufficient domestic demand to take up the potential of the corridors. I think we need to focus on where investment should go and how to attract foreign direct investments because it is impossible to have enough domestic demand to take up the ground floor area,” he said.

He added that all parties involved have to manage the development growth of the corridors to ensure there was room for local players to compete in any industry.

As for preserving the competitive climate for industries, Yaakub added that it would be good to have a central agency to overlook the coordination among the corridors in order to keep the industries within the individual corridors competitive.

He said that while the corridors have been doing well so far, there should be contingency plans for sectors that were losing competitiveness in certain corridors to seek out other potential corridors to grow in.

“For example, some sectors that have lost competitiveness in Iskandar Malaysia could shift elsewhere to develop,” he suggested.

On the other hand, new sectors entering Malaysia were also planting the seeds for exciting opportunities which all corridors could keep an eye out for.

Pinewood Studios has high ambitions for its position in Iskandar Malaysia, as there is no film-related development there.

“We are a green field development not only in terms of the physical space but also as an industry for the country,” Lake says.

He sees setting up a film industry in the southern corridor as a means to create a new international business focused on local and regional production.

“This is about attracting big international investments from China, India and especially the United States. This is an export business,” he says.

With offshore funding coming in, Johor was the main beneficiary, providing opportunities to attract other industries to the corridor. Lake added.

By 2013 when Pinewood is operational, it can create 23,000 jobs and attract RM4bil in investments from abroad.

In regards to spillover benefits to other corridors, the film industry is a great catalyst for tourism, which is an industry championed by most other corridors.

“The production that enters Johor will not only stay in the state and there can be development on the back of film projects,” he said, noting that films like the Lord of the Rings and Harry Potter have contributed massively to the tourism of New Zealand and the United Kingdom.

Pinewood has also been in talks with the Media Development Authority in Singapore to invite small and medium enterprises to move to Johor.

Other key developments that Lake emphasises on was the setting up of a film academy for the region.

“At the Asian Film Policy Forum, we were talking about how we can create a sector in Asean like the European Union where people can move around the region much easier,” he said, in line with the vision to make Iskandar Malaysia not only the film hub but also the regional education centre for film.

He said the key focus was on putting Malaysia on the map as it was a favourable country for investments.

“There is a stable government and economy, the exchange rate is favourable to most countries and Malaysia is considered a safe destination,” he said.