KUALA LUMPUR, 31 May 2016: Malaysia and China reaffirmed their commitment towards strengthening economic ties and bilateral trade, following the signing of Memoranda of Understanding (MoU) between the investors of the two nations which will result in increased two-way investment.
The various MoU reinforce the East Coast Economic Region’s (ECER)’s attractiveness as an international investment hub, with two new investors from China and Malaysia committing RM1.58 billion (USD395 million) worth of investments in the Malaysia-China Kuantan Industry Park (MCKIP) which is located within ECER’s Special Economic Zone (ECER SEZ) encompassing Kuantan Port, Kuantan, Gambang and Pekan in Pahang. With the new ventures, the total investments attracted to date stood at RM15.08 billion (USD3.77 billion).
The new investors include, Guangxi Investment Group Co., Ltd., which will invest RM580 million (USD145 million) on an aluminium component manufacturing facility and LJ Hightech Material Sdn. Bhd., which will invest RM1 billion (USD250 million) in high-technology production-based centre to produce concrete panels for construction industries and activated rubber powder. Construction works at MCKIP for these projects are expected to begin in phases in the first quarter of 2017, and once completed, more than 3,000 job opportunities will be generated for the local communities.
The signing ceremony was held during the 2nd Investment Promotion Conference for Malaysia-China “Two Countries, Twin Parks” held at the Ministry of International Trade and Industry (MITI), Malaysia. The conference was jointly hosted by MITI, the Government of Guangxi Zhuang Autonomous Region, the Pahang State Government, Malaysia-China Business Council and the East Coast Economic Region Development Council (ECERDC). ECERDC was represented by its Chief Executive Officer, YBhg. Datuk Seri Jebasingam Issace John. The inaugural China-Malaysia “Two Countries, Twin Parks” Investment Promotion Conference was first organised on 19 September 2015 in Nanning, China.
The signing of the agreements was witnessed by YB Dato’ Seri Ong Ka Chuan, Minister II of MITI; YBhg. Tan Sri Ong Ka Ting, Malaysian Prime Minister’s Special Envoy to China; and H.E. Mr Zhang Xiaoqin, Vice Governor of the Guangxi Zhuang Autonomous Region.
“The high level of interest shown thus far towards MCKIP and its twin sister park, China-Malaysia Qinzhou Industrial Park (CMQIP), underscores the long standing partnership the two nations have had in driving economic growth in the region. We believe that our continuous investments into the development of the twin parks, a key component of China’s ‘One Belt, One Road’ policy, will further drive bilateral trade between Malaysia and China,” said Datuk Seri Jebasingam Issace John.
“Importantly, the strong economic ties between the two countries will help attract more investors particularly from China, which in turn will boost the socio-economic landscape for the local communities in the ECER SEZ,” he added.
MCKIP was launched in 2013 and is the first industrial park in Malaysia to be jointly developed by both Malaysia and China and to be accorded the “National Industrial Park” status. An important component in the China-Malaysia supply chain, MCKIP’s target industries include energy-saving and environment-friendly technologies, alternative and renewable energies, high-end equipment manufacturing and the manufacture of advanced materials.
Together with CMQIP, these two parks have been identified by the Malaysian and Chinese governments as an “Iconic Project for Bilateral Investment Cooperation” that will drive the development of industrial clusters in both countries. One of the most active nodes within the ECER SEZ, MCKIP has since received investments that are expected to create more than 12,000 new job opportunities by 2020.
“China and Malaysia have had a long standing tradition of mutual trust and this relationship has been further cemented with the introduction of the five-year Development Programme for Economic and Trade Cooperation that has mapped out a clear course for future growth,” said YBhg. Dato’ Soam Heng Choon, Chairman of Malaysia-China Kuantan Industrial Park Sdn. Bhd. (MCKIPSB), the master developer of MCKIP.
“While MCKIP promises exciting opportunities for investors from China, it will also benefit the Malaysian business community as it will provide more partnership and investment opportunities with companies from China. After all, Kuantan’s close proximity to China makes it a strategic location for investors not just from the two countries but also for investors who want to enter China and the ASEAN region,” added Dato’ Soam, who is also the Chief Executive Officer and Managing Director of IJM Corporation Berhad.
MCKIPSB is a 51:49 joint venture between two consortiums from Malaysia and China. The Malaysian consortium consists of a public-private partnership spearheaded by Kuantan Pahang Holding Sdn. Bhd. comprising IJM Land Berhad, Sime Darby Property and the Pahang State Government. The remaining 49 per cent stake of the Chinese consortium is led by the state-owned conglomerate Guangxi Beibu Gulf International Port Group and the Qinzhou Investment Development Co., Ltd.
In response to the encouraging demand from investors, MCKIP will be expanded by another 800 acres from the current land area of 2,260 acres, bringing the total land area in the industrial park to 3,060 acres.
Further to this, the Federal Government has provided funding of about RM1.7 billion (USD425 million) in incentives and infrastructure to support the growth of MCKIP. Some of the primary infrastructure that is currently on-going include the expansion of Kuantan Port as well as the upgrading of Port Link Road which will improve access between MCKIP, Kuantan Port and the East Coast Expressway. The Malaysian government has also approved a special incentive package for all investors in MCKIP, including 100 per cent income tax exemption for up to 15 years.
To support the growth in Kuantan and ECER, Kuantan Port is currently being expanded into a deep water port that is capable of handling 52 million freight weight tonnes and vessels of up to 200,000 deadweight tonnage (DWT).
Consisting of two phases, namely Phase 1 and Phase 2, the construction of the Phase 1A, with basin depth of 16 metres consisting of 400 metres of berth space and 20 hectares of cargo yard, is expected to be completed in August 2017. Meanwhile, construction under Phase 1B, with a basin depth of 16 metres consisting of a 600-metre berth and 25 hectares dry bulk yard, is targeted for completion by August 2018, while the construction for Phase 2 is subject to market demand.
Presently, the new 4.7 km breakwater, considered one of the longest in the world, will create a sheltered harbour. This sheltered basin will allow for berths to operate safely and efficiently throughout the year. The expansion of Kuantan Port will contribute to a quicker and direct route between ECER and ports in China’s eastern region in addition to the rest of the world. Currently, it takes only five sailing days from Qinzhou Port to Kuantan Port.
This will further enhance the confidence and business opportunities for investors to invest in MCKIP, strategically located within the ECER Zone in Kuantan Port City. In fact, the ongoing expansion of the port and the rapid development of the industrial parks will create a synergistic and dynamic platform for the local economy to move up the value chain, thus boosting Kuantan’s status as a vibrant Port City.
Towards this end, the Government of Malaysia and Kuantan Port Consortium (KPC), the concessionaire of Kuantan Port, are investing RM1.1 billion and RM3 billion respectively in the expansion of the port. KPC is jointly-owned by Guangxi Beibu Gulf International Port Group Co., Ltd from China and Malaysia’s IJM Corporation Berhad.
Meanwhile, as part of the conference’s programme, the investors from China and Malaysia will also visit MCKIP and Kuantan Port the following day for them to explore investment opportunities and business partnerships in the fast developing region of ECER.
Since 2009, China has been Malaysia’s largest trading partner for the seventh consecutive year. In turn, Malaysia has also emerged as China’s eighth largest trading partner worldwide and the largest trading partner among ASEAN countries. Malaysia’s trade with China expanded to US$97.35 billion in total trade volume, despite the economic slowdown in 2015, thus reaffirming the country’s competitiveness in the region.