Malaysia’s economy, specifically the East Coast Economic Region (ECER), will see a resurgence with the introduction of the country’s first Special Economic Zone, which was recently launched by Prime Minister Datuk Seri Najib Razak.
The SEZ is aimed at generating investments of RM90 billion by 2020.
An integrated development zone stretching from Kertih, Chukai, Kuantan Port City, Kuantan, Gambang to Pekan, with special incentives to draw in investments, the SEZ will foster a conducive business environment, accelerate growth and economic development.
The SEZ is expected to contribute RM23 billion to the national GDP and create 220,000 new jobs out of the 560,000 jobs under the ECER Master Plan.
Business Times talks to DATUK JEBASINGAM ISSACE JOHN, chief executive officer of the ECER Development Council which will monitor and coordinate all projects under the SEZ.
Q: Why is the ECER SEZ limited to this area only?
A: While the SEZ forms only 6 per cent of the ECER land mass, the area has a significant impact as it creates 50 per cent of all jobs and 80 per cent of economic output set out in the ECER Master Plan.
Because it contains mature activities such as oil, gas, petrochemical, manufacturing plants and industries, the area has economies of scale for development, concentrating on the provision of infrastructure and facilities as well as customised incentives.
Q: Will the SEZ draw investments away from the other ECER districts?
A : Other projects and initiatives under the ECER Master Plan will continue as planned. While the SEZ's focus is on manufacturing and industrial activities, projects for the tourism, agriculture and education clusters will continue uninterrupted outside the SEZ.
In fact, the rest will act as hinterland catchment areas supplying feedstock to support the development of the Collection, Processing and Promotion Centres (CPPC) for the agro based industries and manufacturing products meant for the domestic and export markets.
Studies are also under way to explore the possibility of a second SEZ within ECER for an integrated development throughout the region. One of the areas being studied is the vicinity near Tok Bali - Besut and its immediate environs along the border of Kelantan and Terengganu.
Q: How competitive are the SEZ's incentives in comparison with other international SEZs?
A: Several fiscal and non-fiscal incentives have been introduced to boost the SEZ's competitiveness. These are supplemented by customised incentives for qualified investors.
Supplementing these incentives, the SEZ will be backed by modern infrastructure and specialised institutions to enhance skills and competencies.
It will be one of the first truly integrated SEZs with new townships, international tourism sites, served by four ports, two airports and knowledge innovation zones.
Processing of applications will also be fast tracked through ECER's one-stop centres established at all ECER Development Council offices, while infrastructure projects are designed to cut down access time to port, airport or highway to 45 minutes.
Utilities will be upgraded with uninterrupted delivery while its port throughput will grow to 70 million metric tonnes by 2020.
Q: Why launch the SEZ now when the economy is still in the doldrums and may affect investments?
A: The idea of an SEZ is timely as it paves the way for recovery. When the up-cycle comes around, SEZ has already put ECER in the forefront in the minds of investors.
In addition, the ECER has committed to the construction and upgrading of infrastructure and supporting facilities which will have a multiplier effect to the growth and development of the Region.
Q: How will ECERDC prioritise between SEZ and ECER? Will ECER's milestone targets change now?
A: The projects in the SEZ are all subsets of the ECER Master Plan and will fuel ECER's growth. Meanwhile, all other ECER projects and programs outside of SEZ will continue to have the same priority and will be implemented as planned.
This means that in addition to the SEZ's focus on manufacturing and industrial activities, projects for the tourism, agriculture and education clusters will continue uninterrupted outside the SEZ, acting as hinterland catchment to supply feedstock for the agro based industries and manufacturing products.
Without the SEZ, the ECER Master Plan targets for 2020 will be difficult to achieve due to the unexpected slowdown in the global economy.
Also, any investments derived for the SEZ will benefit the rest of the region, especially from growth of various economic and commercial activities within the ECER.
This is supported by research showing higher urbanisation correlates to higher economic output and has a positive impact in generating employment and business opportunities in the adjacent areas.
Q: Will SEZ's activities displace agriculture?
A: The SEZ's activities will not displace agriculture but rather it will enhance and create new opportunities for farmers through anchor company and contract farming arrangements, as well as supply chain and value chain integration and enhanced branding, packaging and marketing efforts.
One project focus of the SEZ is agriculture-based industries such as the grain-based animal feed, livestock processing, fisheries processing and halal industry. All these require farming and raw material input, increasing demand for agriculture produce.
Q: What is the employment ratio between local and foreign workers within the ECER?
A: There is no restriction on employment. The priority for jobs will be given to local workers, while unlimited expatriate knowledge workers for management positions can be brought in to fill positions which they are better qualified for.
However, there will be a mandatory portion of local employment required to ensure transfer of technology and employment of skilled labour from the educational institutions in the region.