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‘No policy changes’ for S’pore investors in Iskandar if opposition wins

SINGAPORE — The Malaysian Investment Development Authority (MIDA) has reassured Singaporean investors that there will not be significant changes to policies for companies operating in the Iskandar region — on foreign manpower restrictions and equity ownership, for example — if the opposition wins in Johor in the coming general election.

SINGAPORE — The Malaysian Investment Development Authority (MIDA) has reassured Singaporean investors that there will not be significant changes to policies for companies operating in the Iskandar region — on foreign manpower restrictions and equity ownership, for example — if the opposition wins in Johor in the coming general election.

Speaking to TODAY, Mr K Sukomaran, Counsellor for Investment and Director of MIDA’s Singapore office, said: “MIDA’s message to investors is that although business is somewhat tied to politics, the policies and procedures governing investments and business will remain, (they will) continually be encouraged and rendered the necessary support by whichever party that governs.” He added: “Investors need not be worried about the political developments in the country.”

Iskandar Malaysia was developed in 2006, and Singapore is the largest single foreign investor there.

Mr Sukomaran was responding to comments made by Malaysian opposition leader Anwar Ibrahim in an interview with TODAY. On Monday, Mr Anwar said that “investors, including (those) from Singapore, cannot assume that business must be as usual” should the special economic zone in Johor come under opposition rule. Among other things, he wants more opportunities for Malaysians. Businesses in Iskandar will also have to be “more transparent”, he added.

Mr Sukomaran reiterated that while there “may be some fine-tuning of policies here and there” should the opposition win in Johor, a traditional bastion of the ruling Barisan Nasional coalition, “by and large, investment policies aren’t going to change”.

He added that he did not believe the opposition would overhaul “established policies” that have succeeded in attracting investments.

“We have been having these policies (for) a long time, which are also being fine-tuned along the way to suit the market conditions,” he said.

The government’s existing policy already restricts the employment of foreign workers, noted Mr Sukomaran. The opposition’s “intention isn’t something new”, he added.

Singapore firms watchful, not worried

Singapore companies are keeping a close eye on the electoral contest just across the Causeway. Firms TODAY spoke to said that while they are confident of the long-term development of the Iskandar region — regardless of the outcome of the elections, they would hold back any investment decisions if the Johor state government changes hands and observe whether the transition is orderly.

The success of the Iskandar region has yet to trickle down to the man in the street, with Johor residents lamenting that the cost of living has spiked as a result of the gold rush.

On Tuesday, Democratic Action Party supremo Lim Kit Siang, who is up against BN’s former Johor Mentri Besar Abdul Ghani Othman in the state’s Gelang Patah constituency, echoed Mr Anwar’s comments on the Iskandar region.

The high-profile match up between Mr Lim and Mr Abdul Ghani is closely watched, not least for the fact that the constituency contains Nusajaya — a key component of the Iskandar region.

Speaking to TODAY after a rally, Mr Lim said: “We’ll make sure that what is the best interest of Johor (and) the people ... what will bring economic stability (and) investment will be the top priorities.”

He added: “We want to make Malaysia and Johor a success. We will ... in fact, embark on a new growth path to greater prosperity.”

Currently, the Iskandar authorities impose restrictions on foreign manpower. For example, for manufacturing projects that are export-oriented, companies are allowed to hire three foreigners for every Malaysian worker on their books. The requirement is more stringent for projects that cater primarily to the domestic market, where the ratio is 1:1.

Shareholding requirements vary with the sectors, Mr Sukomaran said. “For the most part, there are no (foreign) equity restrictions in the manufacturing sector. The Malaysian government has been liberalising the services sector (44 sub-sectors up till now) which will not have any foreign equity restriction,” he said.

He added: “We do not encourage the employment of foreign workers so there are some restrictions, but at the same time we also appreciate the fact that companies may find difficulties in getting local workers with certain skills.”

Singapore companies pointed out that firms which are interested in moving into Iskandar would probably be keen to tap on Malaysian workers in the first place, given that one main attraction is the lower business costs, including manpower cost, compared to Singapore.

Singapore firm Hong Guan Tackle, a fishing equipment supplier, set up a warehouse in Iskandar in May last year. Its Managing Director Lee Seng Shoy said all 10 employees at its new warehouse were Malaysians.

Apart from cheaper land and lower rentals, “the whole idea is to employ Malaysians to lower labour costs, especially with the foreign labour tightening in Singapore”, said Mr Lee.

He added: “Iskandar is doing so well at the moment ... I do not think that there will be much change (if the opposition wins), as Malaysia will not suddenly go anti-business.”

Metrohm Singapore Managing Director Billy Wong added: “Whichever party comes to power (in Johor), it will have to strive to improve policies to attract more foreign direct investment. The opposition will have this aspiration as well ... take Penang as an example.”

Adding that his company is eyeing opportunities in Iskandar, Mr Wong said: “Businesses need to look at the long term. This general election is only an intermediate (stage), and political risk is there no matter where you invest, so you always have to manage it.”

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