Singapore companies have mixed views of Iskandar

SINGAPORE — Ten years ago, Mr Lim — the owner of a Singapore food manufacturing company — purchased two industrial land plots across the Causeway, with the hope of shifting some of his operations to Johor Baru’s low-cost environment. He has yet to make that move as, after crunching the numbers, there is not a strong financial case.

“Iskandar is also facing issues of a manpower shortage and rising costs. Last year’s introduction of minimum wages and Goods and Services Tax are just part of it,” Mr Lim, who asked to keep his identity and the name of his company private, told TODAY. “The fact that Iskandar doesn’t have a free port also matters to a food company like us, because imported materials and exported products will be tariffed. Or we can go through Singapore’s ports — and fork out just as much for the cross-strait transport costs.”

But Iskandar’s appeal was enough to help persuade Super Union Precision Engineering to expand part of its manufacturing operations there in 2011. However, while business development director Sabrina Lim said the company is committed to making the move work, the initial results have been disappointing.

“Our factory in Iskandar’s Zone E has been operating since July last year, but besides the property gains from our early purchase, we have yet to enjoy much savings or convenience. In fact, we’re having to pay a premium to transfer some of our workers from Singapore due to a shortage of manpower with the right skills.”

Despite the initial challenges, Ms Lim has no doubt Super Union’s move is necessary and more companies will follow suit.

“Sooner or later, moving or expanding to Iskandar will be a matter of necessity for Singapore companies. Necessity is the word I use, because that’s what happened to us,” she said. “We went to Iskandar not by choice — we were pressured by the intense labour and land constraints at home.”

“My advice is to go there as part of a group — Super Union was one of the six companies that expanded to Iskandar as a cluster. That enabled us to share information on problems such as licence applications, which made things easier for us,” Ms Lim added. “But I hope to see both governments at least improving customs efficiency for easier travelling. Or else there won’t be much cross-border synergy to speak of.” WONG WEI HAN