S’pore, M’sia trade grows on Iskandar activities

SINGAPORE — Businesses in Singapore are being encouraged to further explore Malaysia as a place to expand their operations, leveraging the growth in bilateral trade and investment links.

That synergy is strongest at Iskandar Malaysia (IM), where Singapore is the top foreign investor, accounting for 16 per cent of its total foreign investment as of June this year, Minister for Trade and Industry Lim Hng Kiang said at the annual Malaysia Business Forum yesterday.

“(Singapore’s proximity to IM) allows investors to position their full value chain of business and manufacturing functions across both locations. This helps reduce business costs and improves efficiency,” Mr Lim said. “I encourage businesses to strengthen investment links and leverage both countries’ complementary strengths.”

Mr Lim’s comments came a day after Chief Executive of Malaysian property developer UEM Sunrise Wan Abdullah Wan Ibrahim said the Republic is a key player in IM’s success. His company spearheads development in IM’s Nusajaya area.

“(Iskandar) is a special economic zone and it benefits from its close proximity with Singapore … Nusajaya will not succeed if it’s located elsewhere,” Mr Wan Abdullah told Berita Harian on Monday, adding that IM, in turn, addresses Singapore’s need for a hinterland for further development.

Established in 2006, IM has become an important symbol of bilateral economic activity to Singapore, which is encouraging more local businesses to expand and base part of their operations there, amid rising business costs and manpower pressures at home.

Singapore was the third-largest investor in Malaysia’s manufacturing sector last year, with investments reaching RM2.2 billion (S$859.6 million), Mr Lim said yesterday, adding that Singapore’s trade with Malaysia expanded 1.2 per cent on-year to reach S$113.4 billion last year.

“Singapore has been a very important trading partner for Malaysia … Taking all sectors into account, Malaysia now has about US$24 billion (S$29.9 billion) worth of Singapore investment,” Malaysia’s Minister of International Trade and Industry Mustapa Mohamed said at the forum yesterday. “Singapore is also the clear leader in foreign investment at Iskandar, ahead of Spain, Japan and the US.”

But even as investment links continue to deepen, new uncertainties have emerged for Singapore businesses following several surprise announcements in Malaysia’s budget for 2014, including a goods and services tax (GST) in 2015.

Also speaking at the forum yesterday, Malaysia’s Minister in the Prime Minister’s Department Abdul Wahid Omar sought to assuage these concerns.

“So much has been said of the GST. It’s not an additional tax. It’s merely replacing the existing sales and services tax that we already have ... The rate, at 6 per cent, is also the lowest among ASEAN (Association of Southeast Asian Nations) countries,” he said. “We have also decided to reduce our corporate tax rate by 1 per cent — down to 19 per cent for small companies and 24 per cent for large corporates.”

“There is sufficient time for businesses to prepare for GST … So, as far as the business community is concerned, we don’t believe it will be an issue,” Mr Abdul added.