INVESTOR PREFERENCES 8

by Hazrul IzwanWith continued engagement and investment promotion’s efforts by various investment promotion agencies (IPAs), Iskandar Malaysia has a huge potential to attract foreign investors especially to invest in manufacturing and property sectors as well as other supporting industries. According to the Iskandar Regional Development Authority (IRDA), the cumulative investment commitments in Iskandar Malaysia amounted to RM95.45 billion (US$30.24 billion) between 2006 to June 2012. Of this, 34% is contributed by manufacturing sector, followed by property sector (31%) and 27% from utilities, tourism and other sectors.

In 2011, 40% of the RM95 billion in cumulative investments come from contribution on foreign direct investment mainly from Singapore, Spain and Japan. Indonesia contributed only a small fraction of the total foreign investment values in

all sectors even though Indonesia was ranked second after Singapore in terms of approved manufacturing projects in Iskandar totalling RM689.5 million. The Indonesian’s investment tendency in Iskandar is expected to shift progressively in the next six to 12 months due to the Singapore factor - rising cost of doing business caused by property prices, labour cost as well as cost of living forcing them looking at other sustainable growth areas in investment.

Obviously, Iskandar Malaysia as an immediate neighbor fits the investor’s criteria for various types of investments, previously many people said that Iskandar is just a backdoor of Singapore but investors now can observe physically – it’s strategic location – it is just across the causeway coupled with improved connectivity and key attractions such as LegoLand theme park, Puteri Harbour, Educity and to name few others are already in place makes Iskandar the ideal tourism city and a viable real estate investment destination that benefits Indonesian investors whose have business interest in Singapore. Those factors are in line with Iskandar’s tagline – “Iskandar Malaysia, the Shenzen of Singapore”.

In order to build an investment-friendly environment in Iskandar, initiative has been taken by IRDA to increase security and safety measures by introducing 46 initiatives to mitigate the crime rate and improve the quality of life for all. IRDA also introduces the Incentive and Support Package (ISP) as the guidelines for investors. Some of the key incentives include tax exemption for 10 years, liberalization of fiscal policy allowing corporations to source capital globally and flexibility to employ knowledge workers in six promoted sectors i.e logistics, creative, education, healthcare & wellness, financial and leisure & tourism.

As a growing economic region, Iskandar specifically in Medini offers end-users a 15% income tax for qualified knowledge workers and incentives such as 100% foreign property ownership and no minimum foreign investment value. These incentives will attract more expatriates to Iskandar, not just for work but will make Iskandar as their second home.

A gated and guarded freehold landed property in Iskandar is only half of the price of a Singapore’s Private Apartment. The comparative advantages in Iskandar Malaysia offered are way better solutions to investment in terms of various types of property with water and green features which is reasonably priced ranging from RM450 to RM1,200 per square feet. Plus, low mortgage rate at an average of 4% per annum, loan tenure up to 30 years, margin of financing available for foreign buyers between 70% to 85% and also attractive promotions by developers such as Developer’s Interest Bearing Scheme (DIBS), waiver of legal and stamp duty etc. made Iskandar one of the preferred investment destination in the region. Moving forward, developers in Iskandar such as UEM Land, Gamuda, UM Land SP Setia, Mah Sing Properties etc. are continuously supporting IRDA in transforming Iskandar’s property landscape. Fore ign developers, contractors, operators and investors in Indonesia are welcome to contribute their experience, skills and knowledge to jointly develop Iskandar Malaysia with local developers through a joint-venture or other forms of property investment and development projects.

For more information about Malaysia Property Incorporated, kindly contact the author at hazrul@malaysiapropertyinc.com

The Indonesian’s investment tendency

in Iskandar Malaysia is

expected to shift progressively in the

next six to 12 months due to the Singapore

factor

“

SINGAPORE FACTOR:IN ISKANDAR BY

INDONESIANRISING INTEREST

THE

INVE

STOR

S

Figure 5: Cumulative Committed Investments in Iskandar 2006 - June 2012

Source: IRDA, Khazanah, IIB & corporate announcements

100

80

60

40

20

0

2006

2007

2008

2009

2010

2011

6-20

12

Legend: Manufacturing Properties

Utilities, Tourism & Oth. Government

Cummulative investments

RM bn

11.30

25.80

41.75

55.56

69.48

84.78

95.45