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Plan highlights need to climb value chain

Article - April 3, 2012
Five economic corridors have been created to attract investment, create job opportunities, widen business activities, and improve Malaysians' quality of life
In 2006, the government drafted the Ninth Malaysia Plan (9MP) to allocate funds to all economic sectors in Malaysia in order to move the economy up the value chain, encourage innovation for a knowledge-based economy, and improve quality of life.

Five economic zones were created as vehicles for achieving balanced development, beginning with Iskandar Malaysia (IM) in Johor, followed by East Coast Economic Region (ECER), Sabah Development Corridor (SDR), Sarawak Corridor of Renewable Energy (SCORE), and Northern Corridor Economic Region (NCER).

Development of the five corridors is on schedule, according to government sources, and to date the government has fulfilled 75% of its budgetary commitment (RM 244.3 billion, or $79.6 billion). The remaining 25% will be continued under the 10th Malaysia Plan.

Each zone is administered by a separate authority and offers investment opportunities, as well as incentives, for local and foreign entrepreneurs alike. For example, investors in the ECER, which covers the states of Kelantan, Terengganu and Pahang as well as the district of Mersing in Johor State, enjoy a 10-year tax exemption, 100% investment tax allowance, and exemptions from import and export duties.

Each of the five corridors is poised to become a platform to attract more foreign direct investment that can accelerate Malaysia’s economic growth over the next decade
Although hydrocarbon-rich ECER was established in 2007 to attract oil and gas companies and petrochemical industries (the master planner for ECER is, after all, Petronas), a wide variety of activities are also being promoted. Indeed, ECER’s master plan envisions the area’s transformation into a major international and local tourism destination, an exporter of resource based and manufacturing products, a vibrant trading center and an infrastructure and logistics hub.

South of ECER, Iskandar Malaysia (formerly known as Iskandar Development Region and South Johor Economic Region) actively promotes shipping, electronics, tourism and real estate. Strategically located on the border with Singapore, IM is also ideally positioned to absorb run over from its costlier neighbor, although in practice Singapore and Iskandar complement each other rather than compete.

The state-of-the-art tele-communications, transparent public institutional framework, and dynamic knowledge-based clusters (including overseas campuses for Newcastle University, Marlborough College, and the University of Southampton) that IM boasts today all attest to the corridor’s evolution since 2006.

“The progress that has been achieved so far in Iskandar Malaysia is highly laudable but it is just the beginning, with more key developments to be launched and many others over the duration of the region’s 20-year development horizon,” said Dato’ Sri Mohd Najib bin Tun Abdul Razak, Malaysia’s Prime Minister and Co-Chairman of the Iskandar Regional Development Authority.

Northwest of Iskandar and ECER is the Northern Corridor, which has identified public and private sector-driven projects in the key economic sectors of agriculture, manufacturing, tourism and logistics services. Already having proven its strength in these activities, NCER welcomes investors to tap into related projects and help move the sectors up the value chain. In agriculture, for example, the development plan calls for farmers to deliver better yields of high quality products, while in manufacturing, NCER aims to retain its lead by constantly reinventing itself through “Centers of Excellence”.

The largest of the economic corridors, Sarawak Corridor of Renewable Energy was launched in early 2008. As its name suggests, the core focus of this area is on harnessing its renewables – namely hydropower – although coal and natural gas also play an important role as they are found in abundance in the region. Consequently, investors in SCORE enjoy competitively priced power to run their businesses.

SCORE has identified 67 different industries to be developed, of which 10 are considered priorities: aluminum, glass, steel, oil, palm oil, fishing and aquaculture, livestock, forestry, marine engineering, and tourism. These industries, which are being developed extensively through private sector participation, have the highest economic impact on the corridor as they take on an increasingly value-added profile.

For more information on the Sabah Development Corridor, please refer to its featured article on the left.

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