Source: The Star Online (April 4, 2016)

Penang island running out of space for new projects to take off

GEORGE TOWN: The proposal to acquire 323ha for industrial expansion is very timely as the island is running out of space for new projects to take off.

Frepenca immediate past chairman Datuk Heng Huck Lee (pic) said Penang is in a very good position to attract fresh investments from the aerospace space sector due to the surrounding electronic and electrical supply-chain eco-system, as the aerospace industry is set to expand rapidly in Asia Pacific over the next five to 10 years.

The long-term prospects of the global aerospace industry is exciting, as Airbus is projecting demand for 32,585 new passengers and freight aircraft by 2034, which will have a market value of US$4.9 trillion.

“Of these, 22,927 would be single-aisle aircraft, 8,108 twin-aisle aircraft, and or 1,550 very large aircraft,” the Airbus global market forecast (2015-2034) says.

Another industry that is expanding in Asia Pacific is the medical device sector.

According to a recent report from Euromonitor International, an international research firm, China’s and India’s healthcare service revenues are expected to advance by 12% and 9%, respectively, in 2016 alone, which would result in a large number of new hospital construction projects and soaring demand for medical and surgical equipment.

“The market growth was spurred by rapid expansion of the healthcare industry, as the hospital, medical and dental service industry’s revenue in Asia Pacific has been rising at a compounded annual growth rate (CAGR) of 8% (in US$ terms) over 2008-2014, representing the highest growth among regions.

“The region’s healthcare industry is expected to continue to grow rapidly over 2016 as well,” the Euromonitor International report added.

Penang is an attractive investment destination for these new medical device opportunities in Asia, as it already has a cluster of medical device companies, Heng added.

“We need to have the necessary land bank to draw these investments. It will be too late to acquire new land bank when investors come knocking on our door,” he said.

According to Heng, most investors prefer the island to mainland for setting up manufacturing operations.

“If they cannot invest on the island, they would rather go somewhere else to invest. There have been such cases,” he said.

Heng added that skilled workers also preferred working on the island, close to their homes.

“Put it this way, on the island, they need to travel 20km on a daily average to go to work, whereas on the mainland they will need to travel between 40km to 50km on a daily average. Naturally, they would rather spend less time travelling,” Heng said.

Small & Medium Enterprises Association of Malaysia (Samenta) secretary Yeoh Seng Hooi said the 800 acres site should be designed to accommodate dedicated parks for different industries to enhance the appeal of Penang as an investment destination.

“For example, there should be a park just for the small and medium industries to accommodate the vendors supporting the multi-national corporations.

“At least for the first few years the SMEs should be given discounted rental rates to enhance their competitive edge,” he added.

The Federation of Malaysian Manufacturers (FMM, North) vice-president Lee Teong Li said the connection of LRT to the 323ha park would encourage the workers to work flexi-hours.

“Presently, the factory buses are able to ferry workers according to the scheduled working hours.

“The LRT system should be backed by a feeder bus system to transport workers to their homes in the residential areas,” he said.

Under the Penang Transport Master Plan (PTMP), SRS Consortium, the appointed project delivery partner, will reclaim 1,497ha of land, of which 290ha is for industrial development.

The proposed PTMP would feature a LRT from Komtar to Bayan Lepas, a monorail from Komtar to Air Itam and Tanjung Bungah, e-buses across the North Channel, bus rapid transits on the mainland, and a 20 km Pan Island Link Highway connecting Tanjung Bungah to the Penang International Airport and the LCE with tunnels cutting through the hills.

SRS Consortium, a joint venture in which Gamuda holds 60%, with Ideal Property Development Sdn Bhd and Loh Phoy Yen Holdings Sdn Bhd holding 20% each, received its appointment letter as the project delivery partner on Aug 14.