Invest in Building Supply Chains, Not Real Estate

Today, I am here representing Tengku Zafrul Aziz, MITI Minister to launch the MYSite Selection Portal and the Malaysia Industrial Park Directory. MYSite and the Directory are not just tools; but platforms for paradigm shifts in how we see industrial development into the future.

I would like to discuss three paradigm shifts that we would like to see for Malaysia’s industrial parks.

First, investing in supply chains not real estates

Malaysia’s industrial parks have become too much of a real estate play which is not helpful for the nation. As the global supply chain has relocated over the past several years, it is evident that investors choose Malaysia not because we have many industrial parks but because we have a strong ecosystem.

As a nation, we want to build resilient supply chains as closely and as seamlessly connected with each other as possible. Before Covid-19 and the recent geopolitical upheavals, for several decades, the manufacturing world was operating on the basis of “just-in-time”, i.e. spreading the supply chain across the globe. Today, the motto is “just-in-case”. Everyone in the global boardroom is talking about “de-risking” now.

Previously, factories were vertically linked globally but had very little connections or linkages domestically. For the interests of the investors and as well as for Malaysia, we now need to ensure the emergence of strong linkages domestically.

Malaysia must position itself as a secure and resilient supply chain. Therefore, industrial parks shouldn’t be about real estate play but about building supply chains and ecosystems.

I hope to see some of the current batch of major developers not just see industrial parks as a real estate play but actually invest their brainpower and money into developing supply chains. This is especially so for the GLIC or GLC developers.

Second, stop building just factories that house foreign workers but build livable communities for Malaysians

Malaysia’s urban planning is plagued by an old idea from the United Kingdom called “the garden city” concept. The 19th century industrial towns in the UK were dirty, filthy, and messy. As a response, some thought that we should separate work places from residences.

So for the longest time, Malaysia’s industrial parks were built far from where people are actually living. But that means a lot of carbon footprint to move people from their homes to work places each day.

Over the last few years, Malaysian planners now accept that foreign workers can stay near the factories, thus we now have centralised labour quarters (CLQ). That is a paradigm shift of sorts.

But we don’t want an economy that hires foreign workers while our youth work in Singapore, Australia or South Korea as cheap labour. We must be very determined to reduce the number of foreign workers by making hiring of foreign workers more expensive and to make automation a cheaper option.

I want to take this opportunity to encourage all of you to take a look at the Salaries and Wages Survey Report 2023, which was released by the Department of Statistics Malaysia (DOSM) yesterday, that the median wage grew by 7.1 % in 2023, a significant feat.

But the legacies of more than 30 years of dependence on cheap foreign labour is that 50% of workers in Malaysia are earning less than RM2,602, a very low figure. As a society, we must feel a collective shame about this fact.

We must change that. Let us come together to remind ourselves – my colleagues in MITI, MIDA, FMM, and everyone else, that every economic decision we make in this country, the primary objective is to create a middle class society in Malaysia.

And we must tell industries that Malaysia has talents. There is no talent problem in Malaysia, there is only a pay problem.If you pay enough for Malaysian workers in Singapore to come back, you will have talent. As I always say, if you pay 2/3 of Singapore pay, most Malaysians would be happily coming back to work in Malaysia.

Industrial parks can play a constructive role to bridge the pay gap between Malaysia and Singapore. Instead of building CLQs for foreign workers, we want to see more decent housing for young Malaysian engineers. Malaysia will not be a great technology nation if we hire more foreign workers, but Malaysia will be an indispensable industrial nation if we have more young engineers.

Say we pay Malaysians 50 percent of Singapore pay but housing in industrial parks are very affordable, it is almost equal to 2/3 of Singapore pay too.

I hope the industrial park operators and developers will take up the challenge of building communities for Malaysian engineers and workers.

Third, we want industrial parks to compete to meet high standards

Let me explain the rationale behind the thinking of MYSite Selection Portal and the Malaysia Industrial Park Directory.

Under Malaysia’s federalism, land matter is the prerogative of the state governments and municipalities are governed by the state governments, not by the federal government.

Malaysia has 600 industrial estates scattered across the nation. Not all industrial estates are created equal. Some are good, some are poorly maintained and give a bad name to the nation. The federal government has no control over how an industrial park is built and managed apart from issuing national standards, laws and regulations.

But how to get the industrial parks to meet the expectations of foreign investors who may not understand Malaysia sufficiently? How to protect national reputation?

Previously, there was a tendency to sweep things under the carpet. But there is a paradigm shift now.

In 2018, the Malaysia Industrial Park Directory was born out of a collaboration between MIDA and FMM. Back then, it was a simple yet effective way to guide businesses to the right industrial spaces.

Now, six years later, MIDA and FMM are once again collaborating to create platforms that offer essential tools and reliable information for entrepreneurs, businesses, and professionals. These platforms will assist users in navigating the diverse industrial landscape and identifying promising opportunities.

MYSite Selection Portal allows:

1. Anyone – be it an investor, developer, or entrepreneur – to access detailed information on Malaysia’s industrial parks in one place.
   
2. Through advanced filtering and analytics tools, the portal simplifies the process of identifying sites that match specific operational needs. This efficiency saves valuable time and resources for developers and investors alike.
   
3. By enabling seamless communication between industrial park developers and potential investors, the platform facilitates meaningful partnerships and accelerates project timelines. For developers – a dedicated platform to showcase their projects and attract the right investors, boosting visibility and unlocking potential. For Investors – a streamlined process to identify and evaluate locations that align with their business objectives, reducing uncertainty and enhancing efficiency.

We are not stopping here. MITI and MIDA, in collaboration with SIRIM, are working on a star rating system for industrial parks, which evaluates the following four key parameters: planning and management; infrastructure and business competitiveness; environmental sustainability and social responsibility.

These measures will ensure that every industrial park in Malaysia meets acceptable standards and call out those which do not meet the standards. In the near future, these guidelines will be seamlessly integrated into the MYSite Selection Portal, empowering investors with detailed, transparent assessments.

This initiative will not only promote high-quality industrial parks but also set a benchmark for developing new ones, raising standards and safeguarding Malaysia’s reputation.

While the federal government doesn’t manage industrial parks, MITI and MIDA have very limited funding for industrial park upgrades – just RM15 million for 2025 from the Ministry of Economy, we are working to upgrade the infrastructure through a “pledge and pitch” concept, in collaboration with local councils.

The theme for pledge and pitch in 2025 is “5G Adoption for Industrial Parks”. MIDA will invite local councils to pledge and pitch to bring 5G to the industrial parks under their watch. Engagements with key stakeholders, including Digital Nasional Berhad (DNB), Telekom Malaysia Berhad (TM), Malaysian Communications and Multimedia Commission (MCMC) and industrial park developers, have already begun to ensure the success of this initiative.

In conclusion, doing the same thing over and over again to expect a different outcome is insanity. What works in the last 30 years may not be useful for the next 30 years. We must do things differently, at a fast pace. And it is in this context that I am delighted to officially officiate the Launch of the MYSite Selection Portal and the Malaysia Industrial Park Directory.

This is my speech delivered at the launch of the MySite Selection Portal and the Malaysia Industrial Park Directory on December 11, 2024.