Johor poised to benefit from supply chain shift
10 May 2023
Johor is likely to benefit the most from Chinese companies moving supply chains out of China to manage risks.
A report by an international consulting firm showed Asean countries such as Indonesia, Malaysia, Thailand and Vietnam have benefitted from the move.
It stated that many China-based manufacturers were actively looking at setting up overseas productions, in anticipation of supply chain challenges and political risks.
While they were not moving their entire production out of the mainland, the report said that a combination of geopolitical risks such as tensions with the United States and rising costs were pushing them to look for alternatives.
“We have the right ecosystem for them to set up operations in Johor,” state investment, trade and consumer affairs committee chairman Lee Ting Han told StarMetro.
He said a lot of multinational corporations in China were exploring the option of relocating their operations to Indonesia, Malaysia, Thailand or Vietnam.
“They still have their operations in China plus one outside the mainland,’’ he said, adding that the move would have a positive impact on Malaysia.
Lee said Johor’s close proximity to Singapore was an added advantage.
He said by investing in Johor, especially Iskandar Malaysia, foreign investors could have the best of both worlds, with Singapore as an international financial and trade centre.
He said they preferred to use Singapore as their platform to explore the Asia-Pacific region, including Asean countries with a population of about 650 million.
“We have been negotiating with potential investors since the country’s international border was opened on May 1, 2022,’’ said Lee.
He said Johor was looking to attract more manufacturers in the electrical and electronics, pharmaceutical, health, data as well as oil and gas sectors.
“We are optimistic of repeating last year’s success story,” he said.
He added that Johor attracted RM70.6bil in foreign direct investment in 2022.
Iskandar Malaysia Johor Chamber of Commerce and Industry secretary-general Md Salikon Sarpin said Johor needed to act fast to attract China-based companies to invest in the state.
He said Iskandar Regional Development Authority and other stakeholders must work together and put in more effort.
“Other countries in the region are also actively lobbying.”
At the same time, he said Johor also faced competition from other Malaysian states in attracting foreign companies.
Md Salikon said Iskandar Malaysia’s proximity to Singapore was a strong selling point for Johor.
“The state government should focus on attracting more quality investments from all over the world and reduce its dependence on labour-intensive manufacturing activities.
“While the manufacturing sector remains relevant, Johor should go for high-tech and capital-intensive investments.”
Source: The Star