Strong business fundamentals anchor Kulim Technology Park’s future growth
22 Nov 2021
Kulim Technology Park Corporation (KTPC) is looking to ‘meet and exceed’ client’s requirements to remain a premier tech-park in the region.
Group chief executive officer Mohd Sahil Zabidi said to further value-add to its services and offerings, the company is looking to strengthen Kulim Hi-Tech Park’s industrial ecosystem.
This means attracting supporting industries, perhaps by way of a small and medium enterprise (SME) park so that tenants enjoy a more secure and cost-effective supply-chain as well as strengthen its value chain,” he said.
He said KTPC is also working on incorporating elements of the environment, social and governance (ESG) investment evaluation requirements through a structured sustainable development programme.
This includes a solar power initiative that is actively promoted to the tenants, not only because it promises to significantly lower operating costs but more importantly, is simply “the right thing to do”.
“These are all necessary for continued relevance and growth model of the future,” he said.
Mohd Sahil emphasised that KTPC cannot realistically continue to rely on acreage expansion as a source of growth given that land is a finite resource.
“In the decades ahead, we need to anticipate the possibility of tenants moving or the need to rebuild.
“We have made proposals to both Malaysian Investment Development Authority (MIDA) and the Ministry of Finance on plans for a restoration fund.
A portion of the lease amount is to be put away and tax breaks given for the refurbishment of buildings that would otherwise be rundown and problematic.
‘We are lucky in the sense that for most parts our tenants are generally from ‘clean’ industries. What about industries with higher effluents or chemical use? It will be a burden to both government and society,” he said.
He hoped that the development of the park will have an everlasting and positive impact on the surrounding communities.
“We want the school students to know that KTPC offers ample career opportunities especially in areas of engineering and the pure sciences. We are putting up a gallery and innovation centre where they can come and see for themselves how technology features strongly in their everyday lives”, he said.
The park has a tenant that produces in-flight entertainment systems and others that produce wafers, an important component in mobile phones and electronic gadgets.
He cited the example of one of the park’s first tenants Intel, which at the time focused on testing and assembly activities has now gone on to design and development as well as research and development.
Malaysian embraces technology easily and the next generation should embrace capabilities that allows them to deep-dive into technological innovation for commercial success and national development, he said.
Despite a difficult investment climate over the last two-year period, Kulim Hi-Tech Park registered a 117.72 per cent increase in revenue to RM172 million in 2020, over the previous year’s total of RM79 million.
This is expected to increase further by end-2021 despite the economic blows brought upon by the COVID-19 pandemic, which is testimony to the resilience and wisdom of its management which has long paid careful attention to its business fundamentals.
Developed and managed by KTPC, a subsidiary of the Kedah State Development Corporation and a member of the Malaysian Industry Government Group for High Technology (MIGHT), the premier, fully integrated high technology park is the first hi-tech park in Malaysia and officially opened in 1996.
It is situated within the Northern Corridor Economic Region and covers an area of approximately 4,000 acres.
The park currently holds assets and investments in excess of RM100 billion.
Mohd Sahil said even if an entity enjoys full government support, it must always aim for financial strength and build its own reserves.
Mohd Sahil assumed the position in 2019, after having served as the finance vice-president where he held as a top priority the discipline of regular financial housekeeping.
He then took over as corporate strategy senior vice-president when a five-year strategic plan for the company was put in place.
“The two elements remain the core of our operations — a robust and comprehensive five-year corporate planning exercise aimed at bolstering internal reserves and financial strength,” he said.
Competition for tenants among technology parks is not just among local players but is a global playing field.
In this sense, KTPC has been steadily building its brand over the last two decades and had invested in sound infrastructure.
He said to ensure the growth momentum, he pays very close attention to the park’s value proposition, and what it offers potential tenants.
All of these must start with a strong research team, and a clear idea of the kind of strategic investments it hopes to attract.
In recent years, KTPC has welcomed industry players in the field of advanced material, medical instruments and renewable energy among others, key industries to propel Malaysia into the next era of growth.
He said that while previously the focus was on incentives as a primary draw for investors, this cannot be done indefinitely especially with some countries like Vietnam going as far as giving free land.
“Now investors come with sizable investments and are looking at long-term commitment. They expect speed of decision and execution,” he said.
Typically, investors look for a site to fulfil three main criteria. Top of the list is the talent pool.
“Any points of strength that you want the client to pay attention to must always be evidence-based.
“For example, if a potential client has questions on talent availability, we will get the universities or institutions of higher learning to present to them the manpower profile and offerings,” he said.
Secondly, given that these industries typically use a lot of power, costs and quality of utilities are also high on their priority list. This would include the supply of electricity, water and sometimes gas.
Next is the quality and effectiveness of client servicing. A high-tech park operator is expected to be an effective problem solver.
“In their engagements with local authorities, they need to know exactly how long it will take to complete the construction of the proposed facilities and these must be accompanied by facts and figures.
“This is another characteristic of the present-day investor — they are very detailed,” he added. “They are no longer satisfied with just the big picture.”