Investment opportunities in Teregganu for Singapore-based businesses

Producer: Yvonne Gomez
First broadcast: 3 June 04, Radio Singapore International

At Malaysia's last election in March 2004, Terengganu state passed into the hands of the ruling Barisan Nasional, or National Front coalition, from the Islamic conservatives, Parti Islam SeMalaysia, or PAS.

Together with the pro-business policies of the new leadership under Prime Minister Abdullah Ahmad Badawi, this has resulted in a renewed interest in Teregganu, and jumpstarted plans to invigorate the economic development of the state.

According to information provided by International Enterprise, or IE Singapore, Teregganu state is one of the less industrially-developed states, with one of the smallest gross domestic products in the country.

Terengganu was once totally dependent on agriculture and timber-based activities, but the discovery of oil and gas off the shores of the Terengganu has brought about tremendous economic development to the state. And with the highest crude oil reserves in Malaysia, oil and gas are the largest contributers to Teregganu's GDP.

Teregganu state also has two sea ports - a deep sea one at Kemaman, and also one at Kertih, dedicated solely to the petrochemical industry.

For more on the investment potential in Terengganu, I spoke to Mr Nik Nasri Nik Ahmad, State Director of the Malaysian Industrial Development Authority in Teregganu.

NNNA: From MIDA's perspective, we can talk about the strength of the manufacturing side. Teregganu is rich in natural resources. We have a big reserve of oil and gas. In Malaysia, only a few states have oil and gas and gas reserves, like Sabah, Sarawak and Teregganu states. There is a federal government intention to make Teregganu, starting from Kertih down to Kuantan, a petrochemical corridor for the ASEAN countries. This plan is still in progress, and Teregganu will benefit most from this plan. Besides oil and gas, there are other natural resources, we have silica sand. If I'm not mistaken, it has a 99.5% silica content, which is the highest in the world, and even better than Sarawak s silica sand. But this silica sand is still untapped by local businesses and foreign companies. So the state is very keen to find potential investors to get into this business, beause from silica sand, you can process it to become glass. The glass industry can produce many types of products. Teregganu is also rich in forest reserves. In Malaysia, Teregganu has the third highest amount of forest acreage. So, that's why you may have noticed that there are so many SMI (small and medium industry) companies producing furniture products.

YG: For the Singaporean business people here, what specifically can they come and do with these natural resources?

NNNA: I suggest that they find out which local companies have the potential for a joint venture, and to explore what can be done with these natural resources. For example, we have a few companies that make furniture products in Teregganu. There are also a few companies, local, as well as foreign companies, involved in downstream activities of the petrochemical products. So I think, oil and gas, the furniture sector, as well as the agriculture sector, are still untapped by local, as well as foreign companies.

YG: With the change in government, what has been the business sentiment now? What changes are you all looking forward to, with foreign investments into Teregganu?

NNNA: There are high expectations about what the new government can do. First of all, the goal is to attract more foreign investment because the state is now drafting a five-year development plan. I think there are many sectors they'd like to emphasise. Besides oil and gas, I think they'd also like to emphasise the development of small and medium industry companies. But the most important thing for the state now is to create employment for its people. They've been very aggressive in promoting this.

Recently, IE Singapore led a business delegation to Malaysia, which included a visit to Kuala Teregganu, the state's capital. During the visit, they met with senior state government officials, visited national oil corporation Petronas gas production complex at Paka, and the port of Kemaman.

With the famous Redang Island's reefs bursting with the largest assortment of coral species that peninsular waters have to offer, just 50km off the coast of Kuala Teregganu, Teregganu also has tremendous potential for tourism. Apart from these, there are opportunities for Singapore companies in major infrastructure jobs in Terengganu. They include the new airport and a major highway promised by Barisan Nasional during the elections.

I spoke to Mr Yew Sung Pei, Director of International Operations for Southeast Asia at IE Singapore, who also went along to Malaysia on the mission. He told me why Singapore-based companies could have an interest in Teregganu.

YSP: Well, Teregganu is a relatively new investment destination for Singapore-based companies. Many of our Singapore companies go to Johore or Selangor states. So, during our stay in Teregganu, we understand is finalizing a new five-year development plan. And I think there will be a lot of opportunities for Singapore investors to work on.

YG :What industries do you think Singaporeans can venture into in Teregganu?

YSP: They shared that they are going to focus on education and training, and also infrastructure, like roads. So I think these are the areas in which our education service-providers and infrastructure provider companies can look at how they want to participate in this development there.

YG: Oil and gas is one of their main activities there. Is there any way in which Singaporean investors can actually take advantage of that?

YSP: Certainly, I think Singapore is a strong player in oil and gas, be it as a service-provider or components, logistics and so on.

YG: Having visited the place, what challenges do you foresee Singaporean investors running into there?

YSP: I think at the state level, they would certainly have to find out more about the local regulations governing the different industries, and really be able to source and find the right local partners.

YG: In your opinion, what are some of Teregganu's strengths and weaknesses, in terms of attracting foreign investors?

YSP: Well, I would say that Teregganu is relatively untapped. So to summarise what I've said earlier, I think with all these new developments coming up, in the next few years, we'll be able to see many activities coming out of there. So for the Singaporean investor, it's virgin land so it's good for us to really explore.