While the Government continues to show its wholehearted support for Iskandar Malaysia, the economic region’s newest investment project should give it a “super” boost for the New Year, and “bond” more creative knowledge workers to it

Iskandar Malaysia’s wooing of knowledge workers continues unabated. Fresh incentives from the Government from the recently announced Budget, as well as the confirmed participation of a major international film studio, are set to propel the economic region into a bumper 2010.

Best of the Best From the Silver Screen

The recent announcement of Pinewood Studios’ entry into Iskandar Malaysia set off a palpable buzz of excitement, not just in the South but nationwide and perhaps in the region as well. And for good reason – Pinewood Studios is responsible for some of the best moments in film history, including movies such as Superman, James Bond, Batman, and Tomb Raider, as well as television dramas, commercials, animation and more.

Pinewood is now entering Iskandar Malaysia in a RM400 million joint venture with Khazanah Nasional Bhd. The move is seen as the Government’s upping the ante in boosting Iskandar Malaysia’s appeal as a global creative hub. The product, Pinewood Iskandar Malaysia Studio (PIMS) is scheduled to open by early 2013. It will be located on a 32-ha site next to Medini (the Gulf-backed urban development area).

The project is already off to a good start with Astro signing up as an anchor tenant, using PIMS to produce its local language content programmes. PIMS will remain an independent studio, with Pinewood’s global pull geared to attract big-budget movie producers in Europe and the United States to use the facilities here.

According to Khazanah managing director Tan Sri Azman Mokhtar, PIMS is ‘conservatively’ projected to generate about RM1 billion in direct and spinoff business over the next eight years and ‘will create 3,000 direct jobs and potentially an additional 5,000 indirect jobs a year’. Other sectors which should benefit from spillover effects include tourism, finance and high-value manufacturing.

Overcoming Setbacks Part of the Game

Tan Sri Azman admitted to the media in December that Iskandar Malaysia did suffer a dip in new investment. The economic recession greatly affected the Gulf region, particularly Dubai, from which came some of Iskandar Malaysia’s major investors. Thankfully, however, the management did not put all their eggs in one basket, and as a result, said Tan Sri Azman, the special economic corridor’s exposure to Dubai investors was considered ‘very small’.
Khazanah, meanwhile, will continue to divest none-core assets and equities held in ‘mature’ government-linked companies (GLCs), to finance new greenfield projects, including PIMS and other Iskandar Malaysia facilities.

Wooing More Creative Knowledge Workers

The Government is also looking at other means to attract and keep knowledge workers here. The recently announced Budget, for example, announced a 15 percent income tax rate specially for knowledge workers in Iskandar Malaysia. The Government is now embarking on an in-depth study to work out how best to implement this, with decision-makers from the Finance Ministry, Economic Planning Unit and Inland Revenue Board.

The results of the study should be ready for tabling in Parliament in the first quarter of 2010, said Iskandar Regional Development Authority (Irda) chief executive officer Harun Johari. Parliament will then need to pass a new Bill before this preferential tax rate can be implemented – proving that talk is far from cheap, indeed!

Under the proposal, Malaysian and foreign knowledge workers residing and working in qualifying activities in Iskandar would enjoy the tax regime of 15 percent. It applies to those engaged in qualifying activities – green technology, biotechnology, educational services, healthcare, creative industry, financial advisory, consultancy services, logistic services and tourism, who apply for and begin employment in Iskandar between Oct 24, 2009 and Dec 31, 2015.

The study, then, will look at the definition of knowledge workers, income bracket and implementation once the Bill is passed, said Harun, adding: “We, the stakeholders of Iskandar are not involved in the study and we are not the decision makers but we do give our views when asked.”

Irda is the regulatory authority involves in planning, promoting and facilitating the development of Iskandar; other stakeholders include Johor government, Iskandar Investment Bhd, UEM Land Holdings Bhd and Iskandar Waterfront Development Sdn Bhd.

Looking at the Big Picture

The inclusion of logistics services in the group applicable for the tax rate gives a boost to key components of Iskandar Malaysia, including the Port of Tanjung Pelepas (PTP), Johor Port and Senai Airport. As pointed out by PTP chairman and Senai Airport Terminal Services Sdn Bhd chief executive officer Datuk Mohd Sidik Shaik Osman told The Star, an efficient logistics infrastructure would make Iskandar Malaysia more attractive to potential investors.

The sentiment was echoed by UEM Land Holdings Bhd, a major participant in Iskandar Malaysia. The company’s strategic marketing and corporate communications director Zulkifli Tahmali said the tax cuts would add value to efforts to attract knowledge workers from all over the world to high-skill industries such as biotechnology. These workers would then spend on properties, consumer goods, vehicles and services – thus, spilling over the benefits to all.