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Economic Corridor Development: The Experience Of Northern Corridor Economic Region

IMTGT – Economic Corridor Development Training 02 September 2015 1 Using Regional Enablers To Ensure Delivery

Leveraging on the inherent strengths of each region for balanced economic development

2 What Is Koridor Utara?

|Area size : 2.5 mil ha |Population: 6.09 mil Malaysia pursues a regional approach to economic development

3 What Is Koridor Utara? Koridor Utara’s development is NCIA’s helmed by the Northern Corridor Mandate: Implementation Authority (NCIA) Created under Act 687, NCIA is the entity mandated to drive the Government’s regional strategies in the context of the economic development agenda

4 The Key Thrust Areas

A Brownfield area that leverages on the strengths of its key economic activities.

5 Champion For Modern Food Zone And Food Security Agenda

Commercial- scale Engineering/Tech nology driven Aqua- Horti- Paddy Buy-back culture culture structures Local/ Foreign investors

D/stream Livestock processing

6 Leveraging On 40 Years Of Evolution To Generate Further Economic Growth

• 500,000 employed in the E&E sector • More than 45% of the countries manufacturing exports

• 9 companies represented account for: • RM25bil in total revenue • RM1.4bil in R&D expenditure • RM0.7bil in R&D contracts Leverage on the past • 5,030 total R&D employees • 805 with Masters Enhance the present • 85 with PhDs Shape the future

7 Koridor Utara’s Strong Logistics Fundamentals

Launch pad into South Unparalleled logistics capabilities East Asia and the Bay of Bengal Koridor Utara’s economic activities have, over time, caused the evolution of its logistics industry.

8 Koridor Utara Positioned As A Premier Destination For Tourists

5 TOURISM THEMES IN KORIDOR UTARA

1. Nature Adventure 2. Health & Wellness 3. Cultural Heritage 4. Business Tourism 5. Affordable Luxury

2 International Gateways with PENANG and LANGKAWI and 10 Domestic Clusters / Nodes

9 Development Phases of Koridor Utara

The three phases of development

• Phase 1: 2007 – 2012 Secure anchor investors and build priority infrastructure

• Phase 2: 2013 – 2020 Broaden private sector involvement, including establishing networks of businesses, foreign and domestic linkages

• Phase 3: 2021 – 2025 Achieving regional leadership via

sustainable, market-led growth. 10 Six Overarching Goals For Phase 2

11 The Game Plan To Deliver Results For Phase 2

Sustainable approach in carving out economic opportunities

Short Deal Term Flows

Two-pronged approach for Phase 2 New Growth Nodes Growth

KORIDOR Nodes Longer UTARA PHASE 2 & Term Enhanced elements of inclusiveness Inclusive -ness 12 Using The Private Sector To Drive Economic Development

NCIA leverages on Koridor Utara’s support eco- system to generate new jobs and business opportunities.

13 Phase 2: Taking Koridor Utara To The Next Level

The Growth Nodes Strategy is guided by six (6) strategic studies

14 Phase 2: Taking Koridor Utara To The Next Level

Perlis Optimising impact via new growth nodes

Perlis SEZ

TITITITITITI TINGGITINGGITINGGI Agriculture Chuping Valley • Seed and hybrid crop • Commercialisation of fruits

BESERIBESERI CHUPINGCHUPING • Mango

KURUNGKURUNG BATANG BATANG PAYAPAYA

ABIABI ABIABI PADANGPADANG SIDINGSIDING PADANGPADANG PAUH PAUH PADANGPADANG SIDINGSIDING NGOLANGNGOLANG NGOLANGNGOLANGORANORAN KECHORKECHOR

SENASENA WANGWANG BINTONG BINTONG SENASENASUNGAISUNGAI ADAM ADAM KANGARKANGAR JEJAWIJEJAWIJEJAWI

ARAUARAU SERIABSERIAB KUALAKUALA PERLIS PERLIS KURUNGKURUNG ANAIANAI Chuping UTANUTAN AJIAJI KAYANGKAYANG • Development of Chuping Valley SANGLANGSANGLANG

Perlis Inland Port & Padang Besar Enhancement Development of a modern Kuala Perlis and efficient rail connected Kuala Perlis tourism inland port in Chuping Valley. 15 Phase 2: Taking Koridor Utara To The Next Level

Kedah Optimising impact via new growth nodes

Kulim High-Tech Park •New range of amenities to further enhance livability aspects of KHTP.

Kedah Science & Technology Park / Bukit Kayu Hitam • New development of Science & Technology Park

Rubber City A world class, integrated city with rubber-based industry

Agriculture Langkawi Tourism Rice bowl – modernization Tourism initiatives to help rejuvenate and estatisation of rice economic activities in Langkawi. production areas 16 Phase 2: Taking Koridor Utara To The Next Level

Perak Optimising impact via new growth nodes

Greater Kamunting • Kamunting industrial park • Heritage & Eco tourism • Public Transportation • Aquaculture Belum Temengor • Tourism facilities

Manjung • Tourism – Pangkor & Manjung • Logistics Kerian • Aquaculture • Modern agriculture – low land crops at • Kawasan Perindustrian Kg Aceh Bagan Serai • Rice bowl – modernization and estatisation of rice production areas 17 Phase 2: Taking Koridor Utara To The Next Level

Penang Optimising impact via new growth nodes

Shared Service Outsourcing • Regional Shared Services Outsourcing programme

Manufacturing • Strengthening local eco-system i.e. M&E, E&E and Medical Devices • Factory in Factory Logistics • Supply chain cluster • Logistics Automotive hub

Tourism • Strengthening Penang as a hub for Medical Tourism 18 Investment Performance 2008 - 2014

2014: 2013: RM 18.8 bil 2012: RM 10.67 bil 2011: RM12.28 bil 18,381 Jobs 18,603 Jobs 2010: RM27.9b GNI RM9.91 bil RM18.7b GNI RM6.08 bil 16,335 Jobs 2008-09: 10,369 Jobs RM20.1b GNI 15,898 Jobs RM18.5b GNI RM1.4 bil RM11.4b GNI 2010 2011 2012 2013 2014 Local 53.4% 10% 39% 62% 77% Participation Foreign 46.6% 90% 61% 38% 23% Participation

19 2014 Was A Successful Year For Koridor Utara 2014 has generated RM18.8 billion of private sector participation

20 2014 Was A Successful Year For Koridor Utara Comparative figures as per MIDA’s 2015 report

2014

Figures in RM ’billion

21 The Challenges Based on the Key Thrust Areas

A Brownfield Agriculture • Leverage on the region’s biotechnology expertise area that • Implement the Shared Value Concept leverages on the strengths Manufacturing of its key • Augment the region’s support eco-system • Opportunities for local private sector participation economic • Value-added opportunities from private sector (eg BPO) activities. Tourism • Develop key areas (Langkawi, Health Tourism, Taiping Bandar Warisan and the Belum Temengor area) • Implement the Shared Value Concept

Logistics • Move activities up the value chain • Leverage on the region’s experienced trade network • New logistics initiatives (eg Perlis Inland Port) 22 The Challenges Based on the Key Thrust Areas

Logistics • Move activities up the value chain • Leverage on the region’s experienced trade network • New logistics initiatives (eg Perlis Inland Port) 23 Agriculture Initiatives

The Challenges

1. Legacy issues Farms characterized by smallholdings, which makes it difficult to achieve economies of scale. Results in inefficient production, high cost of production, inconsistent quality of agricultural produce, low yield, low incomes.

24 Agriculture Initiatives

The Challenges

2. Weak marketing environment - Farmers cannot sell their produce directly to hypermarkets and retailers - Agricultural products do not meet the quality standards demanded by the market

25 Agriculture Initiatives

The Challenges

3. Low rate of technology adoption and good agricultural practices by farmers - Low productivity, high production costs and poor quality of produce

26 Agriculture Initiatives

The Challenges

4. Poor water management and irrigation facilities - Especially in padi areas outside MADA, almost around 40,000 ha - Depends heavily on rain for water supply

27 Agriculture Initiatives

The Challenges

5. Ageing farmers - The farmers are more than 55 years old - The youth are not attracted to work in a farming environment - Not sustainable in the long run

28 The Challenges Based on the Key Thrust Areas

Logistics • Move activities up the value chain • Leverage on the region’s experienced trade network • New logistics initiatives (eg Perlis Inland Port) 29 Manufacturing Initiatives

Creating a Taking manufacturing to the next conducive level support eco- system

30 Manufacturing Initiatives

A region’s continued The Challenges prosperity will depend on its 1. The k-economy how it is able – Freedom of movement in capital and to compete labour are the main characteristics here. – As a region evolves, it will have to explore on new areas of competitiveness.

31 Manufacturing Initiatives

The Challenges

2. Current offerings in industrial parks: – Inability to attract talent to live in the area – Unsatisfactory support services – Lack of industry clustering – Legacy issues

32 Manufacturing Initiatives

The Challenges

3. Critical shortage of knowledge workers. – Results in low-tech SMEs – General lack of R&D and innovation among SMEs – Lack of industry-university collaboration

33 The Challenges Based on the Key Thrust Areas

Logistics • Move activities up the value chain • Leverage on the region’s experienced trade network • New logistics initiatives (eg Perlis Inland Port) 34 Tourism Initiatives

The Challenges

1. Underperforming key attractions - Great potential of natural tourist attractions not fulfilled. - Bad business acumen leads to facilities being in state of disrepair.

35 Tourism Initiatives

The Challenges

2. The lack of marketing and branding push - Private sector drive at key sites still lacking. - Communication skills to be enhanced (storytelling and command of English).

36 The Challenges Based on the Key Thrust Areas

Logistics • Move activities up the value chain • Leverage on the region’s experienced trade network • New logistics initiatives (eg Perlis Inland Port) 37 Logistics Initiatives

Excellent Koridor Utara carries more than 45% of logistics Malaysia’s manufacturing exports infrastructure

Penang Airport carries almost 2x the Koridor Utara’s value of goods via KLIA production Exports capabilities have, Bukit Kayu Hitam & Padang Besar are over time, caused gateways to 67% of S.Thailand exports the evolution of the logistics industry in the Koridor Utara to leverage on region products from the hinterland; to be processed in the region and transported out.

38 Logistics Initiatives

Leveraging on our logistics The Challenges capabilities: How can we take an already efficient sector to the next level?

39 Other Common Implementation Issues

Human capital issues

1. Human capital is the single most important feature of a region’s long-term prosperity. 2. Two categories of human capital issues – Attitude-related – Skills- based worker related – Knowledge worker related

40 Other Common Implementation Issues

Land issues

1. Problems of land conversion, private land acquired for public development purposes, 2. The brownfield nature of Koridor Utara means that despite being 2.4 million ha in size, there is a lack of congruent land lots on suitable terrain for large-scale initiatives.

41 THANK YOU