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Final Report on PPP Applicability Study for the State of Kedah, Malaysia

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Final Report on PPP Applicability Study for the State of Kedah, Malaysia Final Report on PPP Applicability Study for the State of Kedah, Malaysia Toyo University May 2016 Foreword This Report is the result of our study and visit of the Regional Development Support Program (RDSP) with the PPP applicability for the State of Kedah, Malaysia. Public Private Partnership, PPP is the concept of bringing private sector efficiency, speed finance and technological advance to the public sector service and projects. The public is expected to achieve more ambitious development objectives than traditional procurements by taking this concept. The Report includes our analysis of the given assignments: development of rubber industry, technology parks, transportation (airport), tourism (Langkawi) and agriculture (rice production) by including private-sector orientation for economic growth. Realizing those ideas are not an easy task. It requires political leadership, strong institutions and the participation of broad stakeholders including citizens. This is a lesson taken from our past study experience in several local governments in Japan and other Asian Countries. We hope that the ideas mentioned in this Report will be examined for their implementation at the various levels of the State of Kedah. Throughout this study, we tried to show a part of our ideas to follow “Vision 2020” launched more than two decades ago by the former Prime Minister Dr. Mahathir bin Mohamad, who is also Honorary Advisor of Asia PPP Institute at Toyo University. We intended to show “beyond 2020” concepts for Malaysia and Kedah for their future economic development planning. We tried to build a base of the next 30-year vision of Malaysia; such thinking as how Malaysia can become a true advanced nation from current mid-income nation and how Malaysia can take advantage of its position in Islamic world. We tried to come up with a partial answer to this subject in the report. We strongly hope that the limited proposals we have listed in the report can be considered by Kedah State for the future economic growth of the State and Malaysia by continuing its attempt to grow, which could be a part of their Wawasan 2050 for the country. Sam Tabuchi Director, Asia PPP Institute Professor, PPP Graduate School Toyo University i Acknowledgement Director of Asia PPP Institute (APPPI), Professor Tabuchi has attended the Kedah Investment Seminar held in Tokyo in 2014 with the invitation of Tun Dr. Mahathir of Malaysia who is an Honorary Advisor of APPPI of Toyo University in Japan. At the seminar, Dato’ Dr. Ku Abd. Rahman Ku Ismail of Kedah State invited Prof. Tabuchi to visit his state, which he did in the fall of 2014. At that time, Prof. Tabuchi met with the former Chief Minister Mukhiriz bin Mahathir of the State of Kedah. Dr. Ku Rahman and Prof. Tabuchi continued their communication, which lead to conducting the Regional Development Support Program of Toyo University in Kedah in 2016. The officials from the State Government, headed by Dato’ Dr. Ku Abd. Rahman Ku Ismail received Toyo PPP study team in February 2016 and provided all the necessary arrangements during the field survey. Without their dedicated support, this Report could not have been produced. The study team was accompanied by Professor Khairuddin Abdul Rashid from Kulliyyah of Architecture and Environmental Design at IIUM - International Islamic University Malaysia (Toyo University has a collaborative relationship). His inputs and guidance, from the viewpoint of an expert who is familiar with both the concept of PPP and the local context of Kedah State, were valuable for the team in formulating specific recommendations. During the study mission to Kedah State, we have met with representatives of Obihiro Chamber of Commerce and Industry and JICA Office in Obihiro, Hokkaido. We found that Kedah State and Obihiro have a close business relation and some Obihiro companies are already considering advancing to Kedah to manufacture and distribute Obihiro product with the Halal approval. Obihiro is out of scope of our study but we plan to coordinate our effort with the Obihiro group in the future such as sending our report and invite the representatives from Obihiro when we make the final presentation and business match up with Japanese firms. We finally would like to convey our gratitude to all the people of the State of Kedah whom we met during the field survey. The team was supported by various stakeholders from public and private sectors, as well as academia and local citizens. The biggest reason why we believe in the potential of Kedah’s growth is this point: their willingness to advance. ii Table of Contents Foreword ..................................................................................................................... i Acknowledgement ..................................................................................................... ii Abbreviations ............................................................................................................ vi Executive Summary ................................................................................................ vii Chapter 1: Introduction ........................................................................................ - 1 - 1-1. Background .................................................................................................. - 1 - 1-2. Scope of the Report ..................................................................................... - 1 - Chapter 2: PPP trends in Malaysia ...................................................................... - 2 - 2-1. Basic concepts of PPP ................................................................................. - 2 - 2-2. Emergence and development of PPP in Malaysia ....................................... - 2 - 2-3. Issues of PPP in Malaysia ........................................................................... - 3 - Chapter 3: Present Situation of Kedah State ..................................................... - 5 - 3-1. Basic Information ......................................................................................... - 5 - 3-2. SWOT Analysis ............................................................................................ - 5 - Chapter 4: Recommendations ............................................................................. - 8 - 4-1. Overall Concepts ......................................................................................... - 8 - 4-2. Agriculture .................................................................................................. - 12 - 4-3. Rubber Industry (Rubber City Project) ....................................................... - 14 - 4-4. Science and Technology Park (Kedah Science Technology Park) ............. - 20 - 4-5. Transportation ............................................................................................ - 26 - 4-6 Tourism/MICE ............................................................................................. - 30 - 4-7. Halal Industry ............................................................................................. - 34 - Chapter 5: Steps Forward .................................................................................. - 38 - Appendix 1: Visited Organizations.................................................................... - 40 - Appendix 2: Study Team .................................................................................... - 41 - iii Table of Tables Table 1: Result of SWOT Analysis for Kedah ....................................................... - 6 - Table 2: Progressing high-tech parks ................................................................. - 21 - Table 3: Valuation results .................................................................................... - 22 - Table 4: the FAB analysis of KSTP ..................................................................... - 23 - Table 5: Malaysia’s Halal Standards ................................................................... - 35 - Table 6: Favored destinations by Muslim tourists ............................................... - 35 - iv Table of Figures Figure 1: Muslim Population in the World ........................................................... - 10 - Figure 2: The management of Port Authority of New York and New Jersey (PANYNJ) .................................................................................................................... - 11 - Figure 3: The management of Twin Cities-Minneapolis and St. Paul ................. - 11 - Figure 4: Average Yield of Paddy in Southeast Asian Countries (2013-2014) .... - 12 - Figure 5: Natural Rubber production in Malaysia and all over the world............. - 14 - Figure 6: Change of Export Price of Natural Rubber produced in Malaysia ....... - 15 - Figure 7: Production of Gloves and its annual price change ratio ...................... - 15 - Figure 8: Project Timeline of Rubber City Project ............................................... - 17 - Figure 9: Expected Project Scheme for Co-generation system with biomass method .................................................................................................................... - 19 - Figure 10: Growth of Total Factor Productivity .................................................... - 20 - Figure 11: Location of KXP Project Area ............................................................ - 26 - Figure 12: Geographical advantage of Kedah .................................................... - 29 - Figure 13: Image
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