By Chan Quan Min
Kuantan Port’s infrastructure is being upgraded with RM3 billion invested to build new highway interchanges to improve access while the port itself is being expanded with dredging, reclamation and berth construction.
The infrastructure works are part of the Malaysia-China Kuantan Industrial Park, part of a project to develop twin industrial parks that has backing from the highest levels of government in Malaysia and China.
Malaysian reporters were told in Kuala Lumpur yesterday the start of construction work in and around Kuantan Port signified the “seriousness of bilateral relations” between China and Malaysia.
Malaysian and Chinese officials met yesterday at the second joint cooperation council meeting of the Malaysia-China Kuantan Industrial Park and China-Malaysia Qinzhou Industrial Park twin development project.
The meeting was chaired by Deputy Minister of International Trade and Industry Lee Chee Leong and Pahang Menteri Besar Adnan Yaakob for the Malaysian side while the Chinese side was chaired by Vice Minister of Commerce Gao Yan and Vice Governor of Guangxi Zhang Autonomous Region Zhang Xiaoqin.
The joint cooperation council meeting is a yearly affair with the stated purpose of strengthening bilateral relations.
Kuantan Port is 60:40 owned by IJM Land and Guangxi Beipu Port Group of China. Guangxi Beibu Port Group paid RM334 million in 2013 to buy its stake from IJM Corp. The RM3 billion in new investment in port infrastructure is shared between both owners.
Total committed investment by private sector companies and government-linked companies has topped RM17 billion to date. Other participating members of the joint cooperation council of the China-Malaysia twin industrial park projects are The East Coast Economic Region Development Council, Sime Darby Properties, SP Setia and Rimbunan Hijau.
SP Setia and Rimbunan Hijau are property developers of the China-Malaysia Qinzhou Industrial Park, which is far larger than its Malaysian twin at 55 square kilometres.
At the Qinzhou Industrial Park, construction has reportedly begun for five separate projects including oil processing, biomedicine, halal food, LED chip-making and a third party product testing laboratory.
The Malaysia-China Kuantan Industrial Park last year saw an investment of RM3.5 billion by Guangxi Beibu Gulf Iron & Steel Investment Co Ltd for the construction of an integrated steel mill for the production of high-carbon and H-shape steel.
The Pahang state government plays its part in the twin industrial park project by making land available at low rates for development, a joint cooperation council spokesperson said.
Tax exemptions and incentives
Companies who set up operations at the Malaysia-China Kuantan Industrial Park stand to enjoy a 10-year tax exemption under pioneer status and a full investment tax allowance for five years.
The tax incentives offered to investors in the Kuantan Industrial Park are no different to the incentives currently being offered to foreign direct investment anywhere in Malaysia.
Companies managing industrial parks are also given “incentives for industrial area management” as announced by Prime Minister Najib Abdul Razak in Budget 2015.
“An incentive of 100% income tax exemption for a period of five years will be made available to encourage the private sector to manage, maintain and upgrade industrial estates in less-developed areas,” Najib said during his budget speech in October last year.
A spokesperson for the East Coast Economic Region Development Council said talks are underway to set up trade links between China and Malaysia by way of Kuantan or Qinzhou seeing as both are sister port cities.
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