Kuala Lumpur forms the most industrialized city in Malaysia. Exec finds out how it has become a metropolitan center.
Written by Ellie Duncan
Malaysia is divided into Peninsular Malaysia and East Malaysia, and Kuala Lumpur, known as KL to the locals, lies midway along the west coast of the former. With a population of approximately 1.5 million, it is the largest city in the country and the fastest-growing region of Malaysia economically.
Despite the speed with which the city has grown, the Malaysian Government is keen to preserve its cultural heritage. Ongoing development carefully incorporates modern conveniences, with the aim of creating a metropolitan centre.
“The capital city offers visitors an eclectic mix, with vibrant Asian culture sitting alongside British colonial architecture and famous hi-tech structures, such as the Petronas Towers,” says Abu Bakar Koyakutty, Trade Commissioner, Malaysia External Trade Development Corporation.
BUSINESS INCENTIVES
Kuala Lumpur offers tax incentives to organisations looking to situate themselves in the city, granting partial or total relief from income tax payment for a specified period. The incentives are designed for different industries, including manufacturing, hi-tech, industrial and automotive.
Monica Lai, Chief Financial Officer of Ireka Development Management, says: “The Malaysian Government is very proactive in terms of business – they ensure a very conducive environment. Over the years, they have put in place a lot of policies and incentives that make trade and investment very easy and reliable for foreign investors. That’s also the reason why it has attracted a number of global players here.”
Those global players include Motorola, Dell, Hewlett Packard, General Electric and Intel. For this reason, Lai identifies the capital as a business hub, and one that is increasingly competitive on an international scale. The country’s abundance of natural resources underpins Kuala Lumpur’s economy, helping it to remain resilient, Lai points out.
Koyakutty further explains: “One of Malaysia’s major pull factors is its large pool of young, educated workers. Many of Malaysia’s university graduates are trained overseas in fields such as engineering and accountancy, allowing them to adapt easily to an international corporate environment.” The youth of the population places pressure on the city to provide a high standard of living and generates opportunities for development.
Another advantage of its population, and one that has been pivotal to its transformation into the business hub of Malaysia, is the English-speaking workforce. Lai confirms that the majority of Kuala Lumpur’s citizens use the language as a means of communication when doing business.
A CITY WITHIN A CITY
Crucial to Kuala Lumpur’s continuing economic growth is the development of Kuala Lumpur Sentral, a self-contained environment which promises to offer urban living and quality of life – a city within a city concept. The landmark project is the work of a consortium, headed by the Malaysian Resources Corporation Berhad.
The development was originally intended as an integrated rail transportation nucleus to support the fast-growing nation. Since construction began, KL Sentral has become a centre of connectivity, investment opportunities and business convenience – in other words, it offers an executive lifestyle.
On completion in 2020, it will comprise 72 acres, and will be accessible via five major highways. The main method of transport within the area will be the RM1.1 billion Stesen Sentral, which is expected to carry 70,000 passengers a day, and over 100 million a year by 2020.
Lai boasts that KL Sentral is the single-largest commercial development in the whole of Malaysia, and currently one of the most exciting in Malaysia. “We definitely see a lot of opportunity in KL Sentral but unfortunately there are not many pieces of land left, they are taken – it is a very competitive market.”
Aseana Properties, managed by Ireka Development Management, has entered a joint venture with Malaysian Resources Corp to construct a two-tower office block and a boutique business hotel in the ‘city’. Many multinational companies also have offices in the area, including Cisco Systems and PricewaterhouseCoopers.
GLOBAL MARKET
The current economic downturn could pose a risk to Malaysia, particularly with the strong presence of multinationals in Kuala Lumpur, and the ongoing construction of KL Sentral. “I think every country is affected by the sub-prime issue, including Malaysia, and I think, in line with other economies, inflation is something that the Malaysian Government has to deal with now,” Lai explains.
Significantly, the country has recently undergone a political change, inspired by the main opposition party, Parti Keadilan Rakyat (PKR). Malaysia’s current Government lost a number of seats to PKR, who are now governing several states in the country.
Lai is certain that Malaysia can only benefit from a more diverse political spectrum: “The people will see that this is actually a positive move because it is good to have a reasonably strong opposition party that can provide some balance to the Government.”
In terms of business, PKR is also keen to encourage foreign-investment and retain Malaysia’s reputation as an investor-friendly country. “Kuala Lumpur’s future is bright; it is strategically located within the ASEAN region. Business in Kuala Lumpur has easy access to a population of more than half a billion surrounding the region,” explains Koyakutty.
The Trade Commissioner emphasizes that Malaysia’s geographical location is the key to its growth: “Being in the centre of two giant economies – India and China – the role of Kuala Lumpur and Malaysia as the hub for these two regions will become important in the future.”
Kuala Lumpur is poised to grow on an enormous scale in the coming years as the development of KL Sentral continues. Realization of the city’s ambition to become an environment in which to live, work and play is not far off, and the strength of its economy bodes well for future foreign investment.