Iskandar Development Region - Malaysian Institute of ... · • co-operate with IRDA in performing its functions under the Act. • where relevant, refer and utilise information,

Iskandar Development Region- unique features of the IRDA Act 2007 to facilitate

investments

Chew Seng Kok

Managing Partner

MIA Regional Conference 2007, Southern Malaysia: Driving Regional Economic Growth, 10 & 11 September 2007

©2007 Zaid Ibrahim & Co. All rights reserved

Development of IDR

©2007 Zaid Ibrahim & Co. All rights reserved.


Background

• July 2005 - Khazanah asked to conduct a feasibility study for Fed. Govt. onthe development of a special economic zone (SEZ) in south Johor that will “compete with other SEZs in the region for investments from around the world.”

• The study concluded that there was a strong economic, social anddevelopmental rationale to create the SEZ in south Johor.

• Key findings from the study incl. the importance of :

– a conducive and facilitative business environment for investors;

– an effective and holistic body to speedily process applications; and

– a statutory body to enshrine the joint commitments of the Fed. & State Govts. & confer a level of permanency and clearly defined objectives, functions and responsibilities of stakeholders involved in the development of IDR

• Khazanah proceeded to prepare a comprehensive development plan for IDR.


Key Milestones

• On 2nd Nov 2006, a Heads of Agmt was signed to form a new company, the South Johor Investment Corporation Bhd (SJIC), to drive the development of catalyst projects in the IDR.

• On 4th Nov 2006, IDR was officially launched by HRH Sultan of Johor and witnessed by YAB Prime Minister and YAB Chief Minister of Johor.

• The Comprehensive Development Master Plan (CDP) for the IDR was released in conjunction with the launch.

• The Iskandar Regional Development Authority Act 2007 came into effect on 17 February 2007.

• On March 2007, PM announced a series of attractive investment incentives for qualifying companies doing business in the IDR.


Legal Challenges in Facilitating IDR for Investors



Physical Developments

• IDR is located within the Johor State which has exclusive jurisdiction over land and local Govt. matters but only the Fed. Govt. can grant special fiscal incentives and waiver of restrictions to facilitate foreign investments.

• The IDR is not a wholly greenfield development – there are many ongoing or approved existing projects within the proposed IDR area.

• Uncoordinated and duplicative developments amongst local authorities.

• Lack of comprehensive master plan on physical development, infrastructure, utilities, etc. to guide strategic long term investors.


Planning & Implementation

• Inconsistent implementation policies on land laws, planning and development matters over time

• Lack of transparency with changes and exemptions to policies in processing applications for planning and development.

• Lack of co-ordination amongst Fed. Govt., State Govt. & Local Authorities in dealing with applications

• Proposals for projects, under existing laws, require different levels of Govt. approvals eg.

� Fed. Govt. - fiscal incentives by MOF, MIDA

� State Govt. - land related matters

� Local Govt. - planning and building issues


Red Tape

• Myriad/Multiple layers of approvals for new projects and investments

• Inordinate delays in processing applications


Multiple Roles of IRDA



Objective (S.4)

• To develop the IDR into a “strong and sustainable metropolis of international standing.”

– single simple objective to drive everything that IRDA is supposed to do

– “metropolismetropolis” = big city or metropolitan area

– “strong & sustainablestrong & sustainable” = a commitment to development which is continuous whilst environmentally friendly

– “international standinginternational standing” = must benchmark against the best of other developments in the world, not just in Malaysia

•• ““A World Class Sustainable Conurbation of International StandingA World Class Sustainable Conurbation of International Standing” -Vision for IDR as stated in its CDP and on the website of IRDA.


Functions (S.5)

• Establish national policies, direction and strategies for development within IDR.

• Co-ordinate performance activities by Govt. Entities (any ministry department office, agency, authority, commission, committee, board, council, or body of the Fed., State or local Government, whether established under written law or otherwise).

• Recommend to Govt. Entities – … policies, laws and actions … to enhance the international competitiveness of

industry and commerce in the IDR– incentives in relation to taxes, customs and excise duties and other fiscal incentives

• Promoting & stimulating IDR as a trade, investment and logistics centre, duty free area and tourist destination

• Facilitating and undertaking in IDR economic and social development incl. residential & agricultural development, culture and recreation activities, public education and public health.


Powers (S.6)

• Require Govt. agencies

i. to provide information within their possession for IRDA to carry out its functions; and

ii. assist and submit info. regarding their activities or proposed activities.

• Recommend to the State Govt. and local authorities within IDR on local govt. functions and services “incl. local planning control”.

• Co-ordinate development of property, infrastructure and amenities in IDR.

• Directly or indirectly approach any investor, whether local or foreign to promote investment in IDR.

• Apply for and accept alienation or transfer of land within the IDR for development.


Special Responsibilities & Powers of IRDA



Direction, Policies and Strategies for Development in IDR (SS.22(1) & (2))

• Its functions on the development of IDR must be consistent with the national policy for promotion & control of land utlisation and the State Govt. policy on planning of development & use of land & buildings.

• Assist the State Planning Committee (SPC) and relevant local authorities to coordinate and implement development in IDR through the CDP for the private and public sectors.

• Implement strategies and initiatives for the development of international trade and marketing, and attracting investments to the IDR.

• Identify the necessary infrastructure for the maintenance and expansion of the economy of the IDR in accordance with the CDP.

• Recommend criteria for Govt. Entities and private sectors to provide infrastructure and services in the IDR.


Prescribed strategic development (S.27)

• IRDA, with the concurrence of the SPC, may prescribe any development or areas within IDR which may have “a significant economic impact” to the IDR as a prescribed strategic development or prescribed strategic development area.

• If so prescribed:

– any person or Govt. Entity intending to carry out any such prescribed development or any development within the prescribed development area shall first refer to the IRDA for its directions.

– directions given by the IRDA shall be for securing conformity and consistency with the contents of the approved CDP.


Principal Co-ordinating Agency (S.28 & 29)

• Acts as principal co-ordinating agency on behalf of Govt. Entities in receiving, processing and expediting of Approvals (licences, permits, passes, registrations and etc incl. those relating to the admission into and departure from Malaysia of non-Malaysians, and for tax, customs, etc required in connection with trade, investment and development in the IDR).

• Provides administrative services and assistance to Johor State Govt. on land matters within the IDR.

• IRDA to appoint at least 2 Commissioners, one appointed by the Fed. Govt. and another by the State Govt. to liaise with and coordinate all Govt. Entities “in order to expedite issuance or grant of all approvals requiredunder Fed. or State laws of Johor, as the case maybe.


• IRDA may enter into an agreement or arrangement with any Govt. Entity (Fed. Govt., State Govt., State Authority or local Govt. and any Ministry department, committee, board, council, or other body, corporate or incorporate, of the Fed. Govt., State Govt. or Local Govt.) to:

– carry out their respective functions and powers

– provide any works or services

– collect, on behalf of the Govt. Entities, fees, costs, levies, contributions or any other charges lawfully required, charged or imposed.

• However, any arrangement or agreement shall be with the consent of the Minister (Fed. Govt. Entity), State Authority (Johor State Govt. Entity) and subject to the laws governing the powers and functions of the relevant Govt. Entity.

Agreement or Arrangements with Govt. Entities (S.31)


Every Govt. Entity has the responsibility to:

• co-operate with IRDA in performing its functions under the Act.

• where relevant, refer and utilise information, statistics and factors disseminated by IRDA in carrying out their activities within the IDR.

• give due consideration to the proposed policies, laws and actions to be applied to the IDR as recommended by IRDA.

Duty on Govt. Agencies vis-à-vis IRDA (S.32)


Effect & Implications of Comprehensive Development Plan

(CDP)



CDP*

This plan serves as a guide for future economic, social, environmental and physical development, and supports the existing development planning system.

IDR CDP

Strategic Economic, Social, Institutional and Management Plan

• Regional level policies• Plan for growithh and sustainable

development • Contains policies and strategies for

implementation

Physical Plan• Proposals for physical development

incl. plans for infrastructure, utilities, transportation, greenery & public amenities

National Physical Plan

State Structure Plan

Other Local Plans

* Source - Khazanah/IRDA


Contents of the CDP (S.23)

IRDA is to prepare the CDP consisting of:• Strategies for the physical, economic and social development of the IDR

incl. initiatives for :

– mgmt of the use of land

– mgmt and promotion of urbanisation

– protection, preservation and enhancement of natural environmental resources, agricultural resources, parks and open spaces

– dev. of coastal areas balanced with protection of natural coastal environment

– revitalisation and enhancement of JB City Center

– provision, integration & co-ordination of urban infrastructure and utility services

– targeted commercial development


Wider Context of the CDP (S.23)

• Proposals, policies and strategies to areas surrounding the IDR if reasonably required to achieve the proposals for the CDP, incl. on matters relating to security, the protection and improvement of the environment and the preservation of natural resources

• Draft of CDP must conform generally to existing structure plans and take account of the National Physical Planning Council and national, state and regional policies.


Statutory Duty with Respect to Approved CDP(S.24 & 26)

• The draft CDP has to be submitted to the SPC for approval.

• SPC is empowered to ensure the contents of the approved SDP are incorporated into the local plans.

• “It shall be the duty of every Govt. Entity and person, whether local or foreign to take cognisance of, and act in a manner consistent” with the contents of the CDP not incorporated into a local plan, once the CDP has been approved by the State Planning Committee.


Approvals and Implementation Committee (AIC)



Approvals and Implementation Committee - “One Stop” Coordinating Body (S.30)

• Statutory backing for a Committee with responsibility, to IRDA, inter-alia:– monitoring status of all approvals

– coordinating the roles and activities of Fed. & State Govt. entities

– identifying any difficulties and issues and recommending appropriate steps and administrative steps to resolve the same

– reporting on the status of implementation

in relation to any proposed major or strategic development & investments

• Committee chaired by MB and comprises senior reps of Fed. & State agencies, Fed. & State Commissioners and president of every local authority within the IDR.

• Composition of the Committee intended to facilitate quicker implementation of approvals through integration and coordination amongst all relevant bodies involved in the process.

• Intended to meet regularly to process applications for investments/projects.


Comparison of IRDA with Relevant Statutory Bodies



Comparison of selected powers

��

Requires govt depts and govt & non-govtagencies carrying out/intending to carry out development to submit reports of activities

�

�

�

�

�

�

P’badananLabuan

��Preliminary studies, plans & surveys for development

�Privatise, transfer or dispose of any of its activities or assets

��

Give financial assistance to any public authority, person or company appearing to have facilities for activities

Perform all functions of a local planning authority

�Perform all functions of local govt.

��Establish companies

��Commercial activities

IRDAP’badananPutrajayaLADAPDCAuthority


Comparison of selected powers (cont.)

��Impose fees

��To regulate, coordinate & undertake development

��

�(but no

involvement of State Govt.

��

Co-operate with, act as agent, act in association with or on behalf of Fed. or State govt. & promote & co-ordinate such govt. activities

�Regulate, approve & control buildings

�(only for

prescribed strategic dev. or

strategic dev.

areas)

�

Requires Fed Govt, any public authority, company or person to obtain its prior approval before carrying out devpt.

IRDAP’badananLabuan

P’badananPutrajayaLADAPDCAuthority


Commercial Development Initiatives for IDR



South Johor Investment Corporation (SJIC)

• An investment holding company with Khazanah, EPF & KPRJ as shareholders.

• Mission is to promote and coordinate the overall development andinternational positioning of IDR.

• Mandated to invest in selected strategic and catalytic initiatives through shareholding stakes in JV or contribution of land either through sale or lease or granting of a concession or development of IDR.

• On 29th August ‘07, SJIC executed series of agreed conditional agmts with leading blue-chip investors from the Middle East with an initial investment of US1.2 billion to develop Node 1, an integrated international city development in IDR.


Investments in IDR consistent with IRDA & CDP Objectives

Press Release by SJIC on 29 August 2007

•• SJICSJIC – “Aldar, Mubadala, Kuwait Finance House and MDI as founding partners in Node 1… committed to sustainable development and & investment strategies”

•• AldarAldar – “landmark project… founded on sustainability, environmental stewardship and shareholder returns”

•• MubadalaMubadala – “sustainable development… built upon a solid infrastructure attracts global brands“

•• Kuwait Finance HouseKuwait Finance House – “international standards for liveability and quality of life”

•• MDI MDI – “global destination of choice for commerce and financial services”


Conclusions

• Strong foundation for unique and institutional framework and arrangements through IRDA Act and AIC in implementation.

• Unique and unusual roles of IRDA as “a master planer, policy maker, investment promoter, facilitator, landowner and developer, all rolled into one”.

• IRDA’s roles complemented by SJIC in driving the “demand side” for IDR through stimulating and coordinating private sector development and investments.

• The first wave of Middle-East Investors has arrived on 29th August 2007.

• Real challenge now is to deliver on the promises through implementation of the planning and approval process, benchmarked against the standards to be a “metropolis of international standing”.


Documents

Iskandar Development Region - Malaysian Institute of ... · • co-operate with IRDA in performing its functions under the Act. • where relevant, refer and utilise information,