KUALA LUMPUR (Feb 23): An economist has welcomed the incentives offered to companies relocating to the Tun Razak Exchange (TRX), but stressed a need for the government to increase ease of relocation by minmising red tape and boost the supply of high-quality talent.
“The incentives that the government is planning to offer are tremendous," said Malaysian Institute of Economic Research's (MIER) head of research Dr Shankaran Nambiar.
"Malaysia is certainly well-placed to attract companies [due to] obvious locational advantages. There are economies of association that companies can enjoy by being in Singapore. However, Malaysia is a lot cheaper than Singapore,” he told The Edge on Friday.
But Nambiar added that to ensure the success of the TRX project, there is a need to reduce red tape in the government's bureaucratic process.
The government, he said, must also ensure an abundant supply of high-quality talent.
“High-quality talent that can take on jobs in the new technology areas is an absolute imperative. If the government is not able to provide that from domestic sources, then it must at least make sure that there is ease in the movement of skilled labour,” he added.
Earlier Friday, Prime Minister Datuk Seri Anwar Ibrahim launched TRX as the country's International Financial Centre by announcing several incentives for companies relocating to TRX, including an industrial building allowance, a tax exemption for 70% of the statutory income for five years for property developers, and a stamp duty exemption for loan and service agreements.
Malaysia University of Science and Technology Professor Geoffrey Williams was less positive about the incentives, saying they could potentially hurt the property market in other parts of Kuala Lumpur and nearby areas.
"Incentives for TRX could draw buyers and tenants away from the other areas that are already seeing new developments. This will force down prices and rents for the owners [in those areas] and reduce their investment returns," he said.
According to Williams, the incentives have sent mixed signals to the market.
“On one hand, TRX is presented as a world-class financial hub with high-end mixed commercial, retail and residential property space. This should attract buyers and tenants on its own.
“On the other hand, the incentives suggest difficulties in filling up the massive space in a market which already has an over-supply of property. The TRX project was seen as risky from the start due to its size in a market which already has a property overhang and empty units,” he said.
Situated in the heart of Kuala Lumpur, TRX spans 70 acres and boasts modern infrastructure. Its master developer is TRX City Sdn Bhd, a subsidiary of the Ministry of Finance (Incorporated).
TRX investment partners include the Lendlease Group of Australia, Mulia Group of Indonesia, HSBC Malaysia, Affin Group, CORE Precious Development Sdn Bhd, Veolia, IJM Group and Prudential Malaysia.