In defence of the China developers

THE China developers came … saw ... and now, they are on the way to stamping their mark on the property market in Johor Baru.

But their aggressive marketing and massive projects have spooked our local players, many of whom are scrambling to survive against the onslaught by the China "invaders".

These are no pushover companies. The Country Garden Group, Guangzhou R&F Properties and the state-owned Greenland Group are among China's top developers with astounding annual revenues that surpass even the GDP of many Asean countries.

Their reach is also extensive with impressive real estate developments spread across China and in many of the biggest cities around the world.

Their technical expertise and management know-how is also unshakeable as manifested by the many world-class projects they have successfully delivered to discerning customers and property investors.

With such impressive track records and the enormous financial resources at their disposal, we should be happy to welcome them to Iskandar Malaysia. Right?
The answer, shocking as it may seem, is a flat No!

Indeed, certain parties with vested interests have now started a campaign blaming virtually everything that is besetting the once "hot" Iskandar Malaysia property market on these China players.

They claim a looming oversupply situation is imminent and blame it on these China companies because of their penchant to launch massive projects in one go.

But the truth is that these China developments pose no threat to the local market. This is because, unlike the run-of-the-mill mixed developments by local developers, theirs are all exclusive waterfront projects with creative and unique features.

They are here to help transform Johor Baru into a new, vibrant and exciting waterfront world-class city and destination. This is something the local big boys have not even considered, let alone undertake.

Don't forget, this requires tremendous investment and capital outlay. And frankly, only China, which now virtually controls the world economy, has the financial muscle to make such a commitment.

So, why the backlash towards this foreign direct investments (FDI) from China?

Malaysia welcomes FDI from all countries, including China. Anyone with a viable, innovative and creative project proposal is welcome.

However, they must also have an impressive track record with proven skills roll out and undertaken projects. They must also be financially strong to weather the storm in the event of an economic slowdown.

The China players, without a doubt, meet all the prerequisites and are worthy of participation in the Iskandar Malaysia property market.

The economic spill-over of their investment on the local economy is going to be tremendous. This will have far-reaching implications on all sectors of the economy.

It is also noteworthy to clarify the China projects occupy a negligible land size ... they make up less than one-fifth of Iskandar Malaysia's total landbank of 2,000 sq km.

Also, the land in question is almost completely within the "international belt" of Johor Baru. This is where the new "Gateway to Malaysia" will be built to give the city a new international façade.

When completed, they will help reposition Johor Baru as a new world-class waterfront city. Their projects in no way pose any competition to the mundane housing schemes by local developers.

It is also significant to point out that fears of an impending property glut in Iskandar Malaysia, as is being whipped up by our property builders, is largely unfounded.

These China companies are monitoring market demand closely and if need be, will almost certainly delay or stagger their project launches accordingly. This is basic business common sense.

Malaysian developers also need not worry that these foreigners will take away their domestic market share of the property business.

The China projects are exclusively waterfront developments aimed at the high-end luxury market segment. They do not pose any threat to Malaysian developers.
Of course, there are complaints that these foreigners have got away without having to adhere to strict building laws and regulations because of their alleged links with people in high places.

This is where the government has to crack the whip. The building industry is one of the most regulated with a host of statutory rules governing almost every aspect of the construction process.

Hence, it is incumbent that the authorities do not waver when it comes to protecting local interests, especially bumiputra participation in the local economy.

The relevant government departments and agencies must ensure local suppliers, contractors and businesses get their fair share of all contracts by these foreign developers. It is their job to make sure all abide by the rules, including these China players.

But in all fairness, we must stop running down these companies from China. If left unchecked, the increasing negative public sentiment may force them to pull back and ship out altogether.

Should that happen, it will severely impact investor confidence in Iskandar Malaysia and probably sound the death knell of the southern economic growth corridor.

Roy, a long-time resident of Johor Baru, is a keen watcher of economic, political and social trends on both sides of the Johor Straits. Comments: letters@thesundaily.com