Part of the "Inside Iskandar" section in today's ST.
The Straits Times
www.straitstimes.com
Published on May 31, 2013
Inside Iskandar
Kingsmen plans to expand if price is right
WHEN Kingsmen Creatives expanded its production capacity back in 2005, its top priorities were space, proximity and price.
The firm, which designs and makes retail and corporate interior furnishings and fittings as well as exhibition installations, wanted a large space that could be divided into sections for woodworking, metalworks, plastics and spray-painting.
It also had to make sure that this workshop was nearby so its managers could easily supervise and check on the quality of the manufacturing.
Singapore was simply too expensive a location in which to lease such a large space, while places such as China and Vietnam, while cheap, were too far away.
Johor was the perfect solution.
Kingsmen rented a 200,000 sq ft workshop space in Senai Industrial Park II, in Flagship E of Iskandar. The rent that it secured for the space was 60 per cent lower than what it would have had to pay in Singapore.
Kingsmen was smart to move into Iskandar early. Rentals have been rising steadily over the past couple of years, noted managing director Simon Ong.
"From being 60 per cent lower, the rent has been creeping up to 50 per cent cheaper than Singapore. The prices of new leases have risen since the announcement of the high-speed railway between Singapore and Kuala Lumpur," he said.
"When we renewed our lease, the rental increased a bit too, but it's still lower than what we would be paying if we were just coming in now."
Despite the fact that Iskandar is no longer as cheap a place to do business as in the past, Kingsmen still sees potential and opportunities there.
"Our group is growing and we have plans to expand in Iskandar. If we can find the right place, we might invest there. We are looking," said Mr Ong, adding that the company is not restricting itself to the Flagship E area.
One major reason why Kingsmen still wants to expand in Iskandar is the fact that security and infrastructure there have improved greatly, as development has accelerated over the past five years.
"Seven to eight years ago, it was in a very different condition. Now, there are more industrial facilities that are good, with good security," Mr Ong said.
"And in terms of roads, logistics and all that, they are not issues any more. Previously, every area had different issues, whether logistics, manpower or security, because Iskandar wasn't so established."
Nonetheless, Kingsmen is steeling itself for challenges ahead.
"It used to be much easier to find workers. It's become harder and I foresee that going forward, it will be harder because there are more companies going in now," Mr Ong said.
"Workers such as Malaysian carpenters have a choice; they can get work permits in Singapore quite easily... and they are expecting higher and higher salaries."
Salaries have at least doubled, from 2005 to now, he added.
That is why companies looking for cost reductions should not turn to Iskandar, he said.
"If you want to save, you should go to Vietnam."
