MCKIP SET TO FIRE INTEREST IN A HOST OF LOCAL STOCKS

A host of local stocks are anticipated to pick up steam with the launch of the 685-hectare Malaysia-China Kuantan Industrial Park (MCKIP) on February 5, 2013 that will pave the way for a slew of new contracts to replenish their companies’ order book.

Investors are turning their attention on MCKIP which is targeting a list of industries that involves the manufacturing of equipment for plastics and metals, automotive components, stainless steel, carbon fiber, electrical & electronics, information & communications technology, and consumer products.

Dozens of companies on Bursa Malaysia Securities have the fundamentals and business synergies to join the MCKIP bandwagon, as the RM1.5 billion industrial park provides opportunity for collaboration and joint-ventures with large Chinese companies and can fuel the potential of some companies to be on par with the “big-boys.”

The launch of MCKIP comes at the perfect time with the FBM KLCI still on its 1,600 point support level and anticipated to have further upside riding on a possible pre-Chinese New Year rally and taking into account that the 13th General Election is believed to be called in late February. The benchmark index had earlier in the month hit an all time high of 1,692.65 points at close.

A private sector initiative with the federal government as facilitator, MCKIP will also stir the interest of strategic emerging industries such as environmental-friendly technologies, new-generation information technology, biotechnology, and alternative energy to set foot. The industrial park’s potential is enormous as it is projected to create 5,500 employment opportunities and RM7.5 billion in total investment value by 2020.

What is interesting is that MCKIP is not a standalone but within the KuantanPort Cityproject that covers 30,000 hectares of an integrated industrial and logistics hub.

Besides higher level of sustainable economic relations between Malaysiaand China, the industrial park serves as platform for growth development and support of the private sector to help promote investment inflows and entrepreneurial opportunities that will also boost the small and medium enterprises (SMEs).

MCKIP is the first industrial park in Malaysia to be jointly developed by Malaysia and China, and is a government-to-government initiative announced in reciprocation to the China-Malaysia Qinzhou Industrial Park that was launched in China by Chinese Premier Wen Jiabao and Malaysian Prime Minister Dato’ Sri Najib Tun Abdul Razak on April 1, 2012.

To spice-up MCKIP, it will be developed by a master developer comprising a joint venture company between a Malaysian Consortium and a Chinese Consortium under a 51:49 equity ratio. The Malaysian Consortium consists of SP Setia Bhd with 40% equity, Rimbunan Hijau Group (30%) and the Pahang State Government through Perbadanan Setiausaha Kerajaan and Pahang State Development Corporation (30%). The Chinese Consortium involves Guangxi Beibu Gulf International Port Group (47.5%), CCCC Real Estate Co Ltd and China Harbor Engineering Co (47.5%), and Qinzhou Investment Co (5%).
 

Prime Minister Najib will officiate the ground breaking of MCKIP and is likely to unveil a list of fiscal and non-fiscal incentives such as preferential tax treatments that will bring further excitement among investors and see stronger equity returns sooner than expected.

It is learned that several memoranda of understanding (MOUs) will be inked on February 5 by key Malaysian and Chinese companies that are eager to commit their investments in MCKIP “in a big way” riding on the positive impact the industrial park has to offer.

It was recently reported that Chinese companies were showing keen interest to invest in MCKIP despite the political issues related to the Lynas rare earth plant in Gebeng which is located near the industrial park.