Special Vehicles Alliance ASEAN Market Progress Report

101 Pages·2015·2.42 MB·English

Strategic Management Advisory

Adelaide City Council

Investigating Opportunities for Leveraging Adelaide’s Sister
City Relationship with George Town, Penang, Malaysia

September 2015
TABLE OF CONTENTS
EXECUTIVE SUMMARY ......................................................................................... 1
1.0 INTRODUCTION AND PROJECT OBJECTIVES ................................................. 8
2.0 OVERVIEW OF SOUTH EAST ASIA – THE ASEAN REGION ............................ 11
2.1 ASEAN ECONOMIC COMMUNITY..................................................................................................... 12
2.2 TRANS-PACIFIC PARTNERSHIP AGREEMENT (TPP) ............................................................................... 13
2.3 REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT (RCEPA) .......................................... 15
3.0 OVERVIEW OF MALAYSIA ......................................................................... 17
3.1 KEY ECONOMIC DRIVERS ................................................................................................................ 17
3.2 LOCAL REGULATORY ENVIRONMENT ................................................................................................. 18
3.3 MALAYSIA - AUSTRALIA FREE TRADE AGREEMENT (MAFTA) ................................................................ 19
3.4 ASEAN - ANZ FREE TRADE AGREEMENT (AANZFTA) ........................................................................ 22
4.0 OVERVIEW OF PENANG AND GEORGE TOWN ............................................ 25
4.1 PENANG ...................................................................................................................................... 25
4.2 GEORGE TOWN............................................................................................................................. 27
5.0 OVERVIEW OF SELECTED PENANG INDUSTRIES ......................................... 29
5.1 EDUCATION .................................................................................................................................. 29
5.2 HEALTH AND HEALTH TOURISM ....................................................................................................... 30
5.2.1 Hospital Providers ........................................................................................................... 32
5.2.2 Medical Device Manufacturers ....................................................................................... 32
5.2.3 Pharmaceutical Companies ............................................................................................ 33
5.3 PROFESSIONAL SERVICES................................................................................................................. 34
5.3.1 Legal Services .................................................................................................................. 35
5.3.2 Accounting Services ........................................................................................................ 36
5.3.3 Architectural Services...................................................................................................... 37
5.4 TRANSPORT INFRASTRUCTURE ......................................................................................................... 37
6.0 THE SOUTH AUSTRALIAN AND ADELAIDE CONTEXT ................................... 39
7.0 ANALYSIS AND OPPORTUNITY ASSESSMENT ............................................. 42
8.0 STRATEGIC ASSESSMENT AND RECOMMENDATIONS ................................ 57
9.0 CONCLUSION ............................................................................................ 62
Executive Summary

AsiaAustralis has been commissioned by the City of Adelaide to investigate opportunities for leveraging
Adelaide’s Sister City relationship with George Town, Penang, Malaysia.

The role of local government in economic development and how this is implemented has been under scrutiny in
recent times. This has been compounded by difficult economic conditions since the global financial crisis and is
challenging local government to find alternative models for economic success and sustainability.

The purpose of this project and report is to assist the Adelaide City Council make economic development a
stronger focus in existing Sister City Agreements, and specifically George Town.

The key objectives of this project were to:

 Better understand the trade and investment opportunities available in George Town and how to
leverage Adelaide’s economic drivers such as education, health and professional services.

 Better understand the capability of the Adelaide City Council and its businesses to supply markets in
George Town.

 Improve the awareness and export readiness of Adelaide City Council firms in relation to the
opportunities identified in George Town.

In order to achieve these objectives, AsiaAustralis has utilised existing in-market networks in Malaysia to
coordinate research and engage broadly with a range of government (trade and investment agencies), and non-
government organisations. While not a requirement of this project, AsiaAustralis participated in the South
Australian Government’s Trade Mission to George Town during August 2015 to ensure access to appropriate
Penang government personnel and consistency with the State Government’s approach to this market.

This project and research focuses on potential trade and investment attraction opportunities associated with
the George Town sister city relationship, the findings and recommendations of the project have been
considered within Council’s broader economic development strategy.

Analysis and opportunity assessment is therefore undertaken on the basis of Council’s Relative Competitive
Position (RCP) of priority industries and compared with the Market Attractiveness (MA) of George Town. This
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enables an evaluation of Council industry’s strengths and weaknesses (RCP) against the George Town market
opportunities ad constraints (MA).

There are significant regional market differences between Adelaide, South Australia and George Town, Malaysia
and it needs to be recognised that South Australia’s economy and population are comparatively small in a global
context, and the City of Adelaide’s even smaller. It is recommended that Council’s George Town sister city
strategy specifically adopts a targeted approach that supports and adds value to current private sector and
government initiatives in Malaysia and the broader ASEAN region. AsiaAustralis research has resulted in the
following four core deliverables, which are outlined in further detail throughout the report:

1. George Town, Malaysia’s specific role in the Malaysian economy and its strengths, weaknesses,
opportunities and threats.

Sections 3, 4 and 5 detail George Town’s role and its strengths, weaknesses, opportunities and threats.
Most importantly, its Bilateral Free Trade Programs provide economic integration opportunities for
Adelaide firms throughout the Indo-Pacific should they establish businesses or joint ventures in George
Town. Its industry strengths are focussed around the health industry including medical products and
technology manufacturing, medical research and the provision of diagnostic, medical and clinical
services to international patients, both on and off-shore. Examples of specific opportunities for
Adelaide organisations include:

o Investment in, and promotion of, Malaysian Retirement Villages in Adelaide. This is a specific
investment attraction opportunity for the City of Adelaide with the opportunity to match
Malaysian investors (e.g. Gamuda, SP Setia, EcoWorld, etc.) with Adelaide service providers
(e.g. Southern Cross, Metcalf Group, etc.) for new development in the City of Adelaide,
including vertical (High rise) developments.

o The size, growth and advanced nature of the healthcare industry in Penang and George Town
make it a suitable market for any medical device company in Adelaide seeking international
investment and export markets. Partnerships could also be struck between the Royal Adelaide
Hospital, the health science faculties of both the University of Adelaide and the University of
South Australia and healthcare providers in George Town to build upon services that they
currently offer.

o Promotion of Penang’s Health Tourism industry as a major export development opportunity
for Adelaide’s globally recognised surgeons and medical specialists (e.g. Adelaide Plastic
Surgery Associates, Wakefield Reconstructive and Cosmetic Surgery, etc.). Adelaide medical
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practices and specialists have the opportunity to establish practices or joint ventures in
George Town, Penang for the servicing of Australian and other international patients.

George Town’s ambitious post-secondary education targets and strategies offer for Adelaide’s
universities and TAFE sector to develop transnational and twinning business including for example:

o Transnational education - Given the importance and funding emphasis that the Malaysian
government is placing on advanced tertiary education, as noted in this report, there is an
exceptional opportunity for City of Adelaide education institutions (universities and TAFE) to
initiate transnational education in Penang in association with Penang institutions (Appendix 1
contains a list of Penang’s Higher Education Institutions). This is a specific investment
attraction opportunity in George Town, Penang and extends to education and training in aged
care.

o MAFTA provides preferential access for South Australian TVET and Higher Education in
Malaysia, and would provide opportunities for Adelaide City based institutions to develop
outpost operations in Penang in order to grow Malaysian student market share. Flinders
University, UniSA and TAFE SA are three organisations that have commenced early stage
exploration of developing business relationships in Malaysia with recent advancement via the
State Government’s Trade Mission to George Town in August 2015.

o Institutional Twinning – The City of Adelaide could facilitate proposals between university and
TAFE organisations in Adelaide and George Town. Malaysian institutions already practice
twinning systems, whereby Malaysian students complete a portion of their degree at a foreign
institution.

o Malaysia and Penang’s expanding tourism and health tourism industries offer opportunities
for hospitality education and training in this sector including, for example, TAFE’s capabilities
and accreditation being provided to Malaysian education and training organisations (e.g.
Pacific Challenge Hospitality Training).

The Malaysian Government has identified 11 high-potential professional services under the ETP that it
wants to proactively develop through a range of policies and initiatives. The Malaysia Australia Free
trade Agreement has also committed to allow 100% Australian ownership in accounting, auditing and
bookkeeping services in Malaysia. Examples of opportunities in the professional services sector include:

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o Leveraging the networks of professional services organisations including accounting firms,
financial institutions, migration agents, educational institutions, and other members of the
City of Adelaide international business community who are interested in expanding or
establishing a presence in key overseas markets. The relaxed Malaysian government policy
towards foreign investment in this industry offers a prime export development opportunity for
City of Adelaide accounting practitioners in particular to enter the Malaysian and specifically
the Penang market1. Target sectors for the City of Adelaide to promote the George
Town/Malaysian opportunity include:

 Engineering
 Creative services
 Project management
 Accounting services
 Systems engineering and integration
 Civil and mechanical engineering
 Oil and gas engineering
 Architecture

o Utilising the full market access for Malaysian Architectural and Engineering firms (and
practitioners) to build inbound foreign direct investment into key infrastructure and property
development within the City of Adelaide precinct. While not headquartered in George Town,
target Malaysian companies for inbound investment could include, for example:

 Gamuda Land
 SP Setia
 KFM
 EcoWorld

Opportunities for tourism and arts industry are also identified in these sections of the report.

1 Note: Legal firms have been excluded as it is unlikely that Adelaide firms would be granted Malaysian QFLF status considering the need to
have expertise in international Islamic finance.

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2. The City of Adelaide’s strengths and weaknesses in relation to opportunities for trade and
investment with George Town, Malaysia.

Sections 6 and 7 detail The City of Adelaide’s strengths and weaknesses in relation to opportunities for
trade and investment with George Town. Strengths focus specifically on health, education and
professional services related to the above George Town opportunities plus the City’s recent and
planned infrastructure developments which place city businesses well to access George Town’s and
Malaysia’s broader professional services sector.

3. The City of Adelaide’s priorities for trade and investment attraction by industry sector, and
substantiated by market attractiveness and relative competitive position criteria.

Section 7 of the report assesses the City of Adelaide’s priorities for trade and investment by industry
sector based on the research undertaken, especially the SWOT Analysis, and within the context of
Market Attractiveness and Relative Competitive Position Criteria. The following chart summarises the
assessed George Town market potential by major industry sector.

Adelaide's Copmetitive Position Low Adelaide's Competitive Position High
Healthand
Aged Care
d
n
a
m
Infrastructure
e
D Development
gh Education
Hi
Professional
Tourism
Services
d
n
a
m
e
D
w
o
L
Arts Industry

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In priority order (for economic development), the Adelaide City Council should focus on the following
sectors:

 Priority #1 - Health and Aged Care
 Priority #2 - Education
 Priority #3 - Professional Services
 Priority #4 - Infrastructure Development
 Priority #5 - Tourism
 Priority #6 - Arts

4. Recommendations in relation to the City of Adelaide’s strategy for pursuing trade and investment
opportunities with George Town, Malaysia.

Section 8 of the report analyses the research and consultation and provides recommendations for the
city of Adelaide to pursue trade and investment opportunities with George Town. It identifies that
there are strong economic communities of interest between the City of Adelaide and George Town and
it recommends a transition strategy for moving from a cultural to an economic development
partnership.

The following initiatives are recommended for consideration by the City of Adelaide (and George Town)
to commence and give momentum to the transition from a strong cultural position to new trade and
investment initiatives:

 Drafting by the City of Adelaide, and proposing to the city of George Town, a City to City Trade and
Investment Agreement focussing on the identified economic communities of interest and
associated trade and investment attraction opportunities. This must be a substantive, active
partnership, not a ceremonial agreement, and must have the objectives of increasing employment,
increasing investment, expanding industries, and strengthen the overall global competitiveness of
Adelaide and George Town.

 Subject to successfully establishing the City to City Trade and Investment Agreement,
development and implementation of strategically selected sub-agreements to more strongly align
the economies of both cities including, for example, chamber to chamber, university to university,
airport to airport, and eventually business-to-business. Such a strategy will provide a more
focussed and cohesive approach for economic growth across the two cities.

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 In recognition that it is more broader metropolitan areas that drive regional economic growth,
extension of the City to City Trade and Investment Agreement Sub Agreements to other
organisations in areas contiguous to the cities of Adelaide and George Town such as port to port,
industry association to industry association, etc.

 Annual Trade and Investment Missions from Adelaide to Penang focussing on the identified
economic communities of interest and associated trade and investment attraction opportunities.

 Request the Penang Government to conduct similar annual Trade and Investment Missions to
Adelaide, again focussing on the identified economic communities of interest and associated trade
and investment attraction opportunities.

 The annual Adelaide and George Town trade and investment missions to be incorporated into the
proposed City to City Trade and Investment Agreement.

 Promotion in Penang of Adelaide being ranked as one of the most liveable cities and CISCO’s first
Lighthouse City in Australia. This puts Adelaide alongside Barcelona, Chicago, Hamburg and Dubai
as one of the world’s leading residential and innovative cities. Promotion should focus on holiday
travel, retirement living and new business establishment.

 Promotion in Adelaide of Penang and specifically George Town’s status as a United Nations
Educational, Scientific and Cultural Organisation (UNESCO) World Heritage Site. Promotion should
focus on holiday travel.

 As above, joint promotion of Arts festivals including the OzAsia Festival in Adelaide and The
George Town Festival in Penang. Arts and culture can facilitate international economic activity by
providing connections and helping to grow understanding between different cultures.

 Establish a City of Adelaide/George Town online portal for dual access to market information, a
digital trade hub and trade mission platform.

Examples of specific trade and investment opportunities in key industry sectors are provided in this report along
with extensive appendices at the end of the report identifying key organisations within the key industry
segments in George Town, Penang, Malaysia.

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1.0 Introduction and Project Objectives

“Forward-thinking metro leaders are increasingly adopting strategies to enhance their global trade
position, investing in the key assets for driving trade or building structured relationships with trading
partners to increase their global competitiveness.”2

The concept of sister cities was conceived after the Second World War to rebuild diplomatic relationships and
reconcile citizens through cultural and educational exchanges. But today, sister city partnerships are being
increasingly used to forge strategic trade and economic ties between cities and regions. With rapid globalisation
and the movement of people and money, regions are recognising that established sister city relationships are an
excellent platform for export trade and foreign investment subject to the sister cities having sufficient economic
communities of interest.

AsiaAustralis has therefore been commissioned by the City of Adelaide to investigate opportunities for
leveraging Adelaide’s Sister City relationship with George Town, Penang, Malaysia.

The role of local government in economic development and how this is implemented has been under scrutiny in
recent times. This has been compounded by difficult economic conditions since the global financial crisis and is
challenging local government to find alternative models for economic success and sustainability.

The purpose of this project and report is to assist the Adelaide City Council make economic development a
stronger focus in existing Sister City Agreements, and specifically George Town.

The key objectives of this project were to:

 Better understand the trade and investment opportunities available in George Town and how to
leverage Adelaide’s economic drivers such as education, health and professional services.

 Better understand the capability of the Adelaide City Council and its businesses to supply markets in
George Town.

 Improve the awareness and export readiness of Adelaide City Council firms in relation to the
opportunities identified in George Town.

2 Amy Liu, Co-Director, Brookings Metropolitan Policy Program
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