Malaysia launches industrial township

Malaysia launches industrial township

KUANTAN, Malaysia (Reuter): Prime Minister Mahathir Mohamad launched a US$1.6 billion industrial township built to make electrical appliances yesterday, part of a multi- pronged effort to go global with made-in-Malaysia products.

MEC City, undergoing construction on a 1,215-hectare (3000- acre) site outside the east coast city of Kuantan, will build air conditioners and refrigerators in its first phase.

The project, a brainchild of Mahathir, is part of government efforts to reduce a worrisome current account deficit by cranking up exports of Malaysian-made goods.

"I am convinced the project will help the country's industrialization process and help reduce the current account deficit through exports of the goods produced, and lower imports of the same products," Mahathir said at the launch.

The township is owned by Malaysia Electric Corp Bhd (MEC), a wholly-owned subsidiary of property and manufacturing firm Kuala Lumpur Industries Holdings Bhd MEC has been producing electrical appliances for the past 20 years.

"Most of the foreign branded electrical products are actually being made in Malaysia, by companies owned by Malaysians through contracts," Mahathir said.

"Products made by us have the same quality as products imported from foreign countries. I believe Malaysian-branded products will one day be well-known like Japanese and European brands," he added.

Malaysia is already one of the world's biggest exporters of air conditioners through various Japanese joint ventures.

At the launch, the Finance Ministry's Khazanah Holdings Bhd signed an agreement to take a 30 percent stake in MEC, which has a paid-up capital of 70 million ringgit. KLI Holdings will hold 60 percent while the rest will be held by a yet-to-be identified Bumiputera (indigenous race) firm, company officials said.

MEC on Monday set up a joint venture to market its electrical products in 11 Middle Eastern countries.

It also signed technical collaboration agreements with Japan's Osaka Shoji Ltd, Taiwan's Kolin Co Ltd and four South Korean Companies -- Korea Electronics Co Ltd, Hanchang Corporation, Samsung Electronics Co Ltd and Saekwang Aluminium Co Ltd -- to transfer technology for making the various electrical products.

Sales to the Middle East are expected to be worth "hundreds of millions of ringgit" with the first shipment there expected in April, company officials said.

MEC will eventually produce items such as rice cookers, kettles, television sets, irons, blenders and hairdryers under the MEC brand. Company officials said MEC hopes to export 70 percent of its products within three years.

Some 29 plants form the manufacturing core of MEC City, which will also have research and development centers, shops and cinemas, and a residential area with 6,280 houses.

The Malaysian-made Proton car, which is exported to Europe, Africa and Southeast Asia, was the first high-profile effort to go global with a made-in-Malaysia consumer product.

Malaysia posted a trade deficit of 617.97 million ringgit in 1996, against a 9.36 billion gap in 1995. The deficit is widely expected to narrow further over 1997, but at a slower pace as infrastructure projects suck in imports, analysts said.

The current account, measuring trade in services as well as merchandise, was officially projected to level off at a deficit of 11.45 billion ringgit in 1997, about the same as in 1996.