KKIP’s success story, future plans

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THE Kota Kinabalu Industrial Park, (KKIP) did not happen overnight, and its journey was not exactly a bed of roses.

Two decades ago, the 8,325 acres of land, where KKIP now stands was just a piece of jungle.

Today, about 4,005 acres of its Phase 1 had already developed, in progress, or yet to be developed, whilst the balance of 4,320 acres for Phase 2 is waiting to be gazetted.

It had to go through winding roads, luring investors to start their businesses, but today, the self-contained industrial integrated township can now be proud with its achievement of having over RM2.5 billion worth of investments in manufacturing, most of it involving small-and-medium enterprises (SMEs).

It is safe to say that KKIP is a paradise for the SMEs, especially since it is located near the Sepanggar Bay Container Port, which, if translated into business terms, saves transportation costs.

The backbone behind KKIP’s success is its chief executive officer (CEO) Dr Tarsiah T Z Taman, who recently spared some time to share the ‘bitter-sweet- story’ with The Borneo Post.

“When we started KKIP in 1995, it was in a critical condition. One, being that not all of the land belonged to the government. In fact about 80 per cent of the land belonged to individual owners.

“We had to convince land owners back then that these lands needed to be developed. We explained to them that we were not just acquiring the land for the sake of making money, but to develop an industrial park that would be one of the state’s industrial icons. I was the KKIP Sales and Marketing manager at the time.

“After gaining the land owners’ understanding and trust, we proceeded with the first stage of developing the industrial park. But, unfortunately, our biggest challenge then was infrastructure,” said Tarsiah.

She explained that 20 years ago, the stretches at the Sepanggar area was still gravelled, and to make things worse, KKIP’s development was at a critical condition as KKIP Sdn Bhd did not have any grant from either the state or federal governments.

It was at a stage where the company had to borrow money to develop infrastructure facilities, such as roads and electricity supply.

“When we passed that challenge, we had another problem, and that was to market KKIP as an industrial park.

“We started promoting the first cluster that we wanted to develop. It was the Free Economic Zone (FEZ), but that had since been shut down due to the lack of positive response from foreign investors.

“After marketing the FEZ in China, Japan, Korea and Taiwan, only one company from Taiwan signed up, but after three years, they had to stop due to the lack of manpower because our locals were just not interested to work in factories at the time,” she said.

Realising the problem in securing Foreign Direct Investments (FDI) due to the shortage of manpower, KKIP had to re-structure its approach and replaced FEZ with general investments.

After seeing the potential, the state government showed interest and was willing to subsidize and offer rebates to the purchasing processes.

“Back then we were selling as low as RM5 per sq ft. Then it went up to RM7 and RM9. Today,the figure had gone up to between RM28 and RM30, while secondary sales by private owners are being transacted up to RM40 per sq ft,” she said.

For the last 10 years, KKIP has had loans from the federal government and Bank Pembangunan to develop the industrial park.

“It was almost impossible for us to cover our expenses back then, but thanks to the loan and support, we were able to run the business smoothly, and better still, we are now able to pay our debts.”

Today, after facing all the challenges, and after developing various industries in KKIP, they are keen to be part of the industrial development by encouraging SMEs to go beyond Brunei, Indonesia, Malaysia, snd the Philippines – the East Asia Growth Area (BIMP-EAGA) region.

“I am positive that we in KKIP have a role to play to encourage our investors to be part of the force in transforming these small players into multinational companies. But based on our experience, there will always be challenges for us in every stage of our struggle.

“Sadly, most of our SMEs have no passion to go beyond. To them their target is just within this region because they believe the BIMP-EAGA market is beyond their reach,” added Tarsiah, expressing her wish to bring the SMEs in Sabah to greater heights.

It was a passion she kept even from her university years.

Tarsiah remembered that when she did her PhD, her thesis was on the challenges of developing industries.

“I was passionate about the issue and I would like to see our SMEs grow and be at par with the other big companies. They must realise that these successful companies had a humble beginning, and it is not impossible to achieve,” she said.

Giving the C&F Enterprise Sdn Bhd and Hock Min Coffee Factory as examples of food and beverages companies in KKIP, she said they have been operating at KKIP and have successfully marketed their products internationally.

She said KKIP wanted to work closely with the other government-linked-companies (GLCs), and was now aiming high, and that is to expand their business at the Sipitang Oil and Gas Industrial Park (SOGIP).

“We believe SOGIP will be another perfect place for us to expand, and getting oil and gas investors at SME level is coming in.

“KKIP has a good track record, and we are confident in developing other industrial parks based on the success we have achieved at KKIP,” she said, adding another KKIP achievements was its success story in becoming a Research and Development (R&D) and training institution hub.

Having 15 R&D and training institutions operating at KKIP, Tarsiah said it was one of the industrial park’s pride and joy.

As an industrial integrated township, KKIP is not only open for factories but also R&D and training institutions, commercial lots, residential units, schools, tourism spots and recreational facilities.

As of July, a total of 219 factories are operating at KKIP, creating jobs for 7,049 people from its factories (5,611), R&D and institutions (1,114), commercial (176) and utilities (148).

Expecting over RM500 million worth of investment this year, KKIP, which is located about 22km northeast of Kota Kinabalu, is looking forward to achieve its 2020 vision.

KKIP, which is divided into clusters, namely wood-based, food, metal, rubber and plastic, logistic, warehousing, electronic and electrical, automotive, ceramic and other industries hopes that in the next six years, it will house 1,722 factories operating and offering 24,000 job opportunities.