Foo handing an invitation letter for the SME Sabah Council Members Installation Dinner to Tangau.
From right to left … Fairuz Bandar (PR secretary MTI), Lie Chun Vui (SME Sabah Council member), Lawrence Wong (SME Sabah secretary), Wilfred Lim (SME Sabah VP), Datuk Frankie Liew (SME Sabah permanent hon. president), Ben Chong (deputy minister of MTI), Foo (president of SME Sabah), Tangau (DCM and Minister of MTI), Tseu Kei Yue (deputy perm. secretary of MTI), Michael Chin (DP of SME Sabah), Lau Jiin Woei (organizing chairman of SME Sabah), Alvin Choo (asst. secretary of SME Sabah), Terrence Chong (council member of SME Sabah).
KOTA KINABALU: The state government should ensure that 70 percent of the supply of auto parts to the proposed Tan Choong assembly plant be reserved for local SMEs.
SME Sabah president N K Foo said this during a courtesy call on Minister of Trade and Industry Sabah Datuk Seri Panglima Wilfred Madius Tangau by SME Sabah, on October 8.
This will provide business opportunities to local entrepreneurs and create thousands of jobs to reduce the high youth unemployment rate in Sabah as each car requires thousands of parts.
Foo further suggested that the government could help SMEs to start their factories by providing various incentives and financial assistance schemes specific for these SME manufacturers.
One very important scheme is the allocation of sufficient land within the allotted assembly plant parcel or adjacent to it at KKIP for the building of small factory lots with sizes suitable for such auto parts manufacturing.
Through KKIP, factories can be built for lease at preferential rentals to eligible SMEs with a five-year option to buy at a predetermined price.
Many SMEs lack start-up capital to purchase factory buildings as they have to buy equipment and need working capital too.
Being sited within the auto assembly parcel would save transportation and warehousing costs since all manufactured parts can be delivered to Tan Chong as soon as they are manufactured. This will greatly alleviate the working capital needs for local SMEs.
By having auto parts manufactured in Sabah and supplied to the assembly plant in Sabah, the cost of the parts will be cheaper and delivery more timely. This will reduce the need to ship parts from Peninsular Malaysia which will be more expensive due to the high shipping cost.
Foo further suggested that training institutions like vocational schools in Sabah can start providing training and design a course specific for the auto assembly manufacturing requirements while the plant is being built over a period of more than a year.
These students can be sent to Proton factories in Peninsular Malaysia for practical internship attachment. This will provide further employment opportunities for unemployed Sabahans to take up jobs that require some skills and enjoy a higher pay package.
For Tan Chong, when their assembly plant is ready, they can easily source local workers with the required skills and reduce their labour costs of sourcing workers from outside Sabah.
SME Sabah also explored with Tangau on ways to increase frequency of ships to Sabah to facilitate the export of perishable fruits from Sabah to China.
Tangau said this could only be achieved on a sustainable basis through industrialization where only manufacturing could create the consistent high freight cargo.
Once there is adequate cargo volume, many shipping companies had informed Tangau that they would send ships to Sabah ports. This will also push down the present high costs of shipping for exports from Sabah.
Apart from that, the efficiency of ports in Sabah also needs to be improved to reduce the time (including waiting time) to discharge and load cargoes.
Perhaps ports dedicated specifically to serve large industrial parks such as KKIP, POIC and SOGIP can be built for better efficiency and flexibility that can allow for overnight loading and discharge when there is congestion during certain busy period.