Inside Iskandar: Start-up firm buys factory

FOR many local businesses, Iskandar is viewed as a possible alternative to Singapore.

But NanoRad chief executive Chan Wai Yin is not hoping to relocate his office from Singapore to new premises across the Causeway.

However, he has bought a factory in Iskandar and it represents his first foray into manufacturing.

NanoRad has designed an industrial radiator which requires up to 70 per cent less material to make than existing models on the market.

"We spent the last two years fine-tuning the design and making a prototype. We've tested it and it works. So we decided to take the next step of buying a factory and the equipment to produce these radiators on a bigger scale," said Mr Chan.

Mr Chan did not want to rent factory space, as he was worried about the risk of rising rental rates. However, buying a factory in Singapore was out of the question for a cash-strapped start-up.

A friend directed him to Iskandar and, eventually, Mr Chan signed a deal to buy a factory unit sitting on a 100,000 sq ft piece of land at i-Park @ Indahpura, an industrial park in Senai-Skudai.

"I paid about $4 million for everything. To get a factory unit of that size in Singapore, it would have cost me $20 million to $30 million," he said.

His factory is still under construction and will be ready in the next month or so. Work has been progressing on schedule and, so far, things are looking good.

"The whole industrial park is very nice and the security seems quite good."

Indeed, the units at i-Park @ Indahpura look more like fancy terrace homes than factories and the landscaping makes the area look like an upscale residential development. The park will have a workers' dormitory with 5,000 beds, a running track, eateries and gardens once it is completed.

Its developer, AME Group, is developing five industrial parks in Iskandar, three in Nusajaya and two in Senai-Skudai. The take-up rate for all of these projects has been healthy - in fact, its most recent launch, an industrial park named SME City adjacent to i-Park, sold out within two hours.

The influx of companies to Iskandar has not only driven up the cost of industrial property, it has also caused wages to soar.

A few years ago, salaries in Iskandar were about half those in Singapore. Today, however, Mr Chan is offering Singapore-level salaries to attract Malaysian workers.

"Finding workers seems to be difficult. There are a lot of factories already operating and the population there is not so big," he said.

"If you want skilled labour, such as welders and electricians, that might be challenging. We've hired two recruitment agencies and they are looking for people in Johor, Singapore and elsewhere."

Small and medium-sized enterprises thinking about following in Mr Chan's footsteps should also be aware of the costs involved, he said.

"The mortgage administration fee is very expensive and legal fees are also very high. If you take out a loan in Malaysian ringgit, it carries a 0.5 per cent stamp duty," he said. "There are other fees, for valuation and such, so you might end up paying 1 per cent of the property price in administration fees."