Knowing who will come is key to success

Knowing who will come is key to success

But the chief executive of industrial park developer Sembcorp Development, Mr Kelvin Teo, has a different take on that theory.

"We always say that if you have money, you can build - it's nothing special. But the more important thing is, who will come," said Mr Teo in a recent interview at the firm's Hill Street premises.

"That's our strength. We know where these people are. The customers will tell us where they want to go."

Sembcorp Development's customers are companies that buy land or lease factories in the industrial parks it develops.

The firm began building industrial parks slightly over two decades ago, with its first project on Indonesia's Batam island.

The success of its Batam industrial park project "gave us the confidence to say, perhaps we should export our expertise in terms of industrialisation to the region", Mr Teo said. "We want to export our expertise in urbanisation and in industrialisation. Countries welcome us because we, as a company, have a track record of bringing in FDI (foreign direct investment)."

Bringing in FDI helps the host country as it creates jobs for locals, helps the country lift the value of its exports, and grows its tax revenue, he said. "Along the way, we try to localise, meaning that we also transfer tech to the industrial park where we operate."

Sembcorp Development has three industrial park projects in Indonesia, four in China and five in Vietnam.

Mr Teo said the company's extensive track record means its database of customers "easily has 4,000 names... We can always ask them where they want to put their next factory".

Apart from its wide network, Sembcorp Development distinguishes itself from competitors by offering transparency, reliability and efficiency, with no hidden costs, he said.

"Our industrial parks command a premium, we're not the cheapest. But we... deliver on our promises and MNCs (multinational corporations) can see our reliability."

This is aided by the fact that the Sembcorp group includes companies that deal in areas such as wastewater treatment and utilities. "Most developers who do industrial parks have to outsource when they require power or water supply, but we can do everything under one roof. That indirectly reduces the cost. We can pass the cost savings to our customers."

Having the Singapore brand name also helps: "When we go to a regional project, we are flying the Singapore flag. The joint venture partner, or the local government, will look at us as representatives of Singapore."

All of the firm's overseas industrial park projects are joint ventures.

Mr Teo added that the firm works closely with Singapore government agencies, so that Singapore companies can use Sembcorp's industrial parks as a platform to provide services overseas.

This applies even to small and medium-sized enterprises (SMEs) which may have capital constraints, he said, noting that Sembcorp will usually build some standard factories in its industrial parks that it offers on three-year leases. These standard factories are often leased out to SMEs that provide support services for larger firms in the industrial park.

Mr Teo said Singapore SMEs can mitigate their risks when expanding by using Sembcorp's industrial parks as a platform, but only as long as they are clear on what services they want to provide. "Don't just jump to a country that just opened up and people say that this is a good place to go... Always ask yourself what's your core competency, do you have a business model that's sustainable, to be able to sell or provide services in the country that you want to go into."

He noted that one major challenge Sembcorp Development faces is limited resources. "To embark on mega projects requires a lot of manpower and people who can see the market, see the trend." This is important because "our business requires us to understand the trends... We don't want to bring the wrong industry to a country because the country may not be ready for that".

To avoid industry mismatches, he said, Sembcorp Development works with the local government of the host city or country to identify which industries they want to attract to the industrial park.

melissat@sph.com.sg


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