The Malaysian economy is at a period when it is able to grow sustainably, even during a global slowdown. At the centre of its ongoing development is the country’s robust property and construction industries, which, as well as attracting global investment, also makes social development a reality.
Integral to Malaysia’s ultimate progression into a developed economy is its commitment to corporate and social responsibility. Leading this approach is the Sunway Group, one of the most well-known and trusted conglomerates in Malaysia. The firm has gained its impeccable reputation through its continuous commitment as a master community developer to improve the lives of all that come into contact through a unique build-own-operate business model, powering its property and construction projects, the most notable being its modern and innovative townships spanning some 4,000 acres in Malaysia. World Finance had the opportunity to speak with Tan Sri Dr Jeffrey Cheah, Founder and Chairman of the Sunway Group, to discuss the country’s expanding property and construction markets, and the company’s role in Malaysian society.
Integral to Malaysia’s ultimate progression into a developed economy is its commitment to corporate and social responsibility
How has the property market in Malaysia changed in recent years?
Malaysia has enjoyed many years of booming property, which is why the current slowdown is promoted by the central bank to ensure growth is more sustainable in the long-term, and with new infrastructure spend by the government, this will open up new areas for property developments and townships. This year’s low oil and commodity prices, goods and services tax (GST) implementation and the depreciation of the ringgit, have also affected disposable income and investment decisions. Nonetheless, we are optimistic in the long run. Our nation’s flagship economic programme, the Economic Transformation Programme (ETP), is on track to propel Malaysia to become a developed nation by 2020, with a GNI per capita of $15,000. Following the launch of the ETP in 2010, Malaysia’s growth in private investments has increased by more than double, and for the first half of 2015, its recorded private investments reached close to MYR 108.5bn ($25.05bn). This total, coupled with a track record of high pipeline investments, signifies continued confidence in Malaysia as an attractive nation for investment.
In 2014, Malaysia recorded a GDP growth rate of six percent, and although 2015 proved to be a challenging year for the global economy, the Malaysian Government is resolute in sustaining its momentum and targeting growth between 4.5 and 5.5 percent. In the announced budget for 2016, an allocation of MYR 267.2bn ($62.7bn) was pledged to secure the sustainability of Malaysia’s growth through areas such as road projects, mass rapid transit and light rail transit lines.
Globally, the International Institute for Management Development in Switzerland ranks Malaysia as the 14th most competitive nation among 61 economies. While the World Bank reports that Malaysia is the 18th easiest place to do business among 189 companies and the World Economic Forum lists it as the 18th most competitive country out of 140 economies. Additionally, our participation in the ASEAN Community and in both the Regional Comprehensive Economic Partnership Agreement and the Trans Pacific Partnership Agreement are further incentives for businesses to invest in Malaysia as a gateway to larger and more robust markets.
What are the biggest opportunities for property companies in Malaysia?
Master-planned residences, offices, retail and other amenities that are integrated within a neighbourhood and located close to quality public transportation are the biggest opportunities for property companies in Malaysia.
The 800-acre Sunway Resort City is the country’s first fully integrated green township as certified by the Green Building Index (GBI) of Malaysia. It is Sunway’s flagship township development, which has been transformed from a tin-mining wasteland into a sterling example of a transit-oriented community where people live, learn, work and play in a safe, healthy and connected environment. People of all ages and incomes have greater access to jobs and opportunities within the city, while also leading affordable and healthy lifestyles. Carbon footprint and transportation costs are also reduced, allowing residents more disposable income and spending power. Today Sunway Resort City welcomes 42 million visits annually and is home to more than 200,000 people, including a student population of 25,000.
What are the biggest challenges?
Currently the biggest challenges are concerns over Malaysia’s economic outlook, which is resulting in a wait-and-see stance towards property purchases. The property market will remain sluggish until things are more settled and there is an improvement in economic sentiments. Like any other business, we are keeping a close watch on the market and will adjust the pace and scale of our launches accordingly.
How has the company become the country’s largest property construction group?
One of the key contributors to our achievements for more than 40 years now is our Build-Own-Operate business model, which continues to benefit all of our stakeholders. Because we operate the full real estate value chain, this diversifies our earnings base and creates synergies for our construction, property development, property investment and REIT divisions.
Simultaneously, this translates into a lifelong commitment to the sustainable growth of Malaysian society, as we are the largest stakeholder in all of the integrated townships that we have built and are developing, which total some 4,000 acres. They include Sunway Resort City, Sunway City Ipoh and Sunway Iskandar. Our unique Build-Own-Operate business model is actually a key differentiator for us in the industry, which is reinforced further by our commitment to community – this commitment is ingrained in our DNA.
What has been your involvement in some of Malaysia’s most impressive landmarks?
Sunway Group’s construction division has completed some of Malaysia’s most impressive landmarks, including the Kuala Lumpur Convention Centre, the Sunway Pyramid Shopping Mall, Legoland Theme Park and Pinewood Iskandar Malaysia Studios.
In what ways do you contribute to the communities in which you work?
As a group, we grow alongside our communities. Besides assuring sustainable capital gains as a result of being the largest stakeholder within our integrated townships, Sunway Group’s corporate responsibility programmes continue to support our triple bottom line approach – people, planet and progress.
How do contributions extend to Malaysian education and other CSR initiates?
Our CSR augments what we hope to achieve with our business model, which is to diligently plan and develop sustainable communities for a brighter future. At present, we are championing three key areas of focus where we can create the most impact: education, healthcare and CARE (Community Aid, Reach-out and Enrichment), which are intertwined with Sunway’s core values of ‘Integrity, Humility and Excellence’.
When our flagship education initiative with the Jeffrey Cheah Foundation (JCF) was founded in 2010, the ownership and equity rights of Sunway Education Group’s 12 learning institutions was worth more than MYR 720m ($170m). Today it is worth in excess of MYR 1bn ($230m) and has been transferred to the JCF, making it the largest social enterprise for education in Malaysia. Through the unique not-for-profit structure of the JCF, operating surpluses from the institutions are ploughed back into the institutions, disbursed as scholarships and research grants, or invested into the expansion of faculty and facilities.
To elevate the quality of education and research within the region, the JCF has also forged academic ties with some of the world’s most renowned institutions, including Harvard University, University of Cambridge, University of Oxford, Monash University, Lancaster University and Le Cordon Bleu. These partnerships allow a two-way flow of scholars and researchers between world-class institutions and the Sunway Education Group, so as to develop and improve the academic standards of teaching and research in Malaysia.
With the aim of democratising access to quality education, as of 2015, the JCF has disbursed in excess of MYR 210m ($49m) in scholarships to more than 23,000 high-achieving students. Together Sunway Group and the JCF have also donated more than MYR 15m ($3.5m) towards upgrading the learning environment of six of its adopted schools nationwide.
In line with the Ministry of Health’s drive towards a healthy nation, Sunway continues to support the nation’s agenda and recognises the importance of healthcare. Sunway proactively seeks to raise the healthcare standards in Malaysia through reaching out and educating the community on health issues and the importance of taking charge of health. Under the healthcare pillar, a plan has been outlined to make Sunway Resort City the first 100 percent smoke-free township by 2018. The group also continues to implement proactive awareness and fundraising campaigns for non-communicable diseases, such as kidney diseases, liver diseases and diabetes.
Sunway’s CARE projects include infrastructure development and donations to charitable organisations that support underserved communities, such as the Safe City Initiatives. Its most recent infrastructure project is the BRT-Sunway Line, Malaysia’s first dedicated and elevated electric Bus Rapid Transit (BRT) system, which came about as a result of a public-private partnership between Prasarana Malaysia Berhad (Prasarana) and Sunway Berhad.
This public transport project serves to enhance the connectivity, accessibility and mobility for the communities in Bandar Sunway, Subang Jaya and USJ. Sunway contributed up to the MYR 123m ($28.4m) to the BRT-Sunway Line project, which now serves more than 500,000 commuters in the vicinity and has also invested some MYR 20m ($4.7m) to construct a 2.3 kilometre elevated covered Canopy Walk to promote walkability in Sunway Resort City. Given Sunway’s plans for regional expansion in the coming years, Malaysia’s development is set to continue at an impressive rate.
Sunway Property is Property Company of the Year in the World Finance Real Estate Awards 2015