What Will Become of Malaysia's $150M Film Studio After Pinewood Pulls Out?

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Iskandar Malaysia Studios

After some early missteps, the state-of-the-art Iskandar Malaysia Studios is trying to turn a page and attract more of the big-budget international film and television projects it was built to service.

Pinewood Iskandar Malaysia Studios opened in June 2014 with global fanfare and an estimated $150 million in investment aimed at turning the Southeast Asian nation into a major hub for international film production.

Five years later, on a considerably more downbeat note, Pinewood and their Malaysian partners officially parted ways. 

The official statement, released late Friday, July 12, from the British studio facilities giant and its once promising outpost in the East, ran just 69 words. 

“Effective July 10, Pinewood Iskandar Malaysia Studios will be known as Iskandar Malaysia Studios (IMS),” the official statement began. “Pinewood Group’s collaboration with IMS comes to a close by mutual agreement, following a 10-year partnership where Pinewood provided consultancy, brand and marketing services. With the initial objectives of the collaboration achieved — including the development of the studios in Malaysia — both parties will now focus on the next phase of their respective businesses.”

The terse statement leaves many questions unanswered as to where the ambitious project went wrong and what the future holds for Iskandar Malaysia Studios. 

The Malaysian studio appeared to get off to a strong start back in 2014 when it signed a deal to host the Weinstein Company's $90 million Netflix series Marco Polo. But the series was axed after just two seasons amid reports of strained relations between production partners. What was supposed to be a test case for Maylasia's tax rebate system — which promises visiting productions a 30 percent cash rebate on local spend — turned into a marketing disaster as reports emerged that Marco Polo producers have struggled to claim the rebate promised by the Film in Malaysia Film Incentive (FIMI).

The facility — which boasts more than 100,000 square feet of studio space — has remained in use. It played host recently to the Chinese disaster epic SkyFire, directed by Simon West (Con Air, Tomb Raider), and to a pan-Asian version of the popular Got Talent reality show format. But major Hollywood productions have been thin on the ground. To date, no tentpole U.S. studio film has shot at the facility. 

“There’s a negative perception in the industry, and that’s because of the inconsistencies,” says Nicholas Simon, CEO of leading Southeast Asia production services company Indochina Productions, which line produced Legendary's Kong Skull Island in Vietnam in 2015. “The rebate took a while to be put into place, but there’s since been a change in government — there is really strong government support for it now."

Several high-profile location managers contacted by The Hollywood Reporter didn’t want to go public with their theories on what has been behind the facility’s struggles. But all privately pointed to issues with the remoteness of the facility (the studios are located on the southern tip of the country, nearly four hours drive from the capital, Kuala Lumpur), an initial lack of qualified and experienced local crew, and problems with cashing in on the incentives offered by FIMI.

A common theme discussed among those close to the situation on the Malaysian side is that the local government grew frustrated by the lack of business referred to the studio by Pinewood and came to feel that their British partners had given up on the project. 

When the Pinewood-Iskander collaboration was first mooted, back in 2009, the Malaysian film industry was still in its infancy, producing around just 30 feature films per year. Local money for the development was provided by the Khazanah Nasional Berhad sovereign wealth fund as part of its plans to expand cinema in Malaysia. It was also designed to boost the local economy in the southern Iskandar development region of Johor state, home to around 1.8 million people with an average monthly household income of $1,376 in 2016 (the last time such figures were released). It was estimated at the time that the complex would create around 10,000 jobs.

By the time the Pinewood-Iskander complex opened, it boasted 100,000 square feet of films stages, with individual stages ranging from 15,000 square feet to 30,000 square feet. The largest stage includes a tank for underwater work. There are also two 12,000-square-foot TV studios.

Rashid Karim formerly worked at Khazanah Nasional Berhad, where he helped devise the FIMI, but since March he has taken the reins as CEO at what is now known as Iskandar Malaysia Studios. This week, speaking with THR in Kuala Lumpur, he was keen to let it be known that the studio remains a world-class facility that is very much open for business. 

“The idea was to first establish Malaysia as a production hub and then build the local industry organically over time,” Karim says. “When the studios opened, Malaysia had never really done anything like it before. So in the early days, there were certainly concerns [at Pinewood Iskandar Malaysia Studios] that there was not enough infrastructure, not enough crew."

He says the studio has worked through its growing pains, and the new government is committed to seeing the facility flourish. "We are learning to explain things better, and we have the experience now to go with our facilities.” 

Last November, Malaysia's new government, led by prime minister Pakatan Harapan, earmarked around $7 million for filmmaking incentives in its 2019 budget. Khazanah Nasional, meanwhile, has set aside $24 million, specifically for financing film incentives for projects shot at Iskandar, Karim says. 

He also highlights the fact that local crew trained as part of the Marco Polo experience have gone on to ply their trade internationally, working on A-list international projects like Peter Jackson’s The Hobbit. China’s SkyFire also demonstrated that the studio could cater to big-budget actioners, he says.

“So some of the goals set actually are being achieved," Karim says. "Perhaps we just need to learn better how to let people know, and to promote our achievements."

"Mistakes have been made, we admit that," he adds, "but we believe Malaysia has all the ingredients — nice climate, easy communication in English and Mandarin, good exchange rates, and generally things are not expensive. We could say now that we have taken charge of our future.”