SINGAPORE -- Southeast Asia is making inroads into the international film industry through a combination of aggressive government incentives and growing Hollywood interest in adding local color and characters to attract Asian viewers.
Malaysia and Singapore, in particular, are increasingly being picked as both filming locations and as production bases. But their own filmmakers are questioning the governments' commitment to investing in local films and talents.
"The needs of film producers today are very much incentive based -- most producers, when you talk to them, just want to find out where they can get free money. It's not about the beauty of your country. Ultimately, it's about the money," said Mike Wiluan, CEO of Singapore-based Infinite Studios. His company operates a $60 million facility that provides production and post-production services to film companies. It has additional facilities on the neighboring Indonesian island of Batam.
Global revenue from filmed entertainment is expected to rise from $88.3 billion in 2013 to $110.1 billion in 2018, driven largely by emerging markets, according to consultancy PricewaterhouseCoopers.
But low-cost options such as U.S. streaming giant Netflix and the ease of online piracy are affecting DVD sales. The global film industry is finding it difficult to turn a profit. Studios in Europe and the U.S. have responded by outsourcing costly productions to Asia, and adding more localized content and characters, in a bid to boost box office returns.
A filmmaking boom?
Two years ago, National Film Development Corporation Malaysia launched a raft of initiatives to entice producers into the country, including a 30% rebate on the total amount spent there.
One of the film companies attracted by the grants was the U.K.'s Pinewood Studios, best known for producing the James Bond and Harry Potter films. Together with Khazanah Nasional, the Malaysian state-owned investment fund, it built the $170 million, 929-sq.-meter Pinewood Iskandar Malaysia Studios, which opened in June 2014.
It was a rare investment in big-budget filmmaking for a Southeast Asian government. The facility, located on 20 hectares of shrub land in south Malaysia, boasts five film stages and two high-definition television studios. One of the first projects to be filmed there is "Marco Polo," a 10-part television series about the 13th-century Italian explorer that just wrapped. More than 500 production staff from 18 countries worked on the Netflix series, which is produced by Hollywood studio the Weinstein Company.
"Asia is becoming a market too big to ignore," says Lorna Tee, a Malaysian film producer based in Hong Kong. "Hollywood has started tapping into Asian talent and locations to help the promotion and box office potential of their films.
"The growth of incentives and [government] tax rebates has also been helpful to that growth," she added. "All of that is good as it helps bring revenue to local production crews and companies, and also helps raise the skills of the crew and develop a further understanding on all sides of international co-production."
Singapore's visual investment
Compared with Malaysia, Singapore's film ambitions are slightly restricted by its lack of space and the higher cost of doing business in the city state. Still, it is aiming to become a regional film hub by luring foreign film companies with grants and low taxation, and by facilitating regional media co-productions.
LucasFilm, famous for the Star Wars series, has been operating in Singapore since 2005, and earlier this year launched a visual effects and animation hub there. It will be used for the new Star Wars film, "The Force Awakens," which is currently in production.
The special effects for the two-part finale of the successful Hunger Games films -- "Mockingjay" -- were done entirely in Singapore by the U.K. company Double Negative.
"I feel that what we're experiencing now is only going to continue as people are starting to realize the power of Asian possibilities in the film industry," says Wiluan.
His company last year worked on HBO Asia's first TV series, called "Serangoon Road," a 10-episode detective noir series set in 1960s Singapore. It is also working on a Ridley Scott-directed film due out next year, called "Equals," starring Kristen Stewart of "Twilight" fame.
But Singapore is still a much costlier location for filmmakers. A recent poll by the Singapore Business Federation and American Express found 90% of companies are concerned about high labor costs and a lack of suitable manpower. Meanwhile, competition is already growing from other countries in the region eager for a piece of the pie.
"In a few years, we might be outgunned by Indo-China or Indonesia, the likes of which are able to compete on a lower cost model," said Wiluan. The Philippines recently announced tax credits ranging from 20-40% as part of a legislation designed to enhance "film tourism." Thailand is considering a similar policy.
That may be a reason why Singapore has championed more collaboration among the 10 members of the Association of Southeast Asian Nations. It calls the use of each nation's resources to increase the chance of locally-produced movies "breaking out" into international film and TV markets.
"By combining the assets and talent in and around Singapore, which includes Malaysia's Pinewood Studios, the region now offers a more compelling proposition for global producers to undertake large-scale international productions here," said Angeline Poh, assistant chief executive (industry) at the Media Development Authority of Singapore.
A Hollywood token
But not everyone is happy about the arrival of government-supported international film studios, even with its promises of high profile work and proximity to stars. Some in the Malaysian film industry have complained about the sapping effect of Pinewood on film talent and a "tokenist" approach to Asian culture and characters. Others query whether government incentives are here to stay.
"With the focus now on the big investment being in the big, expensive -- and primarily English speaking -- films, and less so on developing, promoting and investing in local talent and industry, there are some in the local sector who aren't too happy," said Tee.
Local Malaysian and Singapore films generally don't travel well and are made on tiny budgets -- the average film is produced on $450,000 -- although they are enjoying more success with local and international audiences. A locally produced Chinese-Malaysian film called "The Journey," about a British man who undertakes a motorbike trip across the country with his future father-in-law, was made on just $1 million and recently became the top grossing Malaysian film of all time, breaking the $5 million revenue mark. The Singapore film, "Ilo Ilo," which explores the relationship between a Filipina domestic worker and a Singaporean family, won international acclaim last year and became the first Singaporean film to win an award at the prestigious Cannes Film Festival.
"The other area of concern is the rather tokenistic inclusion of Asian cast and location and storylines in the big productions just for quota or "window dressing" -- which continues to propel the lack of understanding of real Asian characters and stories to the western audiences," Tee added.
Wiluan says that film incentives, such as the ones on offer in Malaysia, are cultivating a much broader -- and permanent -- Southeast Asian talent base, something the region hasn't had the luxury of before.
"It is now about balancing the expectations of foreign producers and insuring that the governments are able to deliver on their incentives," he says. "There are still questions about whether these incentives will be here to stay and whether they will be here for everybody."