“In 2028, Malaysia and Singapore got together to set up the Iskandar-Singapore Economic Zone or ISEZ: one economic system spanning two sovereign countries”, said Ravi Menon – head of Monetary Authority of Singapore. “The experiment succeeded beyond expectations”, he remarked during a keynote address in 2015.
In this imaginative leap into the future, Mr. Menon envisions the ISEZ. The idea has fired up the imagination of many Singaporeans. Iskandar Malaysia holds great potential not only for Singapore but for every global investor.
Here are 12 things you need to know.
1. Singapore needs Iskandar Malaysia
As a global hub, Singapore is not without its challenges. The city-state is confronted with the problem of an ageing population, low birth rate and the lack of affordable space. Singapore needs a hinterland to pool resources like labour and land.
2. Comparative cost advantage
Iskandar Malaysia offers a competitive labour market, as well as an educated and multilingual workforce. Labour and land cost is at one-third the cost in Singapore. Businesses in Singapore wanting to expand their operations have an alternative in Iskandar Malaysia.
3. Bilateral ties is the key
Malaysia-Singapore relations is now going through its best period. The turning point came when a 20-year land and water dispute was settled in 2010. Bilateral ties are still complex as interests often collide. A mutual respect for each other’s interests is the key to the creation of the Iskandar-Singapore Economic Zone.
4. Enter the Chinese
In 2016, China replaced Singapore as the top foreign investor in Iskandar Malaysia. Most of the investments are in real estate. Top Chinese property developers operating in the economic zone are Country Garden Holdings, Guangzhou R&F Properties Corporation, and Greenland Holding Group Company Limited.
5. Two’s company, three’s a crowd
Singaporeans were initially excited to invest in Iskandar Malaysia. Many were investing in properties. The peak in investments came in 2013.
After this, a slew of real estate projects was announced by Chinese developers. A majority of Singaporeans fear an increased supply could turn into a glut.
While the Chinese buyers are snapping up homes, the Singaporeans buyers are holding back. However, Singaporean businesses are still investing in sectors such as manufacturing.
6. Short-term hiccups, long-term potential
In the short-term, sentiments will rule the property market as fears of a property glut is played up. Iskandar Malaysia remains the most sustainable economic corridor in Malaysia.
7. Taking the long view
Iskandar Malaysia is not a short-term play. Its 20-year masterplan will only be completed in 2025. China’s most ambitious project – Forest City, will be built on four artificial islands south of Iskandar Malaysia. The project is to be completed in 2035. The Chinese are taking the long view, so should you.
8. Iskandar Malaysia is not the same from one area to another
So should you invest in Iskandar Malaysia? It depends on which part you are referring to and for what purposes. At three times the size of Singapore, it is not a homogenous market.
9. Names of places can get confusing
Malaysia is a federation of 13 states and three federal territories. Iskandar Malaysia is in the state of Johor. Johor Bahru is the state capital, colloquially known as “JB”. And Johor Bahru City Centre is one of the flagships zones in Iskandar Malaysia. Are you confused yet?
10. Five flagships zones
The easiest way to understand Iskandar Malaysia is that there are five flagship zones. The zones are Johor Bahru City Centre (JBCC), Iskandar Puteri (formerly Nusajaya), Western Gate Development, Eastern Gate Development and Senai-Skudai. Within these zones are key cities such as Johor Bahru in JBCC and Medini in Iskandar Puteri.
11. “Ghost cities”
There will be fear mongers who paint pictures of empty buildings in Iskandar Malaysia. Ignore them. They are picking a corner of town to represent the whole area. Most of the urban areas are heavily populated. In a fast growing economic corridor, there will always be newly developed areas.
12. High-speed rail (HSR) – not all stations are equal
In 2016, Malaysia and Singapore signed a bilateral agreement to build the Kuala Lumpur-Singapore HSR. There will be eight stations along the route. Out of eight stations, three are superior. The stations at Bandar Malaysia, Iskandar Puteri (in Iskandar Malaysia), and Singapore will have joint immigration facilities. This is to ease cross-border travel.
There will also be a dedicated shuttle service for the Iskandar Puteri-Singapore route. Passengers travelling between Iskandar Puteri and Singapore can look forward to seamless travel. They can conveniently clear both Malaysian and Singaporean immigration at the point of departure.
The HSR is slated for completion in 2026. A seamless travel between Iskandar Malaysia and Singapore will be a step closer towards economic integration. The Iskandar-Singapore Economic Zone (ISEZ) can be a reality, not just a dream.