The South Johor Economic Region: Economic Competitor or Singapore’s Hinterland?
Malaysia announced a multi-million-dollar development project aimed at transforming the South Johor Economic Region into a thriving business destination. How should Singapore respond?
When the Malaysian Government officially launched the South Johor Economic Region (SJER) Project on 4th November, 2006 under the 9th National Plan, it was greeted with much speculation by Malaysia’s southern neighbour, Singapore. The SJER is an ambitious multi- billion dollar blueprint which aims to turn the southern Malaysian state of Johor into a prosperous Asian metropolis. Singapore is bound to benefit from this project as it will not only be a boost for the S’porean economy in terms of having another economic hub nearby attracting foreign investors and tourists into the region, but will also provide an opportunity for S’porean businessmen to invest and profit in that area. Ultimately, the economic spin-offs from SJER would help the whole South-East Asian region to prosper.
The SJER, or Iskandar Development Region (IDR) covers an area of over 2200 square kilometers, and under the proposed development plan, it is set to become Malaysia’s second metropolis (After capital Kuala Lumpur) at par with cities like Hong Kong and Shenzhen. It is a joint initiative of the federal and state governments that also aims to create 800,000 jobs and double the income of Johor’s residents by 2025. Viewing this project from Singapore’s perspective, perhaps the biggest advantage to the island nation would be that it’s Changi airport and other sea ports will eventually be the major gateways (Apart from Malaysia’s Senai International Airport, and Johor’s three major Ports) for the movement of goods and passengers from the South Johor Economic Region. Keeping in view the interests of S’pore, Johor’s Economic Planning Unit itself has declared that Singapore’s ports and Changi Airport will be the major outlets for SJER exports. This would increase the revenue of these ports from tourism, as well as trade.
Singapore also stands to gain in another significant way. According to the proposal, two zones in Johor Bahru and the Second Link will be known as ‘Free Access Zones’. From these two zones, Singaporeans would be allowed to enter Malaysia without using their passports or going through the immigration. This will enable the working class of S’pore to explore more economic opportunities in that region, not only as labour, but also for starting business. Also, in conjunction with this, the 20 ringgit tax on foreign cars in Malaysia has been scraped off. This would help attract more S’poreans to the region, as those working there would be able to commute to their workplace on a daily basis.
Also, after its completion, the IDR would be the ideal place to do business within the Johor-Singapore-Indonesia (JSI) Triangle. As proposed, it would offer state-of-the-art physical infrastructure and a world-class business environment like excellent logistical facilities, cyber cities, and central business administration. Businesses in Singapore have already been urged to explore the new opportunities offered by the region. In fact, Malaysian Prime Minister Abdullah Ahmed Badawi has already appointed Singapore’s Parkway Holdings Ltd, which runs Pantai Hospital, as consultant for the setting up of a mega medical hub in the South Corridor. The Government plans to turn South Johor into not just a logistical hub, but also a centre for medical, educational as well as financial services. This would lure foreign investors into the region, as apart from having the Government’s patronage, they will also find lower land cost and lower wage rates in the region.
Moreover, S’pore already seems to respond positively towards the project- economically, by investing in it, and politically, by co-operating with the Malaysian Government. After bilateral talks between the Prime Ministers of Malaysia and Singapore, it was decided that both sides will be setting up a joint ministerial committee to study ways to cooperate to make IDR a success. With Malaysia endeavouring to attract investors from S’pore so as to gain financial support for the project, and Singapore investors investing in the region so as to gain from its high economic spin-offs, both sides seem to be in a symbiotic relationship, which would eventually prove beneficial for both.
The SJER, however, will prove to be a strong economic competitor of S’pore. With South Johor becoming another new international address for business, investment, leisure and culture, part of tourism and investments previously made in S’pore will divert towards it. Moreover, the cheaper prices there will further attract investors there. With 30 billion ringgit of projects already under way in the area, and another 20 billion ringgit of investment by the government and companies committed or planned, the SJER is set to be an alternative trade and investment destination to Singapore. But, it should be noted that keeping all factors in mind, the economic spin-offs and benefits from the project for the whole region are far greater. Moreover, if Malaysia is investing such gigantic amounts so as to develop one of its territories, it would, like any other country, obviously keep its own interests in the forefront.
Lastly, Singapore’s positive response will only help in making relations better between the two countries. There is no use of putting up a hostile nature towards the economic growth of another country and ruin bilateral ties. Instead, it should be worked upon that how both countries would be able to maximize benefit from the project. Close co-operation between Malaysia and S’pore will help people of both countries. Singapore should stand by its policy of mutual respect and mutual benefit. As evident from the above stated points, the SJER project has been planned keeping in mind the interests of S’pore too. SJER is an open opportunity for the economic growth of the South- East Asian region, and S’pore should co-operate fully with Malaysia in the project, so as to not only gain economic benefits from it, but also strengthen political ties with its neighbour.