Since the establishment of Iskandar Malaysia in 2006, the governing authority, Iskandar Regional Development Authority (IRDA) has been ensuring key development strategies and targets are met. We catch up with IRDA’s Chief Executive, En. Ismail Ibrahim, to see how Iskandar has developed five years on with its future plans and investor opportunities in the region.
When the mammoth project of Iskandar project was launched in 2006, it was the largest growth spurt Johor experienced. Encompassing three districts in Southern Johor, namely Johor Bahru, Kulai Jaya and a part of Pontian, it is due to reach full maturity in 2025.
iProperty: What is the reception for Iskandar Malaysia so far, and who are the majority of investors?
En. Ismail: The confidence level of investors and potential investors are on the rise as is reflected strongly in our most recent cumulative committed investment figures of RM77.82 billion as at September 2011 (refer to the pie chart below).
Of the total, 60% are domestic investment and 40% foreign. This is reflects the confidence of domestic investors in Iskandar Malaysia, compared to when we first started in 2006 with 45% domestic and 55% foreign investment. A total of 48.2% of the mentioned investments already spent on the ground with progress on developments on track.
iP: What about the five flagship zones for Iskandar Malaysia?
IRDA: The flagships for each project – whether infrastructure, tourism or education - has respective schedules and completion dates. With their own strengths based on the location, population and land space, some flagships are brown field, meaning they are heavily developed, while some are green field, where potential for development is still vast.
Strategically, when an investor comes in, we will plan which of the flagships is the best fit. For example, if the investor is interested in logistics, we may recommend Flagship E (Senai) or Flagship C and D where the three ports are located instead of Flagship A of Johor Bahru city.
We welcome investments from any country within the nine promoted sectors identified to further drive investment and economic growth in Iskandar Malaysia. The sectors are Petro and Oleo-chemical, Food and Agro Processing, Electrical and Electronics, and Service sectors, such as Logistics, Tourism, Healthcare, Education, Financial Services, Creative.
The focus on Tourism, Education and Creative in Phase 1 of Iskandar Malaysia has seen investments in these sectors such as Johor Premium Outlets, LEGOLAND for Tourism, Newcastle University, Southampton University for Education and Pinewood Studios for Creative. Next year’s focus may be on other sectors such as Logistics and Oil and Gas.
iP: What infrastructures are in place to boost investment opportunities to the area?
IRDA: When we talk about infrastructure, we have to look at it from two perspectives - the soft and the hard infrastructure.
Hard infrastructure includes the completed implementation of river cleaning and drainage projects, flood mitigation and prevention projects, and several road construction and upgrading projects. We are working on other infrastructures such as connectivity and transportation. The Bus Iskandar Malaysia was launched in Feb 2010 and has recorded more than one million passengers so far. In early July this year, BeXtra, the Bus Express Transit, has started operations on one of the three proposed routes.
Soft infrastructure includes the delivery and community in Iskandar where the Iskandar Service Centre (ISC) within IRDA facilitates with various Government authorities and agencies as for faster approvals, advising on policy and incentive matters. With these measures, we have been able to cut down delivery time by 19% compared to the norm. Feedback has been good as we strive for greater efficiency.
The Human Capital Development programmes – outlined in the Iskandar Malaysia Human Capital Development Blueprint – has created a total of 27,299 jobs to date, with the amount increasing to 55,730 from 2011 till 2015. When Iskandar Malaysia reaches maturity in 2025, another 800,000 jobs would have been created to make a total of 1.4mil jobs.
iP: Are there major projects that promote the growth and investment potential of Iskandar and Johor?
IRDA: Some catalytic projects include Johor Premium Outlets, LEGOLAND Malaysia, NuMed, Puteri Harbour and Pinewoods Iskandar Malaysia Studio. Of course, there will be more announcement as Iskandar Malaysia continues to grow. We aim to attract RM73bil new investments to the country’s first economic growth corridor from January 2011 until December 2015.
This is to achieve an economic growth rate of 8% p.a. over the next five years, in order to be a strong and sustainable metropolis of international standing by 2025. This will definitely bring growth to Johor and the surrounding area as well.
iP: What is the percentage of Singaporean investment in Iskandar Malaysia?
IRDA: From 2006 to Feb 2011, investment in manufacturing from Singapore has totalled a cumulative of RM3.49 billion from RM517.19 million in 2006. Singapore has invested a total cumulative investment of RM3.49bil in manufacturing and RM463 mil in services from the total. (This is 5.31% of the total cumulative investment of RM77.82bil).
The percentage may be higher as this excludes Singaporean interests in the property and retail market, as IRDA do not monitor these. In terms of manufacturing, Singapore is one of the top three investors here. While out of the RM463mil Singaporean investment in services about RM100 million is for healthcare.
There may be various reasons why Singapore investors choose to invest in Iskandar Malaysia, but I believe the fundamental reason is that there is ample space in Iskandar Malaysia for business expansion, at a very competitive cost.
This region provides a near shore location for our regional partners to invest in a potentially high growth corridor with strong connectivity and infrastructure. It helps that the diversity of industries offer a long term and sustainable investment proposition, with a ready pool of talented, multilingual workforce. There are various attractive incentives for knowledge workers and business owners who set up businesses in designated areas in Iskandar Malaysia.
iP: What is your overall insight on the Iskandar Malaysia project throughout 2011?
IRDA: We have passed the first phase of Iskandar Malaysia which is essentially the planning stage, to build a foundation and profile the benefits and opportunities available. We have raised the awareness of investors from the Middle East, Europe, America, Asia Pacific and locally of what Iskandar has to offer.
In Phase One, there was a lot of planning, resulting in various blueprints which have since been completed and are currently carried out by the various implementing agencies. One, for example, is the Safety and Security Blueprint and Tourism Blueprint. We also actively promoted Iskandar Malaysia to potential investors both locally and globally.