3 Critical Success Factors for Iskandar Malaysia INC

Should you invest in Iskandar Malaysia? Some say it’s the next big thing, and some say it’s going to be the next big… white elephant. Singapore’s elder statesman, and former Prime Minister, Lee Kuan Yew famously cautioned Singaporeans, “Let’s wait and see how Iskandar develops. This is an economic field of cooperation in which, you must remember, we are putting investments on Malaysian soil. And at the stroke of a pen, they can take it over.” White elephant or not, Iskandar Malaysia INC is dependent on 3 critical success factor.

I – International Buy-In
N – New Metropolis
C – Connectivity

INTERNATIONAL BUY-IN.  Iskandar Malaysia or also commonly referred to as Iskandar Johor, needs foreign investments and the participation of the international community. Without foreign participation, Iskandar Johor will merely be… well, Johor. For the longest time, properties in Johor have been lagging behind places such as Kuala Lumpur and Penang. For many Malaysians including myself, Johor (Bahru) is more of a stopover city before reaching Singapore.

All this started to change in 2012 with the completion of major catalytic projects such as Legoland Malaysia, Mall of Medini, Marlborough College Malaysia, and the coastal highway. The international community began to see the commitment of the government in carrying through various catalytic projects and infrastructure development.

Lured by incentives and lower cost of doing business, investments poured in from Singapore, Spain, USA, Japan, and many other countries. The bulk of these investments are in manufacturing and residential properties. Every now and then, we hear of new investments pouring in, and new projects being launched. This has increased the demand for properties in the Iskandar region.

While foreign investors are attracted by the various incentives in Iskandar, this alone is insufficient. To sustain the investment flow, apart from incentives and lower cost of doing business, corporate companies need a sufficient pool of talent in Iskandar Malaysia.

How do you attract a sufficient pool of talent?

NEW METROPOLIS. In order to attract skilled talent, Iskandar Malaysia needs to be a metropolis of international standards. You do not want a scenario where there are impressive buildings all around but with no one living or working in it. Iskandar Malaysia needs to be sustainable and liveable.

Johor is traditionally a place with high crime rates. Issues of crime and safety needs to be tackled. Residents need to feel safe walking the streets of Iskandar Malaysia. Iskandar Malaysia needs to create not only jobs… but a diversity of job opportunities with competitive salaries. Modern amenities need to be abundant to cater to the diverse lifestyle of its residents. What attracts young urban professionals and retirees can be very different.

Iskandar Malaysia also needs to have its own unique flavour in attracting migrants. Malaysians in general are friendly and hospitable. This can be a unique advantage in itself (Hint: Some cities are known to be rude & unfriendly). Island resorts and beautiful beaches along the Desaru Coast can be another unique advantage. One clear advantage that Iskandar Malaysia has over other cities is its close proximity to the economic powerhouse – Singapore.

CONNECTIVITY.  In 2020, there will be a High Speed Rail (HSR) connecting Kuala Lumpur to Singapore with an estimated travelling time of 90 minutes. It will stop at Iskandar Malaysia before reaching Singapore. A Rapid Transit System (RTS) will also connect Iskandar Malaysia to Singapore’s Thompson Line MRT by 2019. Now imagine living in Iskandar and working in Singapore by taking the RTS-MRT (bypassing the busy traffic at Woodlands Causeway or Second Link Expressway) and arriving at work in 30 minutes. Or imagine working in your Singapore office in the morning, visiting your factory in Iskandar in the afternoon, having your evening meeting in Kuala Lumpur… and be back in Singapore on the same day. All this is possible with improved connectivity.

Once the HSR and RTS-MRT is completed, Iskandar Malaysia will very much be a convenient place to stay or work. The success of Iskandar Malaysia is very much dependent on these two projects proceeding as planned. Kuala Lumpur-Iskandar Malaysia-Singapore has the potential to be a mega region once the connectivity is in place.

CONCLUSION. Lee Kuan Yew’s full quote is “And at the stroke of a pen, they can take it over. They are NOT LIKELY to because they want more investments“. Investments in Iskandar Malaysia have reached a total cumulative committed investment of RM131.64bil in 2013 with 64% contributed by domestic investors. It has reached a point where there is too much at stake for Iskandar Malaysia to fail. There is such a thing as “too big to fail.” Fuelled by domestic & foreign private sector, Iskandar Malaysia has created a momentum of its own.

Remember Iskandar Malaysia “INC” – the 3 critical success factor when making your investment decision. If you feel that Iskandar Malaysia is able to transform itself in these 3 major areas, then this represents a window of opportunity for Iskandar properties. Once Iskandar Malaysia has reached its maturity, you might have already missed the boat. Then you might be lamenting, “Why are properties in Iskandar Malaysia suddenly so expensive?”

written by David Chong, a Property Infopreneur & founder of InsideIskandar.my  He helps property investors in understanding Iskandar Malaysia. 

Next suggested article:  Singapore investors MUST be top in Iskandar, always

3 thoughts on “3 Critical Success Factors for Iskandar Malaysia INC

  1. totally agree. The hype must be justified with concrete pool of business activities and human talent flows to support the entire Masterplan. 🙂

  2. Honestly, I doubt the success of this project. Instead all these high dense development such as country garden 9000-10000 units at Danga Bay already tells you a story of the glut in the subsale market when it is ready. Furthermore Johor now wants to impose a charge on foreign cars because Singapore is doing so. Singaporeans are not happy with the coastal reclamation on Johor side etc. Let’s hope the housing bubble doesn’t implode and bring the entire Johor economy down with it. It will take years for Johor to recover. Nothing is too big to fail and the Americans learn it the hard way.

    • KJ, thanks for your opinion. I actually agree that there is really a huge potential for oversupply, especially with all these China developers coming in such a big manner. Nevertheless, if you look at Iskandar, it better be successful because if otherwise, there is just no way for Singapore to continue its growth as it seeks to attract even more global talents. The plan is to have at least 1 million more population by 2020. Today, Singapore is already the most expensive city in the world. I am not sure how Singapore can accommodate this new 1 Million that they are targeting. The natural choice? Iskandar. First though, the links needs to be up and running for this integration to happen. Note that we are not talking about the whole 1 million but assuming just 10% of these plus the current Malaysian PR deciding to buy in iskandar, then the supply glut may not happen at all. As usual, the things have to fall in place for this to happen. As for comparison with US, it is really between an orange versus an apple and not a fair comparison. Malaysia’s BNM is much stricter compared to the US when the mortgage crisis happened. Just my personal opinion.

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