SINGAPORE: Johor eyes Shenzhen for development ideas
Updated
The Malaysian Deputy Prime Minister, Najib Razak, visited Singapore this week and on the agenda was the Iskandar Development Region in Johor State. Mr Najib held meetings with potential investors in the IDR and later publicly announced a crackdown on crime in the state. The plans for the state are massive - a business city modelled on China's special economic star Shenzhen.
Presenter: Bo Hill
Speakers: Dom LaVigne, executive director, American Chamber of Commerce Singapore; Manu Bhaskaran, head of economic research, Centennial Group Singapore
HILL: On paper it would appear Malaysia is sitting on a goldmine - the development of Johor state, taking advantage of its location in the Malacca Straits, a major interchange in the transport route from Africa and Europe to Asia, the Pacific and the United States.
Just a 30 minute drive from the heart of Singapore, the city proposed by the Iskandar Regional Development Authority will be four times bigger than Hong Kong. A city that a report commissioned by the Johor investment agency said would add 2 per cent growth to the States economy. And, as executive director of the American Chamber of Commerce in Singapore, Dom LaVigne points out, there are a lot of potential investors watching the development closely.
LaVIGNE: Approximately 80 per cent of our 2500 members have regional responsibilities and there's obviously a great interest in potential investment in Malaysia. And I think people are curious to learn more about the Iskandar Development Region and what the implications will be for US businesses in Singapore.
HILL: But, Mr LaVigne says, one of the biggest obstacles at least for American investors will be the outcome of stalled free trade negotiations between Malaysia and the US.
LaVIGNE: If an FTA with the US could be completed that could certainly enhance the idea and other potential investment zones that Malaysia is putting into practice. In some sectors there are some local ownership restrictions requiring foreign investments coming in, certain percentage to be owned by local businesses. That could be something that is a concern for foreign investors. Investors would like the flexibility they enjoy in Singapore.
HILL: Competing with Singapore's powerhouse economy and foreign investment pull could be difficult, but Mr LaVigne says the potential to set up management in Singapore, and operations in Johor, may be the biggest selling point. Manu Bhaskaran, the head of economic research at Centennial Group Singapore, says a lot depends on what happens in Singapore and between the two country's governments.
MANU: For the success of the Iskandar Development Region in the way it's been conceived and planned, I think a significant contribution from Singapore in terms of investment, in terms of exchange of activities, flow of people, is really vital.
HILL: Singapore, a Malaysian orphan which became the biggest economy in the region, doesn't always get along with its neighbour. And Johor state, just a bridge away from Singapore, is often in the firing line and often because of crime. A decade ago, Singapore's outspoken leader, Lee Kuan Yew, said Johor's shootings, muggings and carjackings were notorious. And a decade later, crime in Johor has become such an issue that it was on the agenda when deputy prime minister Najib Razak visited Singapore this week. But Manu Bhaskaran says ultimately the crime rate will not influence foreign investors.
MANU: Nobody can deny this is a problem in Johor. The guys behind the Iskandar Development Plan has recognised that and they have significantly increased their budget allocation for security. And I think that message of concern came across when the deputy PM of Malaysia during his visit Singapore the last couple of days. It hasn't deterred a large amount of foreign investment from Singapore, Taiwan, into Johor. So it is a problem, but it's not a crippling problem so it shouldn't be exaggerated.
HILL: Dom LaVigne agrees and says the crime is often petty and no worse than many cities in the region or globally. He says what will be crucial to attract investors is the quality of infrastructure and predicts the existence, or lack of, an international school will play an important role in attracting business relocation to Johor. Manu Bhaskaran says border movement could be the decider.
MANU: I'm not how they will do it but customs formalities will need to be sorted out. But that's one thing I will be looking at personally, to see if this Iskandar thing really going to take of which I think it will, but they will have to sort out the seamless movement of people first.
