Should You Invest in Iskandar Malaysia?

By David Chong (guest contributor)

Should you invest in Iskandar Malaysia? Some say it’s the next big thing, 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 is dependent on 3 critical success factors I call INC:

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

INTERNATIONAL BUY-IN

Iskandar Malaysia, 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 the 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 the lower cost of doing business, 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 – the issues of crime and safety needs to be tackled. Residents need to feel safe walking the streets of Iskandar. Iskandar 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 and 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 Thomson 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 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 RM131.64 billion 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 the domestic and foreign private sector, Iskandar Malaysia has created a momentum of its own.

Remember Iskandar Malaysia “INC” – the three critical success factors 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?”

David Chong is a Property Infopreneur and founder of InsideIskandar.my, an online magazine which helps property investors understand Iskandar Malaysia. Posted courtesy of www.Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions. Click here to get your free Property Beginner’s and Buyer’s Guide.

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