After 8 years, who does Iskandar Malaysia really benefit?

It was a mega-corridor meant to rejuvenate the state capital, Johor Baru, but eight years after it was launched, Iskandar Malaysia has come up short on its promise to give ordinary residents in southern Johor better jobs and better lives.

This was the sentiment gleaned from a straw poll by The Malaysian Insider among two groups of people, ordinary residents and business owners in four locations in southern Johor – Masai, Bandar Baru Uda, Bukit Indah and Kampung Melayu Majidi.

More than half of the 18 interviewees said that their lives had not changed for the better, even as Iskandar Malaysia seeks to transform southern Johor's physical and economic landscape.

About two-thirds of the businesses surveyed said that they had not felt any spillover effects, in terms of money-making opportunities or profits.

This is after the initiative has brought in RM156.35 billion in investments since 2006 according to an October 18 report by state news agency Bernama.

Yet, many respondents remain optimistic about Iskandar Malaysia, with a majority in both groups saying the initiative was, on the whole, good for southern Johor.

But this optimism was heavily tempered with intense frustration at the rise in the cost of living and the price of houses.

There is also a growing sense among residents that the rich and connected would get the lion’s share of benefits from Iskandar Malaysia while everyone else would get the table scraps.

Man on the street

In face-to-face interviews with 17 residents, they were asked three questions: has life improved in Southern Johor with Iskandar Malaysia? Why has it improved? Why has it not improved? On the whole, do you feel that Iskandar Malaysia is good for southern Johor?

Nine said "no" to the first questions, seven answered "yes" while one respondent replied that he was unsure.

The most commonly cited reason their lives had not improved was that wages were not keeping up with inflation. This was followed by complaints about the high price of property.

“There is nothing special for the people of Johor. Our wages have not gone up but house prices and food have. There are no benefits for us,” said a shop assistant, who wanted to be known only as Ahmad, in Masai.

Another common view when residents talked about Iskandar Malaysia was that what was being built was “not for locals but foreigners”.

They also claimed that some communities were being left behind as they were sidelined from business opportunities while having to deal with the government’s flip-flop policies and its bureaucracy.

For those who thought their lives had improved, the most common reasons they gave were were better roads, more jobs, more business opportunities and less crime.

“I can really see the drop in crime. Before we used to hear about cases all the time,” said a Bandar Baru Uda resident who gave his name as Zainal.

Cashing in or crashing out of Iskandar?

When it came to business owners, only four of the 18 said they had tasted some of the wealth poured into Iskandar Malaysia. The rest said their businesses had not benefitted.

The biggest problem cited by the businessmen was rising operating costs as the price of rent kept going up.

“My landlord keeps raising my rent but my sales can’t keep up. I’m thinking of closing down if it goes up again,” said a soy product retailer in Bukit Indah.

This was a common complaint among businesses in Bukit Indah, a suburb next to the new state administrative centre of Nusajaya and the luxury housing estate of Horizon Hills.

Property owners looking to cash in on the booming construction of luxury homes next door are driving rent prices up by 100% annually, said the business owners.

“Customers nowadays can’t spend as much because their cost of living has gone up,” said one bookstore owner. This was the second most common complaint among business operators.

Business operators who said they had benefited from Iskandar Malaysia said they now had more business opportunities, saw more sales and took advantage of better infrastructure.

But when it came to the question of whether Iskandar Malaysia was on the whole good for Johor, a majority from both groups said “yes”.

Consolidation phase

Pulai MP Datuk Nur Jazlan Mohamed said that the complaints were valid in terms of the present state of the economy in southern Johor.

But it does not reflect the potential of Iskandar Malaysia to make things better for everyone.

“Economic growth goes up but then it plateaus. What we are seeing now is a plateau. It is the consolidation period of the local economy as it balances out between supply and demand.”

During the first surge of money in the first phase of Iskandar Malaysia’s development, many people set up shop looking to profit from all the new homes, offices and colleges being built, he said.

“But growth of high-income earners was slow and so demand could not cater to the supply (of new businesses),” said Nur Jazlan, whose constituency includes Nusajaya and the booming suburb of Bukit Indah.

He said residents benefitted in some way from Iskandar Malaysia, whether directly or indirectly.

“Billions were poured into new roads in my area. Bukit Indah used to get power cuts all the time before Iskandar Malaysia and Nusajaya. Now it is served by a new coastal highway. It has upmarket shops, hypermarkets and a mall.”

He believes property prices will drop in the next few months as part of this consolidation phase but what is really needed is for Iskandar Malaysia to attract more corporations to set up shop.

“We need more high-paying jobs so that residents can earn better salaries and have more disposable income to spend in the local economy. This is where Singaporeans must be lured in to expand their businesses.”

A higher income would partially solve the problem of inflation biting into the pockets of local residents and which prevents them from spending or affording more expensive homes.

With a higher income they could probably afford the previously high prices until the prices go up again, he said. After all, this was the growth cycle in Iskandar Malaysia or any economy.

“It’s a rat race. You will always have to play catch up.” – October 21, 2014.