Future-proofing the Economic Region
Nor Mohamed Yakcop
We have covered a lot of ground in this discussion. What are participants’ key takeaways so far? What are going to be the low-hanging fruit and key priorities as the project moves into its second ten-year period?
IKEA Southeast Asia
The first of my three takeaways is communication. Clear and accurate communication is crucial to the success of Iskandar Malaysia, in particular on the issue of safety here and addressing the negative perception in Singapore. Much of this sentiment is simply inherited rumour and it is important to shape communications campaigns with this in mind.
Second, improving access to Singapore from the Malaysian side would make Iskandar Malaysia an even more attractive place to live and work. This includes enhancing the physical links and reducing the time it takes to cross the Straits of Johor, as well as facilitating the immigration procedure. The key point is to provide people with the choice to travel or commute between the two areas in a hassle-free manner.
Third is to improve existing public transport infrastructure. Although creating an inter-connected and efficient public transport system linking all the key areas of Iskandar Malaysia is a large undertaking, it is essential that a firm commitment and careful planning begin to become a reality.
The latter issue takes us back to communication. Once these commitments and plans are disseminated effectively, people are generally patient and will be satisfied to invest or relocate.
Prof. Tony Downes
Rather than the low-hanging fruit, my background in academia makes me more inclined to focus on the fruit that is harder to pick! In addition to my comment about the importance of market forces playing their part in Iskandar Malaysia, it is vital that political forces continue to contribute to the development process. For example, political differences and cultural issues must be reconciled in order to address the inclusiveness factor, which is a central tenet of the overall initiative.
For example, we have been talking about public transport, but Malaysians are very attached to their cars. We have to ensure that a ‘public transportation culture’ is created to ensure there is demand for these infrastructure projects.
Another of these political issues is the English language. While it may be politically difficult to reintroduce English as the language of instruction in schools, it is essential to identify ways to ensure that all Johorians, who aspire to the kinds of education and income levels espoused by the Iskandar Malaysia project, are fully equipped with the necessary tools to do so. Inevitably, this will include an advanced level of English.
In my view, the hardest fruit to pick relates to the questions surrounding what kind of economy Iskandar Malaysia wants to become. For example, the CDPii identifies nine ‘promoted sectors’, which will form a solid base for development. However, to move forward effectively, the changing local, national and international realities must be embedded into growth plans and value proposition of the economic region. For example, growth in the Singaporean economy is expected to decline in the medium term and so it is vital that Iskandar Malaysia is positioned to take advantage of these changing circumstances. Overall, flexibility and adaptability are essential in terms of strategic planning because a proposal devised, for example, 10 to 15 years ago will not necessarily be the most suitable plan in 10 to 15 years’ time.
My takeaway is the need to adopt a different strategy moving forward; one that moves from being capital-centric to people-centric. It is important to identify ways to engage young people and attract them to live and work in Iskandar Malaysia in order to help secure long-term success and sustainability.
In addition, Tony’s point about broader stakeholder involvement in decisions related to what kind of economy Iskandar Malaysia should become would be a positive move. A clear focus on what to expect over the short and medium term will help everyone to understand, for example, what kind of developments to introduce to the market. In turn, this will help to ensure that future growth is more sustainable for all in Iskandar Malaysia.
My key takeaways fit into two categories: developments that can be described as above water and below water. Investment figures, the number of SMEs and jobs created, among others, have been widely promoted and can be described as ‘above water’. However, there are issues ‘below water’ that do not receive as much attention, such as how the new regional wealth has been distributed equitably to ensure that economic development is shared equally among the local population, regardless of socioeconomic status. I would like to see more collective efforts to focus on the issues below water and increase their level of coverage as important facets of the Iskandar Malaysia story.
Nor Mohamed Yakcop
Therefore Ismail, is there a feeling that, despite the solid progress achieved during the first ten years of Iskandar Malaysia, more of the overall ‘pie’ has been distributed among higher-income segments of society rather than the general population in equal measures?
To some extent, yes. However, it is important to understand Iskandar Malaysia as a 20-year journey in which the platform has been set during the first and second 5-year periods. The third 5-year phase that the project entered into in 2016, as outlined by the CDPii, concerns the pursuit of sustainability and innovation. Crucially, the long-term success of the Iskandar Malaysia project itself will depend on our collective ability as stakeholders to ensure inclusive and equitable growth.
Prof. Tony Downes
Inclusivity is indeed a vital and often overlooked component of the Iskandar Malaysia narrative. For example, approximately 50 per cent of the staff at the UoRM are not knowledge workers, they are primarily Malaysian and, like the rest of us, they would like to live near their place of work, which is the campus at EduCity. However, they cannot afford to do so, and this illustrates a pertinent inclusiveness issue.
One of the priorities moving forward is to ensure that government policy is consistent and that investors are certain that what applies today will still apply tomorrow. Frequent changes to policy and how it is implemented will impede the growth of all sectors and precipitate an unfavourable perception from the international investor community.
One example of policy inconsistency in Malaysia is the Film in Malaysia Incentive. This scheme was established as a financial incentive for the production of creative content in the country by offering a 30 per cent cash rebate on all Qualifying Malaysian Production Expenditure. However, interpretation of the guidelines is rather inconsistent and some civil servants lack the necessary film industry experience to resolve problems that arise. This is having a knock-on effect on the creative work being undertaken in Malaysia. What all sectors of the economy want is a transparent system, and more needs to be done to ensure that this kind of system is developed.
Prof. Dr Wahid bin Omar
My takeaway is for stakeholders at all levels to place added emphasis on the creation of not only talent, but also entrepreneurs, particularly within the digital economy space and other promising and state-of-the-art fields, such as biotechnology.
There are many budding entrepreneurs with highly propitious ideas in the university sector who simply require financial support to get their developments off the ground. The goal for a number of universities, including UTM, is to contribute directly to the economic development of Iskandar Malaysia and beyond, and to play a relevant role in efforts to secure a sustainable and prosperous future for our students, as well as society as a whole.
Thus, part of our strategy to achieve this goal is to forge close working relations with authorities. For example, we are collaborating with the Johor State Government on a project in which our professors work in partnership with local community members to build their digital skills. The aim is to train them via a range of capacity-building initiatives and transform them into future engines of growth.
It is essential that more of these kinds of capacity-building projects between established stakeholders and the local population are implemented in order to move Iskandar Malaysia, and the country, beyond its labour-intensive economic production to become truly economically viable in the digital economy.
The whole playing field has changed since the Iskandar Malaysia project was launched in 2006 due to the rise of the digital economy. It is therefore vital that all stakeholders embrace this development and switch their focus to setting up business incubators for the new digital segments, such as game development and short-form programming.
One way to attract new businesses to the area or to promote their continued development is to take advantage of existing institutions, including UTM, who are experts in this field. For example, lessons can be learned from the Imagineering Institute, a multi-disciplinary research lab and partnership between UTM, MMU, City University of London and Osaka University Japan. The institute includes a start-up acceleration programme within its premises aimed at providing entrepreneurs with access to advanced lab tools, machines for prototyping, and academic researchers. These kinds of initiatives are needed throughout Iskandar Malaysia to foster the growth of innovation and technological development.
Khairil Anwar Ahmad
A general takeaway is that there are many lessons to learn after the first ten years in Iskandar Malaysia. One idea would be to solicit feedback from investors and stakeholders about their experience here and the areas they believe could be improved.
I also see the importance of advancing and encouraging innovation and this requires the nurturing of young talent, as indicated by a number of other participants. Accordingly, the goal should be for all actors to promote this culture of innovation, individually and collectively, and to create an ecosystem that incubates the ideas of the younger generation and channels them to transform change, as suggested by Michael.
For example, global companies are implementing initiatives to directly involve younger employees in their operations. For example, I was told that the Accor Hotel Group has set up a shadow executive committee, populated by employees under 25 years old, that is instructed to challenge the senior committee with ideas about future company direction. Furthermore, Nestlé is now utilising what it calls ‘Digital Acceleration Teams’ in which a group of young professionals is working closely with senior company staff to develop the company’s relationships with consumers online and maximise their social media footprint.
These types of initiatives should be replicated at the individual company level in Iskandar Malaysia. It would provide a valuable example that links directly to boosting innovation and, indeed, inclusiveness by engaging younger, digitally literate people in the Iskandar Malaysia project.
Anwar Syahrin Abdul Ajib
One key priority relates to how we create an environment where people want to come and live, learn, work and play. We have to provide good arguments for the kinds of lives that can be built in Iskandar Malaysia. We could learn a lot from the students that come here to study in that respect because they spend three or four years in Johor and should be able to provide good feedback.
One aspect of this relates to Tony’s point about the economic decision-making. It is important that stakeholders concentrate their efforts on ensuring that Iskandar Malaysia becomes a genuine hub in a small number of specific segments, rather than emphasising the development of a large number of different industries. For example, there is a population of approximately half a billion people within a four-hour flight radius of Johor. Given that Newcastle University Medicine Malaysia is churning out doctors and IHH is already investing in Gleneagles Medini, there are tremendous opportunities to transform the economic corridor into a world-class destination for healthcare. But, this is just one possibility out of many.
At UEM Sunrise, we are committed to promoting the benefits of leisure and in 2018 we will be opening a 343-acre natural heritage park in Iskandar Puteri, in which residents and visitors will be able to enjoy a regenerated green space. Therefore, the key to success is for all stakeholders to work together in a complementary manner to implement projects. Thus, individual developments can be built in pursuit of the wider mission to transform Iskandar Malaysia. The key is ensuring ongoing dialogue and interaction.
A 2015 study, compiled by the global market research firm Nielsen, found that 72 per cent of millennials are willing to pay more for products and services that come from companies who are committed to positive social and environmental impact. This compares to 55 per cent in 2014 and indicates a rising trend. This clearly supports the general consensus around this table that engaging the youth and channelling their ideas to strengthen the bottom-up approach is of great importance.
Stakeholders in Iskandar Malaysia must provide millennials with platforms from which their ideas can be put into practice, from start-up incubators, to other ideas including the creation of more co-working spaces. Beyond that, it is important to target the generation of an entire ecosystem in which entrepreneurs and innovators, from the graduate level up, receive suitable support and backing in order to grow.
My second takeaway concerns the availability of data and the so-called ‘fourth industrial revolution’, which is a fusion of technologies that is said to be blurring the lines between the physical, digital and biological spheres. Although the fourth industrial revolution is not expected to be fully interconnected for another 20 years, the key to its success is big data. To use an example from the manufacturing industry, the way in which this data is shared results in the combination of intelligent factories, machines, raw materials and products that communicate within an Internet of things and cooperatively drive production.
Importantly, big data and the Internet of things, in addition to aspects such as manufacturing, can be used to enhance the liveability of a particular area by connecting people, process, data and things. Thus, continued efforts must be undertaken to ensure that Iskandar Malaysia benefits from this kind of technological advancement, as this will help to attract people looking for a modern and innovative setting in which to live and work.
An additional point, one which is equally important and that has not been discussed so far, relates to environmental concerns. The 2013 Low Carbon Society Blueprint for Iskandar Malaysia helped to set the tone and was followed by the commitment of the Malaysian Government at the 2015 Paris Climate Conference (COP21) to reduce carbon emissions intensity by 45 per cent by 2030. Accordingly, there is an opportunity for all parties to set concrete goals in this area, with the lead coming from the government in terms of an implementation plan to clarify how the climate targets will be met. Furthermore, it is important that any such plans emphasise the sustainability aspect. This includes attracting green technology industries to the economic region and promoting the emergence of a circular economy. The benefit of the latter is that it will help to ensure a positive development cycle that engenders sustainable economic growth and the creation of new jobs, as well as helping to boost local and global competitiveness.
Critically, the key to my two takeaways and additional point about the environment is, as everybody has stressed, clear and concise communication and regular coordination among stakeholders.