How to Transform Iskandar Malaysia into an Attractive and Sustainable Metropolis?
Nor Mohamed Yakcop
There is consensus that Iskandar Malaysia has been highly successful in certain areas over the past ten years, in addition to the need to redouble efforts to drive growth over the next decade. With that in mind, what are the most important lessons learned at the halfway stage and how can these lessons help collective efforts to entrench the economic region as an attractive, sustainable and thriving global metropolis? Azman, let’s start with you.
One key lesson learned is the positive role of GLCs, including Khazanah, UEM Sunrise Berhad and IIB in helping to provide the platform to realise the growth of Iskandar Malaysia. The strength of GLCs is their focus on and expertise in developing catalytic projects, by providing increased investment in infrastructure while simultaneously facilitating the involvement of other private sector players, both domestic and international. Furthermore, the holding power of investors in Iskandar Malaysia has enabled them to withstand market volatility and remain strong. This provides increased security to the economic region and enhances its long-term sustainability.
In terms of efforts to make Iskandar Malaysia more attractive and sustainable, much will depend on relationships with foreign partners, including those with all ASEAN countries, not just Singapore.
Ultimately, the process of creating a thriving global metropolis in southern Johor will be a long-term undertaking, and the presence of strong investors with a long-term orientation and holding power will help to generate the value and stability required.
Prof. Dr Wahid Omar
One important lesson that must be communicated in conceptualising the path forward is the importance of open discussion and engagement between the main stakeholders, such as this roundtable. It is rare for a university to be invited to participate in a platform such as this in Malaysia and I see the opportunity as having a two-way benefit. As an institution, on one hand UTM can listen to the debate and take up the challenge of devising our own plans in response to what is being highlighted. On the other, it provides us with the chance to put forward our own ideas in an attempt to influence proceedings.
Therefore, to ensure that Iskandar Malaysia becomes an attractive, sustainable and thriving global metropolis, first it is important to recognise that the process is not a straight line and things will change. Second, it is essential to involve the world of academia in this process. At UTM, for example, there are approximately 1,500 PhD holders who could be engaged in related projects to identify ways in which this particular goal can be realised. The key, therefore, is for all Iskandar Malaysia stakeholders to regularly meet and communicate with one another to ensure that ideas continue to flow. Only then can the remaining challenges be overcome as we move towards 2025.
Khazanah is aware of the strengths of the universities and the part they can play in developing ideas, innovation, research and data. I agree that ongoing collaboration between universities and the public and private sector at events like this are an essential part of devising ways to put mapping and research findings into practice.
We must identify new and exciting ways to stimulate and encourage innovation and entrepreneurship as part of efforts to ensure the region thrives. With that in mind, one possible idea is to create an industrial design award that involves local universities or companies, such as UTM and UoRM, or Sunway and IKEA. The competition should stipulate that products must be manufactured here and built by local communities, as a way of involving the latter within production processes and supply chains.
IKEA Southeast Asia
That is a fantastic idea. I would be very interested in working together with other stakeholders in Iskandar Malaysia to move a project like this forward.
Nor Mohamed Yakcop
This is a good example of how these kinds of meetings can facilitate progress. What about other concrete areas in which actions can help to bridge existing gaps between the initial aspiration and the materialisation of Iskandar Malaysia’s goals?
One thing we must not forget is that Iskandar Malaysia is not just Iskandar Puteri; to ensure long-term sustainability, the other four flagship zones must not be overlooked. Thus, in terms of concrete actions to bridge gaps, while some efforts are already being made in this respect, constructing a strong and thriving city centre in Johor Bahru will contribute greatly to development efforts across the other flagship zones and help the economic region to gain further recognition as a global metropolis.
One specific area that requires further attention is connecting the distinct nodes of Iskandar Malaysia in an effective manner by integrating the geographically disparate flagship zones. I know many people who live and work in Iskandar Puteri that very rarely come to Johor City, for example.
The main challenge is the lack of a really strong public transport system; currently, the only way to travel between these places is by car. In my opinion, this all relates to the need for a more holistic view, particularly if we are aiming for sustainable development.
Public transport is a classic example of a physical enabler that provides a network linking all the separate parts in an urban setting. Accordingly, a high-speed rail network connecting Kuala Lumpur and Johor Bahru with Singapore is due to begin construction in 2017, with completion expected in 2026.
Similarly, under the Transportation Blueprint 2010-2030 for Iskandar Malaysia, a Bus Rapid Transit system (BRT) has been earmarked for construction, which when completed, will represent a huge step towards an integrated connectivity system that serves the entire local region. Therefore, steps are being taken by institutional stakeholders and the realisation of these transport networks will be a tremendous boost to southern Johor.
The key to public transport development is finding a workable funding model and facilitating private-public coordination with long-term, sustainable players who understand what is required. The government has been working since 2006 to lay the foundations for public transport in Iskandar Malaysia; during the next stage of development, we must increase PPP initiatives to progress further.
Prof. Tony Downes
A new, efficient public transport system is certainly one of the development gaps in Iskandar Malaysia. The main challenge in the development of such a system is always cost. In this regard, it is important that stakeholders strike a balance between improving infrastructure in such a way that is not financially detrimental to its inhabitants, while creating an ecosystem conducive to the arrival of new people who want to live and work in the economic region.
Following Michael’s call for a more holistic vision, higher education in Iskandar Malaysia would certainly benefit from more joined-up thinking. Most of our students come from Johor and from my perspective, additional work is required to homogenise efforts to ensure that universities such as ours create a real link between what we are doing and the actual needs and desires of students. In particular, this relates to students from defined population centres, such as Johor.
In turn, this is directly related to the chain that links people from school, through university, to employment and family life in Johor, and the challenge for Iskandar Malaysia is to unite all these separate aspects. Steps are being taken, for example, at the UoRM where we are reaching out to local schools, but more needs to be done by all actors to help join the dots.
Khairil Anwar Ahmad
Another serious challenge is to increase the size of the working population in Iskandar Malaysia. For example, a large number of residential units have been or are being built in Iskandar Puteri, but the population is not growing because there are limited employment opportunities in the area.
Progress is ongoing, with increasing numbers of small and medium-sized enterprises (SMEs) arriving to the area, most of which pertain to the light industrial sector. However, growth has been slow in the services and financial service industries, while a moderate rise has been detected in the creative, education and health sectors. Additional expansion in these areas is certainly needed.
The attractiveness factor is one of the key challenges for any new development. As Khairil said, part of this includes building additional industries in Iskandar Malaysia that will give rise to new job opportunities. These do not have to be big or high-tech industries but they do need to cater to the entrepreneurial spirit of young graduates, particularly those coming out of MMU. Millennials want to create jobs for themselves and it needs to be made easier for them to do so.
Regarding SMEs, certain economic development theories state that once big catalytic projects involving large companies from the private sector have been established, there will be a knock-on effect on SMEs. Inevitably, market inefficiencies or setbacks will emerge along the way and that is why industrial policy and coordination are so important.
Similarly, while the working population can certainly be expanded and diversified, significant progress has been achieved since 2006, with thousands of jobs created in the construction, leisure and tourism, creative, education and healthcare sectors to date. Nevertheless, it is certainly important to tap into the younger, entrepreneurial side of things in order to ensure Iskandar Malaysia is genuinely attractive to other young talent.
The priority moving forward should be more coordination and joined-up thinking between all players, including the government, IRDA and the private sector. The adoption of a common approach will facilitate the process of bridging the identified gaps related to public transport, SME market penetration, a growing working population, as well as other areas of development.
Khairil Anwar Ahmad
In order to bridge these gaps, I think the strategic communications plan should be reviewed. During my efforts to promote Iskandar Malaysia, I have concluded that there is a lack of awareness about the project itself, particularly on the international stage.
To date, much of the promotional work has, perhaps, been carried out in isolated pockets, where individual groups have promoted themselves, first and foremost. The joint development of stakeholder communication strategy based on a set time period, whether a year or three years, for example, will help players to pool their resources and avoid a situation in which efforts are duplicated. This will be a tremendous benefit in terms of communicating the success story of Iskandar Malaysia and go some way towards resolving the issues we have been discussing.
What this roundtable discussion has clearly reflected so far is the need to address the communications gap. The practice mentioned by Khairil in regard to stakeholders shaping their communication strategies from an individual rather than collective perspective is impeding efforts to promote the benefits and success stories from the economic region among domestic and international audiences. This behaviour is understandable, but, I agree, moving forward it is important to coordinate and integrate efforts to devise a common communications plan.
Prof. Tony Downes
In terms of collectively promoting Iskandar Malaysia abroad, certain governments are good at involving the wider business community in their foreign trade missions. These trips consist of a diverse group of representatives from the public and private sector who travel together to a particular country or region to promote the collective benefits of their home nation or area of operations. This kind of collective trade mission involving Iskandar Malaysia representatives is one potential way to enhance our communication efforts.
Identifying ways to ensure long-term momentum and commitment are fundamental to the sustainability of Iskandar Malaysia as a place in which people want to live, work and enjoy recreational activities. From the perspective of property development, particularly in terms of sustainability, further gaps exist in relation to the actual process of project implementation. This includes the need to increase interaction with local communities to understand their requirements and aspirations.
For example, I know from personal experience that many young professionals choose to go to Singapore at the weekend because there are not enough recreational opportunities in the area. Clearly, a number of malls, as well as other leisure and entertainment projects, are under development in Iskandar Malaysia. However, stakeholders can do more to pre-empt future demand and speed up these kinds of initiatives, from baseline research to looking at the approvals process, the readiness of infrastructure and how projects integrate together.
A related point, as highlighted by Michael and Azman, is the importance of engaging young talent in the economic region to pursue an entrepreneurial spirit. More communication and collaboration between the universities would help to introduce a new generation of talented people and raise Iskandar Malaysia to the next level.
We must identify ways to engage members of the younger generation and offer them opportunities to flourish. This can be done not only through universities, but also at the institutional level via the provision of assistance to start-ups and young entrepreneurs that want to become meaningful stakeholders in Iskandar Malaysia.
Shahrull Allam Shah Abdul Halim
Johor Port Berhad
The arrival of world-class multi-national corporations (MNCs) to Iskandar Malaysia will certainly help drive the emergence of new start-ups and SMEs. It is the duty of stakeholders in the economic region to aid the integration of SMEs following the entrance of big players; success will depend on enabling participation to some degree.
One opportunity is to attract original equipment manufacturers and distribution centres here, for example in car manufacturing. Significantly, we are in talks with Volkswagen about this matter and BMW has already broken ground on the BMW Group Parts Distribution Centre Malaysia at Senai International Airport.
Additionally, it is important to entice recognised brand names. One positive development in this domain is that U.S. chocolate maker Hershey is building a production plant in the economic corridor. These kinds of notable developments will create favourable conditions for local SMEs to tap in to the value chain.
Policy is a critical factor that is helping to attract MNCs and, thus, generate rising numbers of SMEs. To this end, there must be greater incentives put in place by the authorities. The presence of free zones is one incentive and there are a number in Iskandar Malaysia, including the free zone area at Johor Port.
However, certain issues need to be resolved in this regard, including an unintended consequence of the 2015 Goods and Services Tax (GST) whereby free zones were recognised as part of Malaysian territory and, thus, subject to associated duties. This is diminishing the incentive offerings in relation to the transfer of goods. The Ministry of Finance and the Malaysian Investment Development Authority are looking into this situation and we expect it be resolved. Nevertheless, it exemplifies the importance of the policy decision-making in helping SMEs, and Iskandar Malaysia itself, to become sustainable and conducive to long-term growth.
Nor Mohamed Yakcop
This issue about unintended consequences of certain policies is highly pertinent. Therefore, and related to what has been discussed about bridging the gaps in distinct areas, what can be done to ensure more effective coordination between all players moving forward?
The priority is to follow a clear communication strategy and hold ongoing discussions in which all levels of stakeholders are involved. These conversations must include the people who will be directly affected by the decisions being made. The government cannot just talk among itself. Since IRDA acts as the focal point that unites all parties within Iskandar Malaysia, from high-level decision-making processes, to maintaining close relations with the local population, we are well positioned to act as the conduit for communication.
Another related point about coordination is that Iskandar Malaysia must transcend concerns solely about economic growth; it must also be about inclusiveness, and this requires balance. That is why the goals of IRDA often take time to materialise. For example, our aim is to create pools of local SMEs to cluster around a specific catalytic project, but this organic approach takes longer than, for instance, attracting foreign SMEs.
This is due to the time required to create the right opportunities and work with the appropriate agencies in order to help form highly skilled businesses capable of reaching a globally recognised level. IRDA is working with specialist organisations, including SME Corporation Malaysia and the Ministry of International Trade and Industry, to streamline this process, with an emphasis on how policy decisions can be most effectively translated at the local level. Replicating this approach across other sectors and institutions would help to ensure that coordination efforts are conducted more effectively in the second ten-year period.
Effective coordination between constituent stakeholders is essential to the success of Iskandar Malaysia over the next ten years. I agree with Ismail that too much top-down is unhealthy; effective PPPs must be arranged and play an increasing role, particularly in light of fiscal constraints. Accordingly, one priority is to harness the energy and ideas of the younger generation by embracing the ‘indie economy’. It is vital to understand the increasing reluctance of younger generations to fully engage with the ‘capital economy’, which has seemingly lost touch with the ordinary citizen. If we can facilitate this ‘indie’ phenomenon, which is happening all over the world, it will help ‘future-proof’ development in Iskandar.