Iskandar's challenges, 10 years on
Projects taking longer gestation period amid labour crunch, but there are bright spots
As Iskandar enters its tenth year as a development region, some projects that were seen as catalysts for growth in the region appear to be taking a longer gestation period than expected, with many developers taking a wait and see approach.
Companies hoping to take advantage of the region as a lower-cost location have faced problems in getting the manpower they need.
On the other hand, bright spots have come through in the areas of education and healthcare.
According to the Iskandar Regional Development Authority (Irda), "Iskandar Malaysia is well on track". Irda has achieved 48 per cent of its target of attracting RM383 billion (S$128 billion) of committed investments from 2006 to 2025, with 10 years still to go, an Irda spokesman told The Straits Times. About 50 per cent of the RM187.96 billion in committed investments received so far has materialised, in terms of projects already built, for example.
SECTORS TO WATCH, CATALYTIC PROJECTS
Irda's Comprehensive Development Plan for 2014 to 2025 identifies nine economic sectors that will drive growth in the region.
The core sectors are electrical and electronics, petrochemical, oil and gas, food and agro-processing, logistics and tourism.
Its emerging sectors, which Irda feels have great potential to drive growth, are healthcare, education, creative and financial, investment, real estate and business services.
A total of 605,381 jobs have been created in Iskandar Malaysia from 2007 to date in these nine sectors, along with other sectors, including property and construction.
Irda is targeting the creation of 817,500 jobs by 2025. The region is projected to have a population of around three million by then.
The manufacturing sector has always been the region's main growth driver and accounts for about RM52.10 billion of committed investments to date, translating into firm demand for industrial space.
Take the 210ha Nusajaya Tech Park, where joint developers Ascendas and UEM Sunrise have almost fully sold its first batch of 21 ready-built facilities. A second batch will be completed by the end of this year. Its customers are from precision engineering, marine, security systems, logistics and distribution, data centre and telecommunications. About 77 per cent are Singaporean or international companies.
But firms note that there are problems with securing manpower; the unemployment rate is just 3 to 4 per cent. "Skilled workers would prefer to work in Singapore, which is just a bridge away. We have heard it is not easy to secure sufficient foreign labour given quotas in Iskandar," said Mr Kurt Wee, president of the Association of Small and Medium Enterprises. There is not yet a large enough domestic population in and around the region to help alleviate the labour shortage.
The savings for a company choosing to manufacture in Iskandar over Singapore is about 20 to 30 per cent, compared with places like Klang Valley and Kuala Lumpur, where savings can be up to 50 to 60 per cent, he estimated.
Moderating prices of industrial land in Singapore over the past one to two years also means Iskandar has become a less attractive option for companies, Mr Wee added.
Some small and medium-sized enterprises (SMEs) from Singapore have factories in Iskandar but are not even using them due to high labour costs.
"In the long term, though, we are still optimistic about the adoption of Iskandar as a location for operations... There is room to make Iskandar more attractive in terms of building a vibrant industrial and commercial base, relooking customs procedures and tax incentives," added Mr Wee.
Things are going slowly on the development front.
Construction has not started for the 28.7ha township in Danga Bay, a joint project by CapitaLand, Temasek Holdings and Iskandar Waterfront Holdings announced in 2013. Building has also yet to start on the 9.23ha Vantage Bay project by Rowsley, a firm controlled by Singapore billionaire Peter Lim, which was repositioned last year from an integrated residential, office and retail project to a healthcare hub.
Mr Lim has another large project, motorsports hub FASTrack Iskandar. A spokesman said the design, technical and tender details are being reviewed with a view to commencing construction this year. It will take up to three years to build the project on the 121ha site, the spokesman said.
Some developers are believed to be changing tack.
Malaysian developer Tropicana, for example, is said to be considering selling some of its land bank, including sites at Tropicana Business Park, development land in Gelang Patah and a commercial parcel opposite Danga City Mall.
The company is focusing its development efforts on Klang Valley instead, market sources say.
A Tropicana spokesman said it has no definite plans to sell land. Its Bora condominiums and Oasis 2 shop offices are under construction, and it is planning to launch landed homes in Tropicana Danga Cove, she added.
Progress on the energy front is easing up as well.
Developments in Iskandar and southern Johor, which are part of a bid to make the region one of Asia's top oil and gas hubs, have slowed amid weak oil prices.
The completion of the Pengerang Integrated Petroleum Complex (PIPC) is likely to be delayed due to difficulty in getting new investors to sign up, according to the federal government agency Johor Petroleum Development Corp late last month. Phase 1 of the project is on track but future phases may be delayed, according to news reports.
Malaysia's state-owned oil and gas company Petronas said last year it is delaying until mid-2019 the start of its US$16 billion (S$22.5 billion) refinery and petrochemical integrated development (Rapid), which is to be in Phase 1 of PIPC.
A decline in oil prices forced Petronas to review and re-tender some of its engineering, procurement and construction contracts.
However, it is clear that developments in Pengerang have been a boost to the area. "Thousands of people from the country and region have moved there... (the nearby) Sungai Rengit town is booming and housing prices have shot up," said Mr V. Sivadas, executive director PA Property Consultants.
In the education sector, various international schools have set up shop in EduCity, including Marlborough College Malaysia, which has 823 students. Tertiary institutions include the Netherlands Maritime Institute of Technology with 1,387 students, and Newcastle University of Medicine Malaysia with 598 students.
"Apart from Malaysians, there are students from Singapore, Sri Lanka, India, Seychelles, Mauritius, United Arab Emirates, France, the Philippines, Bangladesh, Egypt, Indonesia and Austria at EduCity," said a spokesman for Iskandar Investment.
This year will see the opening of the Management Development Institute of Singapore (MDIS) campus in EduCity, along with the first phase of Raffles American School.
Healthcare has also proven to be Iskandar's strong suit.
Gleneagles Medini opened last year, taking the number of beds in the area to 1,500 in key private hospitals. These hospitals, including Regency Specialist Hospital and those under the KPJ Group, are said to be packed. Upcoming hospitals, including Thomson Medical Centre and more by KPJ, will add about 1,000 more beds.
So with such a mixed bag, what needs to take place for Iskandar to succeed? While much land has been allocated for high-end housing and commercial uses, there is a shortage of homes for middle and lower income groups. More infrastructure investments to the north, north-east and north-west of Johor are needed to solve the housing crunch.
Experts also point to the need for a far smoother flow of people and goods across both countries.
Bilateral discussions on the Johor Baru-Singapore Rapid Transit System are ongoing, a Ministry of Transport spokesman told The Straits Times.
"Following Malaysia's confirmation of their terminus location at Bukit Chagar, both countries are now discussing the type and alignment of the crossing scheme. The next step will be to commence Phase 2 of the Joint Engineering Study, which is expected to take about two years," he said.
Both governments expect to finalise the commercial model and procurement approach for the Kuala Lumpur-Singapore High Speed Rail this year.
"Until the Causeway and Second Link congestions are solved, this region will be held back. It will not be able to fully realise the potential of being complementary to Singapore," said Mr Sivadas. "Eventually, we need to go back to the core issue. If you are building a city, it must have connectivity."
A view of Nusajaya, one of Iskandar’s five flagship zones
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But I never had the chance of taking up a second or third loan on property in my early 20s or 30s i.e. the boat never came near to me....so now when the chance comes I took the boat and just hope it floats as I don't intend it to be a suicidal move. For me it's a chance that is simply unavailable in Singapore, but in JB it is a "star" I can just thankfully reach. :p
To buy jumbo won't be just my own suicide, it's family suicide! What other choice in Singapore for me? Honestly none that I can see. Selling off my HDB to buy another HDB (new or resale) would make me worst off, if not the same as before. So my HDB would not make money for me at all by selling it. The only light I can see at the end of the tunnel for me was JB which my colleague suggested. We could sell the HDB and used the cash proceeds for paying the downpayment and renovations for JB home. But the property agent told me, don't ever sell your HDB, $80K proceeds is hardly much and you will soon be left with nothing from it. Rent it out and you can get that kind of money back in 3 years and still continue to receive income from it. Plus you still have a property in Singapore.
