This article first appeared in Forum, The Edge Malaysia Weekly on September 4, 2023 - September 10, 2023

A fresh look at how the immense potential of Greater Johor Baru, also known as the Iskandar region, would serve as the catalyst for Malaysia’s second economic take-off. Greater Johor Baru should be positioned as the nation’s second metropolitan region after the Klang Valley and, to achieve this end, be given adequate resources and policy support.

Before independence in 1957, as a result of the British decentralised governing structure, Penang, Ipoh, Johor Baru/Singapore and Kuala Lumpur were of similar level of economic importance. Post-independence, Kuala Lumpur became the nation’s unrivalled commercial centre while the disparity between Kuala Lumpur and the nation’s other cities grew wider.

Political structure was one of the many underlying factors that resulted in the widening gap. Umno was the dominant party that provided the candidate for the prime minister while almost all peninsular states were governed by an Umno menteri besar, who was most likely a state liaison Umno chief appointed by the Umno president, who also wielded powers as prime minister. Under such a tacit institutional setting, the state governments tended to acquiesce to most of the federal government’s dictates.

The Malaysian constitutional framework provides that the federal government takes all the proceeds from income taxes while the state government can only rely on land taxes and other natural resources.

However, since the end of Barisan Nasional’s one-party state structure in 2018, states have become important power centres. Even if the state menteris besar or chief ministers were from the same party, the prime minister and the federal government have to be more consultative with them. In the case of Johor, the sultan is a strong advocate of state’s rights.

The new political milieu should provide an impetus for more attention to be given to the needs and potentials of Greater Johor Baru.

There were similar attempts before. Previous prime minister Tun Abdullah Ahmad Badawi created new federal corridor agencies, such as Iskandar Regional Development Authority (Irda), with the objective of developing the region with federal resources and projects. However, the approach is now generally regarded as merely adding a “corridor” layer of bureaucracy without the intended benefits of conurbation.

Prime Minister Datuk Seri Anwar Ibrahim has recently instructed the corridor agencies to cease the investment promotion function. In the long run, Irda should be “returned” to the state of Johor and synchronised with the state authority.

Since the fall of the Berlin Wall in 1989, which symbolised the collapse of Communism, the world entered into a period of hyperglobalisation. Coupled with the containerisation of transport, which only became the dominant form of freight in the last half-century, outsourcing of manufacturing under the ethos of “just-in-time” was the rule of the game until Covid-19 hit the world in 2020.

Singapore was the poster child of hyperglobalisation. As the global city and regional financial hub, firms from Europe and North America set up regional headquarters in Singapore while locating their main production lines in China and other low-cost countries around the globe. For some decades, Singapore needed no hinterland.

What has changed? Covid-19 and other pandemics, as well as health challenges such as an ageing society, mean firms have to price in disruption. Likewise, wars and geopolitical tensions, climate change and climate-related disasters, and financial instability, are disruptions that can no longer be ignored.

The world has now moved from “just-in-time” to “just-in-case”, from the sole pursuit of economic efficiency, that is, low production cost, to economic security. The key phrase now is “shorter and more secured supply chain”.

In such a context, Greater Johor Baru provides Singapore with a production site. Investors investing in Singapore are demanding to see their factories within a couple of hours of flight time. Johor is within sight, and reachable by road, very quickly.

Housing costs, especially rents, have increased tremendously over the past few years in Singapore largely due to the influx of China investors who relocated from China for various reasons. The high housing costs in Singapore is juxtaposed with a glut of apartments, condominiums and high-end residential properties in Johor Baru. Singapore and Johor Baru may be each other’s cure as far as the housing question is concerned, provided commuting is smooth.

The separation between Malaysia and Singapore in 1965 was not entirely cordial and this has created a sense of competition between the two neighbours. It was real with the older generation of leaders who knew each other personally but tended to compete with each other, such as Tun Dr Mahathir Mohamad and the late Lee Kuan Yew. Today’s leaders may have less sense of animosity and suspicion between them.

An important mindset shift is that the federal government would need to recognise that if any parts of the nation are thriving, such as Johor Baru, the result is inevitably beneficial to the country as a whole.

There is a need to see Greater Johor Baru as the second metropolitan region of the nation. The region is huge and sees economic migrants from as far as Sabah and Sarawak, as well as northern and eastern states, relocating to find better opportunities, whether in Johor Baru or in Singapore.

Once Greater Johor Baru is seen in a different light from other state capitals, resources and policy support could be channelled to fulfil human development needs, such as schools, hospitals and care facilities, and other economic requirements.

My parliamentary seat of Iskandar Puteri and the state seat of Perling are both in Greater Johor Baru, and I can see very clearly the need for more resources for human and social development. The current planning does not take into account the huge number of Malaysian economic migrants who congregate in the region.

More resources should also be channelled to provide decent public transport for the region, especially bus and water-based modes of transport. Many Johoreans are familiar with Singapore and, therefore, can easily become accustomed to taking public transport if sufficient services are available.

A Greater Johor Baru-wide transport master plan that also takes into consideration cross-border traffic should be commissioned. The advent of the Johor Baru–Singapore Rapid Transit System (RTS) — scheduled to be completed in 2027 — is a good start to make commuting more convenient. But it should not end there.

More effort should be made to make immigration checks easier with the introduction of newer technology and speed. Special arrangements should be made for holders of Malaysian and Singaporean passports, or at least regular users of the crossings, to cross borders with minimal checks. If there is a fear of crime, the authorities on both sides, especially the police, have already had extensive cooperation to deal with it.

The KTM Shuttle Tebrau should not cease service after the RTS starts. And more catamaran-based ferries should be introduced, such as between Forest City and Julong, and between Pasir Gudang and Changi, to provide more options apart from the Causeway and the Second Link. Making walking across the Causeway a more comfortable experience with a walkalator and roof-cover, as announced by the prime minister in January, should be pursued as a low-hanging fruit by the Ministry of Home Affairs and its counterpart in Singapore.

With more commuting links, firms could set up shop in Greater Johor Baru while continuing to maintain a presence in Singapore. When more businesses locate some parts of their operations in Greater Johor Baru, they can save on other operation costs even when paying their workers at least two-thirds of Singapore’s pay. It will help shift the wage structure of Greater Johor Baru, with more employers having to pay higher wages across the board.

When many more Malaysian workers are better paid in Johor, fewer will need to travel to work in Singapore while consumption in Greater Johor Baru will thrive further through integration and a general population that has better income.

If done well, Greater Johor Baru as the second metropolitan region will be one of the engines of growth that will power Malaysia’s second economic take-off.

Liew Chin Tong is deputy minister of international trade and industry

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