Singapore’s Shenzhen - Iskandar a glimpse of the future for many

REALITY bites. Singapore is running out of land, population growth is continuing. The nearby option – for both workers and retirees – is Malaysia’s emerging Iskandar development, just across the Straits of Johor, where lower housing and schooling fees beckon . . .

Across the Straits of Johor that straddle Malaysia and Singapore, the dedicated economic development zone known as Iskandar is rapaidly taking shape.
Iskandar, covering more than 2,217 sq km, will mean as much to Singaporeans as to Malaysians — but for totally different reasons.  In a social sense for the former, economic for the latter. Iskandar could one day become home to many Singaporeans priced out of home ownership in the land-starved city-State.
A Singapore writer, John Liu, poignantly pointed out this fact after a recent (reluctant) visit to the zone.
Along with a party of invited Singapore journalists, Liu visited Pinewood Studios, developed by Australia’s largest property/construction group, Lend Lease. Specifically, the party was invited to watch the shooting of the first part of Journey of Marco Polo, produced by John Fusco for Weinstein, the US film-making company. The sceptical visitor came away impressed — Liu’s interest in Iskandar is no longer academic.
“In its vast sound stages, and in the poise and determination of its management, and in the rolling green fields of land, I caught a glimpse of the future. My future, actually,” he wrote. “As Singapore’s population gets older, as its costs go up while its land banks go down, it is very likely that my destiny, and the destinies of many of us, lie tied up somewhere up north (Iskandar).”
Such is the reality. Singapore will at some point run out of land. Population growth is continuing, and the city-State is preparing  for when it will have a population of 10 million – almost double the existing number.
Already, 74 per cent of all buyers of residential property in Iskandar are from Singapore. House and apartment prices there are around a quarter of those for comparable private landed property in Singapore.
For some years now, in official circles, there has been talk of establishing a “silver city” in Iskandar, supported by medical and other amenities to service ageing Singaporeans.
To make the move palatable, governments on both sides believe the key is to provide excellent transportation and uncomplicated immigration clearance, with the introduction of a form of smart card for frequent travellers.
Generally, it is fair to say that Singaporeans have yet to come to terms with the idea of living permanently in Malaysia.
The same cannot be said for Corporate Singapore. In April this year, Singapore companies emerged as the bigger foreign investors there, committing about RM11 billion — primarily to manufacturing, education, health care and property development.
Billionaire Singaporean Peter Lim has been one of the largest investors in the Iskandar region over the past two years, with a RM10 billion development in the city centre of Johor Bahru. Most recently, Lim set up a venture with his partner, the Royal Family of Johor, to provide IT and security services.
Blue-chips led by CapitaLand and Ascendas Land International Pte Ltd, a Singapore Government-linked company, have invested heavily in Iskandar. Ascendas is in joint venture with Malaysia’s UEM Land Berhad to develop an integrated eco-friendly technology park in Nusajaya, one of the five regions in Iskandar.
Although Malaysia and Singapore have a symbiotic relationship, it is one often fraught by irritation and rivalry.
Singapore investors have taken comfort from a comprehensive bilateral economic agreement, signed off in 2013. The deck, it seems, has been cleared for better future relations and closer co-operation.
In this more amiable climate, Singapore and Kuala Lumpur are forging ahead with plans for a high-speed rail link — with a stop at Iskandar – linking the two capitals. And Singapore is extending its mass rapid transit system to
Johor Bahru. Other plans to improve connectivity include possibly a third link and ferry service.
Not surprisingly then, Iskandar, which was launched in 2006 to a lukewarm reception from Singapore investors, is now taking off.
New investments in Iskandar more than doubled in the second quarter of 2014 compared with the first three months of the year. The region recorded RM9.72 billion in new investment in the quarter to June 30, bringing the year's total, so far, to RM14.56 billion. That momentum is expected to continue, with investor confidence running high.
From 2006 to June 30 this year, cumulative committed investment for Iskandar reached RM146.20 billion, of which 36 per cent was foreign direct investment.
The tipping point, according to observers, is completion of three key develpments in 2012. They are Medini Iskandar Malaysia, Legoland Malaysia and EduCity@Iskandar. So-called catalytic projects, they are the Government’s seed investments to encourage a clustering of similar and supporting industries.
Legoland, which is the first franchise by this US company in Asia, has spawned development of other theme parks. Similarly, Pinewood Studios is intended – and expected — to provide a hub for creative activities.
Seven educational institutions, including Australia’s Newcastle University, the UK’s Medicine Malaysia, University of Reading, and the Management Development Institute of Singapore, either have plans to or have started work on their Malaysian campuses in Iskandar.
The well-known British boarding school, Marlborough College, and the American International School are among a number of international campuses to establish a presence in Iskandar. Also moving in is Raffles Education Foundation, which runs 38 colleges around Asia Pacific and is planning a two-stage development to be completed by 2020 to house 6,500 students by 2020.
Then there are a number of hospitals, including Singapore’s long-established premier private establishment, Gleneagles, which is building the 300-bed Gleneagles Medini Hospital. Another group, Regency, completed its Regency Specialist Hospital in Iskandar four years ago.
Two Government-owned agencies – Khazanah (Malaysia) and Temasek (Singapore) – are in joint venture to develop “urban wellness centres”. This is part of Malaysia’s ambition to increase its offering of medical tourism to surrounding countries — and to the world.
Singapore patients visiting hospitals in Iskandar will be able to pay for services from their accounts with the Central Provident Fund, Singapore’s national pension plan, just as they do now when visiting a hospital in Singapore.
Malaysia’s aspiration is to develop a number of key sectors – financial services, information and communications technology, logistics and related services, tourism, education and health – in Iskandar, which forms a critical plank of the Malaysian Government’s Economic Transformation Plan (ETP) – a blueprint to catapult Malaysia into the league of higher income countries by 2020.
Quay Chew Keong, Development Director of First Concept, the Malaysian operation of the leading Australian developer, Lang Walker, has watched development of Iskandar from when it was a mere concept.
Quay says Malaysia’s Federal Government and the Johor State Government have both invested heavily in infrastructure. As a result, all facilities are (or will be) well-supported by expressways to increase connectivity to other parts of Malaysia and to affluent Singapore.
Completion of new highways, such as the New Coastal Highway, the Eastern Dispersal Link Expressway and the Senai-Pasir Gudang-Desaru Highway, have increased accessibility.
Quay envisages that many young Malaysians who seek employment in Singapore could choose to live in Johor and commute.
Already, he says, some expatriates working in Singapore are living in Johor Bahru, where rents for landed properties are lower and school fees are considerably cheaper than in Singapore
(annual fees are around RM70,000-RM90,000, compared to S$100,000 in Singapore.
First Concept is the developer of Senibong Cove, a decade-long project in the resort area of Desaru, with an end value of A$5 billion, and one of the best-established and most successful projects in Iskandar. The company has so far taken deposits for almost RM1 billion worth of houses and apartments.
Opportunities beckon, and developers from Singapore and China have started to flock to Iskandar. So far, five mainland developers have about 150 hectares of land and are reclaiming a further 2,000 hectare alongs the foreshore facing Singapore. Three Chinese companies — Greenland, Country Garden and Guangzhou R&F — have announced projects for at least 13,000 homes by the end of 2017. Greenland, for example, paid RM600 million, and is reported to be looking to acquire more sites to build up a RM10 billion portfolio.
Johor Bahru has a population of around 1.6 million, but Quay says the projection is to grow to three million as economic development takes off in Iskandar. Significantly, he says the industrial heart of Iskandar is starting to pump as large industrial projects are completed.
In June, Malaysia’s Prime Minister, Najib Razak, officially opened a multimillion-dollar oil storage terminal, sited on 61 hectares of reclaimed land. It is part of an ambitious plan to build a huge oil and gas hub in what is known as the Pengerang Oil and Gas Hub, aiming to be the largest in Asia and costing some US$22 billion to fully develop.
 Petronas, the Malaysian State-owned oil company, is developing the complex, which has already attracted some RM20 billion in commitments from investors, including the US oil giant ExxonMobil (RM10 billion), and the Anglo Dutch company, Shell (RM5.1 billion).
Slowly but surely, a critical mass is forming in Iskandar, boosting the economy of Johor State, southern-most in peninsula Malaysia.
It is the drift of scores of small to medium size enterprises from high-cost centres like Singapore and Taiwan to set up plants in Iskandar which will eventually create jobs and attract people to the economic development zone.
Iskandar, according to the international accounting house Ernst & Young, is on the way to becoming Singapore’s Shenzhen.