Improving connectivity will renew interest in the southern gateway state's property market
Contributed by Sulaiman Saheh
Fresh from the one-day state visit by Prime Minister Datuk Seri Anwar Ibrahim to Singapore, measures on alleviating congestion on the Johor Causeway, the primary arterial way that links Iskandar Malaysia and the city-state, were abuzz. As reported in Singaporean media, the Menteri Besar of Johor made a plea to the federal government for a solution to ease the traffic congestion on the causeway that manages up to 200,000 daily commuters.
With the attention, interest in the southern gateway state is expected to be renewed with issues such as the importance of improving connectivity to and from Singapore and its context on how to attract more investments and how to charm our neighbours into Iskandar Malaysia. Being the state that has the highest number of overhang properties, questions on how to successfully rekindle growth acceleration of the region sustainably while mitigating risks of overbuilding have resurfaced in the wake of post-pandemic.
The property market of Iskandar Malaysia has been somewhat reinvigorated since the opening of international borders. But one would wonder if the growth momentum seen in the mid-2010s can be replicated. The growth within Iskandar Malaysia had been outshined by property play then, but for a sustainable and more profound progression, it has to be driven by a strong economic base and investments that create higher value employment with a wider spread multiplier effect.
Relating to the importance of improved connectivity, the execution of the Five Strategic Pillars and the Promoted Growth Sectors - which were the drivers of growth for the region as defined in Iskandar Malaysia’s comprehensive development plan, are implicitly contingent on an efficient flow of people and goods (and even services). A thriving region would inherently require the infrastructural support of human movement and logistics as well as the creation of a conducive and business-friendly eco-system for the targeted investors, businesses and human capital.
The connectivity between Johor Bahru/Iskandar Malaysia and Singapore here relates mainly to the physical transportation connectivity of people and ground transport. There are reportedly more than 300,000 commuters that travel daily between Johor and Singapore (200,000 via the Sultan Iskandar Building CIQ in Johor Bahru city centre and 100,000 via Sultan Abu Bakar Complex CIQ in Gelang Patah) - and the current congestion problem is dire. One can take up to two to three hours to cross the causeway.
Long journeys taxing well-being
The tagline of having to live in Iskandar Malaysia while working in Singapore for Malaysians may work as the remuneration justifies the long hours of travel due to the better exchange rate and salary packages offered by employers in Singapore but the journey is taxing for their social well-being. Reversing the equation, for Singaporeans to realise their dream of, say, sending their children to an internationally renowned college or university at a much cheaper tuition fee or having a business meeting at their manufacturing facility or satellite office in Johor Bahru - and - having to be on the road for three to five hours a day is also an inconvenience that borders to being repellent. This discourages to some degree the movement of property transactions in Iskandar Malaysia, which has seen a plateau since its hype in the mid-2010s (notwithstanding other factors and the years of general market slowdown and the Covid-9 Pandemic).
A more efficient and convenient travel mode is needed. There had been proposals for a mass transport system like the Rapid Transit System (RTS) between Bukit Chagar station in Johor Bahru and Woodlands North station in Singapore. This would be a start to alleviate the current congestion problem as, according to MRT Corp (the developer of the RTS link) on its official website, the RTS expected daily ridership is approximately 40,000 passengers per day. However, it alone is insufficient as it only accounts for about 20% to 30% of passengers crossing in Johor Bahru and as the system is only slated for completion by the end of 2026. A more immediate plan is needed. Furthermore, motorcycle commuters who depend on motorcycles for their work would still need to ride their bikes – unless the RTS system allows motorcycles to be ferried over or an alternative solution is made available.
For a more immediate impact, upon the recent directives by the prime minister, more lanes are opened with more manpower to be deployed at the Johor Causeway and Gelang Patah CIQs. In addition, the immigration processing system can be improved through technology deployment in immigration processing (to be handled by the Ministry of Communications and Digital) to reduce the bottleneck effect, hence a smoother and more convenient travelling experience and time-saving.
But connectivity alone is not enough to propel growth to Iskandar Malaysia. Investments leading to job creation and higher income opportunities are needed.
In luring more investors especially from Singapore within its existing clientele/investors/tenants and prospective parties, the main challenge has been not on the facilities and amenities available in Iskandar Malaysia, nor its costs of occupation. It is in the ecosystem and support system for business set-ups.
The top concern here is the talent pool and manpower availability. The size of the labour supply, more specifically skilled labour supply, in Johor is insufficient to provide a consistent stream of the required workforce for businesses. Skilled workers are inclined to work in Singapore or even move to other major cities in Malaysia like Kuala Lumpur and Penang as the earning capacity is more attractive. In enhancing the appeal for more businesses internationally and in Singapore to expand into Iskandar Malaysia, workforce availability in terms of numbers, quality and the appropriate skill levels are key.
More programmes and comprehensive engagements with industrial players led by respective government authorities and agencies are needed to generate, retain and attract a talent pool to Iskandar Malaysia. Though easier said than done, industry-linked degree programmes and industrial-attachment programmes could be refined further to grow the region’s workforce capacity.
Opportunities created in Iskandar Malaysia should complement those in Singapore. It should build up, as how it was originally strategised to be, on the overall ecosystem of the Singapore-Johor conurbation. Cost-effectiveness has been the main advantage, but as seen over the past decade or so, it alone is insufficient to lure sustained investments. Improvements to the daily operational issues must be systematically addressed for not only the business and investors community but also for the supply chain and labour input. The ease of commute, the time spent, and the processes during cross-border travels, on top of the opportunity for income generation and job opportunities are key to mould the conurbation as one seamless region.
Last year, the chief executive officer of Iskandar Regional Development Authority (IRDA) mentioned that the focus will be on economic and social recovery to boost the development of Iskandar Malaysia. By attracting investments, especially private investments, more job opportunities, entrepreneurship and business opportunities will be generated which rightfully forms the underlying economic base for better employment, higher income levels and population growth for the region. We hope that the policies that will be in place will be business and investor-friendly and are to be more consistent, to attract not just domestic investments but also foreign institutional and retail investors.
The key now is implementation. Plans are just as good as the actual execution, and this is where it gets complicated. Under the new government, we hope that a comprehensive strategy with an executable plan will be formulated – something that would be palatable to all stakeholders, be it the federal government, the state, the relevant authorities as well as the business partners who would be carrying out the plans. The challenge is to make financial sense and its sustainability, as well as to maintain focus with the ultimate beneficiaries in mind.
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