Iskandar Malaysia – Boon or Bane to Singapore?

March 15th, 2009 jonathan.lam

When the Port of Tanjung Pelepas (PTP) was officially opened in Mar 2000, there was little concern in Singapore about the weight PTP being a serious competitor to the Port of Singapore Authority (PSA). After all, there was the common thought that PTP (and Malaysia in general) cannot match the efficiency and reputation of Singapore. In addition, PSA had been the incumbent port of call for most shipping companies.

Alarm bells start to ring when Maersk Sealand announced that they are shifting their operations from Singapore to PTP in the same year. In 2002, Evergreen Marine Corporation followed suit by announcing that they too, are shifting their operations to PTP. Feeling that PTP was breathing down their neck, PSA management starts to restrategize and effect cost cutting measures. The seedling of thought, that Malaysia can one day overtake Singapore on the world map, has been sowed.

If PTP was the “Lion”, enter Iskandar Malaysia, the “Dragon” that packs a potential punch to make a dent in Singapore’s progress. After all, Iskandar Malaysia will be 3 times the size of Singapore when the project is fully complete. With the world being so globalised, there is no lack of talent with a sizable expat pool expected in Iskandar Malaysia. There is no lack of natural resources as well.. land, people, plantations and even oil. Of course, there is Senai Airport that will be scaled up to match Changi Airport. In sea fare, oh! There is PTP. Top up all this with a US$12billion worth of investments received so far from the private sector, Iskandar Malaysia can pose a serious threat to Singapore.

Replicating Singapore’s success might not be so hard. Make it an easy choice for MNCs to make Iskandar Malaysia their regional headquarters. Lower the tax rates, improve the general security in the region, offer lower cost housing and make savvy improvements in infrastructure, learn from Singapore and their policies.. there are levers the Malaysian Authorities know they can pull to deal with any potential doubts in would-be investors. And it seems to work already. Even Singapore has already indicated an explicit interest to be part of Iskandar Malaysia.

Singapore leaders are not sitting idle. They know that Singapore needs to make progress in all disciplines of growth to fend off competition from not only Iskandar Malaysia, but also from Hanoi, Hong Kong and regional cities. They have started to liberalise the arts scene. Allow foreign banks to setup branches. Sell Singapore as a medical hub. Draw top talents in bioscience studies. Allow Integrated Resorts (IRs) to open in Singapore. And the list goes on..

On the other hand, they are trying to play this game of chess well with Iskandar Malaysia. Iskandar Malaysia is located so close to Singapore (Iskandar Malaysia is located in the state of Johor, with the city of Johor Bahru just a mere 25km from Singapore’s Central Business District) that any strategic decisions must be well thought through. Make the right move, and Iskandar Malaysia can turn into an advantage for Singapore. There is no harm in growing the pie, as long as every one can take a bigger slice at the end of the day. And maybe Singapore can have 1 slice and more, with some ownership in Iskandar Malaysia.

Singapore has come a long way since independence to where they are now. They have a proven track record and established leadership structure. With the “Dragon” looming up north, Singaporeans will be hoping that their leadership plays the right move on this one to have the Dragon on their side. Otherwise, Dragon can easily turn around blows southward. And this time, it will not be just PSA feeling the breathe of fury.

Editor’s Note: This article is contributed from Jonathan Lam, a freelance writer residing in Kuala Lumpur. Article has been edited before publishing.

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