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This blog is about the rapid developments in Iskandar Malaysia for residential, commercial and industrial buyers and investors to receive updated information. Helps you to make discerning decisions about allocating partial assets into this Iskandar region for good appreciation in the years to come. Do contact me for any enquiries.
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Is the Iskandar Malaysia project still an attractive proposition for Singapore companies and individuals?
These are the comments by key industry figures in real estate and commerce:
Thomas Chua President Singapore Chinese Chamber of Commerce & Industry
ISKANDAR Malaysia has been on the SCCCI’s radar since the Malaysian government launched the project in 2006, recognising it as a natural hinterland for Singapore. It has attracted a steady stream of Singapore investors, with substantial investments coming from our member companies. Over the last two years, in particular, the push factor has become more salient as local companies are now exploring the region as a viable alternative location and also to integrate the Iskandar operation with Singapore due to the economic restructuring at home.
We were very encouraged by the response to the recent business briefing we organised on Iskandar Malaysia, followed by a 100-member business mission to identify prospects in this growing economic zone. This was the sixth mission that SCCCI has organised to the Iskandar region. We are also very appreciative of the strong support from the Malaysian government. An earnest closed-door meeting with Malaysia’s Minister for International Trade and Industry Dato Sri Mustapa Mohamed and other agency officials was extremely useful in discussing issues such as the availability of skilled labour in Iskandar, security, and the kinds of strategic investments in education, healthcare, tourism and creative industries that are being targeted as priorities for its next phase of development.
Any company keen on investing in Iskandar Malaysia should anticipate that while labour costs there are more manageable compared to Singapore, wages are likely to rise over time. It is therefore advisable to avoid labour-intensive operations and focus instead on value-added businesses using innovation and technology. Another factor for considering Iskandar is the availability of land there which may solve the problem for manufacturing companies in perpetual straits over the lack of affordable industrial space.
While we are upbeat on the growth prospects of Iskandar Malaysia, it is always wise to temper this optimism with caution and to be on the lookout for risks that come with every investment.
Abdullah Ibrahim Managing Director/Chief Executive Officer UEM Sunrise Berhad
AS master developer of Nusajaya, the epicentre of Iskandar Malaysia, it is our priority that businesses continue to thrive, as they are the key drivers and success indicators of the economy. The year 2012 was the ”tipping point” in the regional city’s development, which we define as the moment ”when a slow and reversible change becomes irreversible with dramatic consequences”.
The first phase of projects has been completed and they include Puteri Harbour, Southern Industrial and Logistics Cluster, Nusajaya Residences, Afiat Healthpark, EduCity, Kota Iskandar, Puteri Harbour Indoor Theme Park and Legoland® Malaysia. The Coastal Highway which connects Nusajaya and Johor Bahru also ensures excellent connectivity to and from the city. The second phase of development will drive Nusajaya towards its full potential as a truly attractive destination for businesses.
Now is the right time to go to Nusajaya and it is only going to get better. Our journey has just started and there is more to come.
Lam Joon Khoi Secretary-General Singapore Manufacturing Federation
THE Iskandar Malaysia project remains an attractive proposition for many Singapore companies and individuals. It certainly widens the options available to them when they consider expansion, restructuring or relocation. They will, of course, have to factor the availability of labour, the cost of land and compliance with the regulation in their decision-making. Being close to Singapore, companies in Iskandar can continue to leverage on the value chain provided by companies in Singapore, eg, design, logistics and financing.
Investing in Iskandar is not a one-off decision. Current and prospective participants need to regularly assess their needs, seek professional advice and monitor the development plan of Iskandar. At Singapore Manufacturing Federation, we have taken the initiative, with the support of Spring Singapore, to assist companies that are interested in Iskandar. We endeavour to provide up-to-date and relevant information, and facilitate companies to access business networks in Iskandar. Ultimately, the decision rests with the companies.
V Hariharan CEO Singapore Mercantile Exchange
COMPANIES and individuals have been drawn to Iskandar by the promise of cheaper land and labour, and generous tax breaks. But where sufficient cheap labour will come from continues to be a big question mark. One has seen similar plans in China not taking off and there were haunting images of ghost cities like Chenggong, Yunnan in early 2000. An indicator of the challenges closer home is Singapore’s own labour shortage in sectors such as hospitality and manufacturing.
However, given the ground realities, it is very much in Singapore’s interest that Iskandar succeeds. Already Singapore has become the largest source of foreign investment in Iskandar. Creating urban townships – in this case, an entire region – for work, play and living can sometimes take much longer than anticipated. Malaysia on its part needs to put in place practices to attract labour and talent to Iskandar, while Singapore companies need to be a bit more patient and work around the teething issues.
Tan Tiong Cheng Executive Chairman Knight Frank Pte Ltd
ISKANDAR Malaysia (IM) presents a suitable relocation destination for Singapore enterprises and individuals. Its key attributes include close proximity to Singapore, land availability for large real estate development, lower labour costs, as well as current efforts by Iskandar Regional Development Authority to spur economic development and attract foreign investment. However, challenges do exist, notably the limited pool of skilled workers in IM and the companies’ difficulty in attracting workers back from Singapore given the strong dollar. Singapore enterprises are also generally unfamiliar with business regulations and processes, and concerned with security, logistics and transport accessibility issues in IM.
Weighing the strengths and limitations of IM, Singapore enterprises can channel space-reliant and more labour-intensive manufacturing operations and older-type industrial businesses to IM. Offering wages that are lower than Singapore wage levels and yet reasonably attractive for Malaysians to choose to work back home in IM is one approach our companies could adopt. But note that IM still requires a medium-term gestation period of at least five years to build its pool of skilled labour to support future knowledge-intensive industries being planned for by IRDA. Singapore businesses would have to either export their skilled workers to kick-start these industries in IM, or offer wages to their Malaysian counterparts equivalent to what they are getting in Singapore, to attract them back to their home country.
However, there have been recent signs of unhappiness and concerns from the local Johoreans due to the rapid price escalation of Johor residential properties. Singapore enterprises could face fresh challenges entering the Johor market in light of this current sentiment. To foster economic growth and the long-term viability of IM, the political willpower from both Malaysian and Singapore governments would be essential to address any political and social pressures, so as to create a ”win-win” relationship that both countries would enjoy in future.
Tham Sai Choy Managing Partner KPMG in Singapore
ISKANDAR is part of a real need: that of creating a larger conurbation as we deal with Singapore’s physical constraints on growth. Our growth trajectory is not simplistic, and our own needs are therefore not easily predictable.
Our demands on Iskandar are very high: in order to be relevant, they need to match the quality of infrastructure and support that we are used to in Singapore. All this says to me that the way Iskandar grows to be complementary to Singapore will therefore take time, just as it took time to build Singapore.
Yeoh Oon Jin Executive Chairman PwC Singapore
FACED with rising wage bills, rentals and other operating costs in Singapore, businesses – particularly SMEs – may find it commercially advantageous to move their labour-intensive businesses to Iskandar Malaysia.
Its accessibility and close proximity to Singapore, as well as tax incentives offered by Malaysia, enhance its overall attractiveness. The proposed high-speed rail link is also expected to facilitate greater cross-border trade and investment when it is built.
However, Singapore investors must carefully evaluate issues such as the availability of skilled resources and the effect of the new minimum wage requirement for workers in Malaysia. Proper management of these issues may help businesses achieve cost savings of up to 30 per cent if they shift their operations which require a high usage of land and/or labour to Iskandar Malaysia.
Glen Chan Chief Operating Officer, Pacific Star Group; and President, Pacific Star Development Pte Ltd
THE unabated rise of business and labour costs in Singapore has made Iskandar Malaysia (IM) a value proposition for SMEs and other major manufacturers. Endowed with abundant land resources, skilled workforce, strong legal framework and increasing expansion in domestic demand, these key drivers will drive investments, confidence and opportunities in IM. The full potential of the IM region to complement Singapore in tackling the high costs of doing business here and in overcoming the restriction on foreign labour has yet to be fully tapped, and will continue as an attractive proposition for Singapore-based businesses.
Even though there may be short-term challenges in IM for foreign businesses such as the shortage of skilled labour, the longer-term overall benefits are likely to outweigh these short-term adjustments. Importantly, investors should spend time understanding the various master-plans of IM and the implementation milestones of these master-plans so as to calibrate their respective business strategies accordingly in a manner that will reap optimal returns. The list of diligence for all investors is long but vital to avoid a misalignment of expectations versus on-the-ground reality.
Kong Chee Min Group Chief Executive Officer Centurion Corp Ltd
THE prices of properties including industrial land in the area have grown in recent years. We were lucky to have secured sites for our workers’ accommodation, which is currently either in operation or under development, early on in the cycle. Despite the increase in property prices, I would think that Iskandar Malaysia remains relatively attractive in terms of investments and business opportunities. We have taken a long-term view in the region as it will take several years to develop fully.
Peter Hill Managing Director SimCorp Asia
MALAYSIA is one of the fastest-growing economies in the region. Its export-driven economy, spurred by high technology, knowledge-base and capital-intensive industries, presents Iskandar as an outstanding investment opportunity.
Companies that focus on growth tend to achieve it, whereas a primary focus on cost alone does not necessarily produce the same results. To succeed in maintaining a profitable and competitive business, organisations need an operational platform strategy that is fully and seamlessly aligned with the business strategy. Therefore, it is imperative for the country to implement new technology channels and move away from potentially cumbersome legacy systems so as to provide value-added services.
Scott Burnett Managing Director, SEA Towers Watson
THE Iskandar project presents Singapore with a tremendous opportunity – as the ”hinterland” we have lacked – and a complex challenge, insofar as real business investors (as opposed to those seeking to profit purely from the increase in real estate values) need to staff up their greenfield operations across the Causeway.
Planning around the availability of talent today and in the future is increasingly recognised by Singaporean firms as a strategic imperative. Towers Watson assists businesses to integrate their workforce planning with their business strategy planning in order to give full weight to this issue – including the likely competition for that talent.
In the medium to long term, Iskandar is in our view definitely an attractive proposition for the right kind of businesses. The enterprises that have invested substantial funds are clearly committed to the project, giving Iskandar a strong vote of confidence.
Iskandar’s success in the short term perhaps depends on the ability of its investors to encourage their Singaporean managers to commute. This will clearly put a strain on the human resources of the companies concerned but will also allow management to keep a close eye on their new operations.
Jeremy Lee Regional Manager, SE Asia & Taiwan Moog
GIVEN the limitation of land and labour in Singapore, Iskandar Malaysia is definitely seen as a viable proposition for Singapore companies and individuals. However, only when you walk the talk does one realise the challenges that lie within. It is also about re-orienting expectations, whether the labour force necessary to power the level of industrial activity planned for Iskandar will indeed be forthcoming when the time comes.
For Malaysia, Iskandar represents an opportunity to reverse a decade of lacklustre growth; and for Singapore, it is an obvious practical option to keep up its growth rate in the face of fast-depleting competitiveness given the high cost structures. Industrial land in Iskandar can cost less than a third of the price in Singapore, and manufacturing wages there are less than half. So, while things may not have moved at a pace that was expected, the options are limited. Iskandar has to succeed and companies may just have to wait and re-strategise in the meantime.
Alick Chia Managing Director SKF Logistics Services Asia
DUE to the tight labour market in Singapore and the high land cost, I paid a visit to Iskandar to explore the possibility of moving our regional warehouse there.
After the visit, I had to conclude that it is not a conducive place to locate our regional warehouse. It will still have to rely on Singapore for its seaport and airport to move goods to various parts of the world; and with the uncertainty of the custom authority processing time, it will lengthen our overall lead-time.
Now that even labour is difficult to find there due to the many new investments, the idea of setting up a regional distribution centre there is definitely out for some years.
We have to use technology more to reduce workforce and space requirements while still continue to use Singapore as a distribution centre due to its efficient port and airport to reach the global market.
Kenny Goh Group Chief Executive Officer Macrokiosk
I BELIEVE that the Iskandar Malaysia project is still an attractive prospect and will remain as such for businesses with great foresight. The project presents a great opportunity for businesses looking to invest in property and a natural progression for some Singaporean companies that require a larger space to support and complement its operations in Singapore and globally.
With human capital in great demand globally, it is important for companies to focus on skill training for their current employees. Companies should also look at capitalising on technology to ensure the new market remains as efficient and effective as the others around the world.
Lim Soon Hock Managing Director Plan-B Icag Pte Ltd
I HAVE visited the Iskandar region three times in the last one year. Each time I left with an increasingly positive impression and a greater sense of confidence in the project. The companies which I met have reported satisfaction and success beyond their expectations.
I think this has to do with the Malaysian government wanting to make Iskandar a sustainable success and consequently, as a clear benchmark for other similar developments in the rest of the country. This fact alone is a compelling reason for current and prospective participants to invest in Iskandar.
Despite the shortage of skilled labour, on the whole, Iskandar is still an attractive location for businesses which want to take advantage of the low cost of land and large expanse of space. Businesses will have to look at Iskandar from this vantage point.
I am planning to invest and to set up a telehealth services hub in partnership with Medibank. Iskandar appears to be an attractive location for me to set up the hub, given that healthcare is one area which is promoted. It would even be more attractive if my project can be considered catalytic, and therefore will qualify for the government’s subsidies and preferential treatment, to assist in the start-up of an otherwise proven business.
Businesses will always need to readjust their expectations and strategies, from time to time, to adapt and to grow, irrespective of where they operate. Iskandar is no different. It will continue to be attractive, notwithstanding problems such as labour shortage, when there are other comparative advantages to be reaped, compared to Singapore. Iskandar clearly can complement Singapore, and it appears to be heading in the right direction.
Pollie Sim CEO Maybank Singapore
I BELIEVE companies which already have a high number of Malaysian employees commuting daily to Singapore may find it attractive to relocate and rehire them in Iskandar Malaysia. This is win-win as employers save on the foreign workers levy and enjoy lower rentals, while employees save on travel time and costs.
Naturally, any decision to relocate, whether to Iskandar or otherwise, has to be considered thoroughly and tied into the company’s medium to long-term plans, as efficiencies will take time to yield returns.
In time, it is likely that the link between Iskandar and Singapore will be akin to the one shared by Shenzhen and Hong Kong today, where there will increasingly be more integration and cross-ownership of companies. We recognise this trend and have also set up a team specialising in helping businesses intending to venture to Iskandar. With a full suite of products from factory loans, equipment hire purchase, working capital financing, cash management to foreign exchange hedging, we help ensure that such relocations and expansions can be more smoothly facilitated.
Sam Yap Group Executive Chairman and Co-Founder HTwo Investment Holdings Pte Ltd
AT the onset, the Iskandar Malaysia project was touted as an attractive place to invest. This is understandable due to its closeness to Singapore. Recent updates however indicated there were problems and delays in some developments.
Current and prospective investors, in my view, should monitor development trends and do careful market research to ensure that whatever business or investments they are undertaking or going to undertake will be a viable venture. It is not sufficient to take the data given by agents who would be too eager to paint a glossy picture to get investors’ buy-in.
For some businesses, it would be more prudent to wait till the area has reached a certain level of development and maturity with an established populace before you consider and study the viability of a business venture.
Toby Fowlston Managing Director, Singapore Robert Walters (Singapore) Ltd
THE heightened interest and investment from Singapore in Johor’s Iskandar Malaysia project should strengthen economic ties between Singapore and Malaysia. As we face space constraints in Singapore, the ease of having a world-class liveable city incorporating both residential and commercial developments right across the Causeway has become a viable option. Singaporeans now have a cost-effective solution to the local rising property prices while maintaining close proximity to their home country. In addition, the impending launch of the internal rail project within Iskandar Malaysia will increase transportation efficiency for individuals considering the commute to and from work on a daily basis.
A challenge current and prospective companies need to be mindful of is perhaps adequately staffing their new offices with the varied functions needed to successfully manage a business. With the reported labour shortage and rising manpower costs, prospective employers are considering how to secure and retain top talent.
David Leong Managing Director PeopleWorldwide Consulting Pte Ltd
ISKANDAR Malaysia project is not a faddish movement and proposition. Iskandar Malaysia will become an integral part of Singapore’s production extension and our fates will be tightly interweaved and intertwined together. It is to become a tale of two cities with many shared interests. Iskandar provides the space for Singapore’s expansion. For what Singapore lacks – physical land and manpower constraints – Iskandar can provide.
However, as both cities share the same development tale, the governments on both sides must develop predictable sets of governing laws and policies to regulate the movement of goods and services, including ease of immigration control. The transportation grid from Singapore must be extended to Iskandar with ease.
Businesses in Singapore should have an ”Iskandar Strategy” at some point in time for their manufacturing expansion. It will be a smarter way to grow with lower cost. The fervour in Johor in the Iskandar development region will intensify over the years. Singapore will be the Manhattan and Johor the New Jersey. Whatever, it will be a situation of prospering together because Malaysia is indeed an inseparable hinterland.
Dora Hoan Co-Chairman/Group CEO Best World International Ltd
TO ascertain whether the Iskandar Malaysia project is suitable, companies need to re-evaluate their priorities. If their pressing issues are land cost and manpower constraints, then these can be resolved by Iskandar. Furthermore, even though the shortage of skilled labour can be problematic, this is most probably only a short-term issue since staff can be trained.
With the imperative problems resolved, companies would then need to manage their expectations in other areas, such as the skill level of staff, infrastructure, logistics, etc. In addition, companies need to be cautious about the Malaysian import duty; they have to study whether their products or raw materials are taxable.
While Iskandar can be an appealing solution in face of the rising business costs in Singapore, the project is, by no means, a panacea.
Ang Swee Meng, Allen Group Managing Director Aldon Technologies Services Pte Ltd
THE Iskandar Malaysia (IM) project offers many advantages for Singapore companies such as lower operating costs, abundant land, proximity to Singapore, good infrastructure and comprehensive lifestyle amenities. Interestingly, companies investing in IM can enjoy assistance schemes offered by the Singapore government as well as tax and other incentives by Malaysian government for certain qualifying activities. Increasingly, more and more SMEs squeezed by rising operating costs and labour shortage at home are finding IM an attractive proposition to relocate their operations. Not surprisingly, Singapore companies constitute the biggest contributor to IM.
Notwithstanding the current favourable investment climate, Singapore companies contemplating investing in IM should do their homework and not rush into it. In addition to the cost factor, manufacturing companies should consider other factors including availability of skilled labour, logistics, proximity to customers and intangible costs like security, communications, bureaucracy and supply chain. In addition, manufacturers should consider the longer-term scenario and manage their risks appropriately as factories and machinery are long-term investments.
As Aldon Technologies provides precision engineering services for semiconductor industries involving the use of specialised equipment and hazardous chemicals, we are more concerned with the availability of technicians and engineers who have the requisite skills and who have the capacity to be trained and re-trained to keep up with the fast-changing technology. Another factor that we have to consider is that most of our MNC customers are in Singapore and they expect us to be near them and provide the fastest turnaround of services which may not be possible if we were outside Singapore.
Annie Yap Managing Director AYP Associates Pte Ltd
MALAYSIA has been very active in attracting talent to Iskandar, which is a very clear signal on the growth potential that it has. Moreover, despite the higher costs of operations than expected, the costs are still lower as compared to operational costs in Singapore.
Nonetheless, adjustments of expectations and strategies can be done based on industries. Resources can be allocated more towards automation and technology, which will return higher yields for the company instead of being dependent on labour alone. Also, with plans in place to build a comprehensive transportation network, Iskandar remains a very attractive proposition for Singapore companies and individuals.
Sean Tan General Manager iProperty.com Singapore
JOHOR has long held interest for Singapore investors and businesses. Prior to the 1997 Asian financial crisis, many Singaporeans and Singapore businesses were actively investing in Johor. The crisis of course intervened, leading to a decrease in investment for some years. More recently the Iskandar development has attracted great interest. Infrastructure investment and various developments have created a very strong and positive momentum.
Some investors are perhaps abandoning caution, and rushing to jump on the Iskandar bandwagon, believing it is the next Eldorado. I prefer to take the middle ground; while there is definitely potential, investors should tread cautiously.
Iskandar is an attractive proposition for Singapore companies, when viewed on a long-term basis. Based on IRDA’s (Iskandar Regional Development Authority) Masterplan, it expected to be fully developed only in 2025, with a projected population of at least three million, compared with a current population of around 1.6 million. Businesses should not go in with the idea that everything (ie, infrastructure, manpower, services, etc) is fully in place. We are currently in the early stages of Iskandar’s development life-cycle. There is a fairly long road ahead.
Recognising the current reality versus future potential of Iskandar is important for businesses. As long as they approach Iskandar aware of the risks, the benefits are there. Property prices remain attractive compared to Singapore, and with the exchange rate currently at S$1 to about RM2.50, the overall cost of doing business is significantly lower.
For consumers, Iskandar is also attractive, with very affordable housing options. It is still possible to buy a freehold landed terrace house within a gated compound for as little as $235,000, located in the centre of Nusajaya, only a 15-minute drive to Tuas immigration checkpoint. Affordability and the proximity to Singapore are very appealing for anyone wanting to stretch their dollar.
Anyone interested in Iskandar should start exploring now. With high prices in Singapore, and continued development in Iskandar, it is likely prices there will continue to rise over time, especially once it is more fully developed.
Thirumalai Chandroo Chairman/CEO Modern Montessori International Group
THE aims of businesses and/or individuals investing in Iskander Malaysia have to be conversant with the scope of their particular endeavours and all the elements surrounding it. THE organisation and successful running of a business venture brings an element of risk in any location of the development; hence the assimilation and adaptability of a business enterprise to this is pertinent. So yes, there will be a need to recalibrate prospects and strategies as in any business, anywhere in the world. Current and prospective participants should perhaps establish a sense of the viability of their potential investments. Enterprises could begin to familiarise themselves and solidify knowledge of the types of opportunities available and the lifestyle that is likely to materialise in Iskandar Malaysia; will they then be able to sustain their projected plans for the coming future given the proposed landscape?
Competitors are a necessity to check before venturing beyond the seas. Given the current restrictions that have raised concerns, it is fundamental to recognise what their possible adjustment plans are. You can then prepare an outline of plans that are similarly better. Apposite management of the venture is imperative to the realisation of success. Good management means the scheme is working according to plan and readjustments are recognised and made to satisfy changing conditions.
Philippe HJ Huinck Regional Managing Director, South and South East Asia International SOS
THE Iskandar Malaysia project started in 2006 to capitalise and complement Singapore and Malaysia’s business synergies to form an economic hub for the region. This remains an excellent investment opportunity for companies based in Singapore looking to expand their operations.
While the project offers many advantages, companies looking to invest in the Iskandar project must realise that things are organised and handled differently in both countries. Multinational companies are well placed in understanding the challenges of setting up operations and working in a foreign environment.
Having operations in Malaysia will offer companies the benefits such as space and cost. However this will also come at the expense of other challenges that companies will not face in Singapore. Singaporean companies need to embrace these, while conceptualising plans to alleviate them.
At International SOS we are already doing our part, partnering several companies to provide medical staffing and occupational health advice. We will continue to be heavily involved, helping Singapore companies to realise the full potential that the Iskandar project will bring.
Joshua Yim CEO Achieve Group
THE two major value propositions that will attract businesses to Iskandar are the comparatively low cost of land as well as lower labour costs. However, with projects of such magnitude, there are bound to be teething issues and roadblocks along the way. Another major consideration is whether the infrastructure has been sufficiently developed, and whether this infrastructure facilitates accessibility. In addition, while labour costs for unskilled workers may be considerably lower, the likelihood of there being a shortage of skilled workers is quite high and this may eventually translate into higher labour costs overall.
Ultimately, the success of Iskandar will depend on how the Malaysian government chooses to handle such issues should they transpire. The authorities have put in so much effort in trying to build up Iskandar and attract foreign sovereign funds so they have a large vested interest and they would not want the project to fail. Thus, I believe the authorities will need to look into establishing the right legislation to handle manpower issues, in order to make it attractive to do business in Iskandar.
In deciding whether to establish operations in Iskandar, the Singapore business community will need to take a long-term perspective. They will need to consider the abovementioned factors and weigh them against their confidence in the Malaysian government being determined enough to solve manpower and other issues that may arise.
Ultimately, I believe the success of Iskandar will be largely policy-dependent. Ideally, it would be good for the major investors, such as the property developers, and relevant trade associations to open dialogues with the authorities – to come together to iron out any potential kinks in order to ensure the success of the entire region. Such open communication will certainly go a long way towards building up confidence within the business community.
Ronald Lee Managing Director PrimeStaff Management Services Pte Ltd
AS with the development of any new economic zone, it will take some time for the region to mature into a self-sustaining, bustling hive of activity. Businesses that are considering moving there will, first and foremost, need to understand this and calibrate their strategies accordingly.
At this point, the availability of cheaper land is probably the most attractive proposition. However, the other pillar of any business is its workforce and the reality is that the likely shortage of skilled labour in the initial stages is a valid cause for concern – until a pipeline of skilled local talents is built up over the next few years. This manpower shortage may even result in an upward pressure on wages, and negate the cost difference that made Iskandar attractive in the first place. In addition, operating out of Iskandar may not be suitable or viable for certain industries due to their nature of business.
Thus, companies should conduct their own feasibility studies and take these issues into consideration, as well as other factors like the different business regulations, operating logistics, access to financing, and accommodation for workers who may need to be imported in the short term.
Steve Melhuish Co-Founder and Group Chief Executive Officer PropertyGuru
THE Iskandar project is very much a talking point among business leaders in Singapore and still garners much shared interest as a viable port-of-call for commercial relocation or expansion. With many international companies and brands expressing their desire to move their operations into the Iskandar region, Singapore companies must understand the need to proactively incentivise their employees accordingly to stay competitive if they plan to relocate.
One such area is in the prospect of providing attractive housing choices as a key component to attract and retain talent. Whilst Iskandar is able to provide a large land quantum designated for commercial use, it also offers vast options to support firms in terms of property needed to accommodate their growing labour force and drive productivity in terms of reducing the hassle of commuting to and from work.
In my personal opinion, companies need to expect that their employees will require the necessary infrastructure to protect their welfare, especially so when it comes in the wake of a big decision such as migration and outsourcing. This is especially pertinent for companies which wish to retain their current Singapore workforce base after relocation.
The trend has been picking up in recent times, where recent research has indicated that currently 90 per cent of foreign buyers into the Johor state, including Iskandar, are from Singapore. Moreover, results in our property sentiment survey in Q2 reveal that one out of two Singaporeans are attracted to buy into Malaysian properties, out of which over 25 per cent mentioned a willingness to relocate themselves, if the situation calls for it, in the pursuit for better opportunities abroad. This, together with the fact that 150,000 more units across all private property types will be completed in Iskandar by 2015, shows that there is enough motivation and supply of real estate and the relevant amenities to support a large influx of labour into the area.
Singapore companies therefore need, and should, consider a much bigger picture of how they can balance both the expectations on the monetary business end, and the social aspect of employment before they do decide to move into the Iskandar region.
Patrick Liew Special Adviser HSR Global Limited
THE Iskandar region is a critical and win-win part of the economic development equation for both Malaysia and Singapore. It can play a complementary role in our value chain by providing land, a lower cost of operation, various raw materials, an attractive range of fiscal and non-fiscal investment incentives, and other supporting resources.
In support of the projected growth in the Iskandar region, a comprehensive ecosystem is gradually being formed. The investments cover a myriad of developments, including more than 300 manufacturing companies, a RM300 million mega integrated resort, advanced healthcare facilities, a RM3.5 billion Motorsports City, and other value-added developments. Total investments from the public as well as private sectors have made it one of the largest single development projects ever to be taken in this part of the world. To date, it has attracted more than RM110 billion worth of business investments, creating an upsurge potential for the property market.
There are also many other exciting developments in the near future, including the establishment of the customs, immigration and quarantine facility located at Puteri Harbour; the development of the projected rapid transit system between Singapore and Johor, scheduled to be completed in 2018; and the development of the high-speed rail. These developments will improve connectivity and value-add to the Iskandar region.
Looking at the fundamentals, there is no reason not to believe that Iskandar will represent one of the fastest growing corridors in the region. Barring unforeseen circumstances, it may start the next gold rush and one that may generate positive returns in the long run.
Liu Chunlin CEO K&C Protective Technologies Pte Ltd
THE main attractiveness of the Iskandar Malaysia project to Singapore companies and individuals lies in the facts of cheaper land price and labour cost, similar culture and language, and last but not least, its proximity to the island of Singapore. As long as these facts are present, the attraction will also be there. The shortage of skilled workers is a worldwide problem and there is no short-term solution. After all, it took Singapore decades to achieve its current state of development.
What Iskandar needs is both a long-term and a near-term plan when it comes to shortage of skilled labour. In the long run, it must have a large population of skilled workers willing to come and stay for generations to build up the talent pool. In the meantime, Iskandar also needs to bring in skilled labour forces from nations like China, India and other countries where university graduates are always looking for a place for a better and brighter future. Singapore used to be one of their favourite destinations but it is no longer the case nowadays. Iskandar could be a beneficiary.
Current and prospective participants do need to readjust their expectations and strategies. For companies, they could maximise their returns by using Iskandar as their back office and warehouse, taking advantage of the land price and labour cost, for the time being, while making their operations at and the living conditions of Iskandar enticing enough to attract skilled labour from overseas to relocate for their long-term expansion plan.
For individuals who have bought properties in Iskandar, they should look at their property as a home away from home when they need to relax over the weekend or during the holidays, not just an investment tool. As such, they get to enjoy the benefits of the laid-back lifestyle that could help them achieve a better balance with the hustle and bustle of city life in Singapore. Any appreciation in values of their property in Iskandar should be considered a bonus.
Danny Chua Branch Director of Metro Homes Sdn Bhd / Property Scoopers Sdn Bhd