Iskandar Malaysia: A transformative development for growth and progress

09 March 2012

by Selvendran Katheerayson
Director, Investments

Iskandar Malaysia is the manifestation of a plan to develop a world-class and dynamic metropolis in southern Johor that would be a key growth corridor for the country, by building upon the region’s strategic location, its vibrant population and strong logistical infrastructure.

With an area of 2,217 square kilometers, it is a massive development project, spread over a period of 20 years. Geographically, Iskandar Malaysia encompasses the Johor Bahru district as well several sub-districts in the neighbouring district of Pontian. The entire area is subdivided into five development nodes designated as Flagship Zones A to E.

Balanced regional growth

Under the Ninth Malaysia Plan, the Government of Malaysia embarked on developing five economic corridors to promote balanced regional development and accelerate growth in designated geographic areas. Iskandar Malaysia, or what was then known as the South Johor Economic Region (SJER), in one of the economic corridors. The Government entrusted Khazanah with driving the development of the SJER.

One of the key initiatives towards this end was formulation of the Comprehensive Development Plan (CDP), which was led by Khazanah. Under the CDP, which was unveiled in 2006, Iskandar Malaysia would be a place where living, entertainment and business would seamlessly converge into a strong, sustainable metropolis of international standing. Today, into its sixth year, Iskandar Malaysia has made great strides towards achieving that goal. Before we go into the details of the solid progress achieved in Iskandar Malaysia, let’s take a look at the fundamental vision and foundations that underlie its development.

The development of Iskandar Malaysia is guided by three key principles or foundations, namely, nation-building, growth and value creation, and equitable and fair distribution among stakeholders. These foundations serve to ensure that development is consistent in spirit with national and state-level plans and aspirations, while at the same time, aspires to drive further innovation and reform in the nation-building process. It should also emphasise growth, productivity and value creation, in line with globalization and increased competition. Most importantly, the development of Iskandar Malaysia must be consistent with the tenets of growth with equity, to ensure that the local and Bumiputera population in particular participate in its growth and progress in a meaningful manner.

Pillars of progress

Based upon these three foundations, a five-pillar strategic framework encompasses the broad-based approach adopted for Iskandar Malaysia’s development. The pillars are international rim positioning, whereby Iskandar Malaysia is developed to be regionally and globally competitive; establishing hard and soft infrastructure, ranging from roads and highways to financial incentives and human capital initiatives; investment in catalyst projects to spur further economic activity; ensuring socioeconomic equity and buy-in from the local population; and the creation of a strong regulatory authority, which has been established in the form of the Iskandar Regional Development Authority (IRDA) that was set up in 2007.

IRDA is a Federal statutory body established under the IRDA Act 2007 and tasked with regulating and driving various stakeholders towards realizing the Iskandar Malaysia vision, through the core functions of planning, promoting and facilitating development.

Driving catalytic developments

Khazanah is one of those stakeholders, with a number of investments and initiatives in Iskandar Malaysia. These fall under the third pillar of Khazanah’s mandate, which is to make investments in new sectors and geographies that are strategic to Malaysia’s future.

Khazanah’s development initiatives in Iskandar Malaysia are primarily catalytic in nature and are undertaken through several vehicles. For example, Iskandar Investment Bhd (IIB), in which Khazanah has a 60% interest, is the primary developer of Medini Iskandar, the central business district of Nusajaya. IIB is also the developer of EduCity, an education enclave in Nusajaya comprising among other things, world-class universities, international schools and colleges, and accommodation and recreational facilities. In addition, IIB is involved in the development of the LEGOLAND Malaysia theme park, which is also located in Nusajaya and is set to open later this year.

UEM Land, a company under the UEM Group, is the master developer for Nusajaya. Its projects include Puteri Harbour, Kota Iskandar, and several award-winning residential developments. UEM Group is wholly-owned by Khazanah.

Khazanah has also partnered Pinewood Shepperton to develop Pinewood Iskandar Malaysia Studios, which is a state-of-the-art integration media production facility schedules for completion next year. Meanwhile Themed Attractions and Resorts Sdn Bhd, which is wholly-owned by Khazanah, is involved in the development of the Family Entertainment Centre in Puteri Harbour and will also partner IIB in other attractions.

Long term goals

Over the period of its 20-year development, Iskandar Malaysia is expected to achieve GDP growth of 8% per annum, resulting in nominal GDP of US$93.3 billion with GDP per capita of US$31,100 in 2025. In addition, more than 1.5 million jobs will be created for a population that is expected to reach three million by then. To achieve these aspirations, investments totaling RM383 billion would be required.

As it stands, Iskandar Malaysia has made significant progress. A total of RM84 billion of cumulative committed investments have been recorded to date; for the first phase of its development from 2006 to 2010, about RM69.5 billion in committed investments were received, far surpassing the RM47 billion target that had been set. Actualised investments have resulted in strong progress achieved on the ground, including the rollout of key catalyst projects and physical infrastructure.

The rising investments in Iskandar Malaysia have generated increased economic activity and correspondingly, further demand for workers. More than 20,000 employment opportunities have been created, with nearly 10,000 jobs in the electrical and electronics (E&E) sector, more than 6,000 in leisure and tourism, and nearly 6,000 more in education. More than 55,000 employment opportunities are expected to be generated over the five year period from 2011 to 2015.

Collectively, developments in the each of Iskandar Malaysia’s Flagship Zones provide further testimony to the growth and progress that have been achieved since its inception. In the coming series of articles, we will go deeper into the various key developments and initiatives within Iskandar Malaysia, and highlight the transformative impact they are having on people, businesses and the economy in the region.

(Selvendran Katheerayson joined Khazanah in 2006. He is a Director at the Investments division, looking after the property and automotive sectors. He was also involved with the GLC Transformation programme, where he led the roll-out of the initiative on operational efficiency. Prior to joining Khazanah, Selvendran was a Project Manager at Motorola, covering telecoms infrastructure projects in the region. He holds a Masters in Public Administration from Harvard University, a Masters of Business Administration (Finance) from the University of Hull and an Honours degree in Law from the University of London.)

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