Lim Teck Ghee, Murray Hunter and Carolyn Khor
As the nation battles insufficient tax revenue, growing
government debt and GLC inability to provide the catalyst of dynamism and
change to the economy, young Malaysians are increasingly unable to find
rewarding employment and losing hope that their future in Malaysia will be
promising and secure.
The writing was on the wall from a long time ago with worker
out migration to Singapore and elsewhere increasing with arithmetic progression
since the launch of the NEP.
According to Human Resources Minister V. Sivakumar some 1.13
million out of 1.86 million Malaysians who have migrated overseas resided in
Singapore. Two Malaysian diaspora studies conducted in 2022 and the findings of
which were recently announced found that 39 per cent of the diaspora working in
Singapore are skilled workers and 35 per cent are semi-skilled workers, while
in Brunei, 68 per cent of the working diaspora are skilled workers and 24.1 per
cent are semi-skilled workers.
Our national brain-drain rate of 5.5 per cent of the
population revealed recently compares badly with the 3.3 per cent for the
world. It may not only be an underestimate. It may also conceal the
disconcerting fact that a disproportionate number consisted of some of our
brightest talents and entrepreneurs.
How to stem the outmigration and provide a sustainable and
game changing stimulus to the economy is amongst the biggest, if not the
biggest challenge for the nation. Can Forest City and the South Johore SSEZ
emulate the Shenzhen model which propelled the earlier sleepy Pearl River delta
region into a powerhouse of global economic development?
Background
Forest City in Iskandar Puteri Johor was initially planned
as an integrated residential development commenced in 2006 by a consortium of
Mainland Chinese real estate developers, as an adjunct to the Belt and Road
Initiative (BRI).
Its developer, Country Garden Pacificview Sdn Bhd, is a
joint venture between Country Garden Group and the Esplanade Danga 88 Sdn Bhd
(EDSB), a Malaysian government-backed company. Country Garden, a company on the
Hong Kong Stock Exchange’s Main Board, is listed among the Fortune Global 500
and top 3 developers in China.
The grand vision of the project was to create a luxury
township enclave for well-to-do citizens from the People’s Republic of China.
It was envisioned that the township would attract Chinese wealth and investment
and build a new modern city, built on four man-made islands on the Straits of
Johor adjacent to Singapore. The first island was planned as the High Tech
Industrial Zone, followed by the second one, as the Central Business District
and Tourism Zone. The third island was supposed to be the Financial and
Economic Districts, while the fourth island was intended as a Conference and
Forum Zone. The entire development was supposed to be completed by 2035.
However, the project was hit in 2018 by then prime minister
Mahathir Mohamed, who declared foreigners will not be
granted visas to live in Forest City,
currency controls introduced by President Xi Jinping in 2019, which drastically
restricted potential customers and the onslaught of the Covid-19
pandemic.
Today, the Forest City project, dubbed the “city in the
sea”, is a ghost town and a lost opportunity for the Johor and national
economy. Forest City’s strategic position between the southern tip of Johor and
Singapore, as a potential city to take the overflow from Singapore, in a
similar manner Shenzhen did for Hong Kong remains unfulfilled.
What will it take to revitalise Forest City so that it can
live up to its real promise as a game changer in the national economy?
A reconfiguration and revision for Forest City requires the
setting up of a number of parameters to revitalize the project. The challenges
ahead can be very clearly seen in the SWOT analysis below:
Strengths
·
Location, location, location: The
primary strength of Forest City is its strategic location in relation to
Singapore, easily accessible by road and water. Located near Johor’s second
link into Singapore on the Jurong Industrial side, it can be the gateway
connecting Singapore and Malaysia in future growth plans.
· It is also located in the heart of ASEAN, currently the world’s seventh largest economic bloc. ASEAN has the world’s third-largest young population after China and India: approximately 61% of its total population is under 35 years old. The region also boasts a growing middle class, with a consumption power projected to grow rapidly. The total nominal GDP of the ten ASEAN nations measured in US dollar terms amounted to USD 3.6 trillion in 2022, a size larger than India in 2022, which had an estimated GDP of USD 3.5 trillion.
·
Completed Infrastructure: Much of the
infrastructure and buildings are already onsite in Forest City. Approximately
RM 20 billion has already been spent. Consequently, the needed physical
infrastructure development is already there. What is missing is the human
resources development.
· Support from the Malaysian Government: This project is fully backed by the Malaysian government.
·
Support from the Sultan of Johor: The
Sultan of Johor has on many occasions voiced support for the Forest City project.
Weaknesses
·
Reputational Damage. Forest City is
presently viewed as a failure with some media describing it as a ghost
town. According to reports, Forest City is only one percent occupied. The
Covid-19 pandemic and MCOs wrecked any positive momentum the project was able
to attract before the pandemic.
·
Severe blockages at the customs and
immigration checkpoints across both Johor Baru and Singapore has led to a
non-starter for efficient business trips and regular commuting between Forest
City and Singapore. This has been an issue for 20 years now and constitutes
perhaps the single biggest obstacle to investment flows into Forest City.
Opportunities
·
The major opportunity for Forest City
can come about if it is able to move away from its initial residential property
market orientation to one in which it becomes the hub of hi-tech and value
added manufacturing industries looking to expand out of Singapore and Penang or
new investment flows that are attracted by the cheaper labour, land and other
establishment costs available in Johor.
·
If this can take place, it can attract
the ancillary service businesses that can ensure the sustainable growth of
Forest City. When this development attains critical mass (the incubation period
for Shenzhen’s development stretched over 15 years), considerable multiplier
effects will come to Forest City and the surrounding areas. This could make
Forest City the go-to place to take up overflowing growth from Singapore where
land is severely limited and expensive; and the importation of labour
increasingly out of favour with the local electorate
·
If the high-speed railway between Kuala
Lumpur and Singapore is built, this will add impetus to the future growth of
Forest City as it would become easily accessible from Kuala Lumpur and
Singapore.
Threats
·
Strong competition from neighbouring
countries: In terms of FDI inflow, Malaysia ranks 4th in ASEAN at US$17.1
billion, after Singapore (US$141.2 b), Indonesia (US$22 b) and Vietnam (US$17.9
b). Many globally renowned companies are headquartered in Singapore, Hong Kong
and other up and coming Asian cities and countries that are seen as having
superior investment potential than Malaysia
·
Rivalry with Penang : In 2023, Penang
ranked first in Malaysia for its investment performance, especially in the
E&E sector. The comparative advantages that Johor can offer to local
and foreign companies is not yet apparent
·
Potential institutional threats may
come from future governments that may cease to support the city. This has
happened once before with the former prime minister withdrawing long-stay visas
for Chinese real estate buyers in Forest City, and changing the criteria for
MM2H applicants.
·
Economic conditions and changes in
capital outflow rules in Singapore and China, the two nations whose
participation in Forest City’s present and future development is essential
·
Bureaucratic foot dragging and
corruption compounded by political instability
How can Forest City become Malaysia’s economic lifeboat?
Forest City’s original mission must be scrubbed, and
substituted with a new one. The new mission should encompass building the area
into one of the nation’s major innovative growth areas. This should be
inclusive of both micro, small and medium enterprises (MSMEs) and large
established international corporations.
This requires a dual strategy. The first is straight ‘high
pressure’ selling of the location to foreign and local corporations,
highlighting the advantages of moving to Forest City.
The second strategy is much more difficult. The key is about
developing local home-grown innovation and nurturing this until export-oriented
MSMEs can grow alongside the corporations in the area.
A new dimension of education, nurturing and mentoring of
MSMEs is needed. Unfortunately, traditional universities are not good at this.
Neither are traditional TVET colleges adequate. We hold to the premise that
entrepreneurship cannot be taught effectively and can only be learnt and
sustained through experience. Once this is recognized, the education system
must be re-arranged accordingly.
Our proposal is that Forest City would become a massive
entrepreneurial incubator, with mentors available to nurture innovation based
MSMEs. TVET institutions must teach both the principles of start-ups and the
technologies that these new enterprises will require.
In this way Forest City would be one big start up.
The key is pushing Forest City up to a critical mass where
new businesses will add synergies to the old, and create community multiplier
effects, thus incubating a bustling community economy that will flow over to
services, entertainment, tourism, finance, and construction. Apart from
Shenzhen, Penang and Rayong (in Thailand) are good examples that can be
studied, and the lessons applied to Forest City.
If Forest City can create its own ‘champions’ this will
attract and inspire others to succeed. Thus, instead of Forest City being an
enclave of well-to-do PRC Chinese, Forest City could become a truly Malaysian
entrepreneurial and innovative city which may well become the nation’s economic
lifeboat alongside Penang.
Our immediate priority proposal
If a quick QR code or RFID enabled travel pass can be set up
for easy daily usage by car, rail or water taxi across the causeway, it will
open huge opportunities for Forest City and Johore to benefit from the
Singaporean and expatriate communities.
MURRAY HUNTER is an independent researcher
and former professor at the Prince of Songkla University and Universiti Perlis.
CAROLYN KHOR is a former ministerial press
secretary, a former United Nations Volunteer and an independent
researcher/writer.
* This article was first published on Malaysiakini on April 21, 2024.
