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Homeasia businessIN FOCUS: Johor’s Iskandar region languished during COVID-19. Could it flourish again?

IN FOCUS: Johor’s Iskandar region languished during COVID-19. Could it flourish again?

JOHOR BAHRU: Mr Johari Jaffar stood outside his cafe in Danga Bay and pointed to the thousands of condominium units looming over the Johor Bahru skyline.

“All these used to be empty just a year ago – the whole place was deserted,” the 52-year-old told CNA.

“Barely anyone was around. But look at it now, around seven in 10 are occupied,” Mr Johari estimated. 

Back in 2020 and 2021, the Country Garden Danga Bay condominium development in downtown Johor Bahru was like a “ghost town”, Mr Johari recounted. He said that the homes were mostly boarded up and vacant while storefronts were shuttered during the COVID-19 pandemic.

Since April 2022, however, many areas in southern Johor have become livelier as the prolonged curbs ended. 

He reportedly said that Singapore remained the second-largest foreign investor in Iskandar Malaysia with total committed investments of RM25.3 billion across a range of sectors such as manufacturing, healthcare, education, business services and industrial estate development.

In a Facebook post following the meeting, Singapore’s Minister for National Development Desmond Lee said that both countries will jointly undertake more investment promotion activities to facilitate investments in Iskandar Malaysia. 

He said both sides were looking at collaborating on an electric vehicle ecosystem, incorporating sustainability issues and working together on the management of hazardous chemicals.

Mr Lee added that the committee also discussed potential new areas to enhance cross-border connectivity for pedestrians and cyclists.

The JMCIM is scheduled to reconvene in early 2023 in Singapore. Responding to CNA’s queries, a Singapore Ministry of National Development spokesperson said that the date for the next JMCIM has not been set yet.

Earlier this month, Malaysian Minister of International Trade and Industry Tengku Zafrul Aziz reportedly said that there are plans by the new federal government to re-energise the development of Iskandar Malaysia.

In an interview with the Business Times, he added that there are plans to draw more high-value investments from Singapore and improve connectivity. “It is key that Singapore is part of the Iskandar Malaysia plan,” he was quoted as saying.

CNA has reached out to the Iskandar Regional Development Authority (IRDA), a statutory body set up by the federal government to oversee the development of the area, on how the pandemic has affected overall progress.

PANDEMIC WEAKENS PROPERTY SECTOR

COVID-19 has greatly weakened the residential property sector in Iskandar Malaysia, with property overhang being a particularly acute problem. 

Last September, then deputy finance minister Shahar Abdullah told parliament that Johor was the state with the highest number of unsold homes with 6,000 empty units valued at RM4.7 billion. The number represented 17 per cent of the national property overhang. 

The beach was crowded with visitors, many of whom were either homeowners or tenants in the development. Facilities like swimming pools were in operation and most of the retail shops were open for business.

Some homeowners told CNA that the new occupants in the residential development were mainly locals who worked at the nearby Tanjung Pelepas Port as well as migrant workers. 

Singaporean Isabel Tan, who owns a 3-room apartment in the development, told CNA the property price in Forest City had dropped significantly since the project was launched. 

“I think that this project was (initially) targeted at foreign buyers, mainly from Singapore and China.

“The prices of apartments have fallen by around 30 to 50 per cent so this has made it more affordable for a larger demographic,” she said. 

Country Garden did not respond to queries from CNA on occupancy figures as well as measures it has taken to attract buyers. 

Mr Tan Wee Tiam, a property expert from consultancy firm KGV International, noted that many property developments along the southern Johor coast were targeted at foreigners. 

However, he said that many have also pivoted to the local market because of the oversupply situation as well as the lack of demand from overseas buyers due to the border closures. 

“Gradually I think the developers started to change their focus because they noticed that if they were to just target only foreigners in the long term – this was probably not sustainable,” said Mr Tan. 

Last weekend, Johor chief minister Onn Hafiz Ghazi led a delegation to Singapore and during the visit, he raised some key points on connectivity at a meeting with Singapore’s Transport Minister S Iswaran. 

He said that the Johor Bahru-Singapore Rapid Transit System (RTS) Link was a priority for both countries, and was willing to set short-term and medium-term goals so that the project continues to be on track.

The cross-border rail project aims to connect Bukit Chagar in Johor Bahru city to Woodlands in Singapore, serving about 10,000 passengers per hour each way to help ease traffic congestion on the Causeway. It is scheduled to be operational by end-2026. 

Johor’s works, transportation and infrastructure committee chairman Mohamad Fazli Mohamad Salleh told CNA that a “key priority” for the state government is to reduce congestion in the short term, and not merely wait for the RTS Link project to be completed.

He explained that reducing congestion would have a “multiplier effect” on investment, jobs and the economy. 

Mr Mohamad Fazli is leading a multi-agency task force that looks into easing congestion at the Causeway and Second Link in Tuas. 

He said that the task force has mooted a few proposals including a “single clearance system” where Singapore immigration officers will be stationed at Malaysia checkpoints in Johor to clear people entering Singapore, while Malaysian immigration personnel will be deployed in Singapore to clear those entering Malaysia.

He added that the task force has also drafted proposals to install an additional 25 motorcycle lanes, two lorry lanes and two more pedestrian security scanners at the Causeway to ease the gridlock.  

The Bukit Pasir state assemblyman added that these proposals have been forwarded to the federal government for approval. 

“It is Prime Minister Anwar Ibrahim’s directive that action should be taken to overcome the congestion at the immigration complexes at the land borders,” he said. 

Mr Muhammad Rizki, who operates a burger stall in the area, told CNA that although foot traffic has picked up slightly in the last few months, COVID-19 had “decimated many businesses in the area”. 

“This place was meant to be a hub for foreigners to live in and businesses to thrive but I’m afraid that it has become a bit of a white elephant,” said Mr Rizki. 

“I hope that the ferry services with Singapore do happen and that might bring in more tourists and property investors,” he said.

Will reviving the Kuala Lumpur-Singapore High-Speed Rail (HSR) project be another game changer for Iskandar Malaysia? 

The HSR project, which aimed to reduce travel time between Singapore and Kuala Lumpur to about 90 minutes, was discontinued after multiple postponements at Malaysia’s request and an eventual lapsing of an agreement in December 2020.

Malaysia paid more than S$102 million in compensation to Singapore for the terminated project.

The proposed line was supposed to have a stop at Iskandar Puteri, linking the Nusajaya region within Iskandar Malaysia to Singapore, Melaka, Seremban and Kuala Lumpur. 

At end-2021, then prime minister Ismail Sabri Yaakob suggested reviving discussions on the HSR, even saying in August last year that he would like to see the HSR revived at the earliest opportunity – albeit with some route changes and the possibility of extending it northwards to Thailand and China.

Singapore Deputy Prime Minister Lawrence Wong said then that Singapore was open to fresh proposals from Malaysia on the HSR. 

In January 2021, while he was the opposition leader, Prime Minister Anwar Ibrahim called the HSR cancellation a mistake “both from a current economic standpoint and in terms of future benefits”. Mr Anwar said that the project could have drawn in tourists, businesses as well as foreign direct investments. 

However, it is not yet clear if the new federal government under Mr Anwar would bring back the HSR project.

The chief minister said in a statement on Sunday that these companies were potential investors that could rake in between RM10 and RM15 billion for the southern state and offer high-paying jobs for Johoreans. 

“The state government, with the help of the federal government, is committed to being facilitators and preparing utilities and infrastructure, to ensure a friendly business environment for investors across the world,” he added. 

The efforts were lauded by stakeholders, including Mr Low of the Johor Bahru Chinese chamber of commerce. 

Mr Low told CNA that the initiatives to woo investors taken by the state government were key to helping realise the objectives set out by Iskandar Malaysia by 2025. 

“I think it’s clear that many of these huge corporations are based in Singapore and it might be cost-effective for them, especially those in the manufacturing sector, to spillover some of their operations to southern Johor,” said Mr Low. 

“Johor has land and labour to offer. Johor businesses would also benefit from the transfer of technological know-how from these firms,” he added. 

While the federal government has sent out encouraging signals about Iskandar Malaysia’s progress, researcher Serina Rahman posited that the current focus of the federal government will be on reducing debt and ensuring political stability. 

“I think with Anwar in charge, Johor won’t be totally neglected. But whether the current focus now is for the federal government to attract investments – this seems unlikely,” said Dr Serina, who is also a lecturer in the Department of South-east Asian Studies at the National University of Singapore. 

“Bigger issues such as inflation, systemic institutional problems as well as balancing the demands of this unity government need to be resolved,” she added.

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IN FOCUS: How Johor’s residential property market has been hit hard by COVID-19
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