Johor eyes more S'pore investment

By David Chew

SINGAPORE (JP): The South Malaysian state of Johor wants an influx of Singaporeans now that massive traffic jams along the causeway, which had discouraged them from patronizing it, have eased. The jams came about when the customs department made stringent checks on goods vehicles in late September to curb smuggling, false declarations and other transgressions.

However Johor's Chief Minister, Datuk Abdul Ghani Othman, feels that the 1-km long causeway should not be the only main access for the Singaporeans who have traditionally found his state's close proximity, abundant resources, excellent facilities and friendly people conducive for business and recreation.

There is instead to be a second link -- a 1.9 kilometer concrete bridge linking southwestern Johor to northwestern Singapore, which will be officially opened by the Prime Ministers of Malaysia and Singapore on Jan 2.

With a three-lane dual carriageway capable of carrying 200,000 vehicles daily, or four times the capacity of the causeway, this alternative main access will considerably reduce the traffic congestion on a long-term basis at Malaysia's first road and rail link with Singapore which was constructed in 1923.

Johor's concerted trade promotion moves targeted at Singapore form the thrust of an overall wider Malaysian effort to attract foreign investors and tourists in the wake of the currency and stock market turmoils that have hit Southeast Asia, a situation compounded by the haze.

Now that the monsoon rains have phased out the haze, Malaysia believes that many foreign investors and tourists who kept out of the region could be persuaded to come back. This could give the country an opportunity to sell them its attractions, including strong economic fundamentals, excellent facilities and friendly people.

Malaysia believes Singapore can play a dual role as an investor and a market for its attractions to foreign investors. Singapore has the world's busiest port and airport, and is also the commercial and technological hub of Southeast Asia where the regional headquarters of many foreign multinational companies (MNC's) are located.

From 1980 to August 1997, Singapore invested in 2,059 projects worth M$12.684 billion in Malaysia's growing manufacturing sector, far ahead of many foreign investors. The island republic is also Malaysia's second largest trading partner after Japan, accounting for 16.9 percent of Malaysia's total trade in 1996 compared to 19 percent for Japan, according to official statistics.

With its strong economic fundamentals and sound financial policies, Singapore has also emerged relatively unscathed from the currency and stock market turmoils, and is helping world organizations like the International Monetary Fund (IMF) with rescue packages for countries like Thailand and Indonesia which have been badly hit.

The bulk of Singapore's investments in Malaysia are concentrated in Johor because it is the nearest Malaysian state to the island republic. Of the M$12.86 billion Singapore invested in Malaysia's manufacturing sector between 1980 and 1997, M$6.35 billion or 50 percent was in Johor, around Johor Baru and its immediate vicinity.

Delivering a keynote address at an investment promotion conference in Singapore on Nov. 6, Ghani said the long-term solution to the traffic jams would be "a modern and very accessible crossing which will serve the needs of vehicles to and fro much better than the causeway".

It is part of an integrated project to develop a 10,000-ha new town in Gelang Patah, southwestern Johor, at a cost of M$1.6 billion, which would be physically linked to Tuas in northwestern Singapore by a concrete bridge.

The bridge is close to where many of Singapore's electronics factories are located. Their raw materials sourced from Johor and other states further north, and the state's requirements of foreign imports via Singapore, would bypass the causeway, thus easing the congestion there.

Ghani also disclosed that the second link could provide easy access for Singaporeans to take advantage of investment opportunities beyond Johor Baru and its vicinity, in areas further north like Muar, Kluang, Segamat, Batu Pahat and Kota Tinggi. This is because it is connected to the vast network of roads, highways and flyovers serving these areas which have been earmarked for long-term development.

"We have tremendous space as Johor is a big state with competitive advantages and practices a very open economy. There are 30,000 acres of mixed development comprising of industries, commerce and good housing in the immediate vicinity of the second link," he said in an interview with the writer in Johor Baru on Nov. 24.

Traditionally Singaporean investors have preferred Johor Baru and its suburbs where they have opened up branches of their companies or set up joint ventures with the people of Johor. The state capital's proximity enables them to commute daily via the causeway from Singapore where they maintain their headquarters and also export their Johor-manufactured products overseas.

How will Singaporeans respond to Johor's overtures in the light of Ghani's latest trade mission? Judging from the many inquiries at the exhibition booths, especially on investment opportunities in property development and tourism, it would appear they are quite keen on investing in Johor.

But it would be too simplistic to suggest that they will immediately make a beeline for Johor, as how they will decide depends very much on latest developments in Malaysia/Singapore ties.

Johor is the front-line state in Malaysia's ties with Singapore, traditionally along the lines of a hinterland with its port. Johor/Singapore links are so close and so numerous in terms of economics, politics, culture and personal/family ties that they have become both cordial and troublesome -- experiencing both ebbs and flows like the tide.

On the one hand, Johor has benefited from the spill-over effects of Singapore's rapid development where pressure on land and escalating costs made it necessary for land and labor- intensive industries to be relocated north of the causeway with its abundant land, cheaper labor and lower costs. Since then Johor's economic development has tailed closely behind Singapore's, progressing as Singapore progresses.

But on the other, these advantages appear to be offset by more Singaporean visitors. There already about 30,000 of them crossing the causeway daily to do business, shop or visit friends and relatives. Their lavish spending, amounting to millions of Malaysian Ringgit, has raised the cost of living and price of goods in Johor, especially Johor Baru, making the average Johor consumer resentful of what he feels to be imported inflation.

Johor maintains a system of checks and balances in its ties with Singapore which are motived by economic expediency but constrained by political considerations. Johor must always remind itself that despite its close economic ties with Singapore, its political affiliations lie with Kuala Lumpur. As a state within a larger federation, it cannot deal directly with an independent nation like Singapore without prior clearance from Kuala Lumpur.

One issue central to Johor/Singapore ties concerns international trade, or more specifically, Malaysia's export/import of goods via Singapore as the world's busiest port. Malaysia is developing its own ports and would prefer its exports/imports be shipped through them, particularly Port Klang, the premier port serving Kuala Lumpur and the Klang Valley. In this way considerable foreign exchange could be saved.

Malaysia has given directives for its exporters and importers to use Port Klang for their international shipments, which meant bypassing Singapore. To many Singaporeans, this was a major cause of the causeway traffic jams.

Johor walks a tightrope in following this directive. Though national pride dictates otherwise, it makes economic sense for the bulk of its factories, which are located in the Johor Baru area, to ship their exports/imports via Singapore rather than Port Klang, about 500 km to the north. Moreover many of the factories owned by Singaporeans would prefer Singapore rather than Port Klang as the entry/exit point for their products.

Johor's answer is to develop its own ports, Pasir Gudang and Tanjong Pelepas, so that its importers/exporters can eventually use them in line with the Federal Government's directive to use Malaysian ports. But in the interim, Johor would presumably explain to Kuala Lumpur why Singaporean investors should be allowed to use their own port if Johor wants them to put their money in the state.

The second link between Johor and Singapore will become operational in a month's time, and its success in facilitating an influx of Singaporean and other foreign investors to Johor will depend very much on how bilateral ties are conducted.

The writer is a freelance journalist based in Singapore.