Johor eyes more S'pore investment

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.