Is Batu Pahat in Johor the next Iskandar?
By Madhu Narasimhan and Jonathan S Weintraub
8 July 2014
Business Times
Developing the area could signify the northward expansion of the Singapore-Johor megalopolis
ON July 30, the Iskandar Malaysia economic corridor will celebrate its eighth anniversary. Thus far, Iskandar has been a great success story, attracting over $54 billion in investments since 2006. Nonetheless, it may already be time to search for the next frontier of investment.
THE Hillview Loft condominium complex, perched on a quiet hill and surrounded by lush rainforest, towers above the city of Batu Pahat, Johor. Dubbed "The Fortress" by some residents, the three luxury high-rise buildings are housed within a gated compound equipped with entry checkpoints and 24-hour security. Wealthy Malaysians and a handful of expats from all over the world - Canada, China, Germany, the Middle East, Singapore, and the United States - park their BMWs and Range Rovers in an underground deck beneath the Olympic-sized swimming pool. After work, residents hit the in-house gym or the synthetic-grass tennis courts before retiring to their flats to chow down on organic dinners purchased from local markets.
Batu Pahat's transformation
Located just 110 kilometres north-west of Singapore and 240 kilometres south-east of Kuala Lumpur, the district of Batu Pahat (meaning "chiselled stone" in Malay) is comprised of nearly half-a-million people. Some 20 years ago, the sort of lifestyle and economic prosperity seen today would have been unthinkable; Batu Pahat was little more than a set of sleepy villages. But today, "BP", as it is affectionately referred to by locals, is the second largest city in the state of Johor (after Johor Bahru) in terms of both population and manufacturing production. The area has transformed itself into something of a boomtown, relying on industries as wide-ranging as textiles, food processing, and electronics to spur growth. BP accounts for 50 per cent of the textiles exported out of Malaysia, and is home to production facilities for a number of multinational corporations, including Fujitsu and Sharp.
While the area is not as developed as Iskandar Malaysia - the economic corridor that neighbours BP to the south (spanning across Johor Bahru, Nusajaya, Western Gate, Eastern Gate, and Senai-Skudai) - promising developments are starting to pop up here with increasing frequency.
In addition to the Hillview Loft complex, which was constructed in 2009, SkyGarden, a 22-storey, 246-unit residential high-rise, is expected to be completed in 2017. The property market is on the upswing: large developers, such as the LBS Group, have already finished several ambitious projects, and last year, The Star reported that "a double-storey terrace house in town has doubled to RM400,000 (S$155,000) compared with a decade ago."
Commercial real estate is also visibly taking off in Batu Pahat. In a zone called Taman Flora Utama, new businesses - from trendy fitness centres to upscale bars and cafes - open up every day, catering to the recent influx of foreigners, who come as educators, managers and investors. Foreigners and locals alike frequent the new boutiques, markets, cinemas and shopping malls that are starting to dot the city's landscape.
Local observers predict that there is still much room for growth. "We've seen prices basically double over the last decade, but I foresee property and other industries really skyrocketing over the next several years," M Syazwan, a young entrepreneur states. "There's still a long way to go, but if BP continues to receive external investment and government support, the pace of development could be on a par with Iskandar."
A new economic corridor?
Indeed, with foreign direct investment and assistance from the Malaysian government, Batu Pahat could become a force to be reckoned with. Ideally, BP would replicate the Iskandar model, forming a potent, new economic corridor along with two areas just a little farther up the west coast of Malaysia: Muar (also in the state of Johor) and Malacca (the state that is just north of Johor).
In 2012, Malacca's GDP expanded by 7.2 per cent, making it the fastest-growing state in Malaysia. Johor was close behind, at 6.5 per cent growth. Investors and politicians should look to create a special economic region that syncs up and better harnesses the development of Northern Johor (BP and Muar) and Malacca - areas located between the global hubs of Singapore and Kuala Lumpur. By unifying what would otherwise be an isolated set of economic developments, this corridor would create a new metropolitan hotspot for jobs, investments and urban growth. Businesses in this region would have access to a combined market of an estimated 1.7 million people whose disposable incomes are on the rise.
The BP-Muar-Malacca region already has the basic assets in place to catalyse such transformation, but it will have to make significant improvements on a few fronts in order to fully realise the vision of a corridor.
Sim Tze Tzin, a Malaysian Member of Parliament who formerly worked in Silicon Valley, echoes this sentiment: "This corridor has serious potential," he says. "But for this to succeed, the Malaysian government must drive a strong agenda in this region, focused on developing industry, human talent and infrastructure."
But in addition, the corridor should take advantage of its human capital to yield a more knowledge-based economy. Local institutions of higher education (for example, Universiti Tun Hussein Onn Malaysia in Batu Pahat, Technical University of Malaysia in Malacca) - as well as satellite campuses of international universities - should strive to produce more worldclass engineers, scientists and entrepreneurs who introduce innovative patents, products and technologies into the South-east Asian market. Farmers, agribusinesses and biotech firms should be incentivised. And multinationals should be invited to establish customer service, data analysis, and programming centres in this advanced English-speaking, IT-savvy region.
Infrastructure - roads, railroads, seaports and airports - could also provide an exceptional advantage for the corridor. But sufficient upgrades must be made. Northern Johor shares natural ties and a border with Malacca; several narrow, busy roads extend across the two states, and buses heading to Kuala Lumpur pass through here regularly. It is high time for a fast, uninterrupted, multi-lane highway that runs straight from Singapore to Batu Pahat, Muar, Malacca and Kuala Lumpur. Similarly, a high-speed west coast railroad line would also be useful; current routes run through the centre of Malaysia, an area that is largely undeveloped anyway.
The seaports of Malacca, Muar and Batu Pahat (known as Minyak Beku) rest on the strategic Strait of Malacca; they offer maritime access to Singapore, Indonesia and elsewhere with far fewer piracy issues compared to the northern segment of the Strait. A united corridor should work on transforming these three ports into meaningful commercial centres focused on large-scale fishing, trade, and cultural-historical tourism. (Malacca, a Unesco World Heritage site, could further capitalise on its tourism potential by inviting cruise lines, theme parks and resorts, as it is already beginning to do).
A relatively unknown Malacca International Airport also exists, revamped in 2009 in order to better serve Malacca, "as well as Northern Johor", as its website states. The addition of new domestic and international airline routes, in tandem with swelling economic growth and a rising Asean, will make this a highly popular destination for both business and leisure travellers alike. In just last year alone, Malacca and Northern Johor had over 13.5 million foreign visitors.
For all intents and purposes, Batu Pahat, Muar and Malacca already constitute a corridor; taking the aforementioned steps will simply solidify geographic cooperation and joint economic success. Indeed, these are the very kinds of steps that Johor Bahru (Iskandar Malaysia) took on its own path to prosperity.
Why Singapore should pay attention
But why is any of this - whether it is Iskandar Malaysia or any emerging corridor in Batu Pahat - relevant to Singapore?
Parag Khanna, an American geopolitical strategist based in Singapore, wrote recently: "Across the former British Empire, countries that shunned each other at independence a half-century ago are now sharing currencies, pooling capital, building cross-border infrastructure, and attracting joint investments. Singapore and Malaysia fit this pattern of post-colonial fraternity. Malaysia has become a major economic opportunity for Singapore."
Now more than ever, economic opportunity - rather than borders or political territory - is critical in determining the flow of capital and the "maps" of South-east Asia. Case-in-point: Singapore alone has accounted for a whopping $4.3 billion of the investment in the Iskandar Malaysia corridor. But Iskandar has been around for eight years, and it may already be time for Singapore to look towards the next frontier of investment.
Singaporeans arrive in Northern Johor and Malacca in droves as tourists. There are also a handful of well-to-do expats who settle into places such as the Hillview Loft condominium complex in order to explore local business opportunities. But on the whole, this area is still relatively undiscovered and ripe for growth.
So, could Batu Pahat be the next Iskandar? Will the development of a new corridor past Iskandar signify the northward expansion of the Singapore-Johor megalopolis?
The answers may very well depend on whether Singaporeans will play a core role in catching this next wave of economic opportunity in southern Malaysia. They would be wise to remember that the early bird gets the worm.
The writers are American Fulbright Scholars based in Malaysia.
8 July 2014
Business Times
Developing the area could signify the northward expansion of the Singapore-Johor megalopolis
ON July 30, the Iskandar Malaysia economic corridor will celebrate its eighth anniversary. Thus far, Iskandar has been a great success story, attracting over $54 billion in investments since 2006. Nonetheless, it may already be time to search for the next frontier of investment.
THE Hillview Loft condominium complex, perched on a quiet hill and surrounded by lush rainforest, towers above the city of Batu Pahat, Johor. Dubbed "The Fortress" by some residents, the three luxury high-rise buildings are housed within a gated compound equipped with entry checkpoints and 24-hour security. Wealthy Malaysians and a handful of expats from all over the world - Canada, China, Germany, the Middle East, Singapore, and the United States - park their BMWs and Range Rovers in an underground deck beneath the Olympic-sized swimming pool. After work, residents hit the in-house gym or the synthetic-grass tennis courts before retiring to their flats to chow down on organic dinners purchased from local markets.
Batu Pahat's transformation
Located just 110 kilometres north-west of Singapore and 240 kilometres south-east of Kuala Lumpur, the district of Batu Pahat (meaning "chiselled stone" in Malay) is comprised of nearly half-a-million people. Some 20 years ago, the sort of lifestyle and economic prosperity seen today would have been unthinkable; Batu Pahat was little more than a set of sleepy villages. But today, "BP", as it is affectionately referred to by locals, is the second largest city in the state of Johor (after Johor Bahru) in terms of both population and manufacturing production. The area has transformed itself into something of a boomtown, relying on industries as wide-ranging as textiles, food processing, and electronics to spur growth. BP accounts for 50 per cent of the textiles exported out of Malaysia, and is home to production facilities for a number of multinational corporations, including Fujitsu and Sharp.
While the area is not as developed as Iskandar Malaysia - the economic corridor that neighbours BP to the south (spanning across Johor Bahru, Nusajaya, Western Gate, Eastern Gate, and Senai-Skudai) - promising developments are starting to pop up here with increasing frequency.
In addition to the Hillview Loft complex, which was constructed in 2009, SkyGarden, a 22-storey, 246-unit residential high-rise, is expected to be completed in 2017. The property market is on the upswing: large developers, such as the LBS Group, have already finished several ambitious projects, and last year, The Star reported that "a double-storey terrace house in town has doubled to RM400,000 (S$155,000) compared with a decade ago."
Commercial real estate is also visibly taking off in Batu Pahat. In a zone called Taman Flora Utama, new businesses - from trendy fitness centres to upscale bars and cafes - open up every day, catering to the recent influx of foreigners, who come as educators, managers and investors. Foreigners and locals alike frequent the new boutiques, markets, cinemas and shopping malls that are starting to dot the city's landscape.
Local observers predict that there is still much room for growth. "We've seen prices basically double over the last decade, but I foresee property and other industries really skyrocketing over the next several years," M Syazwan, a young entrepreneur states. "There's still a long way to go, but if BP continues to receive external investment and government support, the pace of development could be on a par with Iskandar."
A new economic corridor?
Indeed, with foreign direct investment and assistance from the Malaysian government, Batu Pahat could become a force to be reckoned with. Ideally, BP would replicate the Iskandar model, forming a potent, new economic corridor along with two areas just a little farther up the west coast of Malaysia: Muar (also in the state of Johor) and Malacca (the state that is just north of Johor).
In 2012, Malacca's GDP expanded by 7.2 per cent, making it the fastest-growing state in Malaysia. Johor was close behind, at 6.5 per cent growth. Investors and politicians should look to create a special economic region that syncs up and better harnesses the development of Northern Johor (BP and Muar) and Malacca - areas located between the global hubs of Singapore and Kuala Lumpur. By unifying what would otherwise be an isolated set of economic developments, this corridor would create a new metropolitan hotspot for jobs, investments and urban growth. Businesses in this region would have access to a combined market of an estimated 1.7 million people whose disposable incomes are on the rise.
The BP-Muar-Malacca region already has the basic assets in place to catalyse such transformation, but it will have to make significant improvements on a few fronts in order to fully realise the vision of a corridor.
Sim Tze Tzin, a Malaysian Member of Parliament who formerly worked in Silicon Valley, echoes this sentiment: "This corridor has serious potential," he says. "But for this to succeed, the Malaysian government must drive a strong agenda in this region, focused on developing industry, human talent and infrastructure."
But in addition, the corridor should take advantage of its human capital to yield a more knowledge-based economy. Local institutions of higher education (for example, Universiti Tun Hussein Onn Malaysia in Batu Pahat, Technical University of Malaysia in Malacca) - as well as satellite campuses of international universities - should strive to produce more worldclass engineers, scientists and entrepreneurs who introduce innovative patents, products and technologies into the South-east Asian market. Farmers, agribusinesses and biotech firms should be incentivised. And multinationals should be invited to establish customer service, data analysis, and programming centres in this advanced English-speaking, IT-savvy region.
Infrastructure - roads, railroads, seaports and airports - could also provide an exceptional advantage for the corridor. But sufficient upgrades must be made. Northern Johor shares natural ties and a border with Malacca; several narrow, busy roads extend across the two states, and buses heading to Kuala Lumpur pass through here regularly. It is high time for a fast, uninterrupted, multi-lane highway that runs straight from Singapore to Batu Pahat, Muar, Malacca and Kuala Lumpur. Similarly, a high-speed west coast railroad line would also be useful; current routes run through the centre of Malaysia, an area that is largely undeveloped anyway.
The seaports of Malacca, Muar and Batu Pahat (known as Minyak Beku) rest on the strategic Strait of Malacca; they offer maritime access to Singapore, Indonesia and elsewhere with far fewer piracy issues compared to the northern segment of the Strait. A united corridor should work on transforming these three ports into meaningful commercial centres focused on large-scale fishing, trade, and cultural-historical tourism. (Malacca, a Unesco World Heritage site, could further capitalise on its tourism potential by inviting cruise lines, theme parks and resorts, as it is already beginning to do).
A relatively unknown Malacca International Airport also exists, revamped in 2009 in order to better serve Malacca, "as well as Northern Johor", as its website states. The addition of new domestic and international airline routes, in tandem with swelling economic growth and a rising Asean, will make this a highly popular destination for both business and leisure travellers alike. In just last year alone, Malacca and Northern Johor had over 13.5 million foreign visitors.
For all intents and purposes, Batu Pahat, Muar and Malacca already constitute a corridor; taking the aforementioned steps will simply solidify geographic cooperation and joint economic success. Indeed, these are the very kinds of steps that Johor Bahru (Iskandar Malaysia) took on its own path to prosperity.
Why Singapore should pay attention
But why is any of this - whether it is Iskandar Malaysia or any emerging corridor in Batu Pahat - relevant to Singapore?
Parag Khanna, an American geopolitical strategist based in Singapore, wrote recently: "Across the former British Empire, countries that shunned each other at independence a half-century ago are now sharing currencies, pooling capital, building cross-border infrastructure, and attracting joint investments. Singapore and Malaysia fit this pattern of post-colonial fraternity. Malaysia has become a major economic opportunity for Singapore."
Now more than ever, economic opportunity - rather than borders or political territory - is critical in determining the flow of capital and the "maps" of South-east Asia. Case-in-point: Singapore alone has accounted for a whopping $4.3 billion of the investment in the Iskandar Malaysia corridor. But Iskandar has been around for eight years, and it may already be time for Singapore to look towards the next frontier of investment.
Singaporeans arrive in Northern Johor and Malacca in droves as tourists. There are also a handful of well-to-do expats who settle into places such as the Hillview Loft condominium complex in order to explore local business opportunities. But on the whole, this area is still relatively undiscovered and ripe for growth.
So, could Batu Pahat be the next Iskandar? Will the development of a new corridor past Iskandar signify the northward expansion of the Singapore-Johor megalopolis?
The answers may very well depend on whether Singaporeans will play a core role in catching this next wave of economic opportunity in southern Malaysia. They would be wise to remember that the early bird gets the worm.
The writers are American Fulbright Scholars based in Malaysia.
