Speech to DAP Johor Baru branches

by Lim Guan Eng

(Johor Baru, Wednesday): The Iskandar Development Region (IDR) - an area encompassing 2,217 square kilometres, which is three times the size of Singapore – appears long overdue. Whether the aspirations of the IDR to attract RM 382 billion over the next 20 years in foreign investment becomes a reality depends on whether all Malaysians are allowed to participate in accordance with international standards of good governance, transparency and accountability. 

1.    Foreign Investment

Most importantly, IDR's success is critically dependent on foreign investment, or a projected RM382 billion over the next 20 years.  This amount is more than the entire RM245 billion foreign direct investment (FDI) the whole country received over the past 20 years. 

The success of IDR will be equally dependent on investment from Singapore.  However, Singapore's investment in Johor has dropped to an alarming level. In the first eight months of 2006, Singaporean investment in the state stood at only RM208.9 million. This is only a mere 11 percent of the total investment from Singapore in 2005, according to statistics given by the Johor State Investment Centre (JSIC).  Last year, the Singaporean investment stood at RM1.9 billion. 

And it is not just the investment from across the Causeway that has gone down. The FDI into the state too has hit a stumbling block.  Until August in 2006, FDI to the state stood at RM2.4 billion - just 44 percent of the total amount which flooded in last year. Even in 2005, when Johor received record FDI at RM5.9 billion, this amount is a far cry from an average of RM19.1 billion required to make IDR a success. 

2.    Crime & Safety

Crime is such a serious problem in Johor that Singaporeans think Johor is not a safe state to work, live and study. The crime index in the country released by the Royal Police Force has worsened from 156,315 cases in 2003 to 226,836 cases in 2006 – a sharp rise of 45.1% in the past three years when the police force had set the target of reducing the crime index by five per cent each year. 

In the past three years, violent crime had skyrocketed by 85.8 per cent from 22,790 cases in 2003 to 42,343 cases in 2006, with rape cases registering the highest increase of 65.5 per cent – reaching an average of 6.7 women raped daily in 2006 compared to an average of four women raped daily in 2003. In 2003, an average of 1.5 persons were murdered daily; but in 2006, this has increased to an average of 1.65 persons murdered daily. 

On 10^th April, a six-month pregnant woman lost her baby after she was attacked by four robbers in the toilet of a petrol station in Jalan Tebrau. Just last week, a 21-year-old clerk was robbed and brutally stabbed to death as her father slept in another room at their double-storey house in Taman Skudai Baru. And just 2 days ago, a 14-year-old girl who befriended a stranger at a telephone booth was raped by him in Tanjung Langsat. 

Hence it is unsurprising that both investors and tourists, particularly from Singapore has been dissuaded or at best, lukewarm towards investing and spending their dollars in Johor. Unless crime can be addressed, investment will be affected by the perceived unsafe investment climate. 

3.      All Hardware Of Physical Development Of Buildings Without The Software Of Developing Human Resources?

Is the IDR’s emphasis on construction projects another example of first world infrastructure but third-world maintenance? The Government must learn from the lack of success at Cyberjaya, which was a special economic zone dedicated to high-technology related activities such as software development.   

Similarly, we must learn from the total failures of BioValley and E-Village which were dedicated to biotechnology and multimedia content creation respectively.  Despite having investment millions in these projects, their emphasis on construction and property development without a properly thought out strategies for the actual projects have resulted in their failures. Otherwise, some of the IDR plans for another dedicated ICT-hub, theme park and medical hub might just end up as ghost towns. 

4.    Government Policy Consistency In Abolishing NEP Rules And Quotas

The government’s commitment towards exempting the IDR from New Economic Policy(NEP) rules and quotas is doubtful following assurances that bumi businessmen would not be left behind. By assuring that the exemptions from NEP rules will not affect bumi participation is in fact stating that nothing will stand in the way from ensuring that the present rules of bumi equity participation still applies. 

Such failure to subscribe to international standards of merit, competency and competitiveness will be too big an obstacle to overcome in making the IDR an international magnet for investment and trade. The government must be firm in applying the concept of “one country, two systems” where any investor whether local or foreign will not have to play by NEP rules and survival depends on one’s technical know-how rather than know-who’s. 

5.    Unequal Treatment of Foreign vs Local Investors

While the Government has recently trumpeted its move to remove the 30% bumiputera quota requirement for investments in the IDR, closer scrutiny leaves much to be desired. The proposed waiver of the NEP's 30% equity requirement would only involve investments in two specified areas in the IDR, encompassing a small area of 1,780 hectares and with the caveat that foreign investors there must have business dealings outside the country. 

This means that such a policy is not applicable to local investors, and by definition, local non-bumiputera investors.  The policy is perplexing because domestic investments can bring equal amounts of economic returns and contributions to the region and country when compared with foreign investors.  Hence the discriminatory policies practiced by the Government clearly marginalises local non-bumiputera businessmen. 

The 5 five points highlighted above are the only challenges and issues facing our government's plan to make IDR a success.  However, they clearly demonstrate the uphill battle which the government face and the lack of political will which is necessary to make the project a success. Barisan Nasional NEP - guided government has been obsessed with the hardware of development – property, heavy industry, mega-infrastructure projects, ports, bridges and airports - but neglected the human software needed to compete in a modern global economy.