PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - Iskandar Malaysia is poised to become three times the size of Singapore when it is completed by its expected date of 2025, says business newspaper the Financial Times (FT).
The newspaper dubbed the special economic zone as "Malaysia's Shenzhen" because it is geared to become a manufacturing and technology hub like the wealthy Chinese city.
It would strengthen the fortunes of both countries by giving Singapore the landmass it lacks, while allowing Malaysia to leverage on Singapore's financial expertise.
The FT noted that Malaysian Prime Minister Najib Razak had previously described Iskandar Malaysia as the "New Jersey" to Singapore's "Manhattan".
In its report Iskandar: 'Malaysia's Shenzhen' takes shape, it said that the head of the island-republic's central bank - Monetary Authority of Singapore managing director Ravi Menon - had proposed a single economic zone covering Iskandar Malaysia and Singapore, that would provide investors with an integrated production and services base in South-east Asia.
The report also said several companies from Singapore had already seized the opportunity to relocate their business to Iskandar Malaysia as the cost of commercial space there was a third of Singapore's prices.
However, challenges remain, such as the excess supply of property and the move away from labour-intensive manufacturing towards higher value-added manufacturing that has squeezed domestic investment.
The FT said domestic manufacturing fell by 41 per cent in 2016, although foreign manufacturing investment rose. It added that Malaysia's increase in minimum wage levels would also further chill investment.
It also questioned if enough jobs would be created for the Iskandar Malaysia population that is expected to grow from 1.2 million to three million people in the next seven years.
Iskandar Regional Development Authority (Irda) chief executive officer Datuk Ismail Ibrahim however remains optimistic that economic growth in the region would eventually catch up to supply, the FT said.