The giant Iskandar Malaysia project in Johor state is a "strategic play" that can lift Malaysia above its global competitors and help Singapore maintain its competitive edge, Prime Minister Lee Hsien Loong said yesterday.
But to do so, investments in the fast-growing Iskandar region need to be channelled into manufacturing as well, not just residential properties and services.
Developing the manufacturing sector will help create jobs and attract investments, to build "an organic, comprehensive, dynamic centre for economic vitality in Johor", Mr Lee added.
He was speaking at a joint media conference with Malaysian Prime Minister Najib Razak at the end of the retreat for leaders of the two countries. Both noted at the conference the importance of the Iskandar region for its "complementarities" with Singapore, and for deepening their integration.
Mr Lee also said Singapore will help Malaysia upgrade its vocational training, as the need for more skilled manpower will rise in tandem with Iskandar's growth.
This will allow Malaysians to take advantage of new jobs and higher pay, he added.
The Iskandar region has become an investment destination in recent years for people and companies keen to tap its potential as a residential area or a less costly business location near Singapore.
Joint projects led by Singapore's Temasek Holdings and Malaysia's Khazanah Nasional share the limelight with developments by companies like builder CapitaLand, and investors such as billionaire Peter Lim.
Howco Group, a British-based supplier of equipment to the oil and gas industry, is investing US$20 million (S$25.2 million) in a heat treatment facility that will complement its Singapore factory.
The new 210ha Nusajaya Tech Park, a joint venture between Ascendas and UEM Sunrise, is expected to create high-tech jobs, by catering to large and small companies in sectors like electronics.
Singapore stands to gain from these investments because of Iskandar's close proximity to the Republic. Mr Lee sees these companies tapping Singapore's financial services, infrastructure and industrial base.
He noted that land constraints prevent Singapore from accommodating many new projects or companies that want to expand. By working together, such projects could be suggested to Iskandar if they fit in with Malaysia's plans.
"It will give you a new flow of projects, which you can choose from, and it will benefit the residents of Johor, the workers from Johor, because there will be more jobs, more opportunities and, I think, better pay."
Datuk Seri Najib agreed: "It's going to be good for Iskandar's development and Malaysia as a whole. So it's what you will call a classic win-win situation."
In a joint statement, both leaders also supported collaborations between Singapore's Malay Heritage Centre and Malaysian agencies and universities to deepen cultural bonds.
One such project is to showcase traditional Malaysian dance and theatre art at the Singapore Malay Culture Festival in September.