CHAPTER 1 - Iskandar Malaysia

Section A Framework for
Comprehensive Development
Part 1 Background and Objectives
CHAPTER 1
Background and Context

Background and Context
chapter
1
1.1 Introduction
Located at the southern-most tip of Peninsular Malaysia and mainland
Asia, South Johor has long played an important and strategic role in
the history and development of Malaysia and its surrounding region.
Johor Bahru, the capital city of Johor and its surrounding areas, has
grown to become the second most important economic conurbation
in Malaysia. The economy is well diversified with successful clusters
emerging around the electronics, logistics, food and agriculture,
tourism and oil and petrochemical industries. Its strategic geographic
position on the world’s busiest shipping routes, its proximity to an
international hub and the large markets of Singapore, Indonesia and
further out, China and India, and its rich endowment of natural and
human resources has both underpinned Johor’s past successes and
underscores Johor’s future potential.
Johor’s relative prosperity has been anchored by a celebrated history
of uninterrupted and mutually reinforcing combination of political
stability and continuity, a progressive and deeply revered Sultanate,
and social and cultural cohesion among its multi-ethnic population
that has been a constant source of strength, innovation and renewal.
Indeed, in the various fields of politics, administration and culture, Johor
has often been at the forefront of national development and the history
of Johor is in many cases synonymous with the history of Malaysia.
The formation of UMNO, the contributions of numerous Johoreans as
important national leaders in politics, administration, business, the arts
and academia, the introduction of modern administration and the use
of the Johor dialect of the national language as the official dialect are
among the many historical testaments to Johor’s enduring significance
to nation-building.
In mid 2005, the Federal Government of Malaysia, along with the
State Government of Johor, identified the need for a focused and
developmental approach to the economically and geographically
important region of South Johor. In arriving at this approach, the
government had taken into cognisance the dominant trends of our
times including globalisation with its increased competition in the flows
of capital, human resource and ideas, the rise of China and India
and the impact of technology and innovation, among others. While
such trends accorded significant opportunities for economic growth
in South Johor in view of its considerable factor advantages in the
supply of competitively priced land, its strategic geographic position, its
industrial base and connectivity and its cost structure, the same trends,
if unchecked and unmanaged, also represented significant threats to
the enduring prosperity and social cohesion of Johor. In particular, the
government was conscious of the need to equally manage not just the
risks of opportunity loss of not achieving full growth potential but just as
importantly to ensure that such targeted growth comes with equitable
distribution. Indeed, it is this underlying socio-economic philosophy and
practice of growth with equity that has been the bedrock that has
allowed social cohesion, peace and prosperity to take place, by the
grace of God.
1.2 Development of the SJER Master Plan
It is against this backdrop that in July 2005, the Government of
Malaysia had tasked Khazanah to conduct a feasibility study for the
development of a special economic zone in South Johor in what was
then referred to as the Southern Belt Economic Zone (SBEZ). A Special
Projects Team (SPT) was formed in Khazanah to undertake the task,
consisting of Khazanah officers, consultants and subject matter experts
from various relevant fields including in town planning, real estate,
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SECTION A
FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
economic and financial planning, environmental planning, legal
and regulatory, marketing, business process re-engineering, social
policy, strategy, and in local government. Officers from the Federal
Government and the State Government of Johor were also seconded
to the SPT.
In October 2005, Khazanah presented a Conceptual Outline Plan for
the proposed South Johor Economic Region (SJER) to the National
SJER Planning Committee (NSPC) that concluded that there was
a strong economic, social and developmental rationale for the
proposed development of SJER. The NSPC was chaired together by
the YAB Prime Minister and YAB Chief Minister of Johor. Khazanah
acts as the secretariat for the committee. The NSPC further tasked
Khazanah to develop a detailed and comprehensive Master Plan
for the development of SJER that aimed to address socio-economic
development in a holistic and sustainable fashion. To drive the planning
process, the strategic framework of the proposed SJER was also
adopted by the NSPC in October 2005 and consists of the following;
1. Vision: Development of a Strong, Sustainable Conurbation of
International Standing
2. Foundations to be based on
a. Nation Building
b. Growth and Value Creation
c. Equitable and Fair Distribution among Stakeholders
In March 2006, the Ninth Malaysia Plan covering the period 2006 to 2010
was launched by the YAB Prime Minister and inter alia, identified SJER as
one of the catalyst and high-impact developments under the Plan. This
was further reinforced when in July 2006, the YAB Prime Minister, the YAB
Chief Minister of Johor and Khazanah announced further details on SJER
that inter alia stated the following;
■ That the proposed SJER would cover the logistic triangle of
Senai Airport to the north, Port of Tanjung Pelepas (South West)
and Johor Port in Pasir Gudang (South East), encompassing an
area of 2,217 sq km. Several key factors in selecting the area of
SJER was highlighted including, its strong connectivity through
the North-South Expressway, road and rail links to Singapore, air
links and sea links to Indonesia and the region and its strategic
location and proximity to some of the world’s most rapidly
growing economies with some 800 million population within a six
hour flight time radius.
■ That the SJER Master Plan would, inter alia, look to address
several key risks that has hampered regional development in the
past, including uncoordinated and duplicative development,
excessive private value capture and potential marginalisation of
the local population. It was also emphasized that a cornerstone
of the proposed Master Plan is the need to ensure that the
rights of the Federal and State Governments under the Federal
Constitution are preserved, specifically Johor’s constitutional
rights on land matters.
3. Five main strategic pillars
a. International Rim Positioning
b. Establishing hard and soft infrastructure enablers
c. Investments in catalyst projects
d. Establishing a strong institutional framework and the
creation of a strong regulatory authority
e. Ensuring socio-economic equity and buy-in from the
local population
■
■
Further, it was highlighted that a key feature of the proposed
Master Plan will be the emphasis on sustainable development,
conservation of the environment and equitable distribution of
the benefits of growth among the local population
It was also highlighted that a key component of the SJER is the
creation of a “one-stop fast track mechanism agency” where
Federal and State Government agencies will work seamlessly to
provide a facilitative environment for investors and consumers.
The Federal and State Governments will play a major role in
facilitating the creation of an investor-friendly environment
through immigration, education, tax, land and close liaison with
local authorities.
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BACKGROUND AND CONTEXT CHAPTER 1 | PART 1
■ In addition to its planning role, it was identified that Khazanah
would also play a catalytic investment role, investing directly or
indirectly, wholly or in partnership into catalyst infrastructure and
development projects. Among others, several catalyst projects
were highlighted, at various stages of study and implementation
including the Johor State New Administrative Center (JSNAC),
Southern Johor Industrial Logistic Cluster, Waterfront City,
Medical Hub, Edu-city, and a proposed international destination
resort. These initiatives were identified to complement the many
important ongoing developments in various sectors by the major
economic players already well established in SJER, including,
the Port of Tanjong Pelepas (PTP), the UEM Group, Senai Airport,
Danga Bay and Johor Corporation, among others.
The announcement in July 2006 also highlighted that the SJER Master
Plan was targeted to be completed before the end of 2006, and, at
that point, was envisaged to consist of several sub-plans, structured
to cover the Physical Plan, the Economic Plan, the Commercialisation
Plan, the Regulatory Plan and the Social Plan. This document, dated
November 4th 2006 is the culmination of the work over the past fifteen
months and represents Khazanah’s proposal for a Comprehensive
Development Plan (CDP) for the SJER development. As highlighted
in the acknowledgements pages, this document, while representing
the views and recommendations of Khazanah, is indeed the sum
total of the numerous and great contributions from many parties and
individuals, without which this exercise would not have been possible. In
particular, the inputs, views and contributions of the State and Federal
Governments in this regard were especially critical and invaluable.
It also follows that being a document that represents the views and
recommendations of Khazanah, the CDP would be required to be
formally approved and adopted by both the relevant Federal and
State agencies in due course.
The report is divided into seventeen chapters, in two main sections.
Section A: Framework for Comprehensive Development consists of
five chapters. The first two chapters in Part 1 of the section covers
the background and context (Chapter 1) and vision and objectives
(Chapter 2) of the SJER development. The next three chapters in Part
2 outline development strategies from the standpoint of physical
development (Chapter 3), economic development (Chapter 4) and
social development (Chapter 5). The overarching theme of this section
is to link the interconnectedness of the three main development
approaches – physical, economic and social – into the holistic and
comprehensive development framework that the plan aspires to.
Section B: Planning and Implementation consists of twelve chapters
divided into five parts. The section builds on the development context,
framework and strategies discussed in Section A and focuses on the
“how to” to realise the strategies outlined in the previous section. In
particular, specific planning and development initiatives are tabled
with an emphasis on specific actionable items. Each of the five parts
represents the multi-prong and holistic approach to SJER development,
covering the regulatory, legal and institutional framework and initiatives
(Part 1, Chapter 6), the social and holistic development initiatives (Part
2, Chapters 7 and 8), physical planning initiatives (Part 3, Chapters 9 to
13), infrastructure development initiatives (Part 4, Chapters 14 to 16) and
commercial development initiatives (Part 5, Chapter 17).
1.4 South Johor in the Regional and Global Context
As discussed, with increased globalisation and liberalisation, and the
resulting increased pace in the movement of capital, skilled labour
and information flows, it is especially important that the development
plans of SJER takes into account these regional and global trends and
perspectives.
1.3 Structure and outline of the CDP
The structure, outline and content of the CDP is driven by the mandated
task of coming up with a “detailed and comprehensive Master Plan
for the development of SJER that aims to address socio-economic
development in a holistic and sustainable fashion”.
A. Regional ASEAN and Asia-Pacific Perspective
ASEAN already exerts a significant influence on Malaysia’s economy,
accounting for 23% of Malaysia’s exports in 2001. Singapore is Malaysia’s
largest trade partner after USA and nearly half of the trade between
Malaysia and Singapore goes through Johor. In addition to being
a major export market, China has also emerged as the principal
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FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
competitor for ASEAN, in terms of exports as well as a destination
for investments in view of its cheap labour and cost of production.
This has further accelerated since China’s entry into the World Trade
Organisation (WTO) in 2001. Indeed, there has been notable evidence
of some international electronic, textile and garment manufacturers
that have recently relocated from Johor to China to take advantage of
lower costs and the large domestic market.
Figure 1.1 : The National Physical Plan, 2005-2020
Spatial Development Strategy
B. Indonesia-Malaysia-Singapore Growth Triangle (IMS-GT)
The IMS-GT currently includes Singapore, Johor and province of Riau
(in particular, Batam) in Indonesia and will later be expanded to
include Negeri Sembilan, Malacca and Pahang in Malaysia, and
West Sumatera, South Sumatera, Bengkulu, Jambi, Lampung and
West Kalimantan in Indonesia. IMS-GT aims to drive economic growth
within the region through improving competitiveness and enhancing
integration. The private sector is expected to act as a driving force for
this, with the government as facilitator.
Johor draws natural advantages from proximity to Singapore.
Singapore, with its population base of 4.2 million, has traditionally
played the role of ASEAN’s trading, services and especially logistics
hub. Spillover from the vibrant Singaporean economy has been
significant; as an indication, the island of Batam in Indonesia has been
a key beneficiary of its proximity to Singapore, and has emerged as
a fast growing offshore manufacturing centre in South East Asia. With
two direct road links to Singapore and sea links to Batam, SJER is well
positioned to benefit from this broader growth area.
Source : NPP 2005-2020, Federal Town and Country Planning Department,
Malaysia
1.5 SJER and the National Physical Plan (NPP) 2005-2020
The National Physical Plan (NPP) is a long term national level plan for
the period until 2020 that spells out strategic policies that will determine
directions and trends of the physical development and conservation of
areas within Peninsular Malaysia. Approved by the cabinet on the 20th
April 2005 and by the National Physical Planning Council (NPPC) on the
26th April 2005, NPP has been prepared under the provision of Section
6B of the Town and Country Planning Act 1976 (Act 172). The main goal
of the NPP is to create an efficient, equitable and sustainable national
spatial framework to guide the overall development of the country
towards achieving a competitive developed nation status by 2020.
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BACKGROUND AND CONTEXT CHAPTER 1 | PART 1
In line with this goal, the NPP’s main objectives are as follows:
■ To rationalise national spatial planning for economic efficiency
and global competitiveness;
■ To optimise utilisation of land and natural resources for
sustainable development;
■ To promote balanced regional development for national unity;
and
The SJER is the Johor Bahru Conurbation as identified by the NPP. As
a regional growth conurbation, SJER aims to balance out national
growth such that the southern part of Peninsular Malaysia will be a
key beneficiary, whilst playing a symbiotic support role to the Level 1
– National Growth Conurbation of Kuala Lumpur. To further support
the NPP, an integrated National Transportation Network for Peninsular
Malaysia has been proposed that comprises three main aspects:
■
To secure spatial and environmental quality and diversity for a
■
Network Configuration
high quality of life
■
National Gateways and Transportation Nodes
Table 1.1 : National Physical Plan Hierarchy of Conurbations, 2020
■
Urban Transportation and Intelligent Transport System
Level Description Area
1 National Growth Cornubation Kuala Lumpur-
Klang Valley-Seremban
2 Regional Growth Conurbations
National Growth Conurbation
George Town- Kulim-
Sungai Petani-
Northern Perak
Johor Bahru-Pasir Gudang-
Tanjung Pelepas
Kuantan-Kemaman
Under the NPP, a high-speed rail system has been identified, and it
is proposed to link the Kuala Lumpur Conurbation to the SJER. It is
envisioned that this rail system could subsequently be linked to Penang
and Kuantan.
Airports and sea ports are expected to play a major role in supporting
the NPP. In this instance Senai Airport (Sultan Ismail International Airport),
is to be integrated with the Port of Tanjung Pelepas as one of the cargo
transhipment mega hubs for the region.
3 Intermediate Growth
Conurbation
4 Urban Growth Centre/Future
Conurbation
Ipoh
Melaka
Alor Setar
Kota Bharu
Kuala Terengganu
Kangar
Termerloh-Mentakab
Lumut-Sitiawan-Manjung
Muar-Batu Pahat-Kluang
NPP 11 – The Conurbation shall be planned and developed as integrated
regions
The NPP also calls for the conurbations to be planned as integrated
regions. In this regard, the CDP, spanning an area across five local
planning authorities, is in effect an integrated approach consistent with
the principles of NPP 11.
Source: National Physical Plan, (NPP) 2005-2020.
In respect of SJER, the NPP has identified the Johor Bahru Conurbation
as the principal conurbation for Southern Peninsular Malaysia and
as one of the second tier conurbations (along with the Penang and
Kuantan Conurbations) after the Kuala Lumpur Conurbation in the
overall hierarchy of urban centres. These conurbations are to be the
prime centres for international and local investments.
In addition, the CDP also addresses issues pertaining to transportation,
water supply, sewerage system, solid waste disposal, green belts,
industrial estates and major employment centres. All these are among
the underlying factors required of regional plans as mentioned in the
NPP.
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1.6 SJER and the Ninth Malaysia Plan, 2006-2010
The Ninth Malaysia Plan (2006-2010) reemphasises the call for balanced
regional development, with development being driven by the growth
centres of respective states as well as trans-border areas. In particular,
the Ninth Malaysia Plan has identified SJER as the focus area for
development in the southern region of Peninsular Malaysia and as one
of the major catalyst and high-impact developments under the plan.
In preparing the CDP, particular emphasis was placed to ensure that
the strategies and initiatives are in accordance to the five thrusts of the
Ninth Malaysia Plan, which are highlighted in Table 1.2
Table 1.2 : Five Thrusts of the Ninth Malaysia Plan
Thrust Key Thrusts Statements
Thrust 1 To Move The Economy Up The Value Chain
■ Spur and generate the economic growth in a continuous,
comprehensive and balanced manner;
■ Manage development and the environment intelligently; and
■ Enhance the living quality of life of every citizen.
In addition, the CDP has been prepared by taking in as inputs the
development strategies outlined in the Draft Johor State Structure Plan
that include, inter alia:
■ To diversify economic development by using existing and
natural economic resources in a sustainable manner and by
introducing new, innovative and productive foundations.
■ To strengthen Johor Bahru’s role as the Southern Growth Centre
by forming the Johor Bahru Conurbation that will extend her
boundary from Pasir Gudang to Pekan Nanas.
Thrust 2
To Raise The Capacity For Knowledge And Innovation And
Nurture “First Class Mentality”
■
To enhance efforts to transform the state into an international
transportation and distribution hub.
Thrust 3
To address persistent socio-economic inequalities
constructively and productively
■
To spur the development of towns and growth centres in the
state is to be in line with the ‘Centralised and Decentralised
Thrust 4
Thrust 5
To improve the standard and sustainability of quality of life
To Strengthen The Institutional And Implementation
Capacity
■
Growth Strategy’.
To ensure that all development in the state is sustainably
implemented with an emphasis on safeguarding the
environment.
Source: Ninth Malaysia Plan
1.7 SJER and the Draft Johor State Structure Plan 2006-2020
The Draft Johor State Structure Plan has outlined a development vision
for Johor by the year 2020 to be:
“A Developed, Sustainable and Glorious Johor”
(Johor Maju, Lestari dan Gemilang)
The CDP has also been prepared to take cognisance of this plan and
the aspirations and the policies and framework therein. In particular,
guidance is taken from the three key fundamental guiding principles:
■
■
■
■
To establish an efficient and comprehensive communication
network for the whole of Johor with several transportation
modes including road, air, rail and water.
To enhance the integration of public transportation in urban and
rural areas, to be supported by an efficient traffic management
system.
To encourage harmony and integration within the community,
as well as improve quality of life by providing basic utilities and
social and communal amenities.
To continue efforts in creating a transparent and efficient state
administration system.
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BACKGROUND AND CONTEXT CHAPTER 1 | PART 1
The Draft Johor State Structure Plan has identified four main planning
zones and these are as follows:
Table 1.3 : Development Focus in Johor Planning Zones
Planning Zones
Southern Planning Zone (Johor
Bahru Conurbation)
Western Planning Zone
Eastern Planning Zone
Central Planning Zone
Central Planning Zone
International Trade, Business and
Service Centre
Main City Centre supported by
manufacturing industry, business and
modern agriculture
Tourism Centres at Beaches, Islands
and Natural Environment Areas
Forest Reserve Conservation Zone,
Water Catchments Area and Palm
Oil Estates
Source : Draft Johor State Structure Plan, 2006-2020
In preparing the CDP, it was identified that by and large the CDP is
consistent with the Draft Johor State Structure Plan. The key difference
being on the emphasis of scope, whereby the SJER Plan focuses on the
Southern Planning Zone of the Draft Johor State Structure Plan.
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