Wide range of investment opportunities await in Johor, Malaysia

Malaysia’s most southerly state, Johor – home to 3.6m people spread over a total of 19,016 sq km – has long played a key political and economic role in the country’s development. On the Strait of Malacca and sharing a border with Singapore, Johor has the country’s busiest trans-shipment hub and benefits from its position at the crossroads of some of the world’s most important trading routes.

Over the past decade much development has focused on the Iskandar Malaysia project, one of five regional growth corridors currently under way in Malaysia, and the most successful in terms of investment committed. The state has improved key roads and other infrastructure as investors have pumped money into education, new industries, tourism and manufacturing. However, significant developments are taking place beyond Iskandar Malaysia’s 2217-sq-km site, in tourism – with the resort of Desaru on the south-east coast being transformed into a luxury beach escape – and in agro-industrial projects designed to leverage Johor’s plantations.

State Within A Federation

Johor is one of the 13 states that make up Malaysia. The third-biggest on the peninsula and once the seat of the ancient Johor-Riau empire, it first rose to prominence in the late 19th century under Sultan Abu Bakar, who established modern-day Johor Bahru and promulgated the state’s constitution. The official coronation of the current monarch, Sultan Ibrahim Ibni Almarhum Sultan Iskandar, took place in March 2015, five years after the death of his father.

Although a constitutional monarch, the sultan exerts considerable influence and has an involvement in a number of businesses. He owns stakes in REDT one, a Malaysian communications company, as well as the Forest City development in Johor. As in other states of Malaysia, the sultan plays a significant role in issues that relate to land rights, as well as in the customs and religion of ethnic Malays.

Government

As Malaysia has a federal system, there are elections for both state and federal representatives, with the party or coalition winning the most seats forming the government at state or federal level. Johor was where the United Malays National Organisation, which has governed Malaysia in the National Front (Barisan Nasional, BN) coalition since independence, was founded. However, in recent years the opposition has made inroads into Johor, tripling its representation in the state assembly to 18 of the 56 seats in the last election in 2013. Still, the state remains under BN controlled by the chief minister, Mohamed Khaled Nordin. At the federal level, BN has 21 of the 26 parliamentary seats. The next election will take place in 2018 at the latest.

The chief minister has an active role in the state’s business corporations and is chairman of Johor Corporation, the state’s investment company. He is also co-chair with the prime minister of the Iskandar Regional Development Authority (IRDA), a federal government body that leads the planning, promotion and facilitation of the Iskandar Malaysia project. The chief minister has responsibility for other investment agencies, such as Johor State Investment Centre.

Economic Background

Like the rest of Malaysia, Johor’s economy has evolved in recent decades from agriculture into services and industry, a process that has accelerated since the launch of Iskandar Malaysia. Johor’s economy increased in size from RM74.1bn ($18.3bn) in 2010 to RM93.7bn ($23.2bn) in 2014, according to the Economic Planning Unit. Services were the most substantial part of its GDP at RM44.5bn ($11bn), followed by manufacturing (RM28.8bn, $7.1bn), agriculture (RM14.6bn, $3.6bn) and construction (RM4.54bn, $1.1bn). GDP per capita rose to RM26,399 ($6540) in 2014, compared with RM21,116 ($5230) four years earlier.

The state’s GDP growth accelerated to 6.5% in 2014, compared with 4.7% in 2013, according to the Department of Statistics. Johor was responsible for 9.3% of national GDP growth in 2014, the fourth-biggest contributor to the national economy after Selangor, Kuala Lumpur and Sarawak.

Singapore

As it steps up development, Johor is keen to leverage further on its neighbour, Singapore, and the city-state’s leading role in international trade. Singapore has long been one of the biggest investors in Johor, investing RM11.6bn ($2.9bn) into 1527 projects in the state between 1980 and 2012, according to EY. The country’s more recent interest in Iskandar Malaysia is built on what EY calls “pragmatic and strategic reasons” reflecting the city-state’s high costs, a labour squeeze and wage pressures. The ringgit’s drop in 2015, losing one-fifth of its value against the US dollar, also saw a sharp decline against the Singapore dollar, underlining Malaysia’s price competitiveness in relation to its southern neighbour.

Manufacturing

In 2015 Johor attracted more manufacturing investment than any other state in Malaysia, according to the Malaysian Investment Development Authority (MIDA). Approved investments increased by 47% to RM31.1bn ($7.7bn), well above Sarawak, the next-best performer with approved investment of RM11.8bn ($2.9bn). In total, 73 new projects were approved, of which 64 were for expansion or diversification. However, Johor, like the rest of the country, is facing what MIDA calls “stiff competition from emerging economies such as China, India and Vietnam”. Addressing this regional competition is a key part of the 11th Malaysia Plan (11MP) 2016-20, as Malaysia seeks to manufacture more complex products, improve productivity through automation and nurture innovation.

For Johor, delivering on such plans will be crucial if it is to meet its economic targets. According to the Malaysian Institute of Economic Research, Johor will have to achieve a real annual growth rate of 8.9% a year if it is to meet the government target of a state GDP per capita of RM43,072 ($10,700) by 2020. Historically, the state has grown by an average 4.83% a year, which would mean a GDP per capita of RM32,888 ($8140) by 2020.

The 11MP has a specific focus on regional economic growth. Policymakers have pledged to accelerate investment by streamlining the process and providing more assistance to investors wanting to set up operations in the country’s five regional corridors. In Iskandar Malaysia, which is the southern corridor, housing, improved public transport, skills training and entrepreneur development will remain a priority.

Johor is also likely to benefit from the 11MP’s focus on developing the competitiveness of four key cities nationwide, including Johor Bahru. The four cities were chosen based on their potential in terms of population, GDP contribution, existing infrastructure, concentration of higher learning institutions and geographical location. The “government’s measures in invigorating the services sector, strengthening the Islamic financial market, spurring the creative industry and boosting tourism [will] attract even more high-quality investments into Iskandar Malaysia,” IRDA’s Economics and Investment Division wrote in its BizWatch commentary on the plan.

The 2016 Johor Strategic Economic Growth Plan focuses on economic growth initiatives for the state’s 10 districts, aiming to capitalise on each area’s strengths, while investing in major rail projects, such as the high-speed rail link between Singapore and Kuala Lumpur and a double-tracking project from Johor Bahru to Gemas in Negri Sembilan, further north. The Iskandar Malaysia Comprehensive Development Plan (CDP) II, released at the same time, is designed to ensure that Iskandar Malaysia’s growth is sustainable and inclusive, with wealth not only generated but shared throughout the community. Iskandar Malaysia’s economy is expected to reach RM120.4bn ($29.8bn) in 2025, with an average annual growth rate of 7.5% between 2016 and 2020, accelerating to 7.7% from 2021-25. The report acknowledges that achieving this will require huge investment, estimated at a cumulative RM176bn ($43.6bn) from 2013-22.

Industrial Development

Johor is focusing its development initiatives on industries such as plantations and resources that have long been the foundation of its economy, but it is looking to make such industries more lucrative by nurturing innovations and leveraging Johor’s location to turn it into a global hub for oil, gas and agri-business.

Malaysia is the world’s largest exporter of palm oil after Indonesia, and Johor is the biggest producer of crude palm oil in Peninsular Malaysia, accounting for 29% of output in February 2016, according to the Malaysian Palm Oil Board (MPOB). Plantation firms were among the first to set up refineries at Pasir Gudang, just east of Johor Bahru and the world’s largest terminal for vegetable oils.

Downstream 

The state is focusing on the development of downstream industries using the waste from palm oil production to produce fuels and other products, as part of the federal government’s National Biomass Strategy 2020, which aims to recycle discarded biomass for energy. A biodiesel processing plant built by Universiti Tun Hussein Onn was commissioned in April 2016 and will act as a centre for experimentation in the field.

Locally owned Carotino, which owns plantations in Johor, benefits from the huge area of land given over to palm oil in the state, as well as from its proximity to ports. The company collaborates with the MPOB to develop new products including cooking oils, margarines, animal feeds and chemicals used in detergents. Natural Oleochemicals, which produces the chemicals used in shampoo, soaps and detergents, also has facilities in Pasir Gudang, from whence it ships its products to key customers in Europe, the US, India and China. Across Johor, the company operates three factories with more than 400 employees. Singapore-based Wilmar, the region’s biggest agricultural group, bought Natural Oleochemicals in 2010 from Kulim, the publicly listed plantations business of the state investment company Johor Corporation.

Pasir Gudang is the most eastern extremity of the Iskandar Malaysia development region, which extends to Senai International Airport in the north, Port of Tanjung Pelepas (PTP) on the west coast and includes the state capital, Johor Bahru.

Ports

PTP began operations in 2000, and currently has 14 berths and one of the largest container storage facilities in the region, with the capacity to handle up to 10.5m twenty-foot equivalent units (TEUs) a year. Maersk Line – a partner in the port – Mediterranean Shipping Company, Evergreen Marine and CMA CGM are the four major shipping lines at PTP, which recorded throughput of 9.1m TEUs in 2015, retaining its status as Malaysia’s busiest container terminal. PTP is connected directly to the Second Link between Malaysia and Singapore, as well as to the North-South Highway, which passes through Kuala Lumpur and on to the border with Thailand.

The port is also connected to Malaysia’s rail network, which offers freight connections to southern Thailand, at a time when the government is keen to shift freight from road to rail. PTP has free zone status, and its Distripark, which covers 405 ha is reserved for distribution, logistics, warehousing and manufacturing activities. It currently has 40 companies operating in the zone.

In terms of current developments at the port, Johannes de Jong, CEO of PTP, told OBG, “In the short-term, due to the economic downturn we will focus on having the most up-to-date equipment and enhance our infrastructure rather than expanding the capacity. Singapore is also expanding their transshipment facilities and they have already invested in having the newest technology. Johor is about 35-40% cheaper than Singapore, but we need to provide the same efficiency as Singapore to be the preferred option.”

Meanwhile, Port of Johor, the state’s second port, appears to be developing as a liquid port, which can handle up to seven ships at a time, with direct pipelines running from the refinery to the vessel. Johor Corporation, the state’s investment company, operates Johor’s third port, Tanjung Langsat, near Pasir Gudang, around which it is also developing one of the 31 industrial parks it has planned across the state. As much as 90% of its work is liquid bulk, and the company works closely with MIDA with the goal of creating an integrated refinery, petrochemicals and oil storage hub for the region.

PIPC

Oil-and-gas-based development initiatives are increasingly concentrated around Pasir Gudang. With an estimated value of RM60bn ($14.9bn), Pengerang Integrated Petroleum Complex (PIPC) will include a 24-metre-draught deepwater petroleum terminal sufficient to accommodate both very large crude carriers and ultra-large crude carriers, and was envisaged as Asia’s leading petrochemicals hub.

However, with the recent decline in oil prices reducing revenues at national oil firm Petronas, the project has been delayed until 2019. Within PIPC, the 2000-ha Refinery and Petrochemical Integrated Development (RAPID) includes oil and gas projects worth approximately RM18bn ($4.5bn), the state’s chief minister said in November 2015 when he tabled the state budget. Due for completion in 2019, RAPID is expected to create 4000 permanent jobs, as well as 50,000 opportunities during construction.

Beyond resources, Johor has been able to attract some significant investments. At Senai International Airport, which is controlled by Malaysian conglomerate MMC (which also owns PTP), US firm Hershey’s has invested RM1bn ($247.5m) to build a chocolate factory, creating jobs for 400 people. Most of the chocolate made there will be exported, with just 5% earmarked for the Malaysian market.

Halal Potential

As one of Malaysia’s largest food producers, Johor is also looking to develop its expertise in halal with industrial parks that have been designed to cater to industries following Islamic principles. United Malayan Land is developing the 142-ha Johor Halal Park in a joint venture with Johor Biotechnology & Biodiversity Corporation (J-Biotech). Phase one is likely to be completed in the fourth quarter of 2016, with phase two targeted for 2018.

The global halal industry was worth around $2.5trn in 2015, with Malaysia contributing $12bn. J-Biotech’s CEO, Wan Amir Jeffrey Wan Abdul Majid, told local media in February 2016 that Johor was ideally positioned to develop the halal industry, whether for food, cosmetics or wellness products. Investors from China, Japan and South Korea are among those who have shown interest in the park, focusing on the potential for exports to the Middle East, he said.

Furniture

Johor is also looking to kick-start its furniture industry – another traditional strength – centred around the western port town of Muar, where Johor Corporation is building an industrial park. Malaysia’s furniture exports reached RM9bn ($2.2bn) in 2015, 14% more than in 2014, according to the Malaysian Furniture Council. An estimated 95% of exports come from just three states: Selangor, Penang and Johor. However, the industry says that a federal government freeze on the hiring of foreign workers is damaging the industry with 14 manufacturers based in Johor closing down in 2016.

Concerns over labour do not just affect the furniture industry. While manufacturers on the whole can expect cost savings of 20-30% by choosing Johor – and particularly Iskandar Malaysia – over Singapore, finding suitably skilled workers is a problem, as better-educated people tend to want to work in Singapore, where salaries are higher and there are more opportunities for career advancement.

In Iskandar Malaysia itself, a variety of incentives have been designed to lure not only companies but also individuals. Companies accorded Iskandar Development Region status are able to take advantage of a 10-year tax exemption, while non-Malaysians are allowed 100% foreign ownership and can source capital from anywhere in the world. Eligible expatriates and returning Malaysians in key sectors can apply for a preferential tax rate of 15% on their employment income, which also enables them to purchase a new car tax-free. Specific industries may require additional licences and permits. Over the past decade, property development and manufacturing have attracted the bulk of investment, with RM96.1bn ($23.8bn, 51% of the total) going into property up to November 2015 and RM52.1bn ($12.9bn, 28%) to manufacturing, according to MIDA. Domestic investment accounts for around 60% of total committed investments to Iskandar Malaysia, with Singapore the leading foreign investor until December 2015, when it was overtaken by China. “The cost of living here is still lower,” Amanda Tan, senior business development manager at MSC Cyberport Johor, told OBG. “When Iskandar Malaysia first started they pitched the idea that it was like Shenzhen and Hong Kong. It’s still portrayed that way. It’s a fact in terms of the cost of living and the cost of doing business.”

Education

With Singapore on its doorstep, policymakers are mindful of Johor’s difficulty in retaining talent. Equipping local residents with the skills companies need and providing a conducive environment for highly educated workers is seen as crucial to the state’s development goals. IRDA is working with the Ministry of Education and Ministry of Human Resources to develop talent in Johor and ensure residents have the skills to meet investors’ needs. It is also striving to improve the capability and capacity of local training institutes, which are benefitting from the renewed emphasis on technical and vocational education and training (TVET) at the national level. IRDA is participating in the 1MASTER National Dual Training System and the TVET Employment Carnival, which takes place twice a year. The first event took place in May 2015, with more than 50 companies and 550 prospective employees in attendance.

EduCity, one of the education hubs in Iskandar Malaysia, is designated a National Key Economic Area of the federal government, and hosts six university campuses, including the University of Newcastle Medical School and the University of Reading Malaysia, as well as a number of tertiary training institutes.

Management Development Institute of Singapore (MDIS) is due to open a RM350m ($86.6m) campus in EduCity in 2016, providing training and diplomas in subjects such as hospitality, tourism and business. By 2020 it expects to have 10,000 students. MDIS said it found the EduCity incentives attractive, while its growing numbers of students from the Middle East would be likely to feel comfortable in Malaysia, where a majority of the population is Muslim. International schools and a branch of the UK’s Marlborough College have also opened, broadening the educational opportunities for the children of those who work in Iskandar Malaysia. These schools are also pitched at families from the region who are looking for a high-quality but also competitively priced education.

Health Care

Iskandar Malaysia is also developing initiatives in health care, to cater not only to local residents who need more private hospitals, but also to Singaporeans and others who are looking for affordable but good-quality care. While Malaysia’s health tourism industry has tended to focus on Penang and Melaka, Johor is now seen as an upcoming destination, three times cheaper than in Singapore, according to Sherene Azli, the CEO of the Malaysian Healthcare Travel Council.

The 218-bed Regency Specialist Hospital, part of Singapore-based Health Management International, opened in 2010. The hospital is currently building a 12-storey extension to cater to an expected increase in demand, despite concerns about margins from the drop in the ringgit (making imported products more expensive) and the introduction of a goods and services tax, which is levied on some medical products.

The 300-bed Gleneagles Medini Hospital, a private facility owned by IHH Healthcare, opened in November 2015. With the slowdown in the property market, some developers have decided to orient their projects towards health care. For example, in September 2015 Singapore-based Rowsley revealed plans to turn its 9.23-ha township project, Vantage Bay, into an RM5bn ($1.2bn) health care centre with specialist hospitals, a wellness resort and serviced apartments for medical tourists. Rowsley’s CEO, Lock Wai Han, told The Straits Times that the recalibration made sense because of demographic changes in Malaysia and Singapore, and Malaysia’s increasing attraction as a destination for medical tourism.

Cinematography

Johor has also ventured into the creative industries, with Pinewood Iskandar Malaysia Studios (PIMS). The 20-ha studio facility was chosen as the production base for the Netflix-commissioned show “Marco Polo”, and has also pulled in several other international productions, including “Asia’s Got Talent” and “Lost in the Pacific”. Imaginarium Studios, founded by British actor Andy Serkis, is also due to open a performance-capture centre at Pinewood. More than 2100 jobs have been created through PIMS’s operations since 2014, according to Khazanah Nasional, Malaysia’s sovereign wealth fund, and the state is drafting a “creative development blueprint” that it expects to release in 2016. A campus of Multimedia University offering programmes in the cinematic arts was launched at EduCity in 2016.

Infrastructure & Property

Johor Bahru once had a reputation as a “cowboy” town, but concerted efforts are now under way to transform the narrow streets and old shophouses that make up the city into a modern metropolis with the potential to take up the mantle of Malaysia’s second city.

An RM20bn ($5bn) plan to upgrade the city centre, backed by Johor Corporation, which aims to bring in private investors, was launched in November 2015. The Ibrahim International Business District aims to improve key infrastructure and will include new office towers and complexes linked by elevated pedestrian bridges. Coronation Square will be at the centre of a new business district occupying the site of the old taxi and bus terminal, only a few hundred metres from the Singaporean border. The development will offer a hotel, shopping, offices and a medical facility providing outpatient services to foreign visitors.

Improvements to Johor Bahru, the town of Tanjung Pelepas and Larkin, with a total expected investment of RM13.8bn ($3.4bn), are part of the next phase of development plans, which are expected to be largely driven by the private sector.

The area surrounding Iskandar Malaysia now has a good number of luxury developments, ranging from condominiums to detached homes in gated estates, with a second business and administrative centre taking shape in Nusajaya, where the new government offices are located. Temasek Holdings, Singapore’s sovereign wealth fund, was one of the earliest investors in Iskandar Malaysia. Its interest, through Capitaland, boosted confidence and served to encourage other companies to come in.

Iskandar Malaysia’s planners aim to cluster projects in a total of five zones, establishing new towns and industrial/commercial areas with specific attributes. This means that investors will be required to understand the proposals in order to choose the best location within Iskandar Malaysia for their project, according to EY. By 2025 the area, with its population of around 1.7m, will be a “strong and sustainable metropolis of international standing.”

Prices

The buzz about Iskandar Malaysia helped fuel a surge in property prices. At the end of 2013 the price of residential property in Johor was rising at 25% a year, the fastest pace in the country, even with regulations restricting foreigners to buying property worth RM1m ($248,000) and above.

Measures introduced by the central bank, Bank Negara Malaysia (BNM) to rein in the market coupled with a slowing economy reduced the growth in prices to 6% in the first quarter of 2015, and some projects have been delayed or repositioned. While there is a glut of high-end property, some high-rise condominiums are going ahead, championed mostly by developers from mainland China. Other developers, such as Australia’s Walker Corporation, which is building the riverfront Senibong Cove project, are focusing on low-rise, low-density estates, which they believe are more likely to sell because people buy such houses to live in them rather than to invest.

“The BNM measures regarding housing lending are understandable because they are intended to avoid the formation of a real-estate bubble,” Tay Thiam Song, managing director of property developer Daiman Group, told OBG. “Nonetheless, it has affected the market because people are not buying. So developers are opting to building smaller, more basic and cheaper houses. The margin they get is lower but it is still a selling product.”

One project currently under way is The Forest City development, to be built on a series of man-made islands between Singapore and Johor, close to the Second Link. It is one of the biggest schemes, and was launched in March 2016 (see analysis). The first phase of the development, which is 60%-owned by China’s Country Garden, is expected to be completed in 2018, with prices averaging RM1200 ($297) per sq foot. Other projects include the Astaka Towers, billed as Malaysia’s highest residential towers, due for completion in October 2017. The Singapore-listed company had sold 70% of the 430 units at time of press. Some 90% of their buyers were from Singapore.

Nevertheless, some industry figures feel that demand is more likely to be sustained at the lower-cost end of the market, where Malaysians can afford to buy. Samuel Tan, executive director at KGV International Property, said that property priced between RM250,000 ($61,900) and RM500,000 ($124,000) is likely to do better over the next couple of years. The slowdown in the luxury market, he said, should also help ensure the more sustainable development envisaged under the Iskandar Malaysia CDP II “by balancing the pursuit [of] economic growth with the conscious need for environmental protection and conservation,” adding that any physical development will provide long-term benefits to the community.

Public Transport

Prior to the development of Iskandar Malaysia, Johor already enjoyed strong transport connections through the North-South Expressway, as well as the causeway and the Second Link to Singapore, with tens of thousands of people crossing the border every single day.

Over the past few years the network of express roads has been expanded, with the New Coastal Highway, the Eastern Dispersal Link and the Senai-Pasir Gudang-Desaru Highway significantly reducing journey times in and around Johor.

With plans to turn Johor Bahru into Malaysia’s second city, the new focus is public transport, including free buses and plans for a bus rapid transit system, in addition to a rail transit system link with a terminus in Johor Bahru that would link to Singapore’s mass rapid transit (MRT) on the island. Developers say the extension of the MRT would be a game-changer for Johor. A high-speed rail connection between Kuala Lumpur and Singapore, which will stop in Johor Bahru, is also on the drawing board. Currently, most people fly between the two cities.

Technology

Technology infrastructure is also being improved. High-speed broadband was rolled out in Iskandar Malaysia as part of the National Broadband Initiative in partnership with Telekom Malaysia, the country’s main telecoms firm. MSC Cyberport – a joint venture between the state’s investment arm, Kumpulan Prasarana Rakyat Johor, and Cyberport Holdings – is leading technological development in southern Johor, with plans for an ICT hub around Senai International Airport. Most tech investments in the area so far have been in data and business process outsourcing, with financial services firms like Visa and Citibank setting up call centres. “The advantages for the ICT sector in Johor are: the easy market access to Kuala Lumpur and Singapore, the low talent cost, a multilingual and Commonwealth tradition, and the cheap electricity, which is very important for data centres,” Ramlee Bin Jaafar, CEO of MSC Cyberport Johor, told OBG. “On the other hand, one of the main challenges we are experiencing is that connectivity costs are still not competitive enough.”

Tourism

From the urban edge of Johor Bahru and the outlet shopping complex and theme parks of the Iskandar Malaysia region to tropical getaways such as Tioman Island and the forest of Endau-Rompin, Johor offers a variety of experiences for tourists.

Tioman, off the east coast, was made famous by the 1958 film “South Pacific”, but while there has been development since, and the island is a popular weekend getaway for Singapore residents, it retains much of its laid-back charm.

Indeed, the majority of the islands off Johor’s south-eastern coast in the South China Sea remain low-key vacation getaways, partly because access remains difficult. However, Tioman has a small airport that offers turbo-prop flights to Kuala Lumpur and Singapore, but most of the other islands are accessible only by boat from the town of Mersing.

The major beachfront development in the state is now focused on Desaru in the far south-east, which is now accessible through a highway from Johor Bahru. Themed Attractions Resorts & Hotels, an investment company that is part of Khazanah Nasional, is spearheading the development, called Desaru Coast, and is set to include luxury hotels, retail and lifestyle centres, and a water adventure park. The first hotels are expected to open sometime in 2017.

As of the end of 2015 Johor had 105 hotels – ranging from one- to five-stars – offering 13,381 rooms, a rise of 15% from the year before, State Tourism, Trade and Consumer Affairs Committee of Johor chairman Tee Siew Kiong told the local Star newspaper in March. Nearly 60% are located in state capital Johor Bahru. The occupancy rate was around 63% for the first nine months of 2015, he said.

The number of visitors to the state has been rising steadily since 2012, when Johor recorded 3.9m tourists. It was forecasting 6.7m in 2015. “The region’s tourism sector is underdeveloped. But it also means there is plenty of room for investors and companies in the hospitality sector to make it grow,” Asman Shah Bin Abd Rahman, director of Johor Tourism Department, told OBG. “At the moment, the majority of the tourism is coming from Singaporean travel agents because Singapore functions as a transport hub. However, we are confident that Johor has what it takes to be a stand-alone destination and attract tourists from other markets in Asia.”

State officials expect that the implementation of the e-visa programme for mainland Chinese, which will operate from March 1 to December 31 2016, will boost arrivals from China by about 10%. “The implementation of e-visa and electronic travel registration and information will also encourage China’s nationals in Singapore to visit Johor,” the State Tourism, Trade and Consumerism Committee’s chairman, Tee Siew Kong, told The Malay Mail. “It is understood there are about 1m of them in Singapore, including those doing business, studying or residing there permanently.”

Tee has been leading official trips to China to persuade Chinese to return to Malaysia following the 2014 disappearance of flight MH370 on its way to Beijing. A reality TV show from the mainland was also filmed in Johor as a way of showcasing some of the state’s attractions, including Legoland. Officials are also working with Singapore to develop tour packages that include Johor attractions.

Attractions

Theme parks and family tourism, including shopping, are a significant element of Johor’s tourism potential. Legoland opened a theme park targeted at families with children aged 2-12 in Iskandar Malaysia – its first in Asia – in 2012. It currently has a water park as well as a resort hotel and employs more than 1000 people.

There are also attractions devoted to the Japanese character Hello Kitty, complemented by shopping malls and Johor Premium Outlets, which sells heavily discounted products by international brand names. Swedish furniture giant IKEA will open its first Johor store (its third in Malaysia) by the end of 2017, and the amount of prime retail space in Johor Bahru is expected to more than double by 2018.

Legoland’s success has encouraged other operators to open their own parks, diversifying the offering. There are now four theme parks in the state. The most recent addition – Austin Heights Water and Adventure Park – opened at the end of 2015. The owner, Austin Heights Group, is also building a hotel, a mall and a convention and banqueting hall on the eight-ha site. They are pegged for completion in 2016.

The state is also keen to showcase its natural wonders to visitors. Endau-Rompin National Park along Johor’s northern border with Pahang covers 480 sq km and offers trekking, climbing and rafting in a rain-forest that is home to elephants, tigers and leopards. In the Iskandar Malaysia area, the authorities aim to preserve the mangrove wetlands that attract birds and other wildlife. In Iskandar Malaysia’s development plans to 2025 tourism is identified as one of five major industries, covering areas such as wetland eco-tours, theme parks, culture and heritage, with an estimated total investment value of RM28.9bn ($7.2bn). “We have five national parks in Johor and, therefore, we have the natural environment for the development of ecotourism in the region,” Mohammed Shakib Bin Haji Ali, director of Johor National Parks Corporation, told OBG. “Some of the other regions in Malaysia have seen the results. It is the time for Johor to develop it and promote it further.”

Outlook

As befits a state of its size, the investment opportunities in Johor are hugely varied, ranging from petrochemicals to industrial manufacturing, education, health care and tourism. While most of the attention is focused on the Iskandar Malaysia project and Johor Bahru, the authorities are keen for other parts of the state to benefit from the economic dividends that such major projects should deliver.