SOUTHERN JOHOR ECONOMIC REGION

SOUTHERN JOHOR ECONOMIC REGION:

(Impact of development on Singapore): 8.

Ms Lee Bee Wah asked the Minister for Trade and Industry what is the impact of the development of the Southern Johor Economic Region on Singapore and whether there are any Singaporean investors who have shown interest in any of the projects.

The Minister for Trade and Industry (Mr Lim Hng Kiang): Sir, based on the Comprehensive Development Plan (CDP) for South Johor released by Malaysia last November, we understand that the development of the South Johor Economic Region (SJER) - or Iskandar Development Region (IDR) as it is also known - will cover an area of some 2,217 square kilometres. Under the development plan, various growth pillars and key projects have been identified for the region. The main sectors slated for development include electrical and electronics, petrochemicals and oleochemicals, food and agro processing, health and education services, and tourism, while major projects will include theme parks, residential areas and new administrative centres.

These plans to develop South Johor into a vibrant area of growth offer opportunities for our companies to invest in Johor and to build on the complementarities between Singapore and Johor.

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A thriving economic region right next to Singapore will also allow us to enhance our value proposition to international investors and to sharpen our competitive edge vis-a-vis other economies like China and India. The Johor-Singapore combination is already regarded by MNCs as a competitive proposition for a wide range of economic activities and, therefore, IDR would strengthen this winning partnership.

Our companies are keenly monitoring developments for opportunities. Although we are not aware of any concrete indications on specific projects, this could be because the IDR initiative is still in the early stages.

Ms Lee Bee Wah (Ang Mo Kio): Sir, I would like to ask the Minister if he has read the remarks by Johor MB Abdul Ghani and a couple of other Malaysian politicians. If so, what advice does he have for Singapore companies thinking of investing in the South Johor Economic Region?

Mr Lim Hng Kiang: I think any Singapore company wishing to invest overseas will have to weigh the country risk of the country that they are investing. I think most countries welcome foreign investors but, as we all know, there are different levels of welcome.

The Johor Menteri Besar, Abdul Ghani was reported as saying that the IDR project was capable of drawing investors on its own and was not dependent on Singapore's involvement. Later on, he clarified that, in fact, the Johor Government does not discriminate against any investors and that Johor welcomes all investments into the IDR including Singapore.

When we try to work out investment guarantee agreements for Singapore

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companies, we do realise that there are different levels of welcome. At the basic level, of course, you do not want Singapore companies to be discriminated against. At the next level of welcome, you do want all foreign companies to be treated equally. Then, at the third level, of course, we try to get some advantages for our Singapore companies through bilateral agreements, for example, through FDA. And, of course, ultimately, if we can have Singapore companies to be granted national treatment, as though they are local companies, that, of course, is the ideal arrangement. So I think Singapore companies venturing overseas will have to evaluate the country risk and also what is the treatment given to them.

Ms Lee Bee Wah: Sir, I would like to ask the Minister: has the Johor MB sent any clear signal to our Singapore companies that they are indeed welcome?

Mr Lim Hng Kiang: Sir, I think it has been reported that Minister Mah, together with some of our officials, went up to South Johor recently and received a briefing by the South Johor and the Federal authorities on this development plan. We are still waiting for specific proposals from the Malaysian side. Of course, we will communicate this to our companies.

Ms Irene Ng Phek Hoong: Sir, several years ago, there was a SIJORI scheme, where the Singapore, Johor and Riau cooperated together to try to create an economic cooperation among the three partners to achieve a win-win-win situation for all. I wonder whether it is possible to revive that sort of spirit amongst the three countries and whether we can have greater cooperation to achieve better progress for our people.

Mr Lim Hng Kiang: The economic fundamentals of SIJORI are still there, ie, the complementarities of Singapore with Johor, as well as Singapore with Batam,

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Bintan and Karimun (BBK). These are fundamental economic conditions which enhance our competitiveness and are valid today as they were many years ago. For example, we continue to work with our Indonesian counterparts to promote the SEZ concept for BBK. And we also work with our Malaysian counterparts to promote the complementarities of Johor and Singapore to foreign investors.

As I mentioned in my reply earlier, many MNCs look at Johor and other parts of Malaysia and Singapore as a fairly compelling value proposition in the way they organise their value chain and in the way they organise their production. They believe that is the way in which we can compete with China and India. That is the reason why we have been able to attract the kind of investments that we are attracting to Singapore, more than $8 billion each year.

So the fundamental value proposition of Johor, Singapore or Singapore-BBK is still there and we continue to promote ourselves in that way.