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Section A Framework for Comprehensive Development
Economic Development Strategies
Part 2 Development Strategies
CHAPTER 4
4chapter
4 - 1
Economic Development Strategies
4.1 Introduction
This chapter outlines the economic development framework and
strategies. The main focus of the economic component is on the
macroeconomic framework. The chapter should also be read
particularly in conjunction with chapter 5 on Social Development
Strategies. Detailed proposals of the development strategies described
here and the various strategic initiatives are also contained in the
Economic and Social Development Plan (ESDP) for SJER.
4.2 Macroeconomic Framework
A. SJER Population
The current population of SJER is estimated at 1.35 million or
approximately 43% of the Johor state population which stood at
3.17 million in 2005 (Figure 4.1). SJER has a multicultural society, with
the Malays representing the majority at 48%, the Chinese as the next
largest ethnic group at 36%, the Indians as a minority group at 9.4% and
followed by foreign immigrant workers, estimated at 6.6% (Figure 4.2).
SJER’s population is relatively young with those aged 15 years and
below forming about 30% of the SJER population. The population in SJER
is also well represented by the working-age population which accounts
for 66% of the area’s population (Figure 4.3).
B. SJER Economic Structure
The total GDP (at PPP) of the SJER is estimated at USD20 billion in
2005, or approximately 60% of Johor’s GDP (Figure 4.4). This translates
into a current GDP per capita of about USD14,790 for SJER, which is
higher than the Johor GDP per capita (Figure 4.5) but is only half of
Singapore’s.
The two main pillars of the SJER’s economy are services and
manufacturing, with services as the dominant sector, contributing about
half of the total GDP of SJER. Within the services sector, wholesale and
retail trade is the largest component with a share of 43%, followed by
tourism and hospitality at 17% and professional and business services
with a share of 15% (Figure 4.6).
The manufacturing sector is relatively large with a share of 45% of SJER’s
total GDP in 2005. It is dominated by electrical and electronic industries
(E&E) at 32%, followed by chemical and chemical products industries
at 12% and food and beverages industries at 11%. These, combined
with logistics and related services are the main economic drivers in SJER
currently.
An estimated 70% of total manufacturing establishments in Johor or
some 4,266 establishments are located in SJER (Figure 4.7). The majority
of them, or about 60%, are located within the Special Economic
Corridor (SEC) (Figure 4.8).
Figure 4.1: SJER Population Size (2005) – National And Regional Comparison
30,000.026,748.1
25,000.0
20,000.0
15,000.0
10,000.0
5,000.0(000, )
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
4,500.0
5,000.0
(000, )
Malaysia
4,234.0
1,353.2
3,170.0
Johor State SJER Singapore
Source: Projected from Census (2000) figures
4 - 2
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
Figure 4.2: SJER Ethnic Composition (2005) – National and Regional Comparison
SJER
Malay, 48.2
Indian, 9.4Foreigners, 6.6
Chinese, 35.8
Malaysia
Malay, 61.0
Indian, 7.0Foreigners, 9.0
Chinese,24.0
Singapore
Chinese, 62.75
Malay, 11.36
Indian, 6.45
Foreigners, 18.3Other, 1.14
Johor State
Malay, 54.0
Indian, 7.0Foreigners, 6.0
Chinese, 32.0
Figure 4.3: Composition of Age Structure (2005) – National and Regional Comparison
SJER
<15 years 15-64 years >64 years
3.1%30.5%66.4%
Malaysia
<15 years 15-64 years >64 years
4.3%32.6%63.1%
Johor State
<15 years 15-64 years >64 years
4.4%31.9%63.7%
Singapore
<15 years 15-64 years >64 years
8.1% 16%
75.9%
Source: State/ District Data Bank 2005 Source: State/ District Data Bank 2005
Source: Ninth Malaysia Plan Source: Singapore Statistic (Sing-Stat)
Source: State/ District Data Bank 2005 Source: State/ District Data Bank 2005
Source: Ninth Malaysia Plan Source: Singapore Statistic (Sing-Stat)
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 3
Figure 4.4: Total GDP (2005) – National and Regional Comparison (in USD Billion PPP)
276.0
20.033.4
127.0
�
��
���
���
���
���
���
Malaysia (a) JohorState (b)
SJER (b) Singapore (c)
Source: (a) Ninth Malaysia Plan (9MP) (b) Converted from UPEN-Johor GDP figures (c) International Monetary Fund/ IMF Database
Figure 4.5: GDP per Capita (2005) – National and Regional Comparison (in USD PPP)
USD(PPP)
Malaysia JohorState
SJER Singapore
10,757.0
14,790.0
29,937.0
10,318
0
5000
10000
15000
20000
25000
30000
Source: (a) Ninth Malaysia Plan (9MP) (b) Converted from UPEN-Johor GDP figures (c) International Monetary Fund/ IMF Database
Figure 4.6: Economic Structure (2005) – GDP by Major Economic Sectors
Services Sector50.0%
Manufacturing47.0%
GDP by Major Sectors In SJER, 2005
Agricultural3.0%
ServicesSector6.6%
Professional& Business
14.6%Wholesale and Retail
42.6%
Value Added of Services Industries in SJER, 2005
Transportrelated13.3%
MedicalEducational
6.1%
Tourism &Hospitality
16.8%
Value Added of Manufacturing Industries in SJER, 2005
Electronics andelectrical products
32.1%
Chemical andchemical product
12.1%
Food andbeverages
11.2%
Others44.6%
Source: SJER CDP 2025
4 - 4
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
Figure 4.7: SJER: Concentration of Manufacturing Establishments in SJER and outside SJER (2005)
76.42 76.03
63.66
47.7638.85 37.70
23.58 23.97
36.34
52.2461.15 62.30
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Chemicals andChemicals Products
Electrical and ElectronicProducts and
Machinery
Rubber and PlasticsProducts
Other Non-Metallic Food Products andBeverages
Fabricated MetalProducts and
Machinery
(%)
Johor Bahru Rest of Johor
Source: Johor Corporation, 2005
Figure 4.8: Percentage Distribution of Manufacturing Industries in SJER, 2005
Pulau Pulau Pulau Pulau Pulau Pulau Pulau Pulau Pulau UbinUbinUbinUbinUbinUbinUbinUbinUbin
Pulau Pulau Pulau Pulau Pulau Pulau Pulau Pulau Pulau TekongTekongTekongTekongTekongTekongTekongTekongTekong
Pasir GudangPasir GudangPasir GudangPasir GudangPasir GudangPasir GudangPasir GudangPasir GudangPasir Gudang
TG. LANGSATTG. LANGSATTG. LANGSATTG. LANGSATTG. LANGSATTG. LANGSATTG. LANGSATTG. LANGSATTG. LANGSATINDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL
AREAAREAAREAAREAAREAAREAAREAAREAAREA
Proposed Senai-Desaru ExpresswayProposed Senai-Desaru ExpresswayProposed Senai-Desaru Expressway
Proposed Senai-Desaru ExpresswayProposed Senai-Desaru Expressway
Proposed Senai-Desaru ExpresswayProposed Senai-Desaru ExpresswayProposed Senai-Desaru Expressway
Proposed Senai-Desaru Expressway
KOTA TINGGIKOTA TINGGIKOTA TINGGIKOTA TINGGIKOTA TINGGIKOTA TINGGIKOTA TINGGIKOTA TINGGIKOTA TINGGIDISTRICTDISTRICTDISTRICTDISTRICTDISTRICTDISTRICTDISTRICTDISTRICTDISTRICT
To Kota TinggiTo Kota TinggiTo Kota TinggiTo Kota TinggiTo Kota TinggiTo Kota TinggiTo Kota TinggiTo Kota TinggiTo Kota Tinggi
Ulu T iramUlu T iramUlu T iramUlu T iramUlu T iramUlu T iramUlu T iramUlu T iramUlu T iram
T ampoiT ampoiT ampoiTampoiTampoiTampoiTampoiTampoiTampoi
JOHOR JOHOR JOHOR JOHOR JOHOR JOHOR JOHOR JOHOR JOHOR BAHRUBAHRUBAHRUBAHRUBAHRUBAHRUBAHRUBAHRUBAHRUT OWNT OWNT OWNT OWNT OWNT OWNT OWNT OWNT OWN
North-South Expressway
North-South Expressway
North-South Expressway
North-South Expressway
North-South Expressway
North-South Expressway
North-South Expressway
North-South Expressway
North-South ExpresswayKulaiKulaiKulaiKulaiKulaiKulaiKulaiKulaiKulai
KULAI KULAI KULAI KULAI KULAI KULAI KULAI KULAI KULAI INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL
AREAAREAAREAAREAAREAAREAAREAAREAAREA
SENAI SENAI SENAI SENAI SENAI SENAI SENAI SENAI SENAI INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL INDUSTRIAL
AREAAREAAREAAREAAREAAREAAREAAREAAREA
SENAISENAISENAISENAISENAISENAISENAISENAISENAIAIRPORTAIRPORTAIRPORTAIRPORTAIRPORTAIRPORTAIRPORTAIRPORTAIRPORT
PONTIAN PONTIAN PONTIAN PONTIAN PONTIAN PONTIAN PONTIAN PONTIAN PONTIAN DISTRICTDISTRICTDISTRICTDISTRICTDISTRICTDISTRICTDISTRICTDISTRICTDISTRICT
Pontian Tow nPontian Tow nPontian Tow nPontian Tow nPontian Tow nPontian Tow nPontian Tow nPontian Tow nPontian Tow n
Pekan NanasPekan NanasPekan NanasPekan NanasPekan NanasPekan NanasPekan NanasPekan NanasPekan Nanas
SenaiSenaiSenaiSenaiSenaiSenaiSenaiSenaiSenai
SkudaiSkudaiSkudaiSkudaiSkudaiSkudaiSkudaiSkudaiSkudai
PulauPulauPulauPulauPulauPulauPulauPulauPulauKukupKukupKukupKukupKukupKukupKukupKukupKukup
PTPFREE ZONE
NUSA NUSA NUSA NUSA NUSA NUSA NUSA NUSA NUSA JAYAJAYAJAYAJAYAJAYAJAYAJAYAJAYAJAYA
To Air HitamTo Air HitamTo Air HitamTo Air HitamTo Air HitamTo Air HitamTo Air HitamTo Air HitamTo Air Hitam
KLUANGDISTRICT
To KualaTo KualaTo KualaTo KualaTo KualaTo KualaTo KualaTo KualaTo KualaLumpurLumpurLumpurLumpurLumpurLumpurLumpurLumpurLumpur
13.55
46.77
23.659.52
0.120.05
0.02
6.32
MUKIMSUNGAIT IRAM
MUKIMPLENT ONG
MUKIMBANDAR
MUKIMT EBRAU
MUKIMSENAI-KULAI
MUKIMSEDENAK
MUKIMPULAI
MUKIMJERAMBATU
MUKIMJELUT ONG
MUKIMT ANJUNGKUPANG
MUKIMSUNGAIKARANG
MUKIMSERKAT
PTPPTPPTPPTPPTPPTPPTPPTPPTPZONEZONEZONEZONEZONEZONEZONEZONEZONE
PASIR PASIR PASIR PASIR PASIR PASIR PASIR PASIR PASIR GUDANGGUDANGGUDANGGUDANGGUDANGGUDANGGUDANGGUDANGGUDANG
ZONEZONEZONEZONEZONEZONEZONEZONEZONE
MBJB MBJB MBJB MBJB MBJB MBJB MBJB MBJB MBJB ZONEZONEZONEZONEZONEZONEZONEZONEZONE
NUSAJAYANUSAJAYANUSAJAYANUSAJAYANUSAJAYANUSAJAYANUSAJAYANUSAJAYANUSAJAYAZONEZONEZONEZONEZONEZONEZONEZONEZONE
SKUDAISKUDAISKUDAISKUDAISKUDAISKUDAISKUDAISKUDAISKUDAIZONEZONEZONEZONEZONEZONEZONEZONEZONE
PONTIANPONTIANPONTIANPONTIANPONTIANPONTIANPONTIANPONTIANPONTIANZONEZONEZONEZONEZONEZONEZONEZONEZONE
SENAI-SENAI-SENAI-SENAI-SENAI-SENAI-SENAI-SENAI-SENAI-KULAIKULAIKULAIKULAIKULAIKULAIKULAIKULAIKULAIZONEZONEZONEZONEZONEZONEZONEZONEZONE
TEBRAUTEBRAUTEBRAUTEBRAUTEBRAUTEBRAUTEBRAUTEBRAUTEBRAUZONEZONEZONEZONEZONEZONEZONEZONEZONE
6.32
Note : SJER - South Johor Economic Region
SEC - Special Economic Corridor
Source : Laporan T eknikal Sektor Perindustrian,Rancangan Tempatan Daerah Johor Bahru, 2003;
501-1000
101-500
<100Circle Scale
1001-1500
1501-2000
LegendProposed South Johor Economic RegionProposed Special Economic Corridor (SEC)Proposed Development Sub-Zone
Major Road
Proposed Highway/ Major Road
Mukim BoundaryPercentage of Existing Manufacturing Industries
Percentage of Manufacturing Industries
Area %
Within SEC 60.45
Outside SEC 39.55
Total Within SJER 100.00
Scale
0 km 5 km 10 km
Source: SJER CDP 2025
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 5
4.3 Global and Regional PerspectivesA. Global Perspectives
The world economy is expected to grow at an average of 4.9% in 2006
and global economic growth is expected to be sustained at 4.6% per
annum over the period between 2008 to 2011.
Future world output growth is expected to be driven by improved
productivity growth in the advanced economies and continued robust
growth in the developing countries. Developing countries are expected
to achieve an average annual growth rate of 6.3% where many are
expected to undergo internal restructuring, institutional and regulatory
adjustments. In contrast, the more advanced economies are expected
to grow by an average 2.8% annually. World population has reached
6.5 billion in 2000 and is expected to rise to 7.9 billion by 2025 according
to the United Nations (Figure 4.9).
B. Global Foreign Direct Investments (FDIs)
Global FDI inflows have risen by 2% from USD632.6 billion in 2003 to
USD648 billion in 2004 (UNCTAD, World Investment Report 2005). While
FDIs to developed countries declined by 14%, inflows to developing
Figure 4.9: Prospects for World Population Growth, 2025 (in million people)
countries rose by 40% to reach USD233 billion in 2004. The key recipients
of global FDIs are the USA, UK and China.
FDI into the Asia-Pacific region recorded a significant annual increase
of 55% in 2004. The increase was attributed to an overall favourable
conditions in Asia, particularly in China and India. China, Hong Kong
and Singapore are the key recipients albeit with the trend of inward
FDIs being unevenly distributed continuing. China has been the most
significant destination for FDIs over the past five years.
C. Asian and ASEAN Perspectives
Growth in the Asian region is expected to be robust, fuelled by
economic growth in China and India. China is projected to grow by
9.0% to 9.5% annually and India at 7.3% annually in the medium term.
Economic growth in the Association of Southeast Asian Nations (ASEAN)
region has benefited its members, and this is reflected in the rise of
real income in each country. Malaysia stands out with the highest per
capita income at purchasing power parity (excluding Singapore which
is considered a developed economy) (Figure 4.10).
812.5
31
2000
3675.8
315
522.9
728.5
905.9
33.1
2005
3905.4
330.6
561.4
728.4
1006.9
35
2010
4130.4
346.1
598.8
725.8
1228.3
38.9
2020
4553.8
375
667
715
1344.5
40.8
2025
4728.1
388
696.5
707.20%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Europe North America Asia Africa Oceania
Source: UN, Dept of Economic and Social Affairs, Population Division, World Population in 2003 (New York 2004)
4 - 6
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Chi
na
Hong
Kon
g
GN
I per
cap
ital (
USD
) (PP
P)
Sing
apor
e
Kore
a
Mal
aysia
Thai
land
Ind
ones
ia
Philip
pine
ss
Ind
ia
0
2003 2004
billion in 2004, representing an average annual growth rate of 7.4%.
D. ASEAN, AFTA and Other FTAs
The ASEAN Free Trade Area Agreement (AFTA) is one of the many
bilateral and multilateral trade arrangements arising from world trade
liberalisation. Through AFTA, the ASEAN countries have been easing
towards complete trade liberalisation, with tariffs brought down to
five or zero percent for a wide range of products among the ASEAN 4
countries in 2005.
ASEAN is also forging ahead with bilateral trade agreements with
countries outside ASEAN. One such arrangement is the ASEAN+3 (China,
Korea and Japan) economic and trade cooperation. It has led to a
Framework Agreement between ASEAN and the Republic of Korea,
expected to come into effect in 2006.
During the period 2006-2007, the newly industrialised countries in Asia
are expected to experience strong growth of between 4.5% and 5.2%
annually. The ASEAN 4 countries (Indonesia, Malaysia, Philippines and
Thailand) are also expected to sustain growth at more than 5% per
annum in 2006 and 2007. Within ASEAN, Malaysia is expected to grow
at 6% annually over the 2005-2020 period as a result of growth in the
agricultural, manufacturing and services sectors.
ASEAN accounts for 4% of global FDI flows in 2004. Singapore is the main
recipient; taking 62% of FDIs into ASEAN, with Malaysia coming second
with an 18% share, and Vietnam in third at 6.3%.
The volume of trade (exports and imports) between ASEAN and the
world rose from USD589 billion in 2000 to USD763 billion in 2004, showing
an annual average growth rate of 6.7%. Within ASEAN, trade volume
has also increased tremendously from USD167 billion in 2000 to USD222
Figure 4.10: Gross National Income Per Capita (USD) (PPP) of Selected Asian Countries, 2003 & 2004
Source: World Bank, ‘World Development Report’, 2005 and 2006
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 7
Others trade agreements include the ASEAN-Japan Comprehensive
Economic Partnership, which commenced in April 2005, and the
Framework Agreement for an ASEAN-China Free Trade Area (ACFTA)
in 2002. Since 2003, ASEAN trade with China has been growing rapidly,
exceeding the USD100 billion mark in 2004.
ASEAN is also actively looking at establishing other economic ties with
more countries. Among them are Russia and India. The first ASEAN-
Russian Federation Summit was held in December 2005, and the ASEAN-
India Free Trade Area (AIFTA) is currently under negotiations.
The US is also interested in setting up bilateral FTAs with individual
countries of ASEAN in view of the fact that two-way trade between
ASEAN and the US has increased considerably to USD123 billion in 2003.
Thailand is among the first to do this (2004), followed by Singapore
(2005) while Malaysia began negotiations in 2006.
4.4 The Singapore – Indonesia Factor
Johor’s closest international neighbours are Singapore and Indonesia.
The development within these countries will have significant impact on
the development of SJER.
A. Singapore
Singapore is now one of Asia’s most developed economies. It has an
estimated population of about 4.2 million (2005) and a GDP of USD127
billion (at PPP). Its per capita GDP is estimated at USD29,936 in 2005, or
almost three times that of Malaysia at USD10,318.
The strategic thrusts of Singapore’s economy are all geared towards
orientating it to the global arena as well as to enhance human
resources, to nurture innovation, to promote national teamwork, and
to reduce economic vulnerability. To achieve this goal, Singapore
has adopted the cluster strategy in its development thrust into the 21st
century, emphasising the need to develop high-tech and high value-
added manufacturing and services sectors to be the twin engines of
growth.
It has developed a world-class transportation and telecommunications infrastructure, facilities and services to link the city-state with major cities
and ports in the region and throughout the world. Key industry clusters that it is pursuing include electronics, engineering, chemicals, life sciences, education and healthcare, communications, media, leisure and tourism, transportation and logistics.
Population growth prospects for Singapore indicate that its current population would rise to 5.4 million by 20251. Its GDP is targeted to grow at between 3.7% per annum to 4.6% per annum from now to 2025, implying its GDP in USD (PPP) could reach USD262 billion to USD312 billion by 2025. This would translate to per capita GDP of USD57,800 at current prices.
Singapore has nearly reached the physical limits of both sea-front land and sea space. Its strategy is believed to be to transfer the development of its more labour and land intensive and lower value added industries to Johor and Batam, mainly through the growth triangle (IMS-GT) and the Johor-Singapore-Indonesia (JSI) node. This would enable it to take advantage of the much larger land resources offered by Johor and Indonesia (primarily Riau Islands).
B. Indonesia
Indonesia has the largest population and economy in ASEAN, making it an important factor for Johor and SJER in their future growth directions. At present, Indonesia is an important source of labour supply for Johor’s manufacturing and services sectors. Scope for future cooperation could lie in logistics, especially in the development of air links between Sumatra and Senai and in other growth areas such as tourism, agro-processing, construction and port services.
Indonesia’s population of 223 million in 2005 is expected to rise to 280 million in 2025. Its’ GDP of USD899 billion (at PPP) in 2005 is targeted to grow at 6% per annum to reach USD2,829 billion by 2025. By then, its per capita GDP is expected to rise from USD3,700 to USD10,000.
Of interest to Johor is the forging of stronger economic ties with Batam and Bintan Islands and other parts of Riau province and the rest of central and Southern Sumatera.
1 Recent reports indicated that this target population has been raised to 6-7 million by 2020.
4 - 8
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
4.5 National and State Perspectives
A. National Population
Malaysia’s national population of 26.75 million (2005) is expected to
increase to 28.96 million in 2010 and to 39.5 million by 2025 (Figure 4.11).
The projected average annual growth rate between 2000 and 2010 is
2.1%. While there is no official projection for Malaysian population for
year 2025, it is assumed that the growth rate between 2005 to 2025 will
on average be 2.0% as the natural growth rate is expected to decline.
But as the proportion of foreign population in Malaysia is expected
to increase, especially among the more skilled professional and
managerial category, the 2.0% percent growth rate seems reasonable.
Labour force is estimated at 11.29 million in 2005 and is projected to rise
to 12.41 million in 2010, supported by a higher labour force participation
rate of 67.3% as opposed to the current rate of 66.7%. The higher overall
rate is due to increased male and female labour force participation
rates.
In the long term, the overall participation rate could reach 70%,
supported by a continuously rising female labour force participation
rate. Employment is expected to rise at an average annual rate of 1.9%
to reach 17.2 million in 2025. A total of 5 million new jobs would have to
be generated to meet demand for employment.
Figure 4.11: Long-Term Prospects in the Supply and Demand for Labour in Malaysia, 2005-2025
11,290.512,406.8
17,814.016,880.0
18,420.0
23,678.026,748.1
28,960.0
39,549.3
3.5 % 3.5 % 4.0%
17,173.0
11,976.010,894.8
-
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
30,000.0
35,000.0
40,000.0
45,000.0
2005 2010 2025
(in '0
00)
Unemployment Employment Labour Force Working Age Population Population
Source: SJER CDP 2025
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 9
4.6 National Economic Structure
The Malaysian economy registered real GDP growth of 5.3% in 2005,
brought about by a strong growth of 7.3% in the services sector. A major
contribution to the growth came from the expansion of the tourism
industry which impacted strongly on the wholesale and retail trade and
on the hotels and restaurants sub-sectors.
The Ninth Malaysia Plan has targeted an average annual economic
growth rate of 6% up to 2010. Although long term national growth
targets are unclear given global uncertainties and risks, the government
is likely to aim for an achievable growth scenario in the long term. A
possible target growth rate of 6% could be assumed from 2011 to 2025.
A. Johor State Population
The current Johor state population of 3.17 million is relatively young, with
median age estimated at 25 years. Dependency ratio is also low at 57%,
indicating a sizeable working population capable of supporting the
young and the aged in the state.
Ethnic composition shows that Bumiputeras made up 54% of the
population; the Chinese 32%, Indians 7% and non-citizens, 6%. The
state population is expected to rise to 3.5 million in 2010. By 2025, the
state population is projected to increase to 5 million. This represents
an average growth rate of 2.3% which means that the growth rate for
the 2000 to 2010 period will be sustained by natural growth rate and in
migration from within and outside Malaysia.
Employment is targeted to rise from 1.3 million in 2005 to 2.21 million by
2025. The rate of growth is higher in Johor at 2.9% per annum compared
to the national growth rate. The labour force would increase to 2.28
million as a result of rising labour force participation rate in Johor.
Figure 4.12: Long-Term Prospects in Demand and Supply of Labour Force in Johor, 2005-2025
2,213.4
3,182.63,170.03,460.0
5,000.0
3.0% 3.2% 3.6%
1,468.01,262.8
2,281.9
1,309.81,516.0
2,262.72,019.5
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
2005 2010 2025
(in '0
00)
Unemployment Employment Labour Force Working Age Population Population
Source: SJER CDP 2025
4 - 10
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
B. Johor Economic Structure
Johor achieved a GDP growth rate of 8.1% in 2004 and 6.5% in
2005. Both the manufacturing and services are key sectors of equal
importance in the state economy. Future trends indicate that services
will emerge as the largest source of GDP growth in Johor.
Between 2001 and 2005, Johor received manufacturing investment
proposals totalling RM19.0 billion, of which approximately 70% were to
be located within the SJER. Between 1994 and 2005, the average ratio
of FDI to total investment was 70%. These manufacturing investments
(2001-2005) are expected to generate a total of 117,993 new jobs.
Johor aims to be fully developed by 2020. This is to be achieved through
structural transformation. Services would increase its share to more than
56% while that of manufacturing would decrease from the current share
of 44% and stabilise at 37% by 2025 (Figure 4.13).
The target growth rate of Johor GDP for the period 2005-2025 is 7%
although under the Ninth Malaysia Plan period (2006-2010), its economy
is targeted to increase at 6.2% per annum. Under this growth scenario,
its per capita GDP would more than double, rising from USD10,800 in
2005 to USD25,800 by 2025.
Over the longer term it is expected that Johor’s GDP will grow above
the national average growth rate. Its share of national gross output
meanwhile is also expected to rise from 12.4% in 2005 to 14.9% in 2025.
4.7 SJER Economic Structure
The two main economic growth sectors in SJER currently are
manufacturing and services.
The key sectors in the manufacturing sector that drives the SJER
economy are electrical and electronic (E&E), chemical and chemical
products (petrochemical, plastics, oleo chemicals) and food processing
sub-sectors (Figures 4.14 and 4.15). They contribute 60% of the total
value-added in manufacturing.
The electrical and electronic sector (E&E) is the dominant sector
with the highest concentration of workers among the main industrial
sectors. It alone accounts for about 50% of the total value added of the
manufacturing sector within SJER.
Spatial distribution of manufacturing clusters in SJER shows that the E&E
cluster is dispersed from Tebrau, Majlis Bandaraya Johor Bahru (MBJB),
Pasir Gudang, Senai-Kulai and Skudai zones while the petrochemical
industries are concentrated in Pasir Gudang and MBJB zones.
The oil palm processing and oleo-chemical industries are highly
concentrated in Pasir Gudang and the other chemical industries are
found mainly in Pasir Gudang, Tebrau and MBJB zones.
The plastic industries and food processing industries are dispersed in
Tebrau, MBJB, Senai-Kulai, Pasir Gudang and Skudai-Kulai zones.
In the services sector, the key sectors are international logistics and
related services, tourism and related services. Tertiary education and
international medical services are already in existence and do export
their services to other parts of the state and the country and overseas.
But their influence on SJER’s economy at present is rather limited. The
educational and health service industries have the potential of being
developed into major drivers to the SJER’s economy.
These key sectors lead to the emergence of supporting or induced
sectors such as retail, wholesale, hotels, restaurants and finance. In
manufacturing, the induced sectors include fabricated metal products,
non-metallic products and transportation equipment.
Figure 4.13: Comparison of Long-Term Structural Changes in GDP of Malaysia and Johor, 2025
100%90%80%70%60%50%40%30%20%10%0%
Malaysia Johor
67.6%
24.2%
8.0%
56.1%
37.3%
6.6%
Primary Secondary Services
Source: SJER CDP 2025
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 11
Figure 4.14: Key Drivers and Induced Sector Activities in SJER Economy
Aa1 Electrical/Electronica2 Chemical and Chemical Productsa3 Food Processing
60 (%)
KEY SECTORS (Exporting)
Bb1 Logistic and related servicesb2 Tourismb3 Tertiary Educationb4 Specialist Medical services
30 (%)
SUPPORTING AND INDUCED SECTORS(Local Market)
Cc1 Fabricated Metal Productsc2 Non-Metallic productsc3 Transport Equipmentc4 Publishing, Printing and Paper Productsc5 Wood Products and Furniturec6 Clothingc7 Others
40 (%)
Dd1 Retail and wholesale traded2 Financed3 Constructiond4 Utilitiesd5 Local Governmentd6 Primary and Secondary Educationd7 Health servicesd8 Professional business and domestion services
70 (%)
Source: SJER CDP 2025
4.8 Strategic Economic Thrusts (SET)
A combination of seven strategic economic development thrusts is
needed to accelerate growth of SJER during the CDP period. The thrusts
are as follows :
SET 1. Strengthen the Existing Main Economic Drivers and Diversity Into
New Economic Growth Sectors
SET 2. Strengthen Supporting Industries and the Basic Foundation
SET 3. Strengthen International Linkages
SET 4. Build on Existing Strength in Respect of Resource Endowment and
Lever on Singapore’s Strength
SET 5. Optimise Spatial Distribution of Economic Activities
SET 6. Adopt the Cluster Approach
SET 7. Provide the Right type of Incentives and Support
SET 1. Strengthen the Existing Main Economic Pillars and Diversify Into New Growth Sectors
Diversification shall be achieved by including four additional ‘pillars’
to further strengthen the main ’pillars’ as shown in Figure 4.15. This is to
attain greater long term growth and stability for the SJER economy. The
four new ‘pillars’ are proposed to be healthcare, educational services,
financial services and creative industries (Figure 4.15).
Increase in both local and foreign direct investment (FDI) into the
existing and new main pillars is required. While before 1986, the official
policy was to attract FDI by offering incentives based on employment
and investment size, the Promotion of Investment Act of 1986 began to
emphasise technological upgrading.
Now, with the tightening of the labour market and the need to
enhance competitiveness in a more globalised market through increase
in productivity and rapid movement up the value chain, the Ninth
Malaysia Plan currently places emphasis on driving innovation through
the application of knowledge and technology. Accordingly, the FDI
that the government now wishes to attract are those that are able to
bring high technology, drive innovation and increase productivity.
Local entrepreneurs, including SMEs must play a major role in the
development of SJER. Large local companies and SMEs need to
synergise with one another as well as with the large multinational
companies (MNCs) and SMEs. SMEs are required to build the supply
chain requirements of both MNCs and large local companies within
SJER.
4 - 12
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
Figure 4.15: Present and Future Structure of SJER Economy
Stable political, social environment
Excellent working and living environment
Excellent physical, infrastructures, including IT
World-class professionals and technical work force
Strong supporting industries (education, R&D, government, private and social institutions, communication andcoordination system )
Strong supporting industries (metal products, engineering, non-metallic, manufacturing related services (MRS))
Electricaland
electonics
Petrochemical
andoleo
chemical
Food andagro
processing
Logisticand
relatedservices
Tourism Healthservices
Educationalservices
Financialservices
ICT &Creativeindustries
SJER Economy
“Strong, Diversified, Dynamic and Global”
(Five existing “Pillars” shall be reinforced)
The Vision
TheMain
Pillars
Supportsysterm
BasicFoundation
(Four new “Pillars” to be added)
Source: SJER CDP 2025
Soft infrastructure includes skilled human resources, good public safety,
good governance, law and order, quality environment and other
amenities that improve the overall quality of the business, working
and living environment. The hard infrastructure refers to public utilities,
transportation network, etc.
With respect to the ’hard’ infrastructure provision, a vital component is
the enhancement of international connectivity, especially in respect
of air transportation. While progress continues to be achieved at Senai,
to reach a critical mass in terms of international connectivity will be
attained only over a relatively long period. As such, the enhancement
SET 2. Strengthen Supporting Industries and the Basic Economic Foundation
The main pillars of the economy are underpinned by numerous
supporting industries, most of which are SMEs. These have to be
strengthened in order to ensure that the key industries are able to
develop without undue constraints.
It is also important to strengthen supporting institutions (public, private
and social) and the basic ‘hard’ and ‘soft’ infrastructural foundation
upon which economic growth is dependent.
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 13
of connectivity through the larger international logistic nodes of
Singapore and Kuala Lumpur is still to be given high priority over the
short and medium term.
Human resource development is another key component of this
thrust. In addition to enhancing the capacity and capability of the
educational and training institutions, a liberal policy with respect to
foreign skilled and professional workers needs to be adopted. Critical
gaps that has appeared and shall appear in the local supply must be
quickly filled by the importation of foreign skills and expertise.
With respect to the provision of ‘soft’ infrastructure, SJER should take full
advantage of the resources that it is well endowed with such as land
and labour. For instance, strong emphasis should be placed on the
provision of ‘parks and gardens’ to offer a unique living and working
environment and lifestyle that fully exploits the availability of space in a
manner that those less endowed with land cannot provide.
The long term objective must be to equip the whole of SJER with a
‘world class’ hard and soft infrastructure. The implementation, given
limited resources, must however be in phases. An important strategy is
to identify high impact projects that can be implemented over the short
term (up to three years) without incurring high cost and within certain
strategic zones where a complete world class infrastructure can be
provided within a period of three to five years from now.
SET 3. Strengthen International Linkages
Industries within SJER need to strengthen their position within the global
value chain in order to obtain market access, reap the benefits of
economies of scale and benefit from technology and innovations.
This thrust for SJER is part of the overall national thrust as contained in the
Ninth Malaysia Plan which stresses on the importance of strengthening
strategic integration with the global economy.
The Ninth Malaysia Plan stated that;
“in the rapidly changing global environment and the increasing trends
towards growing strategic alliances and networking among a number
the national players, it will become imperative for Malaysian investors
to form greater partnership with foreign affiliates, as well as venture
out on their own, to make inroads into targeted growth areas both at
home and abroad. This will enable Malaysian industries to become a
crucial part of the international economic chain and produce goods
and services that create new demand and market opportunities. In
this regard, initiatives to facilitate these industries to meet these new
challenges will include:
■ Facilitating investment in new sources of industrial growth and
wealth creation that require extensive global partnering to reap
economies of scale, expend exports and increase access to
markets.
■ Promoting the expansion of FDI in the country as well as facilitating
joint ventures and strategic alliances between Malaysian firms
and MNCs.
■ Assisting domestic industries to enhance core competencies,
especially in ICT design and engineering skills as well as
management and technical expertise to benefit from regional
and international production networks.
■ Developing and pursuing high standards of product quality and
service performance to sustain market share and create new
market opportunities; and
■ Building the necessary infrastructure and facilities including
dedicated industrial parks in specific locations that have the
potential to attract investment.”
SET 4. Build on Existing Strength in Respect of Resource Endowment and Lever on Singapore’s Strength
Being located contiguous to Singapore, and being part of the strongest
regional agglomeration node that is centred in Singapore that extends
to Johor mainly SJER and the Batam and Bintan islands in Indonesia, the
Johor-Singapore-Indonesia (JSI) node in short, the international linkages
of SJER to the rest of the world are largely with and through Singapore.
The linkages with Singapore (Figure 4.16) are mainly as follows:
A. Manufacturing Sector
■ Vertical linkages – This type of linkages currently exist mainly in
the Electrical and Electronic sector. In this case, the value added
and more skill- and knowledge- intensive activities are located
in Singapore while SJER contains the lower value added and
4 - 14
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
manufacturing end of the value chain.
■ Consumption linkages are also important since SJER exports
consumer products to Singapore and Johoreans do shop in
Singapore and make use of the airlines and other services in
Singapore.
■ Horizontal/parallel developments have also developed within
SJER. They are mainly resource-based industries such as petro-
chemical, oleo-chemical, and some components of food
and agro-processing industries that that process raw materials
obtained from Johor and other parts of the country for the
domestic and export market.
■ Horizontal development and integration in high technology
industries has yet to take place.
B. Service Sector
Linkages with Singapore are strong for Tourism and Logistics, while
tourism is largely a complementary development. For Logistics,
Singapore sea port is still an important outlet for exports from SJER and
Changi airport is an important international gateway for SJER residents
and visitors. However, both PTP and Senai Airport are developing as
largely horizontal system to those in Singapore.
While vertical and consumption linkages such as in E&E industries,
logistic services, tourism, food and agro processing industries will
continue and strengthen, future focus will be on further horizontal
developments, especially in high technology, knowledge-based as well
as resource-based industries. This will include educational and health
services, niche financial services and the ICT & creative industry. (Figure
4.16).
C. Human Resource Linkages with Singapore
It is estimated that 150,000 Malaysians are working in Singapore. Of this,
about 41,000 are commuting daily (mostly from areas within SJER). In
1989, the total number was around 24,000. About 51% of the commuting
workers are employed in the E&E industries.
Their main characteristics are:
■ 60% of the commuters are Johor-born.
■ Unlike those Malaysian workers that reside in Singapore who
are mainly in the skilled professional and managerial class, the
majority of commuting workers are unskilled and semi-skilled
(general workers and machine operators).
■ Only 16% are skilled workers – 10% are employed as technicians
and 6% in managerial or administrative positions.
The major attraction for these workers is the wage differential between
Singapore and Johor. The salary differentials for Malaysian workers in
Singapore could range from at least two to three times higher than that
in Johor. The phenomenon has enabled Johor, especially SJER to keep
its unemployment rate low.
Figure 4.16: Horizontal and Vertical Linkages within the Johor-Singapore-Indonesia (JSI) Agglomeration Node (Present and Future)
Logistic Service System
Petrochemical
Pharmaceutical
Financial/Other Services
Tourism Products
Logistic andOther ServicesFood & Other
Agricultural Product
Electrical &Electronicsand Other
Industries
Singapore
BatamIndonesia
Electronics/ElectricalProducts
Other Product
ICT and Creative Industries
Food & Agro Processing
Logistic Service Systerm
Education & Health
Niche Financial Services
Petrochemical & Oleochemical
Existinc Parallel/HorizontalDevelopment Regionaland Global Market
KEY
Future Parallel/HorizontalDevelopement
Vertical, Horizontal andConsumption Linlkages
JSIAGGLOMERATIONNODE
SJER
Source: SJER CDP 2025
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 15
▼ Positioning SJER within the JSI Node and Internationally
Given the above linkages and the strength of Singapore with respect
to the provision of hard and soft infrastructure especially its international
connectivity, manufacturing related services and other supporting
industries and SJER’s relative weakness in these areas, it is clear that a
principal strategic thrust is to complement and leverage on Singapore’s
strength while building vigorously on SJER’s own strength such as the
resource endowment in respect to land, labour and other natural
resources. (Figure 4.17)
Figure 4.17: Singapore and SJER – Leveraging on The Strength of Singapore and Developing Own Strength
Source: SJER CDP 2025
SJER has to strengthen the hard and soft infrastructure and supporting
industries and institutions to combine these with its inherent strength in
natural resources including land and labour to develop a strong, highly
diversified, dynamic and globally orientated economy.
By reducing its weaknesses (Figure 4.17, quadrant B1) and combining it
with its strengths (Figure 4.17, quadrant B2) and improving access to the
strengths of Singapore, SJER can offer the ‘best’ combination to attract
potential investors. Given its resource endowment and large home
market base, SJER has the potential to eventually develop into a more
stable economic entity.
▼ Strengthening the Economic Linkages within the JSI Node and to
Other Major Global and Regional Agglomeration Nodes
SJER, by virtue of its contiguity with Singapore, and the linkages and
opportunity for leveraging as described, must strengthen its position
within the JSI node which has the potential to develop into a strong and
outstanding international agglomeration node.
From the point of view of international investors seeking to locate their
production, management, control, procurement, distribution centres
and other service centres east of Suez, especially within the Asia-
Pacific region, the JSI node is a major option among other competing
international nodes which include Hong Kong – Shenzhen, Sydney,
Bangkok, Manila and even Dubai and Bangalore.
As investors tend to select among major agglomeration nodes rather
than countries, a strategic stance for SJER to take in the global arena is
to compete as part of a JSI node rather than “going it alone.”
Figure 4.18: Development Perspective within JSI – Further Development of Horizontal/Parallel and Vertical Linkages
Form & Integration within JSI
Existing Main Exporting Industries That Must Be Developed Further
New International Oriented Industries Need to be Developed
Horizontal/ Parallel
Development
Manufacturing• Petrochemical• Oleochemical & Biodiesel• Agro products & Food
Processing
Services• Integrated International
Logistical Services
Attract Larger ‘Development “Flagship” Firms’ to Create New Products in:• Electrical/ Electronics
– Development of high end component of value chain and more value network
• Creative Industries• International Health Services• International Educational
Services• Entrepot BusinessVertical and
Demand Linkages
Electrical and Electronics Industries
Food
Logistic
Tourism
• Produce more high end products
• Enhance complementarities
Source: SJER CDP 2025
STRENGTHHard and Soft Infrastructure• Highly efficient integrated global logistic
system• Strong supporting industries including MRS• Excellent internal infrastructure• Good supply of skilled workforce• Highly efficient and strong government
support• International lifestyle• Good security• Good environment quality
RELATIVEResource Endowment• No raw material• Small income market• Small labour pool• Shortage of land• High cost of living
RELATIVEHard and soft InfrastructureLack of:• Highly efficient integrated global logistic
system• Excellent internal infrastructure• Good supply of skilled workforce• Highly efficient and strong government
support• International lifestyle• Good security• Good environment quality
STRENGTHResource Endowment• Good suply of raw material• Access to large labour market• Low cost of living• Plentiful supply of land
Singapore
SJER
A1 A2
B1 B2
4 - 16
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
▼ Site for High Technology and Knowledge Based Dynamic Clusters
The main drawback at present is that SJER is viewed as the low cost
hinterland to Singapore where cheap resources and cheap labour can
be obtained for the low-end manufacturing activities. This image must
change.
SJER must strive to build itself as a dynamic sub-set of the larger and
stronger international JSI node. It must develop its own character and
strength and be able to attract and support the development of
dynamic and high technology industrial clusters.
SJER can achieve this given its resource endowment and its willingness
and ability to invest heavily to upgrade its hard and soft infrastructure
to a world class standard, at least to the level already attained by
Singapore.
▼ International Positioning of SJER
The International Positioning of SJER can therefore be seen as consisting
of four tiers
TIER ONE – Positioning among Regional and Global Nodes
SJER should present itself as an integrated part of a strong, high profile
and internationally visible and marketable JSI node to attract major
global flagship companies in the higher technology industries by
offering more skilled workforce and expertise. It should also complement
developments with other major nodes and regions via sourcing and
outsourcing.
TIER TWO – Positioning within the Johor-Singapore-Indonesia node
SJER shall:
■ Develop as a major subset within the strong JSI node and global
node.
■ Create strong direct and indirect linkages with other major
regional and global development nodes.
■ Capitalise on its relatively strong resource endowment to
develop its own unique character and enhance its competitive
advantage within the regional and global settings.
■ Strive to attain a seamless physical integration and maximum
international accessibility within the JSI node but must also be able
to spotlight on its unique character and develop its own strength.
■ Develop strong synergistic economic relationship within the
JSI Node through vertical integration while developing its own
horizontal/parallel industrial clusters.
TIER THREE - International Positioning of Major Industrial Clusters
Each of the major industrial clusters needs to be clearly positioned within
the international context. For instance, the E&E cluster needs to position
itself to develop horizontal clusters with strong linkages to the global
chain and not remain at the low end tail of the Singapore cluster.
TIER FOUR – Positioning of its major firms and major institutions in relation
to firms and institutions within SJER, Malaysia, JSI Node and the Regional
and Global setting.
This would include key players such as PTP, Senai Airport, main public
institutions of higher learning, and health care centres. In addition,
world-class facilities and companies in various sectors including leisure
and tourism, ICT and creative industries needs to be targeted.
SET 5. Optimise Spatial Distribution
To meet the efficiency and equity objectives of the Plan by focussing
development on the South Economic Corridor and the northern node
at Senai-Kulai. This subject has been discussed in the chapters on
the Physical Plan of SJER while in the socio-economic context, the
relevance of this strategy particularly in ensuring growth with equity is
also discussed further in the chapters on the Socio-Economic aspects of
development.
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 17
Figure 4.19: International Positioning of SJER within the SJI Regional Node
Sydney
Other
ManilaPhilippines
ShanghaiChina
Hong KongShenzhen
BangkokThailand
BangaloreIndia
DubaiUAE
Singapore
Batam
SJER
KlangValley
NorthernCorridor Eastern
Corridor
JSI REGIONALDEVELOPMENT
NODE
Major RegionalDevelopment Nodes
Source: SJER CDP 2025
SET 6. Adopt the Cluster Approach
A cluster can be defined as a geographically proximate group of
interconnected companies and associated institutions in a particular
field, linked by commonalities and complementariness. Clusters may
take varying forms depending on their level of maturity. They can
include end products and services, suppliers of components, parts,
machinery, financial and professional services and other related
activities. It can also include specialised infrastructure providers,
government and other institutions providing specialised training,
education, information, research and technical support.
The advantage of clustering can be summarised as follows:
“Hard” Benefits of ClustersAsset BenefitsLocal supply chains Design efficienciesSpecialised workforce Higher productivitySpecialised services Faster and easier accessChoice of inputs Lower costs, higher qualityRange of firms Joint ventures, network opportunities
“Soft” Benefits of ClustersAsset Benefits
Association Collective vision, planning, influenceTrust, Loyalties (social capital) Inter-firm collaboration and networks
LearningTechnology transfer and innovation, tacit knowledge and know-how
4 - 18
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
The clusters within SJER currently are mostly not well developed. The
most developed is the E&E cluster which as noted, is actually an integral
part of the Singapore E&E cluster, though the part within SJER occupies
the lower end of the value chain.
Cluster upgrading and development is therefore a major objective
of SJER development policy and strategy. The main thrust is the
transformation of truncated and embryonic clusters into a dynamic
set of clusters able to generate its own innovation and increase
productivity.
The main strategic component of this thrust is the enhancement of
the network cohesion in each cluster so that all firms and institution in
the private and public sectors connect and coordinate smoothly their
demand and supply requirements.
An important initiative to attain this systemic cohesion is the formation
of cluster associations for each of the major industrial clusters. The
membership of this association shall be opened to all those in the
private and government sectors, education, training and R&D
institutions, other intermediary organizations that are involved directly or
indirectly in the supply and demand of related products and services.
SET 7. Provide Right Type of Incentives and Support• Incentives
Strong incentives currently exist under the Cyber City/Cyber Centre Bill
of Guarantees (BoG) and Free Zone Act 1994. The Ninth Malaysia Plan
also proposes more focused Incentives for High Value Added Industries
such as:
i. Pre-Package Incentives to encourage:
□ R&D, technology transfer, job creation (especially E&E digital
context, biotechnology)
□ existing industries to diversify into high-end industries as well as
related services
□ strategic Investment Incentives for New Growth Area
□ amount RM600 million
□ quality investment in “knowledge-incentive, labour saving, high
technology” involving R&D, intellectual property development,
and human capital enhancement
ii. Skill Upgrading Incentives (under – Pre-Package)
The objective is to upgrade skills especially in the SME sector in
areas such as ICT integration, utilization of bioinformatics, virtual
engineering service for high end design activities (Total allocation
RM463 million)
iii. MRS Industry
□ Logistics, business services etc
□ Soft Loan RM220 million
iv. Automation Fund
v. Industrial Adjustment Fund
Given the proposed Cyber Cities and Cyber Centres for SJER and the
existence of a Free Zone near Tanjung Pelepas, generous incentives
are and shall be available within SJER. The package incentives are
also available for companies in SJER that meet the qualifying criteria.
Additional incentives for SJER have also been proposed and is
elaborated further in Chapter 6.
4.9 FUTURE GROWTH SCENARIO, 2005-2025
A. Indicative Targets
The future development scenarios, expressed in terms of indicative
“targets” such as total population, total GDP, average income as
reflected in GDP per capita within SJER and the immediate catchment
area that includes SJER itself plus other parts of Johor State, and
Singapore, are necessary to attain the critical mass for the eventual
development of SJER into a major growth node within the national, JSI
and international context (Figure 4.19).
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 19
The attainment of the critical mass will render viable many costly
physical and social infrastructure proposals including the proposed fast
train from Kuala Lumpur to other parts of Malaysia, internal fixed track
transportation system, the provision of various public goods such as
regional parks and various recreational facilities such as museums, art
galleries, libraries and theatres.
B. Attaining the Critical Mass
The total population of 5 million projected for Johor, with a total GDP
of about USD129 billion (PPP) or a projected per capita GDP of about
USD25,800, should provide a large enough catchment for Senai Airport,
enabling it to attain a passenger flow of around 10 million per annum or
more.
Taking the projected population of Singapore and Johor in 2025 which
is expected to reach about 10 million or more and a passenger flow of
at least 60 to 70 million for Changi annually, Senai can by then justify its
position as the second regional airport, given the limited land and air
space in Singapore.
The future scenario for SJER should include:
■ A well developed, internationally and internally integrated, strong
and efficient logistic system giving it a high level of national and
international accessibility and internal mobility,
■ A strong base for vertically and horizontally integrated dynamic
manufacturing and service clusters. With well developed external
linkages to major regional and global development nodes.
■ A sizeable foreign residents (about 12-15%) with high skills and
income would render viable the various international class social
and educational, health, recreational and other facilities that
are necessary for an international class ‘life style’ which is vital to
attract and retain the inflow of international investment and highly
skilled managerial and professional workforce.
To attain these would require considerable efforts in terms of planning,
investment, management from both the private and public sectors and
the political will to push development to a level where the momentum
of growth and the critical mass could be attained to sustain rapid
development.
▼ Population Growth Targets, 2005-2025
Johor population is targeted to grow from 3.17 million in 2005 to 3.46
million under the Ninth Malaysia Plan. From 3.46 million in 2010, the state
population is expected to increase to 3.9 million in 2015, 4.4 million in
2020, and to 5 million by 2025. By then, the size of Johor population will
be about the same as Singapore’s projected population (Figure 4.21).
From 2005 to 2025, the state population is targeted to grow at an
average annual growth rate of 2.3% (the same growth rate attained
over the decade from year 2000 to 2010. A higher population growth in
the state is anticipated beyond 2010 because of derived impact from
targeted economic growth in SJER.
4 - 20
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
Figure 4.20: Future Scenario of SJER, 2025 – Critical Mass for Transportational Linkages and Interrated Diversified Manufacturing and Service Activities
South Johor
Critical mass for Senai to be the secondairport of the region by 2025 - Sea
port to build strong domestic cargo andstrong international services
(a)
(b)
(c)
Changi Airport
3rd crossing2nd crossing
Johor PortTg. Pelepas
Strong road and raillinkages to Singapore
Critical mass for thedevelopment of morediversified vertical andhorizontally integrated
manufacturing andservice activities
Stronger air and sea linksto East Malaysia and
Kalimantan
Stronger air and sealinks to other ASEAN and
East Asian countries
Enhanced air, sea, railand road links to the rest
of Malaysia
Strengthen air/sea linksto Sumatra and other parts
of Indonesia
Proposed Fast trainfrom Kuala Lumpur
Batam
Well diversified resourceand knowledge based
manufacturing andservice industries
Johor 5.0 MillionSJER 3.0 MillionSingapore 5.4 MillionJohor & Singapore 10.4 MillionSJER & Singapore 8.4 Million
Johor 129.1SJER 93.3Singapore 312.0Johor & Singapore 441.1SJER & Singapore 405.1
Population (2025F) GDP (PPP) USD billion (2025F)
Source: SJER CDP 2025
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 21
Figure 4.21: Development Scenario - A Comparison of Population Growth, 2005-2025
Malaysia
Johore
SJER
SingaporeJohor & Singapore
SJER & Singapore
26,748.1
2005
3,170.0
1,353.2
4,300.07,470.0
5,653.2
39,549.3
2025
5,000.0
3,000.0
5,400.010,400.0
8,400.0
2.0
Average AnnualGrowth Rate (%)
2.3
4.1
1.11.7
2.0
26,748.1
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
30,000.0
35,000.0
40,000.0
45,000.0
2,000.0
4,000..0
6,000.0
8,000.0
10,000.0
12,000.039,549.3
Malaysia
3,170.0
5,000.0
1,353.2
3,000.0
4,300.0
5,400.0* 7,470.0
10,400.0
5,653.2
8,400.0
Johor State South Johor Singapore Johor State &Singapore
South Johor &Singapore
2005 2025
2005 2025
Notes: *This projection is based on UN forecast and appears to include foreigners since the based year figure data didinclude foreigners. But a recent article on Singapore population seems to indicate that targeted figure for year 2020 hasbeen drastically in increased to 6-7 million.
Projected Population (000’)
Source: SJER CDP 2025
The proportion of non-citizens is expected to increase from 6% in 2005 to
11% by 2025. The population in SJER is targeted to expand at an annual
rate of 4.1%, thereby reaching 1.54 million in 2010, 1.91 million in 2015, 2.4
million in 2020, and 3.0 million in 2025 (Figure 4.22).
Growth will be fuelled mainly by migration into SJER, not only from
neighbouring districts in Johor, but also from other parts of Malaysia,
and from other countries. The proportion of foreigners is expected to
increase, especially in the more skilled professional and managerial
category, from the present 6.6% to between 12% – 15%. The population
in SJER will represent 60% of the state in 2025, making it the dominant
economic region in Johor.
4 - 22
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
Figure 4.22: Projected Population in Johor and SJER, 2005-2025
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2005 2010 2015 2020 2025
1,353,2001,536,900
1,396,200
3,000,000
1,912,600
Johor StateSJER
Population Median age (years)
3,170,0003,460,000
3,870,400
4,399,700
5,000,000
0
5
10
15
20
25
30
35
2005 2010 2015 2020 2025
SJER Johor State
26
25
2827
30
28
32
29
3330
Source: SJER CDP 2025
In line with international and national trends, the share of the aging
population would also increase. In Johor, its share is projected to rise
from 4.4% in 2005 to 10% by 2025. In SJER, its share would rise from the
present 3% to 9% by 2025 (Figure 4.23).
A. Future Population Profiles, 2005-2025
In SJER, the current median age is estimated to be 26 years and it is
anticipated to rise to 33 years by 2025 (Figure 4.22). This is expected to
be slightly higher than that for Johor which is estimated at 30 years. The
higher median age shows that in SJER, the in-migration of workers, highly
skilled and educated, would result in a trend towards an older, more
matured population structure.
Figure 4.23: Age Structure of Population of SJER and Johor, 2005-2025
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
10.0
20.0
30.0
40.0
50.060.070.0
80.0
90.0
100.03.1
66.4 67.3 68.0 68.4 68.0
30.5
4.0
28.8
5.6 7.8 9.0
26.5 24.3 23.0
2005 2010 2015 2020 2025<15 Years 15-64 Years >64 Years
(%)
SJER
4.4
63.7 65,4 64.3 64.2 63.7
31.9
5.2
29.4
6.7 8.2 10.0
28.7 27.6 26.4
2005 2010 2015 2020 2025<15 Years 15-64 Years >64 Years
(%)
Johor State
Source: SJER CDP 2025
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 23
▼ Labour Force and Employment Growth Targets, 2005-2025
The size of the working-age population in Johor State is expected to
increase from 2.0 million in 2005 to 2.3 million in 2010, and to 3.2 million
by 2025. About 64.0% of them would be in SJER. This means that by 2025,
SJER would have around 2 million people in the working-age group.
The working-age population in SJER would increase progressively from
about 900,000 in 2005 to 1.3 million in 2015 and 2.0 million in 2025. The
expansion of the working-age population in both Johor and SJER would
lead to a rapidly growing labour force and hence, a relatively large
group of people seeking employment especially when the labour force
participation rate (LFPR) is projected to increase significantly to 72% by
2025. Reflecting the profile of a developed economy, people above 64
years in SJER is expected to remain in the workforce in the future and
continue to work.
The expanding labour force demands a higher economic growth
in SJER, especially in the creation of jobs and in keeping down the
unemployment rate to a range of 3% to 4%.
This means that employment in SJER needs to increase at an average
annual growth rate of 4.3% during the period 2005-2025. The rate has to
be higher than for Johor which is expected to experience an average
annual growth rate of 2.9% during the same period.
Based on the targeted growth rate, employment in SJER is projected to
increase to 752,100 in 2010, 928,500 in 2015 and to 1.4 million by 2025.
This projected growth would also raise the employment level in Johor
(Figure 4.24).
The Services sector will be the major source of employment in SJER. It
would increase its share of total employment from 56% in 2005 to 63% by
2025. This is higher compared to the 55% share envisaged for Johor.
The Manufacturing sector remains important, maintaining its share at
about 39% of employment but its demand for workers would change,
moving towards more knowledge-intensive and higher skilled workers
as the clusters undergo internal restructuring and up scaling in terms of
technology and capital investment.
▼ Economic Growth Targets, 2005-2025
Total GDP for Johor, as a whole, is targeted to reach USD129 billion (PPP)
or RM235 billion (at constant 2005 price) in 2025. Its targeted growth
takes into consideration the Ninth Malaysia Plan’s target of 6% GDP
growth for Malaysia during 2005-2010 (Figures 4.25 and 4.26).
Figure 4.24: Total Employment in Johor State and SJER, 2005 - 2025
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2005 2010 2015 2020 2025
10,400752,100
1,150,700
1,427,9001,262,900
1,453,1001,671,900
928,500
1,923,6002,213,400
Johor StateSJER
Source: SJER CDP 2025
4 - 24
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
Figure 4.25: Economic Growth and Structure of Johor and SJER, 2005 – 2025
20.0
40.0
60.0
80.0
100.0
120.0
140.0
2005 2010 2015 2020 2025
USD
(BBi
llion)
20.029.0
63.5
93.3
33.445.2
62.8
43.1
89.8
129.1
Johor StateSJER
GDP of Johor State and SJER (USD PPP) Economic Structure of SJER
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
50.0
5.0
42.0
3.11
53.8
4.2
39.3
2.7
57.6
3.6
36.5
2.3
61.1
2.8
34.0
2.1
65.0
2.3
31.0
1.8
2005 2010 2015 2020 2025
Agriculture etc ManufacturingConstruction Services
(%)
Source: SJER CDP 2025
Figure 4.26: GDP (PPP)(in USD billion), 2005 and 2025
MalaysiaJohorSJERSingaporeJohor & Singapore
SJER & Singapore
276
2005
33.420.0
127.0
160.4
147,0
876
2025
129.193.3
312.0
441.1
405.3
6.0
Average AnnualGrowth Rate (%)
7.08.04.6
5.2
5.2
276.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1000.0
50.0
100..0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
500.0879.0
Malaysia
33.4
129.1
20.0
93.3127.0
312.0
160.4
441.1
147.0
405.3
Johor State South Johor Singapore Johor State &Singapore
South Johor &Singapore
2005 2025
Source: SJER CDP 2025
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 25
share is expected to decline from the present 42% to 31% – a pattern
consistent with present-day structures of developed economies where
services such as insurance, finance, professional services and other
services dominate their economies.
In the process of restructuring, many of the manufacturing activities will
undergo many changes leading to the emergence of manufacturing-
related services (MRS).
Per capita GDP in SJER in 2025 is expected to double, rising from USD
14,790 in 2005 to USD31,100 in 2025. It would be 1.2 times that of the
state per capita GDP in 2025 of USD25,800 (Figure 4.27).
Options for alternative growth paths were considered for both Johor
and SJER taking into consideration the targeted growth of SJER. The
long-term growth rate adopted for Johor for the period 2005-2025 is an
average of 7% per annum.
Growth of GDP in SJER is targeted at a minimum of 8% per annum
during the period 2005-2025. This would raise SJER’s GDP from its current
level of USD20 billion to USD93.3 billion by 2025 or almost five times its
current level. In Ringgit terms (at constant 2005 price), this means that
GDP in SJER would rise from RM35 billion in 2005 to RM163 billion by 2025.
In terms of internal structure, the services sector in SJER would increase
its current share of 50% to 65% by 2025 while the manufacturing sector’s
Figure 4.27: GDP per Capita (USD), 2005 and 2025
MalaysiaJohoreSJERSingaporeJohor & SingaporeSJER & Singapore
10,318.0
2005
10,757.014,790.029,936.921,664.026,311.1
22,225.4
2025
25,818.531,100.056,111.141,298.147,261.9
3.9
Average AnnualGrowth Rate (%)
4.53.83.33.33.0
5,000
10,000
15,000
20,000
25,000
10,318
22,225.4
Malaysia
10,757.0
25,818.0
14,790.0
GDP PER CAPITA (PPP), 2005
31,100.0 29,936.9
57,777.8
21,664.0
41,298.1
26,311.1
47,261.9
Johor State South Johor Singapore Johor State &Singapore
South Johor &Singapore
2005 2025
Source: SJER CDP 2025
4 - 26
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
Economic growth is accompanied by improved labour productivity.
In Johor, the average annual growth rate in productivity for Johor is
estimated at 4% per annum (Figure 4.28).
In SJER, labour productivity is expected to double within the period
2005-2025, rising from RM57,122 in 2005 to RM113,808 in 2025. The
average increase in labour productivity is 3.5% per annum. This higher
productivity levels should lead to higher per capita GDP for both Johor
and SJER (Figure 4.29).
Targeted developments in SJER are expected to provide mutual
benefits to the outlying areas, in particular, the rural areas. The provision
of urban-based jobs (potentially with higher incomes) releases pressures
on agricultural land to provide employment and stable income, leading
to higher agricultural productivity levels and returns on land.
Figure 4.28: Comparison of Labour Productivity Growth in Johor and SJER (at Constant 2005 price) 2005 and 2025
20,000
40,000
60,000
80,000
100,000
120,000
2005 2010 2015 2020 2025
(RM
)
48,38356,116
67,01182,624
106,126
57,12267,233
80,858
96,274
113,808
Johor StateSJER
Figure 4.29: SJER - Labour Productivity & Per Capita GDP (RM) at 2005 Constant Price 2005 and 2025
20,000.0
40,000.0
60,000.0
80,000.0
100,000.0
120,000.0
2005 2010 2015 2020 2025
(RM
)
25,766.323,567
28,946.9
35,124.6
46,980.048,383
56,116
67,011
82,624
106,126Per Capita GDP (RM)Labour Productivity
JOHOR
20,000.0
40,000.0
60,000.0
80,000.0
100,000.0
120,000.0
2005 2010 2015 2020 2025
(RM
)
25,766.3
32,858.5
39,253.946,232.4
54,168.757,122
67,233
80,858
96,274
113,808Per Capita GDP (RM)Labour Productivity
SJER
Source: SJER CDP 2025
Source: SJER CDP 2025
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 27
▼ Investment Requirement
A. Total Investment
The total investment required to attain the Johor State and SJER
projected growth in GDP is estimated based on incremental capital
output ratio (ICOR) for Malaysia .
The results are given in Figure 4.30(a) and Figure 4.30(b). A total of
about RM47 billion will be required between 2006 and 2010 to attain the
projected growth rate of 8% for SJER and about RM61 billion to attain
a growth rate of 7% for Johor. Over the subsequent 5 year period, the
corresponding figures are expected to increase to about RM73 billion
and RM91 billion respectively.
B. Manufacturing Sector
Out of the total of about RM47 billion in investments required for SJER,
almost RM16 billion will be needed directly (excluding investment in
related infrastructure) for the manufacturing sector. This will be an
increase over the 2001 – 2005 figure of about RM13.3 billion (Figure
4.31(a) and Figure 4.31(b)).
Assuming that the historical 70% average ratio of FDI to local investment
is maintained in the manufacturing sector (Table 4.9), SJER shall need to
target about RM11.3 billion in FDI in manufacturing sector over the five
year period.
However, since the actual implementation rate is only about 70% – 80%
of “approved” investment value, a much higher target of ‘approved’
investment value must be targeted for 2006 – 2010 period. In other
words, to attain an actual FDI target of RM11.3 billion in the 2006-2010
period, a target for FDI approvals of between RM14 billion to RM16
billion is required over the period. This will be an increase of about 50%
over the total FDI approved between 2001 and 2005 which was about
RM9.3 billion.
It is clear that a much more aggressive and vigorous promotional
effort to improve the enabling factors, including the hard and soft
infrastructure, is necessary over the next five years. The major strategic
thrusts and initiatives proposed in this chapter and other chapters are
designed to attain this objective.
Figure 4.30(a): Estimate of Capital Investment Required to attain a GDP Growth Rate of 7%, Johor State (at constant 2005 price) 2005 and 2025
50,000
100,000
150,000
200,000
250,000
2006 - 2010 2011 - 2015 2016-2020 2021-2025
RM m
illion
61,316(USD 16,753)
91,482(USD 24,995)
140,697(USD 38,442)
227,895(USD 56,476)
ICOR (at3.00)
Figure 4.30(b): Estimate of Capital Investment Required to attain a GDP Growth Rate of 8%, SJER(at constant 2005 price) 2005 and 2025
20,00040,000
60,00080,000
100,000
120,000140,000
160,000
180,000
2006 - 2010 2011 - 2015 2016-2020 2021-2025
RM m
illion
47,098(USD 12,868)
73,533(USD 20,091)
107,115(USD 29,266)
155,172(USD 42,397)ICOR (at3.00)
Figure 4.31(a): Estimate of Investment Required in Manufacturing Sector in Johor State, 2005-2025 (at Constant 2005 price)
5,00010,00015,00020,000
25,00030,000
35,000
2006 - 2010 2011 - 2015 2016-2020 2021-2025
RM m
illion
22,704
15,120
6,584
26,370
18,723
7,547
28,770
20,427
8,343
32,220
22,876
9,344
Johor State FDI Local
Figure 4.31(b): Estimate of Investment Required in Manufacturing Sector in SJER, 2005-2025 (at Constant 2005 price)
5,000.0
2006 - 2010 2011 - 2015 2016-2020 2021-2025
RM m
illion
10,000.0
15,000.0
20,000.0
25,000.0
15,892.8
11,284
4,608.9
18,459.0
13,106
5,353.1
20,139.0
14,299
5,840.3
22,554.0
16,013
6,540.7
SJER FDI Local
Source: SJER CDP 2025
Source: SJER CDP 2025
Source: SJER CDP 2025
Source: SJER CDP 2025
4 - 28
SECTION A FRAMEWORK FOR COMPREHENSIVE DEVELOPMENT
▼ Balancing Development Between SJER and The Rest of Johor
It is clear that development within SJER will have profound implications
on the rest of Johor State. For this reason, the issue of equity
considerations is raised in chapters relating to social and holistic
development in order to address the need to balance the targeted
growth in SJER with developments in the surrounding areas outside it.
The rapid development of SJER and its higher average wage rate will
continue to draw labour and population away from the rest of Johor
State resulting in a population growth rate of only 0.5%. This will be
accompanied by a rapid growth in productivity especially in the non-
plantation agricultural sector which is targeted for modernisation and
rapid productivity growth over the Ninth Malaysia Plan.
Average wage rate and income will grow more rapidly in the rest of
Johor State than in SJER, albeit from a lower base. The faster the growth
in productivity within the area outside SJER, the faster will be the growth
in GDP per capita for the area and the more rapidly the income gap
between SJER and the rest of Johor will close, and the faster will be the
overall growth rate for Johor State as a whole (Figure 2.32).
Since the rest of Johor is still very much dependent on plantation
agriculture (palm oil and rubber) and since productivity growth in
this sector is not likely to be very rapid, a conservative estimate of
productivity growth for the rest of Johor at 4.1% is projected assuming
rapid productivity growth in the non-plantation agricultural sector and
other sectors including manufacturing and services. This growth rate is
higher than the 3.5% productivity growth rate projected for SJER.
However, should productivity growth rate for the area outside SJER
be pushed to about 6.1% and GDP per capita at 6.5%, the per capita
income gap will be considerably narrowed by 2025 (from 56% in 2005 to
94.5% in 2025) and Johor GDP can grow at 7.6% if the growth of SJER is
maintained at 8% (Figure 4.32).
Figure 4.32: GDP per Capita (PPP) of SJER and Rest of Johor, 2005 and 2025 (at constant 2005 price)
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
SJER
USD
(PPP
)
14,790
8,288
Rest of Johor
GDP PER CAPITA (PPP), 2005
5,000
10,000
15,000
20,000
25,000
30,000
35,000
USD
(PPP
)
31,100
20,774
GDP PER CAPITA (PPP), 2005
26,54229,411
R of J : Rest of JohorJS : Johor State
GDP percapitaGrowth RateSJER : 3.8%
GDP perCapitaGrowth Rateof R of J : 4.7%JS:4.5%GDP GrowthRate forJS: 7.0%
GDP perCapitaGrowth RateR of J : 6.0%JS: 4.9%GDP GrowthRate for JS :7.4%
GDP per CapitaGrowth RateR of J : 6.5%JS:5.0%GDP GrowthRate of JS:7.6%
4.10 The ‘With” and “Without” SJER Scenario
Strong efforts are needed to enhance the quality of hard and soft
infrastructure within SJER. This will aggressively promote SJER as an
efficient economic development node among local and foreign
investors, and will accelerate economic development and income
growth not only within SJER but also in the rest of the State. The South
Johor Authority (SJA) is a proposed new regulatory, planning and
planning approval facilitation entity which will be created to be the
principal vehicle that will regulate SJER development and facilitate
the highest degree of coordination between the State and Federal
Governments, and between various government institutions, the private
sector and the educational and training institutions. The strong regional
focus and the cluster strategies facilitate close systematic interactions
among the key stakeholders and enabling agencies. In addition,
a commercial and investment vehicle, the South Johor Investment
Corporation Berhad (SJIC), to drive the development of key catalyst
projects, will be incorporated with key Federal and State investment
agencies, Khazanah Nasional, EPF and KPRJ as shareholders
An aggressive development drive and efficient coordination are
needed to attain the targeted growth rates. The necessary rapid
upgrading of the strategic and critical hard and soft infrastructure,
including the enhancement of public sector efficiency will be
achievable with the existence of close and strong support from the
Federal Government, via the new authority to be created.
Source: SJER CDP 2025
ECONOMIC DEVELOPMENT STRATEGIES
CHAPTER 4 | PART 2
4 - 29
Close coordination among various government agencies, educational
and training institutions, and other industries can be facilitated by this new
entity. This will coordinate an efficient development of human resource
to facilitate existing local industries to move up the value chain, and to
adopt more efficient technology, innovate and attract new investors in
high technology industries.
Without this, the potential loss in the future of low-end labour-intensive
assembly industries (as experienced by Johor where about 15,000 jobs
were lost between 2002 and 2005 through company closures) may not
be fully compensated quickly enough by new high technology and
higher value added industries. This is especially so given the strong and
increasing competition from lower cost countries such as China, Vietnam,
the Philippines and Indonesia.
The consequences are likely to be difficulties in attaining and maintaining
a high level of local and foreign investment required to stimulate the
growth of dynamic clusters. To attain accelerated growth within SJER,
a total investment of around RM60 billion will be required over the next
five years. This will require not only enhanced inflow and more efficient
allocation of public sector fund, but also aggressive promotion of private
investment. The total inflow of FDI over the next five years (2006-2010)
must be enhanced by about 40-50 percent higher than the amount
attained over the 2000-2005 period, assuming that the proportion of local
investment will not be dramatically increased.
Table 4.1: Growth Rates / Selected Economic Indicators
Indicator2005-2025 Note Johor
State (%) SJER (%) Rest of Johor (%)
GDP Growth Rate
With SJERWithout SJER
7.05.5
8.06.0
5.24.7
GDP Per Capita Growth Rate
With SJERWithout SJER
4.63.4
3.83.0
4.73.5
Productivity Growth
With SJERWithout SJER
4.03.0
3.31.7
4.22.8
Employment Growth
With SJERWithout SJER
2.82.3
4.33.0
0.91.8
UnemploymentRate
With SJERWithout SJER
(3.5)-3.0(3.5)-6.2
(2.2)-2.1(2.2)-5.2
(4.8)-4.6(4.8)-6.7
Population Growth
With SJERWithout SJER
2.32.1
4.12.9
0.51.4
Note: Figures in bracket refer to unemployment rate in 2005Source: Economic and Social Aspect Report, 2006
With Sjer Without SJER
Population Size 3.0 Mil 2.3 Mil
GDP (PPP) in USD billion 93.3 64.1
GDP per capita (PPP) in USD 31,100 26,694
Labour Force 1.46 Mil 1.16 Mil
Employment 1.43 Mil 1.0 Mil
Unemployment 1.8% 5.2%
Employment Productivity in USD Mil PPP 30.5 25.1
Table 4.2: With and Without SJER Intervention
Source: Economic and Social Aspect Report, 2006
2005 2025Population Size 1.353 Mil 3.0 Mil
GDP (PPP) (in USD Million) 20 93.3
GDP per capita (PPP) in USD 14,790 31,100
Labour Force 0.624 Mil 1.46 Mil
Employment 0.610 Mil 1.428 Mil
Unemployment 3 - 4% 1.8%
Jobs Created -Not Applicable- 817,500
Table 4.3: Projected Benefits of SJER
Source: Economic and Social Aspect Report, 2006