Here's what Iskandar has in store for Singapore's economy

How will Singapore benefit from Tenth Malaysia Plan?

According to DBS, for Malaysia, the IM (Iskandar, Malaysia) project will be a showcase of its current economic transformation process. To address the declining trend in foreign investment and outflow of human capital, as well as to spur the next stage of economic development, Malaysia introduced the Economic Transformation Programme (ETP) and the Tenth Malaysia Plan (10MP) in 2010. 

These two initiatives aim to transform Malaysia into developed nation status driven by a knowledge-based economy. The IM project is essentially a platform to showcase this struc- tural shift and to attract human capital, thereby contributing to the broader macro objectives.

Here's more from DBS:

Separately, Singapore’s keen interest in the IM project is built upon pragmatic and strategic reasons. The potential upside to the IM project is a strong lure but the domestic push factor has also created additional impetus to be in-volved. Singapore is facing tremendous cost pressure resulting from the rapid economic growth in previous years as well as from the current restructuring.

Curbs in foreign labour in a bid to boost productivity and to wean off companies’ dependence on cheap labour supply have led to a labour crunch and significant wage pressure.

Rental and overall business cost have risen sharply in the past few years as well. As a result, profit margins are being eroded and local enterprises that are unable to restructure their businesses or improve productivity will either have to cease their operations or relocate to cheaper destinations.

In this regard, the Iskandar Malaysia region will provide that cost competitiveness and the close proximity to Singapore for these companies.