Here's why everyone's crazy about investing in Iskandar, Malaysia

23 Singapore firms are scrambling for it.

Acording to CIMB, Iskandar's proximity and lower operating costs (labour, utilities, rentals etc.) are its two main appeals to Singapore companies. Given the ongoing restructuring of Singapore’s economy, small and medium enterprises (SMEs) have been foraging for ways to mitigate rising costs of doing business in Singapore.

CIMB adds, the Association of Small and Medium Enterprises (ASME) has been in talks with Malaysian developers to build an industrial park in Johor's Iskandar region. Twenty three Singapore firms have expressed interest in the project.

The planned ASME industrial hub will occupy about 50 ha of land. 

Here's more:

Moving at least part of their manufacturing and logistics operations across the Causeway could offer SMEs some respite, while staying within the supply chain of their customers.

Not surprisingly, Singapore manufacturers have been the biggest foreign investors in Iskandar in recent years. We believe the trend will continue, especially given persistently rising costs and the tightening of foreign labour in Singapore.

Johor’s proximity to Singapore makes it particularly attractive to SMEs which supply services and goods to MNCs based in Singapore but are squeezed by rising labour and other costs here.

At Setia Business Park, an eco-friendly industrial park built by SP Setia, 60% of its clients by investment value are from Singapore. SGX-listed snack maker, Old Chang Kee, is among the Singapore firms known to have operations there. Even companies from elsewhere have been attracted to Iskandar. Taiwan’s Foxconn Technology Group, best known for making iPhones and iPads for Apple, has set up a factory in Indahpura Industrial Park. 

In recent years, more than 3,500 Singapore businesses have set up shop across the Causeway in Iskandar with a total investment of more than RM5bn as at Jun 12. Over 70% of the businesses are SMEs Fishing-equipment supplier, Hong Guan, started operations in its Iskandar warehouse in May.

At twice the size of its warehouse in Singapore, Hong Guan's 14,800 sf freehold space cost about S$900,000. Its local warehouse will be shut down.

Singapore-based, privately-owned Link (THM) Holdings will be purchasing 5.9ha of land from Global Capital & Development, the concession holder of Medini Iskandar that represents Iskandar Investment Berhad and Mubdala, the Abu Dhabi Government Investment Company.

Link intends to build a mixed development called Media Village@ Medini Iskandar, to be completed in three phases over five years. Gross development value of the project could exceed S$1bn.

The development site has been earmarked for a media village designed to support Pinewood Studios, a US$150m film and television production facility that is projected to create over 3,000 jobs.