KUALA LUMPUR: Johor is poised to rival the Klang Valley within the next decade, driven by the transformative development of the Johor-Singapore Special Economic Zone (JS-SEZ).
Economy Minister Rafizi Ramli revealed that early projections estimate the JS-SEZ could contribute approximately US$28 billion annually to Malaysia's gross domestic product (GDP).
"It can easily rival Klang Valley in the next 10 years," he said during a fireside chat at the Forum Ekonomi Malaysia.
Rafizi emphasised the need for Malaysia to establish a new engine of growth, identifying Johor as the state with the greatest potential to assume that role.
"Johor should be able to be that in the next decade," he added.
In 2023, Johor's GDP stood at RM148 billion, compared to Kuala Lumpur's RM249 billion.
The Klang Valley, encompassing Kuala Lumpur, Putrajaya, and six districts in Selangor, remains Malaysia's primary economic hub.
On Tuesday, Malaysia and Singapore officially launched the JS-SEZ with an ambitious target of attracting 100 projects over the next 10 years.
The JS-SEZ spans the Iskandar development region, Forest City, Pengerang Integrated Petroleum Complex, and Desaru, covering a land area of 357,128 hectares. Within Iskandar, the focus areas include Johor Bahru City Centre, Iskandar Puteri, Tanjung Pelepas-Tanjung Bin, Pasir Gudang, Senai-Skudai, and Sedenak.
The SEZ will prioritise new sectors such as aerospace, electrical and electronics, chemicals, medical devices, and pharmaceuticals, alongside established industries like business services, the digital economy, healthcare, manufacturing, tourism, education, logistics, energy, and food security.
Samuel Tan, chief executive officer of Olive Tree Property Consultants, believes Johor has the potential to emerge as Malaysia's second economic powerhouse, complementing the Klang Valley.
"While it is unlikely Johor will surpass the Klang Valley in the immediate future, it has the ingredients to position itself as a critical growth hub for Malaysia," Tan told Business Times.
He highlighted the JS-SEZ as a key driver of Johor's economic transformation, attracting significant investments and fostering cross-border trade, talent exchange, and innovation due to its strategic proximity to Singapore.
"Johor's infrastructure continues to expand with projects like the Rapid Transit System linking Johor Bahru to Singapore, alongside improvements in road and port facilities. These enhance Johor's position as a hub for logistics, trade, and business," he said.
The state has also seen notable investments in manufacturing, data centres, and green energy sectors.
Johor's robust oil and gas industry, anchored by the Pengerang Integrated Petroleum Complex, adds to its economic diversity.
Tan further noted that Johor's comparatively affordable land and property prices make it an appealing option for businesses and residents, positioning the state as a key player in Malaysia's future economic growth.
"JS-SEZ must have a wider vision beyond the countries. The synergy from both countries should be leveraged to attract investors from other countries to the region. The uniqueness and close proximity of the two regions made the JS-SEZ so different and difficult to be duplicated. I believe within Malaysia similar model will be set up. What is important is the implementation," Tan said.
Juwai IQI co-founder and group chief executive officer Kashif Ansari said Johor is not a rival to the Klang Valley but a partner to it.
Together, these regions will help propel the Malaysian living standards to new heights, he said.
"Johor's success will benefit the Klang Valley, just as growth in the Klang Valley also benefits Johor," he told Business Times.
Kashif said that Johor Bahru contributed about 9.5 per cent of the country's GDP in 2023, compared to 16 per cent for Kuala Lumpur and 25 per cent for Selangor.
"The government forecasts the SEZ will add US$26 billion per year to the national economy by 2030. With that kind of growth, in 2030 Johor would be a close match for the economy of Kuala Lumpur as it is today.
"The government expects rapid growth in the SEZ, but it is achievable. Malaysia has a track record of relatively rapid growth," Kashif said.
He added that coming to an agreement with Singapore for a mutually beneficial special economic zone is a significant accomplishment.