04 June 2006


The Star Online > Bizweek
Saturday June 3, 2006
South Johor gets its magic

The possibility of the magic of Disneyland sprinkling its tinsels on a vast piece of land in Southern Johor has turned that spot into a seabed of opportunity

OVERNIGHT, the South Johor Economic Corridor (SJER) has turned into Malaysia’s hottest and most sought after piece of land. Providing a major catalyst for companies and investors to turn their attention to this sweet spot is the Ninth Malaysia Plan, which enveloped a multi-billion-ringgit plan to transform the area into a major economic powerhouse.
The icing on the cake came more recently - plans to lure Disneyland to Johor.
In the last two weeks, it has been widely reported that Malaysia has been in talks with the Japanese operator of Tokyo Disneyland to bring the first Disney theme park to Southeast Asia. It appears that Malaysian government officials and representatives from the government-linked conglomerate UEM World Bhd have been negotiating with Oriental Land to build a theme park of international standard at UEM's 15,343-acre township, Bandar Nusajaya, in the southern part of Johor. The state is said to have set aside investments worth RM2bil for the plan, which could create 20,000 jobs.
Even so, it is clear that apart from Disneyland, other options are also being considered in terms of the development of a major theme park in this spot.
Late in the week, Khazanah Nasional Bhd managing director Datuk Azman Mokhtar said that the masterplan of the development of SJER would be released soon. No doubt, the masterplan will be keenly awaited as it incorporates details on how the transformation is expected to materialise.
For the purpose of the SJER, Khazanah has set up a special team, and planning has been going on for over 10 months. Khazanah’s role in the SJER is two pronged. On the physical and economic aspect, Khazanah has been mandated by the government in the planning and development of the SJER.
Of no less significance is the regulatory and constitutional issues surrounding the area of development. To address these issues, Khazanah is working with the attorney general and its external legal advisors.
Industry observers say that part of the efforts includes drawing up incentives such as tax breaks and so forth to lure foreign investors to the area.
Southern Appeal

It is easy to appreciate the potential of Johor's lure to foreigners, although one must add, that this has yet to be tapped in a big way, up until now.
According to MIDA, Johor is Malaysia’s largest recipient of foreign capital expenditure totalling some RM7.5bil to RM12.5bil between August 2006 to end 2007. This in turn has and will continue to create 14,000 new jobs opportunities.
In terms of connectivity, Johor has the trademarks of an international hub. It has world-class logistics infrastructure and a network of two international airports (Senai and Changi), three international seaports (Port of Tanjung Pelepas, Pasir Gudang and PSA International, the operator of Singapore's ports) and the North-South Highway.
More importantly, it is close to a large manufacturing and commercial base in Singapore. Johor also offers affordable land and skilled labour and has huge tracts of land waiting to be developed.

Biggest beneficiary

With that, the spotlight is back on UEM World Bhd, owner of a huge parcel of land in Nusajaya.
AmResearch’s Gan Kim Khoon says that if the Disneyland project takes off, it would benefit landowners in and around Johor Baru. Arguably, the biggest winner would be UEM World, as the Disneyland project is slated to be in Nusajaya.
“In fact, we understand that the piece of land alienated or designated for an entertainment theme park in Nusajaya is at the southern tip of Johor, in between Johor Baru and Port of Tanjung Pelepas. More specifically, it is adjacent to Danga Bay, a property development project under Ekovest,” says Gan.
UEM World’s managing director and chief executive officer Datuk Ahmad Pardas Senin has confirmed that the company is in talks with Disney, as well as other foreign theme park operators.

“We are in talks with various operators...we are still at the exploratory stages in terms of attracting theme park operators to come and take a look how they find our land, whether it’s suitable for their operations.“
For a project of such size, various elements need to be in place. The fact that Nusajaya is in the SJER, and that the 9MP states that SJER will be a key development area have helped add positive points. This will help us attract the right players to our land,” says Ahmad Pardas.
He adds that 2,400 acres of UEM World’s land have been designated for leisure and entertainment activities.
“This component will have to be there (theme park). The location is such that if you don't have a leisure component, you are not making optimal use of the land. Our land, is so close to major transport hubs. For example it is 30 minutes from Senai, 30 minutes from Changi, 25 minutes from the Port of Tanjung Pelepas, 30 minutes from Johor Baru and 3 hours from Kuala Lumpur by road.
“We need a theme park,
” he says.
Investors looking for some form of confirmation found it in those words over the week.
With that, there are plans to set up a theme park of international standard in Nusajaya. Observers reckon that if it is not carried out by Disney, it may even include other major players such as Universal Studios or Warner Bros.
“If such names come (Disney), it will be an international crowd puller in terms of tourism. The benefit is not just for UEM World or Nusajaya. The multiplier effect is huge, if done successfully,” says Ahmad Pardas.
Very few doubt that. Such a major development of international repute is likely to boost tourism while offering massive job opportunities which will have a positive impact on the economy. Tourism, as it stands, is the country's major foreign exchange earner, second only to manufacturing.
On the ground, it is the taxi drivers, the restaurant owners, and the souvenir shops that will flourish. Hotels, shopping malls and sundry shops will begin mushrooming. All these inadvertently create new job opportunities.
Inevitably, this will also lead to further enhancement to the logistics infrastructure and introduction of commercially and investor-friendly incentives.

Mickey's Multiplier Effect

The value proposition of having a Disneyland in Johor may be easy to appreciate.
Disneyland in Los Angeles has contributed US$3.6bil to the US economy a year. Hong Kong, where Disneyland set up shop in September last year, is banking on the theme park as a major tourist attraction, with expectations of over five million visitors in its first year of operations.
The Hong Kong government owns more than half of the theme park, which cost more than US$3bil to build. The government hopes to earn at least US$19bil over the next 40 years.
Similarly in Malaysia, the appeal of having such a grand scale theme park, apart from providing locals with an attractive holiday option, is the ability to lure tourists. Then, there's the hope that there will be some positive spillover from its neighbour – the additional traffic from Singapore’s yet to be set up integrated resorts. (Singapore is now in the midst of awarding big tourism projects with its huge integrated resort (IR) and casino projects at two sites in Marina Bay and Sentosa Island.)
There is talk in the market that the owners of Nusajaya land may provide the land to the theme park operator for free. This would give the Nusajaya theme park operator more flexibility in pricing its products and services a lot cheaper.
Analysts say that for every RM1bil of new FDI, this could potentially boost Johor’s expected 2007 gross domestic product of 6.2% by a further 1.9%.
Don’t be surprised to witness property prices soaring in Johor, overtaking those in the Klang Valley and Penang. Over the last five years, property prices in Selangor and Penang have risen by 16% and 24% respectively. During this same period, property prices in Johor declined 12%.
This could be due to Johor’s low-cost advantage and proximity to Singapore. However, household income in Johor is substantially lower than in Penang and Selangor. The good part - attracting more investments into SJER will eventually lead to a rise in income levels in Johor.

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