Published November 4, 2008

Global crisis cools investor interest in Iskandar

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(KUALA LUMPUR) Iskandar Malaysia, an economic zone in the southern state of Johor, is seeing lower investor interest since June due to the global financial crisis, an official said yesterday.

'Earlier in the year until June, we received I think, two or three groups of investors visiting Iskandar from overseas on a daily basis; but now you can see that probably in one week, we just receive two or three visits,' investment and business head Noor Azwa Mohd Noor said at a conference.

Iskandar Malaysia is sprawled over 2,200 sq km, three times the size of neighbouring Singapore, and is Malaysia's attempt to create a business hub in the region.

But its success has been limited as investors remain cautious due to the country's political uncertainty and, more recently, the global financial crisis.

Mr Noor Azwa said that Iskandar may have to ask the government for funds to help the project in the current economic conditions.

'We believe for Iskandar Malaysia, we have to play our part in terms of asking the government to give more funds for development, because that will be crucial in terms of mitigating the impact of slowdown of economy globally,' he said.

Iskandar is aiming at an annual gross domestic product (GDP) growth of 8 per cent till 2025, and has not revised this target, said Mr Noor Azwa.

The project saw growth of 7.1 per cent and 6.3 per cent in the first and second quarters respectively, and Mr Noor Azwa said that the first half of 2009 would be 'crucial'. He also said that there was substantial investment in many Iskandar projects from the Middle East, and emerging economies may help the project even if interest from the West waned.

'There will be a slowdown in some parts, probably the US or Europe, but China and India and the Middle East are going to be strong,' he said.

'Our focus going forward for the next six to 12 months is just going to be those that are still showing strong economic growth.'

Much of the investment in Iskandar from the Gulf Arab region has gone into real estate.

Islamic lender Kuwait Finance House, Abu Dhabi investment agency Mubadala Development Co, Aldar Properties and Dubai- based Limitless are among those who have signed up for the multi-billion dollar scheme.

Malaysia's state-owned builder UEM World is also developing land in this area. -- Reuters