Attracting FDI into Malaysia

Lets recap. Singapore population comprises of about 4.4 million. About 440k are PR and 3.11 million are Singaporean in 2005 Many Malaysian are studying and working there. Some stay in Johor while others are staying in Singapore. Despite the fact that Singapore have one of the most efficient transportation in ASEAN region travelling across the causeway remains a hassle. With frequent jams and crowds the situation doesnt seems to improve after close to 40 years of development. Hopefully when the new CIQ open in 2007 the traffic will improve. When we talk about greater ASEAN integration, we should take note of borderless travel of capital and mobility of the people in ASEAN.

Recently Badawi announce the SJER development in Johor. Given the proximity of Johor to Singapore why cant a greater integration be achieved similar to that of Shenzhen and HK?
Many HK people bought homes in Shenzhen which has a lower property price. Even their rails are linked to their metro system in both cities.

The fact that Singapore the size of 680 km sq is a small city state with no natural resources.
Since separation in 1965 from Malaysia, Singapore transform itself from a third world state to a first world state in a mere 30 years. The exchange rate per SGD rose from RM 1.2 (1985) to RM 1.7 (1995) to RM 2.3 (2006). This enhanced the purchasing power of Singaporeans.

Singapore boast one of the highest per capita income in ASEAN 44k SGD (2005 GDP SGD 193b). Most lived in a 3-4 room flats with average area of 1000 sq feet. Average household number is about 4. Average HDB price in Singapore cost SGD 250-300k which require an average of 25-30 years of loan repayment for a couple earning on average of SGD80k per annum.

Across the causeway, a terrace house cost RM 200-250k with average to 2000 sq feet of living space. The cost of the houses are a bargain as compared to the living cost in Singapore. Imagine if 25% of Singaporean bought a house in Malaysia and spend their income in Johor?

Lets do the calculation = 1 million pop x RM 200k = RM 200 billion

This equals to almost our development budget for 9MP 2006-2010. So what is stopping Malaysia from attracting this simple FDI just right in front of our mouth?

What are the benefits?
* lower loan repayment period
* bigger living space
* Singaporean living in Malaysia can be granted PR status
* constant stream of investment and money in circulation in the Malaysian economy

Singapore promotes ownnership of home. It will be cheaper to buy a house to stay than to rent a house in the long run. But dollar and sense tells us to maximise the comparative advantage, to earn the most and spend our earnings in a place of lower living cost. Economic principle also tells us that in the long run supply and demand will be in equilibrium ie the money that flows into Malaysia will bring the living standard of Malaysia up. Many Singaporeans who have factories in Malaysia are actually staying in the Second Link. Malaysia's culture and living takes time to get used to and human is adaptable by nature. No matter how hard the situation it is, there is always a solution. It is just a matter of how resolve is the person to tackle the situation. An easy solution is to give up.

A thought before ending:
If the living condition of Malaysia is so bad, how does the population of 26 million still survive in it after 49 years of independence. Nature's law is that either you adapt to the environment or you become extinct. No matter how chaotic/ complicated a system is, there is still a system within a system if one chooses to see the workings behind the system.