KUALA LUMPUR: Forest City's new designation as a Special Financial Zone (SFZ) will create a multiplier effect benefiting the local economy in the long run, said experts.
They believe its strategic location within Iskandar Malaysia would be effective in not only drawing investment, but also resolving a host of local issues.
Putra Business School Associate Professor Dr Ahmed Razman Abdul Latiff said Forest City's designation as an SFZ would attract highly skilled, high-purchasing power workers into the country, which would create a demand for products and services.
One of the matters that could be resolved, he said, was the overhang of properties in Johor.
"It would be difficult to see a headquarters being moved here from Singapore.
"But by having Forest City as a cheaper alternative, it could become a pivot to relocate operations.
"Or at least if the workers were placed here, when there is an influx of high-skill and high-income individuals, they would consider filling in the gaps (in unsold houses)," he told the New Sunday Times.
He said that should this happen, the next big challenge would be to have seamless transportation for them.
"Both governments would need to figure out the logistics of the workers."
Sunway University economics professor Dr Yeah Kim Leng said Forest City's redesignation as an SFZ could draw in a slew of potential industries.
He said this could come in the form of financial, business and engineering services, regional operational headquarters, data centres, research and development, design and testing services, as well as technology start-ups that constituted the digital economy.
Apart from its location next to Singapore, he said the availability of ready facilities, good transport and communication infrastructures and utilities, a ready pool of managerial and technical manpower, and conducive and safe living environment were the pull factors in attracting foreign investors.
He said numerous multinational companies that were
operating in Singapore but were looking into regional expansion and cost rationalisation were potential candidates to take advantage of the SFZ.
"The creation of an SFZ will enable Malaysia to attract human capital-based and knowledge-intensive investments.
"Given the large number of Malaysians working in Singapore, the other benefit of this policy initiative is that some of them will be able to work and live in Johor if the firms were to relocate or invest in the SFZ to leverage on the lower cost of labour and business operations.
"Global firms looking at establishing a footprint in the Asean markets are also expected to consider the locational and investment incentives offered by the SFZ," he added.
Prime Minister Datuk Seri Anwar Ibrahim on Friday announced that mega multi-million-development project Forest City in Iskandar Puteri, southern Johor, had been designated an SFZ.
He said the move was aimed at simultaneously boosting foreign investment and invigorating economic growth in Iskandar Malaysia.
