Singapore's investment in Johor has dropped to an alarming level. In the first eight months of this year, Singaporean investment in the state stood at only RM208.9 million.

This is only a mere 11 percent of the total investment from Singapore last year, according to statistics given by the Johor State Investment Centre (JSIC). Last year, the Singaporean investment stood at RM1.9 billion.

Statistics also showed that investments from Singapore slumped to the bottom in 2002 with only RM349,478.

However it improved steadily in the following years with RM22.86 million in 2003, RM1 billion in 2004 and RM1.9 billion in 2005.

The downward trend shown so far this year is worrying local businesses.

And it is not just the investment from across the Causeway that has gone down. The foreign direct investment (FDI) into the state too has hit a stumbling block.

Until August this year, FDI to the state stood at RM2.4 billion - just 44 percent of the total amount which flooded in last year.

According to the JSIC data, from 1999 to this year, Johor's highest direct foreign investment has been in 2005. The state is still trying to catch up to the RM5.9 billion which it got last year.

And inevitably neighbours Singapore contributed a large section of that investment in that year. The investors from the island brought in 32 percent of investment out of the RM5.9 billion.

The year 2005, without a doubt, was a milestone for Johor, as it managed to almost double its foreign investments in that year from 2004.

In 2004 the year with the second highest FDI Johor only managed to secure RM2.3 billion of foreign direct investment.

JSIC is a government agency under the office of Johor Menteri Besar. It was established in August 2004 to promote Johor as the regional preferred investment location.

The Iskandar project

Johor Menteri Besar Abdul Ghani Othman last month revealed the same worrying statistics over the lack of foreign investment.

Singapore, which was the largest investor of Johor for the past two years, was ranked third after Netherlands and Lebanon for the investment between January and September this year, he told the state assembly.

Netherlands topped the list with RM1.2 billion investment followed by Lebanon with RM562 million.

However steps are being taken to make Johor a competitive state in the region.

Recently on Nov 4 the government launched an ambitious Iskandar Development Region (WPI) to develop south Johor.

The project, which saw an initial investment injection by the government to the tune of RM5 billion, is seen as the catalyst to offer a strong competition to Singapore in terms of economic development.

The development area will extend from Johor Baharu to the Senai airport in the north, Port of Tanjung Pelepas in the west and Pasir Gudang in the east.

Besides the initial government investment, to be given under the Ninth Malaysia Plan (9MP), the region has attracted another RM10 billion from private investors, both local and foreign.

Khazanah Nasional and the Employees Provident Fund (EPF) will also invest another RM3.4 billion in strategic projects.

Malaysian no longer attractive

The drop in foreign investments in Johor mirrors the current trend the whole nation is facing.

According to the 2006 World Investment Report published by United Nations, foreign direct investment into Malaysia fell 14.2 percent to US$3.97 billion last year amid a 45 percent leap of FDI into Southeast Asia.

In term of attracting foreign investment, the country dropped four places to sixth out of ten Southeast Asia countries.

Neighbouring Indonesia, for first time since 1990, overtook Malaysia with a shocking increase of 177 percent in its foreign investment to US$5.26 billion.

Meanwhile, our northern neighbour Thailand also closed the gap with Malaysia with US$3.69 billion worth of foreign investment, a jump of 161 percent compared to the year before.

A United Nations Conference on Trade and Development (Unctad) report also noted that Malaysia was the fourth most attractive destination for foreign direct investment in 1990 but is now ranked a lowly 62.

Tomorrow: Johor still hopeful of a windfall