On the other hand, an economist points out that it would take more than a political decision to make such a plan work.
Malaysian International Chamber of Commerce and Industry (MICCI) president Christina Tee said such a move could attract start-ups from Singapore to move their operations to Malaysia.
She said lower operational costs, better infrastructure and more attractive incentives would be a draw for new businesses.
The government announced on Aug 25 that a special financial zone would be created in the Forest City property development area to stimulate investment and economic growth in Johor.
Prime Minister Anwar Ibrahim, who is also finance minister, said there would be several incentives for companies operating in the zone such as a special income tax rate of 15% for skilled workers and multiple-entry visas.
Tee said the investment, trade and industry ministry should work closely with the local council and the state government to achieve the objective.
“The government should look to attract investments in high technology, information technology as well as research and development to the special financial zone,” she told FMT Business.
“Instead of allowing our highly skilled talents to leave for Singapore, we should bring Singaporean jobs to Johor so that our talents can stay in Malaysia,” Tee said. “This can help to prevent brain drain.”
About 5.5% of Malaysians have emigrated for better prospects, compared with the global average of 3.3%.
Of the 1.86 million Malaysians living abroad, 1.13 million are in Singapore, human resource minister V Sivakumar said recently.
However, economist Carmelo Ferlito of the Center for Market Education said a town such as Forest City cannot be deemed a financial or tech hub based on decisions made by politicians.
“Cities are emergent orders, the result of bottom-up decentralised processes of human interactions,” he told FMT Business.
“As such, they can’t be planned like an artist plans a painting. They emerge. A city can’t be a financial centre or a tech centre because of some political decisions,” he added.
When making the proposal, Anwar said Johor’s strategic location next to Singapore, the availability of complete infrastructure and lower costs would appeal to businesses from across the Causeway.
A lot of controversy surrounds Forest City, a property development project adjacent to the Straits of Johor comprising four artificial islands spanning just over 28 sq km.
The project has been labelled as a failure. Seven years after it was launched, a large proportion of its 6,000 residential and business units remain unoccupied, leading to comments that it is a “ghost town”.