Johor Boosts Investments By Creating New Economic Wave In Digital, AI Sectors

By Mohamad Syazwan Mustafa

JOHOR BAHRU, July 9 (Bernama) -- Johor has become one of the most vibrant investment destinations in Malaysia as it continues to record investment approvals totalling RM30.1 billion in the first quarter of this year, creating momentum and a new wave in the country's investment ecosystem through the digital and artificial intelligence (AI) sectors.

In fact, almost 90 per cent of the investments received in the three-month period were in digital infrastructure.

According to Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz recently, the state is expected to handle 60 per cent of Malaysia's total data centre capacity by 2030, in an effort to strengthen its role as a digital hub for Southeast Asia.

The figure is not just a statistic, but is considered a reflection of the effectiveness of the economic policies and framework that have been built by the state government with the strong support of the federal government.

The president of the ASEAN Development Partnership Chamber of Commerce, Datuk Tee Siew Kiong said the courage of the Johor government leadership in implementing investor-friendly policies, for example, is seen as a major catalyst in building investor confidence in the state.

“We congratulate His Majesty Sultan Ibrahim, King of Malaysia, the Regent of Johor, the Tunku Mahkota Johor Tunku Ismail, and the Johor state government for their success in convincing investors to invest in the state.

“This success also reflects the stable administration and strong political landscape in the state. In fact, the Johor government has a team that is quite aggressive and wise in assisting investors who are interested in investing here,” he told Bernama recently.

From Oil Palm and Rubber to Artificial Intelligence        

With the presence of giant multinational corporations (MNCs) based in the south of the country such as Microsoft and major data centre players such as GDS International, Nvidia, AirTrunk in the Kulai district, it seems to be opening a new chapter with the transformation of the district, which was previously a rubber and oil palm plantation area, into a high-tech industrial park.

The distance between the district and Johor Bahru city, which takes 30 minutes to an hour by car, is considered an ideal location for investors to build large-scale data centres.

Senior Lecturer at the Faculty of Management, Universiti Teknologi Malaysia (UTM), Prof Madya Nanthakumar Loganathan described the high-impact service sector such as data centres and logistics as the main focus of investors in Johor, reflecting the change in the state's economic structure from the dominance of the manufacturing sector to the high-tech service sector.

Although several logistics sectors have started operating, he said the smart logistics concept is still in the early stages of implementation and needs time to develop, especially for foreign companies that have just started operations at Sedenak Tech Park (STeP) in Kulai.

“While the manufacturing sector used to dominate, Johor state investments are growing more towards the AI-centric service sector now,” he said.

Meanwhile, economist Prof Madya Maimunah Ali from Johor Business School, Universiti Tun Hussein Onn Malaysia (UTHM), said the increasing presence of global firms in the state reflects recognition of Johor as a conducive investment hub that also stimulates the local economy and strengthens its attractiveness at the national and Southeast Asian levels.

“Johor already has a diverse industrial sector including semiconductors, data centre equipment manufacturing, Cloud scale and most recently AI data centres. By encouraging investment in the value chain, the data centre ecosystem will be strengthened and developed.

“The strong development of data centres provides economic spillover to the development of other sectors such as green energy. The establishment of data centres is also a strategic generator for AI,” she said.

Investor-friendly ecosystem supports AI development

Maimunah said that among the attractive factors in the state are the development of infrastructure and competitive business operating costs and incentives, thus positioning Johor as an "investor-friendly" state.

“Operating costs in Johor are low compared to Singapore. This advantage extends to property costs, labour wages and utility expenses. To support and enhance Johor's attractiveness as an investment hub, the Malaysian government also provides various incentives to attract investments such as tax deductions and incentive grants,” she said.

She added that the focus on developing a data centre ecosystem will drive Johor’s growth as a regional AI hub by providing facilities and investments that support the entire data centre supply chain.

“Johor provides an ecosystem that supports AI development and attracts global technology giants to operate locally. From there, new firms will grow and develop, creating a new economic structure.

“The growth of the new economy will not only strengthen Johor’s economy, but will also increase its global competitiveness in the rapidly changing digital landscape. As such, Johor is poised to become a major leader in AI in the future,” she said.

Nanthakumar believes that the role played by federal and state agencies such as the Malaysian Investment Development Authority (MIDA) and the Invest Malaysia Facilitation Centre Johor (IMFC-J) is important in strengthening the relationship between investors and the government.

“At the state level, the Iskandar Regional Development Authority (IRDA) has also played a role in shaping the flow of investment into Johor,” he said.

In addition, initiatives such as the Johor Fast Lane make it easier for investors to speed up processes such as licensing applications and documentation, which were previously seen as red tapes.

JS-SEZ catalyst

Meanwhile, Tee, who is also the former chairman of the Johor Tourism, Trade and Consumerism Committee, said the implementation of the Johor-Singapore Special Economic Zone (JS-SEZ) is also the most important catalyst for this achievement.

He said the investment momentum exhibited has the potential to bring the state to be among the largest economic powers in the region, especially as Johor increasingly becomes the focus of global attention.

Johor's investment attractiveness is strengthened by its strategic location at the crossroads of the world's major maritime routes — the Straits of Malacca and the South China Sea — thus making Johor an increasingly influential regional logistics and trade hub.

Nathakumar agreed with Tee that with its strategic geographical location bordering Singapore, the JS-SEZ can display its full potential, taking into account the strengths of the Johor-Singapore partnership.

-- BERNAMA