The Route Master

A series of economic corridors aim to bring investments to sectors in which their respective regions have a competitive advantage, with the promotion, planning, and management carried out by a separate, dedicated government authority for each. Companies located within the corridors receive both tax and non-fiscal incentives, with the aim of attracting FDI as well as local players to set up here.

The first and largest in terms of size and contribution to the economy is Iskandar Malaysia, formerly known as the Iskandar Development Region (IDR). Covering a large part of Malaysia’s most southern state of Johor, on the border with Singapore, this is managed by Iskandar Regional Development Authority (IRDA) and focuses on financial services, education, petrochemical, urban tourism, high tech manufacturing, biotechnology, and food processing. A number of catalytic projects are located within the five “Flagship Zones” that make up Iskandar, including EduCity, one of the Entry Point Projects (EPP) under the National Key Economic Area (NKEA) of Education. EduCity aims to become an educational hub for the region, and already houses a number of prestigious foreign institutions including Newcastle University, University of Southampton and University of Reading Malaysia; for many, Iskandar houses their first and to date only foreign branch campus.
The Northern Corridor Economic Region covers Perlis, Kedah, Pulau Pinang and northern Perak and is administered by Northern Corridor Implementation Authority (NCIA). Its focus areas, based on its geographic location, are agriculture, manufacturing, tourism, and logistics.

The East Coast Economic Region (ECER) is managed by East Coast Economic Region Development Council (ECERDC) and covers the states of Kelantan, Terengganu, and Pahang, as well as the district of Mersing in Johor. The main industry here is tourism and oil and gas, though the corridor also hosts several industrial parks including the Malaysia-China Kuantan Industrial Park, Pekan Automative Park, Gambang Halal Park, and Pasir Mas Halal Park.

The Sabah Development Corridor in Borneo is managed by Sabah Economic Development and Investment Authority (SEDIA) and focuses on agriculture, tourism, logistics, and manufacturing; oil, gas and energy, higher education, and palm oil.

Finally, the Sarawak Corridor of Renewable Energy (SCORE) is managed by the Regional Corridor Development Authority (RECODA) and covers central Sarawak. It was set up to exploit the state’s energy resources, namely hydropower, coal, and natural gas.

The spirit of public-private partnerships (PPPs) is woven into the fabric of the economic corridors, and many of the megaprojects within the corridors are facilitated by the government but carried out by the private sector. “We strongly believe that for a region to have a true economic growth, the government should not involve itself in the act of doing business or the act of investing. It should be left with the private sector,” explains Prof. Datuk Ismail Ibrahim, CEO of Iskandar Regional Development Authority (IRDA).

At the launch of the 11th Malaysia Plan, the government announced that MYR175 billion worth of investments, representing 427,100 new jobs, had been drawn to the five economic corridors between 2011 and 2015. However, 10 years after their inception, the focus is on keeping the corridors relevant and on the radar of local and foreign investors. In early in 2015, the government announced new incentives including eligibility for 100% income tax exemption for up to 15 years for both newly established and existing companies that expand operations into less developed areas. This was also aimed at addressing the gap that still exists (and has arguably been exacerbated) between the different regions in Malaysia. The new incentives are due to provide employment and business opportunities in more rural areas and reinforces the government’s commitment to addressing disparities, one of the main challenges of achieving developed nation status by 2020.