Deng's wisdom echoes around Malaysia

PUBLISHED : Tuesday, 11 September, 2007, 12:00am
UPDATED : Tuesday, 11 September, 2007, 12:00am

In the 1980s, when Deng Xiaoping proposed 'one country, two systems' as the solution to the Hong Kong issue, he asserted that such an approach could be useful in tackling other international problems as well. Now, it appears, Malaysia and Singapore are borrowing a leaf from Deng's book.

To revive the moribund Chinese economy, Deng designated Shenzhen - then little more than a village - as China's first special economic zone. It worked. Today, Shenzhen has been transformed into a metropolis of 10 million people, largely because of its proximity to Hong Kong.

Now, Malaysia's Prime Minister Abdullah Badawi is turning part of Johor - the country's southernmost state, adjoining Singapore - into a special economic zone. This is the Iskandar Development Region (IDR), which Mr Abdullah has openly likened to Shenzhen - with Singapore playing the role of Hong Kong.

Just as Shenzhen attracted investment from Hong Kong by offering abundant cheap land and labour so, it is hoped, the Iskandar region will provide new opportunities to Singaporean entrepreneurs, to the benefit of both Malaysia and Singapore. Iskandar is several times the size of Singapore.

Malaysia is hoping that Johor will become a logistical hub as well as a centre for medical, educational and financial services. Mr Abdullah has promised investors big returns: 'We mean business,' he said. 'Our vision is to make south Johor the new international address for business, investment and leisure.'

Of course, Shenzhen has been a mixed blessing for Hong Kong. The former British colony saw its manufacturing base move across the border, along with related jobs.

Similarly, Singapore fears the loss of industries and jobs to Johor. Even so, Minister Mentor Lee Kuan Yew says the city state should support the new economic zone because, in the long run, 'it is better for both countries that Malaysia benefits from Singapore's economic growth, and vice versa'.

Mr Lee's son, Prime Minister Lee Hsien Loong, held a two-day retreat with Mr Abdullah in May, when they discussed the Johor project.

The Malaysian leader told Mr Lee then that he welcomed Singapore's investment, and that: 'I see the position of Singapore vis-a-vis the IDR is like that of Hong Kong and Shenzhen ... investment from our neighbour would be welcome, in whatever form and activities.'

Singapore's response was positive. The two governments decided to set up a high-level joint ministerial committee, which held its first meeting in July.

However, not all is sweetness and light. Precisely because Singapore responded so positively, Harakah newspaper, the organ of the opposition Parti Islam se-Malaysia, warned: 'When Singapore is so enthusiastic about the IDR and says it is willing to help Malaysia progress by participating in the IDR, Malaysia must be on its guard. We must find out what Singapore will stand to gain that has made it so eager to participate.' And former prime minister Mahathir Mohamad declared: 'If we give more land to Singapore, one day we [will] lose south Johor just like we lost Singapore.'

Relations between Malaysia and Singapore have improved markedly since Dr Mahathir's retirement in 2003. At their May meeting, the two prime ministers agreed to try to resolve outstanding issues, such as the price of water Malaysia sells to Singapore, the use of Malaysian airspace by Singapore's air force during training, the redevelopment of Malaysia's railway land in Singapore and a bridge to replace the causeway that links the two states.

Malaysia has also set up an advisory panel to help in the Iskandar project. Only time will tell how successful this project will be. But it does call attention to Deng's wisdom in designating Shenzhen a special economic zone.

Frank Ching is a Hong Kong-based writer and commentator.