Iskandar follows the Shenzhen script

Efforts to transform the Malaysian border zone near Singapore into a bustling commercial corridor appear to be on track after a rocky start.

The zone, known as Iskandar, is emerging as an attractive opportunity that deserves to be on the radar of those considering investment in the new growth centres of Asia.

Iskandar is a 2,216 square kilometre urbanisation project, three times the size of Singapore. Nusajaya, the residential zone at its core, which stares across the water at the Singapore skyline, is just a 45-minute drive from Singapore's Changi airport. The zone is geared towards a residential metropolis with educational, medical and theme-park infrastructures being used to attract resident migrants from Singapore. Logistics, transport and industrial-related infrastructure is being developed in adjacent zones.

One reason that Iskandar makes investment sense is that it complements Singapore's new economic strategy. The city state's sharp rise in housing prices and schooling costs is creating a natural pool of demand for low-cost living within commuting distance. This pool also includes the growing ranks of Singaporean pensioners struggling to survive in a low-yield and high-inflation environment. Iskandar's new industrial parks offer the lure of cheap labour, good logistics and infrastructure. For Malaysia, it offers the possibility of regenerating the neighbouring border city of Johor Bahru, improving cross-border connectivity and bringing in cross-border investment in a golden era of Malaysian-Singaporean relations.

Malaysian planners borrowed heavily from China's experience in fostering rapid industrialisation of the Pearl River Delta economic zone. Authorities in Kuala Lumpur identified the Johor border zone in 2006 as one of Malaysia's five special economic corridors, reminiscent of the way Shenzhen was singled out as one of China's five special economic zones in 1979.

However, it has only been since 2011, when Singapore's sovereign fund Temasek announced a 30 billion Malaysian ringgit (HK$6.33 billion) joint investment with its Malaysian counterpart Khazanah that overseas investors started taking Iskandar seriously.