500 km MRT for Iskandar Malaysia

Iskandar Region Development Authority (IRDA) was reported to proposed a 500km Mass Rapid Transit in Iskandar Malaysia, Southern Johore. The project, if it was approved by the Malaysian cabinet would likely to be build in 6 phases, with the first phases to be operational by 2020.

The project might be the one that is proposed by the joint-venture company between Malaysia Steel Works (KL) Bhd and KUB Malaysia Bhd. The joint-venture company, Metropolitan Commuter Network Sdn Bhd, is reported proposing for a world-class commuter rail network, which will utilize the existing Keretapi Tanah Melayu Bhd (KTMB) lines in southern Johore area as well as its reserve lands.

The Malaysian government had given the go ahead for a MRT line in the Klang Valley region, which is likely to start in July this year. The Sungai Buloh - Kajang line, which is about 51 kilometres length, and would likely to cost at least RM20 billion for the first line. The entire MRT ecosystem in KL was slated for a price tag at least RM50 billion for a comprehensive MRT lines of 150 kilometres.

Even though the land price in Southern Johore (not including Johor Bahru city area) is much lower than that in the Klang Valley, it is safe to say that the 500 km MRT projects would costs at least a whopping RM100 billion to say the least, considering that less land acquisitions to be made compared with the KL MRT projects, and that the project manager will utilize the existing KTMB's lines and land reserves.

The project might be a catalyst for more liberalization of the construction and infrastructure sector in Malaysia, as it was reported earlier that Singapore would help the Iskandar Malaysia to put in place MRT lines in the economic zone. This is due to the KTMB relinquishing its lands in Singapore (the relocation of KTM stations in Tanjung Pagar and Woodlands in Singapore) to the government of Singapore.

More details of the project and studies should be made in order for Iskandar Malaysia to have an orderly systematical mass public transportation system, which would attract more people to reside there and fully optimize its potential to become a vibrant metropolis.

Enhancing Malaysia's Capital Market

Malaysia's capital market is forecast to reach RM5.8 trillion in market capitalisation by 2020, said Prime Minister Datuk Seri Najib Tun Razak. As at 2010, the capital market is worth more than RM2 trillion, with the bond market at the third largest in Asia compared to GDP ratio, and is a global leader in Islamic financial market.

It is not impossible for Malaysia to reach such a level, and in fact it is seen as something highly likely given that the nation managed to attract more foreign funds investing in the market and also encourage better earnings amongst Malaysia-listed companies. As the economic growth is forecast to be sustainable at 6% for the next decade, it is very much a matter of when, not if, for the Malaysian capital market to reach such a scale in 10 years time.

Nevertheless, the concern is not on Malaysia's performance alone. The FTSE Bursa Malaysia is regarded as an Advance Emerging Market stock exchange. Now this could be a good sign, as the local bourse was regarded as an Advance Market with daily trades exceed that of New York's Stock Exchange in the late 90s, but after the Asian Financial Crisis in 97-98, the exit of foreign funds from the local market has turned it into a lackluster capital market.

The problem with Malaysia as a whole country or economy is that it is neither here nor there. It is yet to be classified as an advance, high-income economy by the OECD, but it is also not really an emerging market with large domestic market and low-cost labour. Countries with a clear definition of where it is today could attract the most investors, as it is easier for investors to determine where to park their money.

Investors invests in Indonesia because of its vast domestic market and low-cost labour and wage structure, Thailand because of its automotive sector which is regarded as the Detroit of Asia, Singapore for its financial services and high-technology investments such as medical equipments and oil refining, and of course China for all the good reasons you could think of ; vast domestic market, relatively low cost-structure, stable political environment, high number of technically skilled workers and so on.

Now, Malaysia has to reinvent itself economically. The nation has to agree to one inspiration, that is to propel its growth into the high-income bracket. It is now among the higher middle-income bracket, on par with Turkey, South Africa, Thailand and Taiwan. It must reinvent its economy so that it could provide a niche for investors to park their money into.

Under the Economic Transformation Program (ETP), the Malaysian government has outlined several initiatives to turn Malaysia into a high-income economy. One of it is the Islamic finance industry and halal industry. Malaysia has all the advantage in the world to become a world leader in the Islamic finance, and it has also one of the most developed Halal industry. So it could capitalize on these sectors two create niche industries which investors could have a more focused investment theme.

Even though Malaysia's Islamic finance industry is one of the most advance in the world, it does not have a mega Islamic bank, one that could rival the likes of JP Morgan, BoA Merryl Lynch, and Royal Bank of Scotland. One suggestion would be to merge locally incorporated and locally owned Islamic banks to become one single entity which could monopolize the industry. For example, CIMB Islamic, Maybank Islamic, Public Amanah, and RHB Islamic, could be merged to become a mega Islamic bank.

The other sector which Malaysia has an advantage is in Palm Oil industry. Malaysia is the second largest palm oil producer in the world after Indonesia, and the palm oil benchmark price is traded in ringgit. It is only natural that Malaysia should assume the position of world leading palm oil refiners and researchers. Palm oil could be used in the production of bio-fuel, and it has many other uses in many industries  such as food processing, chemical industries and many others.

Malaysia also has a viable footprint in the oil and gas industry. Lead by Petronas, Malaysia's oil and gas industry is slated to drive the economic growth by reestablishing the industry's focus from upstream production to downstream research and developments, and oil refining activity. The southern peninsular state of Johore has recently received substantial amounts of investments in this field and is expected to complement Singapore in oil storage and exports facilities.

Singapore to Venture into Nuclear Power

Singapore is studying the possibility for the city-state to utilize nuclear technology for its future power generation.

According to the state's senior minister for trade, industry and education S Iswaran that the government of the city-state has begun preliminary studies on the possibility of the city-state to use nuclear in power generation.

Asian countries has been ambitious in their planning in utilizing nuclear as an energy source, with Indonesia, Vietnam, Thailand and Malaysia has stated their plans to do so in the next decade or so.

However, due to the Japan's earthquake and tsunami which devastated much of the country's north eastern shores last month, which triggered nuclear crisis due to the destruction of the Fukushima Daiichi nuclear power plant in Sendai prefecture, which was caused by the earthquake and tsunami, many Asian countries has put their nuclear ambition on hold.

Risks for earthquake and tsunami is very much high in countries which is situated on the pacific ring of fire, which includes the Phillipines and Indonesia. Indonesia has stated their plans for a nuclear power plant, but stated that they will undertake the highest level of safety precautions if they were to build and commission nuclear power plants for energy generation of the country.

Thailand, though not directly located on the pacific ring of fire, has put their nuclear power plants plans on hold in reaction to the Japan's nuclear crisis in Fukushima. Malaysia has also postponed such plans, as it incurs high capital outlay and there are still more studies should be conducted in the event of nuclear power plant to be commissioned in the country.

Geographically, Singapore is not an earthquake prone island, but its tiny size will make it highly risky for the island-state to commission such a highly dangerous undertakings, even though the Singapore government could boasts of having the best safety precautions for a nuclear power plant to be commissioned there.

Maybe the best option would be for ASEAN member countries to come out with a joint regulation for any member countries to venture into nuclear power plant to comply with ASEAN's best standard of governing and administer the nuclear power plants set to be commissioned here. The ASEAN's best standard should comply with the world's best standard, approved by the International Atomic Energy Agency and the Organisation of Economic Cooperation and Development.