Jul 21, 2014

Malaysia - Johor Sultan Narrows the Singapore Strait

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Massive reclamation projects cause friction between Singapore and Malaysia

Tunku Ismail Idris, the Sultan of Johor, who was batted back a few weeks ago in his bid to gain control of the regulation of land development in his home state, is now precipitating a diplomatic crisis via massive land reclamations that subvert Malaysian laws and pose an environmental dilemma for Singapore.

Tunku Ismail is said to be a substantial shareholder in several real estate and other ventures within the massive Iskandar Malaysia Development Region, covering 2,200 sq. km and including the city of Johor Bahru and three surrounding towns. The project, started in 2006, is named for the current sultan’s late father, Almarhum Sultant Iskandar.

The Iskandar project is three times the land area of Singapore itself, population 5.3 million, and is designed to take advantage of the state’s strategic location just across the now- narrowing strait. Government planners hope Iskandar can take advantage of Singapore’s commercial and economic success in a way that Batam, Indonesia’s closest island, has never been able to do, providing advanced residential, business, education and tourism opportunities.

The projects stirring concerns in Singapore are the Forest Hills residential development, a joint venture between Kumpulan Prasarana Rakyat Johor, the government’s development arm, and Country Garden Holdings, mainland China’s biggest property developer, and a second, also by a Chinese property company, F&F Princess Cove being developed by Guangzhou R&F Properties Ltd. The Sultan is said to have sold six plots of land worth RM4.5 billion (US$1.4 billion) to Guangzhou R&F Properties.

According to a Malaysian businessman with knowledge of the situation, the Chinese property companies bought the land at over-inflated prices with the proviso that they would get the development order. The proceeds from the “over-inflated prices” were said to have gone into the Sultan’s coffers.

The projects are being built on 2,023 hectares of land being reclaimed in the Strait of Johor, with fill stretching all the way from Malaysia’s former shoreline to Singapore’s marine boundary in the middle of the strait, drastically narrowing the strait and setting the stage for serious land erosion. Nineteen creeks, waterways and rivulets empty into the strait, which forms the boundary between Singapore and Johor. With the same volume of water pushing through a narrowed channel, engineers fear the banks will erode badly.

The projects have raised a blizzard of objections from the Singapore government, which says it was given no prior information about them. Singapore Prime Minister Lee Hsien Loong has spoken personally to his counterpart, Prime Minister Najib Tun Razak, at least twice. The Ministry of National Development has raised concerns, as has the National Environmental Agency. Several third-party notes have been sent, formal diplomatic notes between governments.

So far, however, sources say, Najib has not responded. He has been described as frozen to the controls, unable to bring himself to confront the sultan, according to several well-wired Malaysian sources. He was said to be in Johor today (July 16) to meet with United Malays National Organization cadres to break his fast this evening for Ramadan, but is not scheduled to meet with the Sultan.

There are a variety of environmental and economic considerations that could be used to limit the size of the projects, a source in Kuala Lumpur said. The relatively new Tanjong Pelapas port on the Johor side of the strait was designed to be positioned by Malaysia as an alternative to Singapore’s more expensive terminals. Maersk Sealand, the world’s largest container ship operator, holds 30 percent of the port operator, but is said to be concerned at the effect the reclaimed land will have on the channel.

There are also endangered species that could be affected and environmental laws could be used to slow the projects, according to the sources. In addition, while Malaysian environmental law mandates that no more than 50 acres (20.23 hectares) can be approved for reclamation at one time, the huge Country Garden joint venture gets around the environmental restriction by dividing the project into 50-acre segments divided by small watercourses.

But the Malaysian government, unlike the Singapore government, has not sought to use environmental laws to stop or slow the projects. Part of the reason is that Najib and UMNO are afraid to cross the Sultan for political reasons. In the 2013 general election, the party, which considered Johor a stronghold, lost 18 seats to the opposition although it maintains a healthy majority of 56 of the 74 seats in the state assembly. The composition of the state is changing rapidly from rural to urban as Johor in effect becomes a Singapore suburb, diminishing UMNO’s power base. The Sultan remains the figurehead of the religion and the state to rural Malays. Upsetting a man with a volatile temper, who has had several scrapes with the law for violent behaviour before he became Sultan, is considered unwise.

In the meantime, according to accounts in local media, the Sultan’s business dealings have stirred public outcry because of a growing portfolio of projects he controls throughout the Iskandar development including not just real estate but telecommunications, private security and others.

According to sources in Kuala Lumpur, it is the sultan and his family, despite the fact that the sultan’s office theoretically has been reduced to a figurehead who performs only ceremonial and other socio-cultural functions, who has become the real power in the state. Tunku Ismail, according to those sources, has turned his status on its head, making a play to take power.

The Sultan is said to be close to the state’s chief minister, Mohamed Khaled Nordin and in fact attended English College with him. Mohamed sought to table a measure in the Johor legislature that would have given the Sultan control over vast amounts of lucrative state land through the Johor Property and Housing Commission. The measure would have given the sultan the power to appoint board members and investigate the commission‘s books, among other functions.

The Sultan has been accused privately of sanctioning kickbacks, money laundering and a variety of backroom deals. But in the growing atmosphere of political repression of comments about the sultans, his misdeeds have remained unreported and the power play was largely hidden in shadowy language in Malaysia’s mainstream press, along with his behavioral antics.

“A bigger question lingering in the minds of the people is: can the menteri besar (chjief minister) say ‘no’ to the Johor royal family?”

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