However, even as the region looks towards Singapore's vocational institutions to meet their skilled labour needs, the authorities there may import foreign manpower in the short term to help SMEs from Singapore.
In an exclusive interview with The Business Times, Syed Mohamed Syed Ibrahim, the president and CEO of Iskandar Investment Berhad (IIB), said that Singapore companies should still give Iskandar a chance despite the manpower challenges there.
"My message to the Singapore SMEs is that I will definitely still tell them to come because labour is something that we can easily procure from the market if the need is immediate - whether local or foreign," he said. However, if the SMEs are looking towards the medium term for suitably skilled labour, then they should wait for up to three years for the institutions within Iskandar to help create this pool.
Mr Syed Mohamed said that Iskandar was working on collaborating with the Singapore Retail Academy (SRA) on developing talent for the retail sector, and that the IIB was considering approaching Singapore's Institute of Technical Education (ITE) to provide vocational training.
The issue of the lack of skilled labour is a real one, according to Mr Syed Mohamed. It was a factor the authorities considered from the onset when the Iskandar region was conceptualised and that was why the EduCity cluster within the region was created as it was not just meant to be an educational hub alone as there is another such hub in Malaysia in Bander Seri Alam.
"Basically, the objective of this education hub is to help fulfil the needs of the industries," he said.
However, this alone would not suffice, even though he projects the institutions there to supply about 5,000 personnel in about 10 years' time to the region and that a second phase of EduCity, known as EduPark, has been added to plug the gap in executive education, research and development, and technical education.
Mr Syed Mohamed said that due to the gestation period of the institutions within EduCity, the limited land space in it and the lack of vocational institutions there, it is important that Iskandar rely on sources of supply of labour that are outside as well.
"When we look into the education cluster (in EduCity), the whole value chain of it, we have at the moment tertiary institutions and international schools but we don't have yet vocational institutions. (Therefore) from the perspective of EduCity to meet the needs of Nusajaya, we have a gap and we are working very hard to address this."
From the government point of view, a structured training programme, National Occupational Skills Standards (NOSS), helps to churn out skilled labour in Malaysia and part of this will be channelled towards meeting the needs of the Iskandar region.
According to the Malaysian Department of Skills Development, the number of students in NOSS programmes across Malaysia in the past two years was some 101,450 in 2012 and about 89,252 in 2011.
In fact, for the Legoland theme park in Iskandar, NOSS worked with its operator, Merlin Entertainment Group (Merlin), to provide their manpower needs, Muhammad Zainal Ashikin, chief development officer of Themed Attractions & Resorts at Iskandar Malaysia, told The Business Times.
"Once Merlin had a clear definition of its manpower requirements, we worked closely with the Department of Skills Development Malaysia, which is the custodian of NOSS," he said.
NOSS helped churn out 700 personnel from its basic skills-level training programmes for Legoland, out of which 80 per cent were from the Johor region and 10 per cent from the remainder from Sabah and Sarawak. Besides a few managerial positions, this allowed Legoland to establish an almost complete Malaysian workforce. Mr Zainal added that it was helpful that Merlin identified its labour requirements early, allowing them to work with NOSS to recruit suitable candidates from the programme, and so, it is key for companies coming to Iskandar to have a clear vision.
Apart from Legoland, the Johor Premium Outlets is also another example where the workforce required was supplied locally by tapping the institutions already identified by the government because at one point they were looking to use foreign talent from the Philippines and others, Mr Syed Mohamed said. "But ultimately what we have working over there are locals."
Outside of Malaysia, institutions from Singapore could play a key role in complementing NOSS to provide vocational training for the manpower needs of Iskandar Malaysia. "That is actually the plan. There is the retail academy in Singapore, that has long been established relative to what we have here, and we have made contact with them because apart from providing their own courses, they also have collaboration with a UK university for masters course in retail. So instead of inventing something new, we thought why don't we establish this collaboration with them, and that is actually being done," Mr Syed Mohamed said.
However, when contacted, the SRA said that it is still reviewing its strategic direction and is undecided on this venture. "Until we decide on the review, we will then resume looking at any collaboration," said Choy Sok Jee, assistant director of industry & manpower at the academy.
As the region develops and demand for labour there grows, it is unclear if even the eventual ecosystem will be sufficient.
The Iskandar Regional Development Authority projects that the labour force in Iskandar Malaysia will increase from 618,000 in 2010 to 1.46 million in 2025 - an increase of 842,000 in 15 years. The effects of a tight labour force could lead to an upward pressure on wages as has already been seen.
The Malaysian media recently quoted Johor State Human Resources and Unity Committee chairman R Vidyanathan as reporting at the State Legislative Assembly that the workers at Legoland received a minimum salary of RM1,600 (S$620) while managers and technicians were paid RM2,200 a month, and that the salaries were quite high compared to other areas in the state.