By Thenesh Anbalagan
Budget 2027 presents an opportunity to give Malaysia’s commitment to equitable development a stronger geographical and industrial dimension. The Pre-Budget Statement 2027 recognises that development should respond to the particular strengths and needs of different states, regions and communities, captured in the principle that “resources should follow needs on the ground”. This Policy Brief argues that the same principle should extend more deliberately into industrial policy through a selective, place-based approach. The aim should be to build from what Malaysia already has, rather than create new economic centres from scratch. Malaysia already has a number of forgotten cities with productive, institutional and community foundations that can be strengthened and reconnected to the country’s next phase of economic transformation. This Policy Brief identifies Muar, Kluang, Segamat, Batu Pahat, Ipoh and Taiping–Kamunting as examples. A stronger focus on these places would also send an important signal to communities beyond Malaysia’s main growth centres: that the Government recognises they are more than people and postcodes, and that these places have a history and a heart in this nation. It would tell these communities that the Government sees them, hears them and gives them hope that they can continue to build their lives and futures in the places they call home.
Industrial development must therefore be thought about, understood and advanced through the principle of total development. It is about more than where factories are built or where investment lands. It is about how development can strengthen the country, the places where economic activity takes root, and the lives of the people who sustain it. Total development has three dimensions: macro, meso and micro.
At the macro level, Malaysia should think about how every state and industrial region can contribute to, and benefit from, national progress, and how development in one part of the country can strengthen another through supply chains, logistics, infrastructure, skills, markets and public services.
At the meso level, development should shape the economic ecosystem around a city or industrial region: transport, energy, logistics, industrial land, skills, education, healthcare, housing, technology, environmental management and public services should be planned together over the long term, while related industries, institutions and capabilities are connected rather than allowed to develop in silos.
At the micro level, development must improve what life actually looks like for people who live in and around these places, including their jobs, wages, housing, transport, education, healthcare, public spaces, local services and ability to remain rooted in communities that continue to have economic, social and cultural life.
This approach is more important now given rising geopolitical tensions and how quickly the global economy is changing. Industrial development cannot continue to operate on architectures designed for a different era and expect to solve the challenges of the present. For too long, industrial development has been advanced through artificial labour dependence and an approach of moving fast without thinking long. The result has been a model that attracts investment, expands production and fills labour gaps without asking what kind of economy, workforce and communities it leaves behind.
As we move forward into a new world, starting again from our forgotten cities is one way Malaysia can build back better. A place-based approach allows total development to be put into practice by bringing its macro, meso and micro dimensions together around places that already possess economic and institutional foundations.
This framework matters because Malaysia already has many places with what may be described as a sleeping industrial base. Forgotten cities are often not places without economic foundations. Many already possess factories, SMEs, universities, hospitals, railway lines, industrial land, technical knowledge, social institutions and established communities. Their problem is that these assets have often developed in fragments, become disconnected from one another, or have not been given a clear role in the country’s next phase of growth.
Total development provides a way to bring these pieces together around a coherent economic purpose. The pathways will differ from place to place. Some forgotten cities require industrial upgrading; others need diversification, stronger infrastructure, better logistics, deeper university-industry connections or more capable local institutions. In some places, inherited industrial assets may be better repurposed towards new economic, educational, cultural or community uses. The objective is to identify what each place already has, where those capabilities can realistically lead, and what economic ecosystem must be built around them for development to endure.
Johor provides a useful place to begin because several different development archetypes can be found within one state. Muar already possesses a mature industrial ecosystem spanning furniture, semiconductors, engineering and agro-industrial machinery. Its next phase should deepen the intellectual and technological capabilities around that base, with the longer-term ambition of developing Muar into a knowledge-industrial city, the “Boston of the East”. Kluang can become the economic heart of central Johor by using renewed railway connectivity to shape a stronger logistics and industrial ecosystem around agriculture, manufacturing, warehousing, cold-chain facilities, freight movement and skills, while connecting Muar, Batu Pahat, Segamat, Mersing and surrounding districts more effectively to the national rail network and Johor’s ports. Segamat can strengthen its role as northern Johor’s food and agricultural engine by moving further downstream into processing, logistics, cold chain and agri-technology. Batu Pahat can deepen its manufacturing and SME base through stronger links with educational institututions, applied research, automation and technical capabilities
The same framework can extend beyond Johor. Ipoh and Taiping–Kamunting show how older industrial cities can acquire new economic functions while building on infrastructure, institutions, skills and identities accumulated through earlier phases of development. A forgotten city should therefore be understood as a place whose existing capabilities have not yet been connected to its next economic purpose.
ITotal development does not require a large new fund for every city or the creation of a new economic centre from scratch. The more credible approach is convergence and focus: coordinate existing industrial, infrastructure, skills, university, housing, state, GLIC and private-sector resources around selected places, while directing federal expenditure towards identified constraints that prevent economies from progressing.
Malaysia already possesses many of the ingredients it needs. In its forgotten cities, the firms, workers, roads, universities, hospitals, industrial base and communities are often already there. Budget 2027 should be the catalyst that connects these assets more deliberately, gives these places the confidence and resources to become stronger versions of themselves, and begins building the economic, institutional and social foundations Malaysia will need as it approaches 2030 and beyond. In doing so, Budget 2027 can help create the conditions for Malaysia’s next great leap in development towards 2057-Merdeka100 (or 2063-Malaysia100), one hundred years after Merdeka (or Malaysia). The renewal of Malaysia’s forgotten cities would also send a larger signal about the country we intend to become by its centenary: one in which opportunity is more widely shared, every part of the country is given the chance to contribute, and no one is left behind.