ASSESSING THE SMART CITY INITIATIVES ON THE

FOREIGN DIRECT INVESTMENT (FDI) INFLOWS IN

ISKANDAR MALAYSIA

LOW MEI TENG

LIM YANG

SEVINDER TAN ZHI YING

PROJECT REPORT SUBMITTED IN PARTIAL FULFILMENT OF

THE REQUIREMENT FOR THE DEGREE OF MASTER OF

BUSINESS ADMINISTRATION UNITAR INTERNATIONAL

UNIVERSITY

MAY 2024
 APPROVAL PAGE

TITLE OF PROJECT

ASSESSING THE SMART CITY INITIATIVES ON THE FOREIGN DIRECT

INVESTMENT (FDI) INFLOWS IN ISKANDAR MALAYSIA

NAME OF CANDIDATE

LOW MEI TENG MC230924577

LIM YANG MC230924603

SEVINDER TAN ZHI YING MC230521712

The undersigned certify that the above candidate has fulfilled the condition of the project

paper in partial fulfillment for the degree of Master of Business Administration.

SUPERVISOR:

Signature : ………………………………….

Name of supervisor : Assoc. Prof. Dr. Puteri Aina Binti Megat Ameir Noordin

Date :

ENDORSED BY:

Signature : …………………………………..

Name : Dr. Liew Cheng Siang

Dean, Faculty of Business,

UNITAR International University

Date :

ii
 DECLARATION

We hereby declare that the work in this project is my own except for quotations and

citations which have been duly acknowledged.

DATE: _________________________________

LOW MEI TENG

MC230924577

DATE: _________________________________

LIM YANG

MC230924603

DATE: _________________________________

SEVINDER TAN ZHI YING

MC230521712

iii
 ABSTRACT

This research paper examines the impact of smart city initiatives on the economic

development of Iskandar Malaysia through a qualitative analysis of thematic elements

derived from in-depth, semi-structured interviews. The main research objectives are to

provide an overview of smart city initiatives in Iskandar Malaysia, identify the indicators

of these initiatives, and examine their trajectory outcomes. A total of five informants,

representing both local authorities and federal agencies, were interviewed for

approximately one hour each. The study employed thematic analysis to identify key

factors influencing the success of smart city projects, supported by two pilot tests to refine

the interview process and thematic framework. The thematic analysis identified three

main themes that align with the research objectives. These themes underscore the need

for a holistic and integrated approach to smart city development to maximize economic

growth and enhance the region's global competitiveness. To ensure validity and reliability,

multiple coding strategies and triangulation methods were used. The thematic analysis

identified six critical propositions: alignment of smart city initiatives with economic

development goals, the pivotal role of technological advancements, the importance of

policy frameworks, the significance of human capital, the impact of geographical location,

and the necessity of robust data governance. The findings, as illustrated in the diagram,

highlight the interconnectedness of these elements in fostering a conducive environment

for attracting foreign direct investment (FDI) and promoting sustainable urban

development in Iskandar Malaysia.The study concludes with a recommendation for future

research to validate these findings through quantitative methods to further solidify the

conclusions drawn.

iv
 ACKNOWLEDGEMENT

This research project has been an enlightening journey, and it would not have been

possible without the support and contributions of several individuals and organizations.

Firstly, we would like to express my deepest gratitude to my supervisor, Assoc. Prof. Dr.

Puteri Aina Binti Megat Ameir Noordin, whose guidance, encouragement, and insightful

feedback were invaluable throughout the course of this research. Your expertise and

patience have been instrumental in shaping this study. We extend my heartfelt thanks to

the informants who generously shared their time, experiences, and knowledge during the

interviews. Your insights provided the foundation for this research and enriched the

findings with real-world perspectives. We are also grateful to UNITAR International

University for providing the necessary resources and a conducive environment for

conducting this research. The support from the faculty and administrative staff has been

greatly appreciated. To our family and friends, thank you for your unwavering support

and understanding throughout this demanding period. Your encouragement and love kept

us motivated and focused. Lastly, we are grateful to all those who, directly or indirectly,

contributed to the successful completion of this research. Your support has been

invaluable, and we are deeply appreciative of your contributions.

Thank you.

Low Mei Teng

Lim Yang

Sevinder Tan Zhi Ying

v
 TABLE OF CONTENTS

APPROVAL PAGE .......................................................................................................... ii

DECLARATION ............................................................................................................iii
ABSTRACT ..................................................................................................................... iv
ACKNOWLEDGEMENT ................................................................................................ v
LIST OF TABLES ........................................................................................................... x
LIST OF FIGURES ......................................................................................................... x
LIST OF ABBREVIATIONS ........................................................................................ xi
LIST OF APPENDICES ............................................................................................... xii

CHAPTER 1 ..................................................................................................................... 1
INTRODUCTION ............................................................................................................ 1
1.0 Introduction ............................................................................................................. 1
1.1 Background of the study ......................................................................................... 1
1.2 Problem statement ................................................................................................... 4
1.3 Research objective .................................................................................................. 7
1.4 Research questions .................................................................................................. 7
1.5 Scope of the study ................................................................................................... 8
1.5.1 Technological Advancements and Smart Initiatives ........................................ 8
1.5.2 Human Capital Development ........................................................................... 9
1.5.3 Policy Frameworks .......................................................................................... 9
1.5.4 Research Gap and Significance ........................................................................ 9
1.5.5 Methodological Approach ................................................................................ 9
1.6 Significant of the study ......................................................................................... 10
1.6.1 Theoretical Contribution ................................................................................ 10
1.6.2 Methodological Value .................................................................................... 11
1.6.3 Practical Implications ..................................................................................... 11
1.6.4 Societal Impact ............................................................................................... 12
1.7 Definition of key terms ......................................................................................... 13
1.8 Organization of the chapters ................................................................................. 15
CHAPTER 2 ................................................................................................................... 17
LITERATURE REVIEW ............................................................................................... 17
2.0 Introduction ........................................................................................................... 17
2.1 Field of Study ........................................................................................................ 18
2.2 Relevant Concepts ................................................................................................. 19

vi
 2.2.1 Smart City Initiatives ..................................................................................... 19
2.2.2 Foreign Direct Investment (FDI) ................................................................... 20
2.2.3 Technology ..................................................................................................... 21
2.2.4 Human Capital ............................................................................................... 21
2.2.5 Policy ............................................................................................................. 21
2.3 Research gaps ........................................................................................................ 22
2.4.1 Summary table of literature review and identification ................................... 22
2.5 Relevant theories ................................................................................................... 41
2.6 Research framework.............................................................................................. 42
2.7 Propositions ........................................................................................................... 43
2.8 Chapter summary .................................................................................................. 45
CHAPTER 3 ................................................................................................................... 47
RESEARCH METHODOLOGY .................................................................................... 47
3.0 Introduction ........................................................................................................... 47
3.1 Research Philosophy ............................................................................................. 47
3.1.1 Constructivism in Qualitative Research ......................................................... 48
3.1.2 Application of Constructivism ....................................................................... 48
3.1.3 Critical Realism in Qualitative Research ....................................................... 48
3.1.4 Integrating Critical Realism ........................................................................... 49
3.1.5 Methodological Approach for Qualitative Research ..................................... 49
3.2 Research Design .................................................................................................... 50
3.3 Research Instrument Development ....................................................................... 50
3.3.1 Instrument Measurement ................................................................................ 50
3.3.2 Instrument Design .......................................................................................... 55
3.4 Data Collection ..................................................................................................... 57
3.4.1 Unit of Analysis ............................................................................................. 57
3.4.2 Unit of Observation ........................................................................................ 58
3.5 Population and Sampling ...................................................................................... 58
3.5.1 Sampling Frame ............................................................................................. 59
3.5.2 Sample Size .................................................................................................... 61
3.5.3 Sample Response Rate ................................................................................... 61
3.5.5 Sampling Error ............................................................................................... 62
3.6 Data Collection Procedures and Techniques......................................................... 63
Phase 1: Data Transcribing ..................................................................................... 65
Phase 2: Code Generation ....................................................................................... 65
Phase 3: Themes ...................................................................................................... 65
Phase 4: Thematic Mapping .................................................................................... 66

vii
 Phase 5: Themes Definition .................................................................................... 66
Phase 6: Theme Analysis ........................................................................................ 66
3.7 Pilot Test ............................................................................................................... 66
3.7.1 Thematic Analysis from the Pilot Test .......................................................... 67
3.8 Summary ............................................................................................................... 78
CHAPTER 4 ................................................................................................................... 79
METHODOLOGY.......................................................................................................... 79
4.0 Introduction ........................................................................................................... 79
4.1 Interpretive Paradigm ............................................................................................ 79
4.2 Data Analysis Process ........................................................................................... 80
4.3 Within-case and cross-case ................................................................................... 83
4.3.1 Within-case .................................................................................................... 84
4.3.2 Cross-case ...................................................................................................... 85
4.4 Phase 1: Data Transcribing from interviews ......................................................... 87
4.5 Phase 2: Code generation to identify patterns ..................................................... 100
4.6 Phase 3: Themes categorization to find commonality ........................................ 101
4.7 Phase 4: Thematic mapping of similarities and differences................................ 106
4.8 Phase 5: Themes definition ................................................................................. 111
4.9 Phase 6: Theme Analysis .................................................................................... 115
4.9.1 Technology ................................................................................................... 115
4.9.2 Human Capital ............................................................................................. 116
4.9.3 Policy ........................................................................................................... 118
4.9.4 Location ....................................................................................................... 119
4.9.5 Data Governance .......................................................................................... 119
4.10 Summary ........................................................................................................... 121
CHAPTER 5 ................................................................................................................. 123
DISCUSSION, IMPLICATION AND CONTRIBUTION........................................... 123
5.0 Introduction ......................................................................................................... 123
5.1 Overview of findings .......................................................................................... 123
5.2 Discussion of proposition .................................................................................... 124
5.2.1 Smart city initiative ...................................................................................... 125
5.2.2 Technological ............................................................................................... 126
5.2.3 Policy ........................................................................................................... 128
5.2.4 Human capital .............................................................................................. 130
5.2.5 Location ....................................................................................................... 133
5.2.6 Data governance ........................................................................................... 135
5.3 Summary of the discussion ................................................................................. 137

viii
 5.4 Solving research problem .................................................................................... 138
5.5 Answering research objectives ............................................................................ 142
5.6 Fulfilling research objectives .............................................................................. 145
5.7 Implications of research ...................................................................................... 148
5.7.1 Theoretical Implications............................................................................... 148
5.7.2 Practical Implications ................................................................................... 152
5.7.3 Regulatory Policy Implication ..................................................................... 154
5.8 Contributions of research .................................................................................... 157
5.8.1 Theoretical Contributions ............................................................................ 157
5.8.2 Practical Contributions ................................................................................. 158
5.8.3 Regulatory Policy Contributions .................................................................. 159
5.9 Limitations .......................................................................................................... 161
5.9.1 Methodology Limitations ............................................................................. 161
5.9.2 Applicability Limitations ............................................................................. 162
5.10 Recommendations for Future Research ............................................................ 163
5.11 Conclusions ....................................................................................................... 165
References ..................................................................................................................... 167

ix
LIST OF TABLES

Table 1.1 .......................................................................................................................... 13

Table 2.1 .......................................................................................................................... 26
Table 3.1 .......................................................................................................................... 55
Table 3.2 .......................................................................................................................... 60
Table 3.3 .......................................................................................................................... 76
Table 3.4 .......................................................................................................................... 77
Table 4.1 .......................................................................................................................... 84
Table 4.1 ........................................................................................................................ 101
Table 4.2 ........................................................................................................................ 102
Table 4.3 ........................................................................................................................ 107
Table 4.4 .......................................................................... Error! Bookmark not defined.
Table 4.4 ........................................................................................................................ 112

LIST OF FIGURES

Figure 2.1 ........................................................................................................................ 41

Figure 2.2 ........................................................................................................................ 43
Figure 3.1 ........................................................................................................................ 64
Figure 5.1 ...................................................................................................................... 124

x
LIST OF ABBREVIATIONS

FDI Foreign direct investment

RO1 Research objectives 1

RO2 Research objectives 2

RO3 Research objectives 3

xi
LIST OF APPENDICES

xii
 CHAPTER 1

INTRODUCTION

1.0 Introduction

This chapter presents the background of the study, outlining and exploring the concept

of smart cities initiatives and potential influence on foreign direct investment (FDI). The

chapter highlight the issues, problem statement, establishment of the research questions

and research objectives, as well as the justifications of the study. Additionally, it defines

key terms, outlines the scope of the topic, and explains the significance of the research.

1.1 Background of the study

This chapter introduces the research study Assessing Smart City Initiatives on FDI in

Iskandar Malaysia. It trying to explore the concept of the smart city initiatives and their

potential influence on FDI in Iskandar Malaysia, within the framework of the Malaysia

Smart City Framework 2019-2025 and Smart City Iskandar Malaysia. The research gap

is identified regarding the understanding of how smart city projects contribute to

economic prosperity and FDI attraction in Iskandar Malaysia, particularly focusing on

technological advancement, human capital development, and policy enactment. The

chapter outlines research objectives and questions aimed at investigating this relationship.

It defines the study's scope, focusing on Iskandar Malaysia and foreign investment

businesses, and discusses the study's significance in contributing to theoretical,

methodological, and practical knowledge in smart city development and FDI attraction.

Key terms are defined throughout for clarity.

1
 Foreign Direct Investment (FDI) is a pivotal concept within the globalized

business and economic landscape, signifying investments made by one entity in a foreign

nation's businesses (Haudi, Wijoyo & Cahyono, 2020). This strategic investment not only

facilitates global business expansion but also ensures cost efficiency and profit

optimization. Moreover, FDI contributes significantly to infrastructural and social

development, particularly in less developed or developing nations (Haudi, Wijoyo &

Cahyono, 2020).

In the context of developing nations like Malaysia, FDI is widely acknowledged

as a catalyst for economic growth (Li & Tanna, 2019). These countries actively pursue

FDI as it holds the promise of catalysing economic activity through significant capital

injections, infusion of advanced technologies, and introduction of innovative concepts.

Furthermore, FDI plays a crucial role in addressing the pressing issue of unemployment

in developing countries by generating substantial employment opportunities (Rong, Liu,

Huang & Zhang, 2020).

Iskandar Malaysia, established as Malaysia's first economic region in 2006, spans

an expansive area of 2,200 square kilometres within southern Johor, roughly three times

the size of Singapore. Encompassing pivotal locales such as Johor's industrial centre Pasir

Gudang, its capital city Johor Bahru, Iskandar Malaysia, Kulai, Sedenak, and a segment

of Pontian town, making it a significant economic zone in the region (Iskandar Regional

Development Authority (IRDA), 2023). Before the inception of Iskandar Malaysia,

foreign investment experienced a declining trend (Ibrahim & Ali, 2014). However, after

its establishment, Iskandar Malaysia has notably improved in attracting foreign

investments. Johor was the top state for FDI inflow, with RM70.6 billion recorded in

2022, representing 27 per cent of the total (SHAH, 2023; Malaysian Investment

Development Authority (MIDA), 2023). This impressive achievement underscores the

2
thriving economic environment is reinforced by its Smart City agenda (Iskandar Regional

Development Authority (IRDA), 2023).

The Smart City Iskandar Malaysia was official endorsed by the Prime Minister of

Malaysia on 1st November 2014, serves as an added-value-enabler, aiming to facilitate

ease of doing business and enhance living standards within Iskandar Malaysia (Iskandar

Regional Development Authority (IRDA), 2023; NATIONAL DIGITAL

DEPARTMENT, 2024 ). This initiative is structured around three key areas, with a

particular emphasis on bolstering the economy (Iskandar Regional Development

Authority (IRDA), 2023; NATIONAL DIGITAL DEPARTMENT, 2024 ).

The construction of smart cities has significantly improved the quality of FDI

utilized in pilot cities and promote high-quality economic growth (Ye, Zhao & Chai,

2021). According to an interview conducted by Việt Nam News with Erhan Atay, the

Senior Program Manager for International Business and Master of International Business

at RMIT University (2021), international investors are increasingly prioritizing new

criteria when selecting investment destinations. These criteria encompass the level of

digitalization, sustainability of the economy, and social inclusivity of the environment.

These emerging factors are expected to exceed conventional investment factors like

inexpensive labour, ample resources, and a sizable population.

The current study aims to explore the concept of smart city initiatives and FDI in

Iskandar Malaysia. By examining critical factors such as technology adoption, human

capital development, and policy frameworks, we seek to understand how these initiatives

influence FDI inflows. We aim to unravel how these initiatives effect the investment

landscape.

3
1.2 Problem statement

FDI is a critical driver of economic growth and development, particularly in

emerging economies like Malaysia (Li & Tanna, 2019). However, attracting, and

sustaining FDI inflows entails addressing various challenges and considerations. As

highlighted by Professor Emeritus Datuk Norma Mansor, President of the Malaysian

Economic Association (2024), Malaysia is experiencing a slowdown in incoming FDI

compared to its regional counterparts. According to MIDA, the approved FDI investment

in Johor declined from RM50.78 billion in 2022 to RM31.0 billion in 2023 (MIDA, 2024).

The regulatory landscape and ease of doing business significantly influence FDI

decisions. Investors express uncertainty due to the lack of clear fiscal policies from the

government, making it challenging for them to assess the risks associated with their

investments, as noted by Firdaos Rosli, Chief Economist of Ambank (M) Bhd (2024).

The World Bank underscores the direct link between FDI and economic growth,

emphasizing the importance of a conducive regulatory framework, especially for regions

like Iskandar Malaysia, which is embarking on its Smart City journey. Such an

environment fosters innovation, entrepreneurship, and foreign investment. Before the

establishment of Iskandar Malaysia, the approved FDI in Johor was RM3.9 billion(MIDA,

2024). There was a significant increase in FDI in 2006 and 2007, following the

establishment of Iskandar Malaysia, with approved FDI rising to RM7.6 billion and

RM9.2 billion, respectively(MIDA, 2024).

Singapore's success in consistently attracting a significant portion of annual FDIs

within the ASEAN-10 is largely attributed to talent-driven investments, as highlighted by

Tham (2024). The strong Singaporean economy has led to approximately half of Iskandar

Malaysia workforce goes to Singapore to work, according to Tan Siew Keng, President

of the SME Association of South Johor (2024). Addressing structural issues, particularly

4
enhancing human capital, productivity, and employment, is crucial for attracting FDIs

into Iskandar Malaysia (Business Times, 2024). The Asian Development Bank (2024)

warns that a decline in FDI could trigger a talent drain, as professionals seek better

opportunities elsewhere, thus weakening Malaysia's human capital base.

FDIs often bring technological advancements and knowledge transfers, especially

in the era of Smart Cities. The decline in FDI poses a significant risk to the pace of

technological advancement in Iskandar Malaysia, which relies on smart city initiatives to

enhance the ease of doing business (Thye, 2024). This could adversely affect various

sectors, particularly high-tech industries reliant on innovation for competitiveness.

Furthermore, Malaysia's ability to participate effectively in the global value chain may be

hindered by the lack of new technologies, impacting its long-term economic prospects

and attractiveness to future investors, as highlighted by the Asian Development Bank

(2024).

A study conducted by Salim et al. (2018) reveals that FDI has played a significant

role in job creation within various economic sectors, including services such as

construction and property, resulting in the generation of 702,000 jobs since the

establishment of Iskandar Malaysia. Additionally, the study highlights that the influx of

FDI tends to bring advanced production technology and inputs, either through foreign-

owned firms or imports. While existing literature often discusses key determinants

attracting FDI inflows at a national level, such as policies, there is a noticeable gap in

research regarding the primary factors drawing FDI to Iskandar Malaysia (Thas et al.,

2017).

There is a discernible lack of detailed to determine as technology, human and

policy are the true key elements in the Smart City Initiatives (Rozman, Azmi &

Sukereman, 2022). While Mosannenzadeh and Vettorato (2014) emphasize the pivotal

5
role of technology within the Smart City initiatives, Borsekova et al. (2018) and

Angelidou (2015) argue that the integration of human elements alongside technology is

imperative for achieving Smart City objectives. Additionally, Nam and Pardo (2011)

assert that the attainment of Smart City initiatives and goals relies on a combination of

Human Factors, Technological Factors, and Governance Factors. Research has broadly

addressed the concept of smart cities but has fallen short of detailing their economic

effects such as attracting FDI within the specific locale of Iskandar Malaysia. Despite the

initial increase in FDI following the establishment of Iskandar Malaysia, there has been

no consistent improvement in FDI inflows after the release of the Malaysia Smart City

Framework (2019 – 2025). According to MIDA, the FDI recorded in Iskandar Malaysia

was RM11.5 billion in 2019, RM6.8 billion in 2020, RM58.78 billion in 2022, and

RM31.0 billion in 2023(MIDA, 2024).

While Iskandar Malaysia has made strides in implementing Smart City initiatives,

the alignment of these strategies with FDI promotion policies remains unclear. There is a

dearth of research investigating the coherence and effectiveness of policy frameworks in

incentivizing FDI inflows amidst the transition towards a Smart City paradigm.

Addressing this gap is essential for policymakers to formulate evidence-based strategies

that maximize the synergies between smart city development and FDI promotion.

The unit of analysis is centred on the foreign investment businesses in Iskandar

Malaysia, specifically evaluating how the synergy between technological innovations,

human capital, and policy frameworks within smart city initiatives impacts the city’s

capability to draw FDI, thereby influencing its economic growth trajectory. Iskandar

Malaysia will be the focus locality for this study.

Smart City initiatives encompass a diverse range of interventions aimed at

enhancing urban infrastructure, governance, mobility, sustainability, and quality of life

6
through the integration of Information and Communication Technologies (ICT) and data-

driven decision-making processes (Lai & et al., 2020). In the context of Iskandar Malaysia,

these initiatives encompass projects supported using technology and related to digital

infrastructure development, urban mobility solutions, sustainable energy systems, and

innovative governance models (Bakhtiar & Samsudin, 2023).

Building on the outlined problem statement, the aim of this study is to critically

assess the role of smart city initiatives influence the FDI to Iskandar Malaysia. It seeks to

explore the concept of the key proposition variables of smart city initiatives (advanced

technologies, the cultivation of human capital, and the implementation of supportive

policies), and FDI inflows. This investigation aims to bridge the identified research gap

by providing a comprehensive analysis of how smart city initiatives can be optimized to

foster economic development in Iskandar Malaysia, thus contributing valuable insights

for policymakers and urban developers geared towards maximizing the economic

potential of such initiatives.

1.3 Research objective

RO1: Explore the concept of Smart Cities Initiatives in Malaysia

RO2: Identify the indicators of the Smart Cities Initiatives

RO3: Examine the trajectory outcome of Smart Cities initiatives

1.4 Research questions

In accordance with our research goals, researchers have established research questions

using qualitative method, conducting interview sessions with the government agency, the

city planner and city council. In this context, the in-case and out-case analysis, alongside

7
thematic analysis as described by Braun & Clarke (2006), provides a comprehensive

framework for data interpretation.

RO1: What does technological advancement in Iskandar Malaysia’s smart initiatives

attract foreign investors?

RO2: In what ways does human capital within Iskandar Malaysia contribute to its appeal

as an investment destination?

RO3: What policies have been implemented in Iskandar Malaysia to support smart city

development, and how do they effect FDI (Foreign Direct Investment)?

1.5 Scope of the study

Our research delves into the intricate dynamics between the development of smart

city initiatives and the attraction of foreign direct investment (FDI) within Iskandar

Malaysia. This exploration is pivotal for understanding how technological advancements,

human capital development, and supportive policy frameworks collectively influence FDI

inflows and contribute to the region's economic growth. The scope of this study

encompasses a detailed examination of these elements, aiming to provide comprehensive

insights into the mechanisms through which smart city initiatives can bolster economic

prosperity in Iskandar Malaysia.

1.5.1 Technological Advancements and Smart Initiatives

The study places a significant emphasis on understanding the role of

technological innovation in urban settings, exploring how the integration of

innovative technologies into Iskandar Malaysia’s urban fabric impacts FDI

attraction. This aspect is informed by literature suggesting that technological

advancements within smart cities can enhance infrastructure, improve resident life

quality, and create a conducive environment for business and investment (Hu,

Wang, & Zhai, 2023).

8
1.5.2 Human Capital Development

Human capital represents another critical focus area, with the study

evaluating the impact of a skilled workforce on Iskandar Malaysia's appeal as an

investment destination. The investigation into human capital is supported by

evidence indicating the vital role of education and skill development in supporting

smart city innovations and attracting investments (Su & Liu, 2016).

1.5.3 Policy Frameworks

Furthermore, the study examines the strategic and regulatory policies

enacted to facilitate smart city projects in Iskandar Malaysia. It aims to identify

how these policies, including incentives for green projects and investments in

technology, influence FDI attraction by fostering an investment-friendly

environment (Xu, Ding, & Guo, 2020).

1.5.4 Research Gap and Significance

A notable research gap exists in the detailed understanding of how smart

city initiatives directly contribute to economic prosperity, particularly in the

context of FDI attraction within Iskandar Malaysia. This study seeks to fill this

gap by offering a nuanced analysis of the factors driving economic development

in smart cities, thus providing valuable insights for policymakers and urban

planners (Choon, Ghosh, & Rosli, 2024).

1.5.5 Methodological Approach

Employing a qualitative methodology, this study will utilize in-depth

interviews with key stakeholders in Iskandar Malaysia, supported by thematic

analysis to uncover patterns and themes within the data (Braun & Clarke,

9
 2006). This approach will facilitate a comprehensive exploring the concept

between smart city initiatives and FDI.

This study aims to contribute to the academic and practical understanding of smart

cities' impact on FDI, with a focus on Iskandar Malaysia. By bridging the identified

research gap, it hopes to inform future urban development strategies that leverage

technological innovation, human capital, and policy frameworks to attract foreign

investment and spur economic growth.

1.6 Significant of the study

This study holds significance in several key areas, contributing to theoretical

understanding, methodological approaches, and practical applications in the field of smart

city development and its influence on Foreign Direct Investment (FDI) in Iskandar

Malaysia.

1.6.1 Theoretical Contribution

This research aims to enhance the existing body of knowledge by

exploring the intersection of smart city initiatives and FDI attraction in the context

of Iskandar Malaysia. By investigating this relationship, the study seeks to expand

our understanding of urban development dynamics and their economic

implications. The findings have the potential to bridge gaps in current literature,

particularly in how technological advancements, human capital development, and

policy frameworks collectively influence FDI in emerging smart cities. This

contribution is crucial as it addresses the current lack of comprehensive theoretical

frameworks that integrate smart city concepts with FDI attraction theories in the

10
context of rapidly developing economies (Yigitcanlar et al., 2019). The insights

gained from this study could serve as a foundation for future research in urban

economics and smart city development, offering a more nuanced understanding

of how these initiatives impact investment patterns in emerging markets.

1.6.2 Methodological Advancements

The study employs a qualitative case study approach, utilizing in-depth

interviews and thematic analysis to examine the complex phenomena of smart city

development and FDI attraction. This methodological choice is significant as it

demonstrates the value of context-specific, detailed investigations in

understanding multifaceted urban issues. By showcasing the effectiveness of this

approach, the research contributes to the methodological discourse in urban

studies and economic geography. The study's design allows for the capture of rich,

contextual data that quantitative methods might overlook, providing a deeper

understanding of the nuances involved in smart city initiatives and their impact

on FDI (Kummitha & Crutzen, 2019). This approach can serve as a

methodological reference for future researchers investigating similar phenomena

in other smart city contexts, highlighting the importance of holistic, context-

sensitive research designs in urban development studies.

1.6.3 Practical and Policy Implications

The findings of this study have significant practical implications for

various stakeholders involved in smart city development and FDI attraction. For

policymakers and city planners, the research provides valuable insights into which

smart city initiatives are most effective in attracting FDI. This knowledge can

11
inform policy formulation and resource allocation, allowing for more targeted and

efficient urban development strategies. Investment promotion agencies and city

authorities can utilize the study's findings to better showcase Iskandar Malaysia's

smart city capabilities, potentially enhancing the region's attractiveness to foreign

investors. The research also contributes to the identification of best practices in

smart city development and FDI attraction, serving as a potential benchmarking

tool for other cities aiming to enhance their global competitiveness (Ismagilova et

al., 2019). Furthermore, the study addresses policy gaps by highlighting the need

for adaptive regulatory frameworks that support both smart city development and

FDI attraction, guiding policymakers in creating more effective and forward-

thinking urban policies (Ullah et al., 2021).

1.6.4 Societal and Economic Impact

Beyond the theoretical and practical contributions, this study holds

significant societal and economic importance. By examining the relationship

between smart city initiatives and FDI, the research will contribute to strategies

for sustainable economic growth in Iskandar Malaysia and similar regions.

Increased FDI, attracted through effective smart city initiatives, can lead to job

creation, knowledge transfer, and overall economic development, potentially

improving the quality of life for local residents (Ma'in & Mat Isa, 2020). The

findings may inform the development of policies and strategies that foster

inclusive growth, social well-being, and environmental sustainability. This

holistic approach to urban development, considering both economic growth and

societal benefits, aligns with global sustainable development goals and can serve

as a model for other emerging smart cities (Bibri & Krogstie, 2020).

12
1.7 Definition of key terms

Table 1.7 below shows the definition of the key variable terms with their sources

in a table format for ease of reference.

Table 1.1
Definition of key terms

Key Terms Definitions Citation

Smart City Smart city initiatives refer to the use of technology, (Ismagilova,

Initiatives data, and innovative solutions to improve the quality et al., 2019)

of life, economic competitiveness, and sustainability (Appio et al.,

of urban areas. These initiatives often involve the 2019)

integration of information and communication

technologies (ICT) into various aspects of city

management, such as transportation, energy,

healthcare, and governance.

Foreign Foreign Direct Investment (FDI) is defined as an (Ma'in & Mat

Direct investment made by a company or individual from Isa, 2020)

Investment one country into business interests located in another (Choon, et al.,

(FDI) country, with the intention of establishing a lasting 2024)

interest and control in the foreign enterprise. FDI

plays a crucial role in the economic development of

host countries by providing capital, technology, and

managerial expertise.

Economic Economic growth refers to the increase in the (Appiah-Otoo

Growth production of goods and services within an economy & Song, 2021)

13
 over a specific period, usually measured by the

change in real Gross Domestic Product (GDP). It is a

key indicator of a country's economic health and can

be influenced by factors such as investment,

productivity, and technological progress.

Urban Urban development is the process of improving the (Aina, et al.,

Development quality of life and economic well-being of people 2019)

living in urban areas through the creation and (Bibri &

maintenance of physical infrastructure, social Krogstie,

amenities, and economic opportunities. It involves a 2020)

multi-disciplinary approach that encompasses urban

planning, governance, and sustainability.

Technological Technological advancement refers to the (Ullah, et al.,

Advancement development and application of new technologies 2021)

and innovative solutions to improve products, (Ismagilova et

services, and processes. In the context of smart cities, al., 2019)

technological advancement involves the integration

of ICT, Internet of Things (IoT), and data analytics to

enhance urban management and service delivery.

Human Human capital development is the process of (Faggian, et

Capital improving the knowledge, skills, and competencies al., 2019)

Development of individuals to enhance their productivity and (Ma'in & Mat

contribution to economic growth. It involves Isa, 2020)

investments in education, training, and health to build

14
 a skilled and competitive workforce that can attract

foreign investment and drive innovation.

Smart City Smart city policies are government initiatives and (Appio et al.,

Policies strategies designed to promote the development and 2019)

implementation of smart city solutions. These (Caragliu &

policies aim to create an enabling environment for Del Co, 2019)

technological innovation, public-private

partnerships, and citizen engagement in the planning

and management of urban areas.

Digital Digital infrastructure refers to the physical and (Ismagilova et

Infrastructure technological components that enable connectivity, al., 2019)

data processing, and service delivery in a smart city. (Appio et al.,

It includes broadband networks, data centers, 2019)

sensors, and other ICT tools that form the backbone

of smart city initiatives and enable the integration of

various urban systems.

1.8 Organization of the chapters

Chapter 1 is an introduction to the research study titled "Assessing Smart City

Initiatives Effect on Foreign Direct Investment (FDI) in Iskandar Malaysia." This chapter

provides an overview of the research context, highlighting the importance of smart city

initiatives and their potential impact on FDI in Iskandar Malaysia. It discusses the

Malaysia Smart City Framework 2019-2025, which serves as a comprehensive national-

level guideline for the development of smart cities across Malaysia and emphasizes the

15
need to understand how these initiatives influence local economies, specifically in terms

of FDI attraction.

The problem statement identifies the research gap, acknowledging the limited

understanding of how smart city projects, particularly those involving technological

advancement, human capital development, and policy enactment, contribute to economic

prosperity and FDI attraction in the specific context of Iskandar Malaysia. The research

objectives and questions are outlined, focusing on explore the existence between smart

city initiatives and FDI in Iskandar Malaysia, with a particular emphasis on the role of

technological advancement, human capital development, and supportive policies.

The scope of the study is defined, specifying the geographical context of Iskandar

Malaysia and the focus on foreign investment businesses and key stakeholders within the

city. The significance of the study is discussed, highlighting the potential theoretical,

methodological, and practical contributions of the research to the field of smart city

development and FDI attraction. Key terms used throughout the research paper are

defined, ensuring a common understanding of the essential concepts.

By providing a comprehensive background, identifying the research gap,

outlining the objectives and questions, defining the scope, and discussing the significance

of the study, Chapter 1 lays a solid foundation for the research paper, setting the stage for

the subsequent chapters that will delve deeper into the literature review, methodology,

findings, and conclusions.

16
 CHAPTER 2

LITERATURE REVIEW

2.0 Introduction

This chapter presents a comprehensive review of the literature on smart city initiatives

and their influence on foreign direct investment (FDI). The review identifies the relevant

concepts, and highlights research gaps (Albino, Berardi, & Dangelico, 2015; Appio, Lima,

& Paroutis, 2019). It focuses on the intersection of smart city development and FDI

attraction, discussing key concepts such as technological advancements, human capital

development, and policy frameworks (Ismagilova et al., 2019; Yigitcanlar et al., 2019).

The chapter also introduces relevant research frameworks and propositions that guide the

study's conceptual foundation (Kummitha & Crutzen, 2017; Tan & Taeihagh, 2020). By

conducting this literature review, the chapter establishes a robust conceptual groundwork,

identifies key research gaps, and justifies the need for further assessing the key factors of

17
smart cities initiatives and FDI in the context of Iskandar Malaysia (Choon, Ghosh, &

Rosli, 2024).

2.1 Field of Study

This study focuses on exploring the existence of smart city initiatives on foreign

direct investment (FDI) in the context of Iskandar Malaysia. Iskandar Malaysia, a rapidly

developing economic region in southern Malaysia, serves as the unit of analysis for this

research. Established in 2006, Iskandar Malaysia spans an area of 2,300 square kilometers

and encompasses key urban centers such as Johor Bahru, Nusajaya, and Senai (Rizzo &

Khan, 2013; Iskandar Regional Development Authority, 2023).

Smart city initiatives have gained significant attention in recent years as urban

areas worldwide strive to leverage technology, data, and innovation to improve the quality

of life for citizens, enhance economic competitiveness, and promote sustainability

(Ismagilova et al., 2019; Sharifi, 2019; Lytras & Visvizi, 2018). These initiatives span a

wide range of domains, including transportation, energy, healthcare, governance, and

social services (Appio et al., 2019). However, the implementation and impact of smart

city initiatives vary across different contexts and localities (Tan & Taeihagh, 2020).

In the Malaysian context, the government has actively promoted the development

of smart cities through various policies and initiatives, such as the Smart City Framework

and the Malaysia Smart City Alliance (Rameli, 2022). Iskandar Malaysia, in particular,

has been at the forefront of smart city development in the country, with the Iskandar

Regional Development Authority (IRDA) spearheading efforts to transform the region

into a sustainable and competitive economic hub (Iskandar Regional Development

Authority, 2023).

18
 There has been little research on the precise effect of smart city initiatives on FDI

attraction, particularly in the context of developing nations like Malaysia (Choon et al.,

2024). Previous studies have examined the concept of smart cities and their potential

benefits (Appio et al., 2019). By examining the ideas between smart city projects and

foreign direct investment (FDI) in Iskandar Malaysia, this research seeks to close this gap.

It does this by concentrating on important elements including legislative frameworks,

human capital development, and technical improvements.

By access the proposition factors of smart city initiatives on FDI in Iskandar

Malaysia, this study contributes to the broader understanding of how smart city

development can influence economic growth and competitiveness in emerging economies.

The findings of this research have implications for policymakers, urban planners, and

investors seeking to leverage smart city initiatives for FDI attraction and sustainable

urban development.

2.2 Relevant Concepts

This study explores several key concepts related to smart city initiatives and their

impact on foreign direct investment (FDI) in Iskandar Malaysia. These concepts form the

foundation of the research and are crucial for understanding the concept between smart

city initiatives and FDI attraction.

2.2.1 Smart City Initiatives

Smart city initiatives refer to the strategic integration of information and

communication technologies (ICT), data analytics, and innovative solutions

across various urban domains to enhance quality of life, economic

competitiveness, and environmental sustainability (Praharaj & Han, 2019;

Ismagilova et al., 2019). Transportation systems, energy management, healthcare

services, urban governance, and social infrastructure are all included in these

19
initiatives (Appio et al., 2019; Yigitcanlar et al., 2019). Utilising cutting-edge

technology to optimise urban operations, enhance service delivery, and encourage

sustainable practices is crucial. Examples of these technologies include the

Internet of Things (IoT), cloud computing, big data analytics, and intelligent

transportation systems (Ullah et al., 2021; Mora et al., 2019).

Through the collection, processing, and analysis of massive volumes of

data from various sources, including sensors, devices, and social media, smart

cities also place a strong emphasis on data-driven decision-making. This data

informs evidence-based urban planning and management (Bibri & Krogstie,

2020). Furthermore, to achieve inclusive and participatory governance, successful

implementation requires active collaboration and engagement among

stakeholders, including government agencies, the private sector, academics, and

citizens. (Kummitha & Crutzen, 2019; Praharaj & Han, 2019).

To encourage public-private partnerships, facilitate technology uptake,

and support sustainable development goals, supportive policies, regulatory

frameworks, and governance structures are necessary. (Caragliu & Del Bo, 2019;

Tan & Taeihagh, 2020). In Iskandar Malaysia, the Iskandar Regional

Development Authority (IRDA) spearheads smart city initiatives in line with the

national Smart City Framework, aiming to transform the region into a sustainable

and competitive economic hub (Iskandar Regional Development Authority

[IRDA], 2023; Rameli, 2022).

2.2.2 Foreign Direct Investment (FDI)

FDI is defined as an investment made by a company or individual from

one country into business interests located in another country, with the intention

of establishing a lasting interest and control in the foreign enterprise (Choon et al.,

20
2024). FDI plays a important role in the economic growth of host nations by

providing capital, technology, and managerial expertise (Ma'in & Mat Isa, 2020).

2.2.3 Technology

Technology plays a pivotal role in smart city endeavors, incorporating the

fusion of information and communication technologies (ICT), Internet of Things

(IoT), and data analytics across diverse spheres of urban governance (Ismagilova

et al., 2019). Technological advancements in smart cities can enhance

infrastructure, improve service delivery, and create a more attractive environment

for businesses and investors (Ullah et al., 2021).

2.2.4 Human Capital

Human capital denotes the collective knowledge, abilities, and expertise

possessed by individuals, which enhance their productivity and economic worth

(Faggian et al., 2019). In the realm of smart cities, nurturing human capital entails

dedicating resources to education, training, and skill enhancement initiatives,

aimed at cultivating a workforce capable of spearheading and fostering innovation

(Ma'in & Mat Isa, 2020). A skilled human capital base is essential for attracting

FDI and fostering economic growth (Ridha & Parwanto, 2020). Ridha and

Parwanto (2020) found that human development, alongside FDI and

macroeconomic conditions, has a significant positive impact on economic growth

in Indonesia, highlighting the importance of investing in human capital to attract

foreign investment and promote economic development.

2.2.5 Policy

Policy frameworks play a crucial role in shaping the development and

implementation of smart city initiatives (Tan & Taeihagh, 2020). Supportive

21
 policies, such as incentives for technology adoption, investment in digital

infrastructure, and streamlined bureaucratic processes, can create a conducive

environment for FDI attraction (Caragliu & Del Bo, 2019). In Iskandar Malaysia,

the policy framework for smart city development is guided by the national Smart

City Framework and the strategic vision of the IRDA (Rameli, 2022).

2.3 Research gaps

2.4.1 Summary table of literature review and identification

Industry Gap

According to Anthopoulos, L. G. 2017, Industry gaps relate to differences

between the current technological advancements in smart city initiatives and the

needs of industry players. In the context of Iskandar Malaysia, there is a need

to identify gaps between industry demands for smart city infrastructure and what

is currently available. This includes exploring whether the technology and

infrastructure in place support efficient business operations, transportation, and

communication. An industry gap can emerge when companies face challenges

due to a lack of comprehensive infrastructure, such as advanced transportation

systems or energy-efficient frameworks.

Academic Gap

Academic gaps arise when there is limited research on the impact of smart

city initiatives on foreign direct investment (FDI) attraction. In this context,

there is a need to explore how smart city initiatives contribute to the broader

understanding of economic growth and competitiveness in emerging economies,

especially in Malaysia (Shapiro, J. M. 2006).

22
 Another academic gap is the need for empirical studies that validate

theoretical propositions about smart city initiatives and FDI attraction. Further

studies should investigate the causal mechanisms that drive these relationships

and provide evidence-based insights into their long-term impacts.

Policy Gap

Policy gaps are identified when existing government policies and

frameworks do not sufficiently address the requirements for creating successful

smart city initiatives. In Iskandar Malaysia, the policy framework for smart city

development is guided by the national Smart City Framework and the Iskandar

Regional Development Authority (IRDA). However, gaps may exist when

policies do not adequately promote the desired level of technological

advancement, human capital development, or collaborative governance structures

(Fernandez-Anez, V., Fernández-Güell, J. M., & Giffinger, R. 2018).

One key policy gap in Iskandar Malaysia's smart city development is the

lack of a comprehensive and integrated approach to addressing with the region's

complex challenges. Although the national Smart City Framework offers a broad

framework, it might not adequately consider the specific needs and unique local

context of Iskandar Malaysia (Allam & Newman, 2018). This may result in a

misalignment between the policies and the actual situation, hindering the effective

implementation of smart city projects.

The example of Forest City in Iskandar Puteri, Johor, how policy changes

can impact smart city development and foreign investment. Initially promoted as

a flagship smart city project aimed at attracting foreign investors, particularly

from China, Forest City faced significant challenges following a change in

23
government and a policy reversal that restricted foreign ownership (Moser, 2020).

The unpredictability of policy eroded investor trust and could result in a decrease

in foreign investment, highlighting the importance of stable and consistent policy

for the success of smart city initiatives. (Tham, 2018).

The Malaysian government has recently designated Forest City as a

"Special Financial Zone" (SFZ) to provide a more stable and conducive policy

environment for attracting foreign investment (Prime Minister's Office of

Malaysia, 2023). However, it remains to be seen whether this new policy will be

helpful in resolving the project's key challenges.

An example of a policy gap is the need for policies that encourage public-

private partnerships and facilitate technology adoption. Streamlined bureaucratic

processes and incentives for technology adoption are essential to foster FDI

attraction. Further research is needed to evaluate the effectiveness of these policies

and propose improvements based on empirical data (Angelidou, M. 2014).

Furthermore, there is a need for policies that prioritize citizen engagement

and participation in the smart city development process. Involving citizens in the

development, implementation, and planning of smart city initiatives ensures that

the implemented technology and services align with the needs and aspired of the

local community. (Sepasgozar et al., 2019). Policy gaps in this area might result

in a lack of public trust and support, jeopardising the effectiveness and

sustainability of smart city initiatives.

By addressing these gaps, future studies can contribute to a more

comprehensive understanding of the interplay between smart city initiatives, FDI

attraction, and sustainable economic development. Researchers should focus on

identifying best practices and developing evidence-based policy

24
recommendations that consider the specific challenges and opportunities faced by

Iskandar Malaysia in its smart city journey.

25
 Table 2.1
Summary table of literature review and identification

Author Research Research Independent Dependent Findings Suggested Research Gap

(Year) Objectives Methods Variables Variables Future
Research
Albino, V., To conceptualize Literature review, Technological Urban TA→ UP(+) suggest areas Lack of consensus on definitions,
Berardi, U., smart cities case study advancement, performance P →QL(+) such as the role need for standardization in
& Dangelico, through analysis policy metrics such as ES→ RM(+) of citizen performance measurement, and
R. M. definitions and frameworks, efficiency, engagement, underexplored areas such as the
(2015). dimensions, and environmental quality of life, economic socio-cultural impacts of smart
to evaluate their sustainability. resource models for city initiatives.
performance and management. sustainability,
initiatives. and long-term
impact studies.
Appiah-Otoo, To investigate the Econometric Levels of ICT Economic growth ICT→ EGI (+) Further study Identify disparities in data
I., & Song, N. impact of analysis using adoption and indicators. into the causal availability or quality between
(2021). Information and data integration. mechanisms of rich and poor countries affecting
Communication ICT on growth, analysis.
Technology consideration
(ICT) on of other
economic contributing
growth, with a factors.
comparative
analysis between
rich and poor
countries.

26
Aina et al. Examine the Qualitative Government Urban 𝑃 → GT (+) Explore ways Need for more balanced
(2019) urban governance analysis of policies, plans, governance 𝐼 → UDO (+) to enhance approach combining top-down
transformation in policies, plans, and initiatives for transformation community and bottom-up strategies
Saudi Arabia and and initiatives sustainable urban and sustainable participation
assess the top- related to urban development urban and bottom-up
down sustainable development development approaches
urban outcomes
development
approach.

Alzaidy et al. Investigate Empirical FDI, financial Economic growth 𝐹𝐷𝐼 → EG (+) Examine FDI Focused on Malaysian context,
(2017) impact of FDI on analysis using development in Malaysia 𝐹𝐷 → FDI (+) and financial findings may vary in other
economic growth time-series data development countries/regions
in Malaysia and and econometric impact on other
role of financial models economic
development aspects like
employment,
income
distribution
Angelidou, explore the literature review technological development of 𝑇 → D (+) deeper into the further empirical research to
M. (2015) concept of smart to analyze the advancements, smart cities 𝐴 → D (+) specific validate the theoretical
cities and four forces that institutional 𝐼 → D (+) mechanisms framework proposed and to
examine the converge in smart frameworks, through which explore additional factors
interplay of four cities: socio-economic each force influencing smart city
key forces technological, conditions, and influences the development.
shaping them. institutional, political development of
socio-economic, dynamics. smart cities.

27
 and political Additionally,
force comparative
studies across
different cities
or regions
could provide
valuable
insights into the
contextual
variations in
smart city
initiatives.
Appiah-Otoo, Investigate the Econometric Information and Economic 𝐼 → EG (+) Explore the Further research to account for
I., & Song, N. impact of analysis using Communication growth 𝐼𝐶𝑇 → EG (+) underlying potential heterogeneity within
(2021) Information and panel data Technology (ICT) mechanisms the sample countries and to
Communication methodology to usage and channels address endogeneity concerns
Technology examine the through which that could affect the estimated
(ICT) on relationship ICT influences impact of ICT on economic
economic between ICT and economic outcomes.
growth, with a economic growth growth in rich
specific focus on across a sample and poor
comparing the of both rich and countries.
effects in rich and poor countries. Additionally,
poor countries. longitudinal
studies could
provide
insights into the
long-term

28
 effects of ICT
adoption on
economic
development.
Appio, F. P., Deepen the Literature review Innovation Understanding 𝐼𝐸 → SC (+) Focus on Further empirical research to
Lima, M., & understanding of and conceptual ecosystems and and functioning 𝑇𝐴 → SC (+) empirically validate the proposed conceptual
Paroutis, S. smart cities by analysis technological of smart cities examining the framework and explore the
(2019) examining the advancements effectiveness of specific mechanisms through
interplay between different which innovation ecosystems
innovation strategies for and technological advancements
ecosystems, fostering contribute to smart city
technological innovation development.
advancements, ecosystems
and societal within smart
challenges within cities.
them. Additionally,
comparative
studies across
different smart
city initiatives
could provide
insights into the
contextual
factors
influencing
their success or
failure.

29
Bibri, S. E., Explore the Case study Implementation Sustainability 𝐼 → SO (+) Focus on There may be a need for further
& Krogstie, J. emergence of approach, of data-driven outcomes evaluating the research to explore the socio-
(2020) data-driven smart conducting in- smart city achieved within long-term economic, institutional, and
cities and depth analyses of initiatives the smart city impacts and political factors shaping the
investigate the the smart city contexts of scalability of implementation and outcomes of
innovative initiatives in London and the innovative these solutions. Additionally,
applied solutions London and Barcelona solutions longitudinal studies could
for sustainability Barcelona to identified provide insights into the
within the identify and within the case evolution and adaptation of
contexts of examine the studies. smart city initiatives over time.
London and innovative Additionally,
Barcelona. solutions for comparative
sustainability analyses across
implemented different smart
within these city contexts
cities. could provide
insights into the
transferability
of these
solutions and
the factors
influencing
their adoption
and
effectiveness.
B, K. (2023) To propose Observations and Untapped FDI 𝑈𝑃 → FDI (+) Delve deeper Empirical studies could evaluate
strategies for recommendations potential ("low- into specific the effectiveness of different
Johor to attract based on their hanging fruits") strategies and

30
 FDI and stimulate expertise or policies that approaches in achieving
growth in the real analysis of the have been economic development goals.
estate market by current economic successful in
leveraging and real estate attracting FDIs
readily available landscape in and stimulating
opportunities. Johor. real estate
growth in
similar
contexts.
Borsekova, To investigate the Statistical The size of cities Measures of 𝑃 → T (+) Longitudinal Further research to address
K., Koróny, relationship analysis (population, land technological 𝐿 → ED (+) studies could potential methodological
S., Vaňová, between the size area) infrastructure, provide limitations and to validate the
A., & of cities and their sustainability, insights into the findings across different urban
Vitálišová, K.smart city quality of life, dynamics of contexts. Additionally, research
(2018) indicators, and economic smart city could explore the implications of
aiming to identify development development these findings for urban
potential within cities. over time and policymaking and governance.
functional how they are
patterns and their influenced by
policy factors beyond
implications. city size.
Caragliu, A., To investigate the Quantitative Smart City Urban 𝑆𝐶𝑃 → UI (+) Explore the Research could explore the
& Del Bo, C. impact of Smart research policies innovation mechanisms social and environmental
F. (2019) City policies on approach, using through which implications of urban innovation
urban innovation, data analysis Smart City driven by Smart City initiatives.
focusing on how techniques to policies
such policies examine the influence urban
contribute to relationship innovation and

31
 fostering between Smart identify
innovation in City policies and potential
cities. urban moderating
innovation. factors that
may affect the
effectiveness of
these policies.
Choon, To empirically Quantitative Technological FDI in the 𝑇 → FDI (+) Focus on Need for further research to
R.T.E., investigate the research infrastructure, development of 𝐼 → FDI (+) exploring the address potential methodological
Ghosh, A., & factors methods, such as innovation smart cities 𝐸 → FDI (+) causal limitations and to validate the
Rosli, R.B. influencing the regression ecosystems, 𝑅𝐹 → FDI (+) mechanisms findings across different urban
(2024) attraction of FDI analysis or regulatory 𝑀𝑃 → FDI underlying the contexts. Additionally, research
in the econometric frameworks, (+) relationship could explore the long-term
development of modeling, to market potential between impacts of FDI inflows on the
smart cities. analyze data different sustainability and resilience of
related to FDI factors and FDI smart city initiatives.
inflows and attraction in
various factors smart cities.
associated with
the development
of smart cities.
Haudi, H., To analyse the Quantitative Economic FDI 𝐸 → FDI (+) Future research Research could explore the long-
Wijoyo, H., most influential research stability, 𝑅𝐸 → FDI (+) could explore term impacts of FDI inflows on
& Cahyono, factors that attract methods, such as regulatory 𝑀𝑆 → FDI (+) the dynamics economic growth, employment,
Y. (2020) FDI into a regression environment, 𝐿𝐶 → FDI (+) and and development outcomes.
particular region analysis or market size, labor 𝐼 → FDI (+) interactions
or country. econometric costs, 𝑃𝑆 → FDI (+) between
modeling, to infrastructure different

32
 identify and development, factors
analyze the political stability influencing
factors that FDI attraction
significantly in more detail.
influence the
attraction of FDI
Hu, W., To investigate the Quantitative Human-centric Outcomes of 𝐻𝐶 → SCD Future research Further research to address
Wang, S., & effectiveness and research and technology- smart city (+) could explore potential methodological
Zhai, W. outcomes of approach, centric development 𝑇 → SCD (+) the limitations and to validate the
(2023) human-centric utilizing approaches. mechanisms findings across different urban
versus statistical and processes contexts and time periods.
technology- analysis and data through which
centric from a large human-centric
approaches in sample of and
smart city Chinese cities to technology-
development compare the centric
within a top- outcomes of approaches
down governance human-centric influence smart
regime, using and technology- city outcomes.
evidence from centric smart city
341 Chinese development
cities. approaches.
Ibrahim, P., To analyze the A combination of Economic FDI affluences in 𝐸 → FDI (+) Future research Research could explore the role
& Ali, M. factors quantitative and stability, Iskandar 𝐼 → FDI (+) could explore of institutional factors and
(2014) influencing FDI qualitative infrastructure Malaysia 𝐺𝑃 → FDI (+) the long-term governance mechanisms in
inflows into research methods development, 𝑅𝐸 → FDI (+) impacts of FDI shaping FDI inflows and
Iskandar to investigate the government 𝑀𝑆 → FDI (+) affluences on investment outcomes in the
Malaysia, a major factors affecting policies, 𝐿𝐴 → FDI (+) economic region.

33
 economic FDI inflows into regulatory 𝐼𝐼 → FDI (+) growth,
development Iskandar environment, employment
corridor in Malaysia. market size, labor generation, and
southern availability, and sustainable
Malaysia. investment development
incentives outcomes in
Iskandar
Malaysia.
Kummitha, To qualitativelyQualitative Citizen-driven Perceptions, 𝐼𝑜𝑇 → P (+) Future research Need for further research to
R. K. R., & investigate the
research Internet of Things experiences, and 𝐼𝑜𝑇 → E (+) could explore address potential limitations,
Crutzen, N. role of citizen-methods, such as (IoT) initiatives outcomes of 𝐼𝑜𝑇 → OCE the such as sample
(2019) driven Internet of
interviews, focus within smart citizen (+) effectiveness of representativeness and
Things (IoT) in groups, or case cities. engagement in different generalizability of qualitative
emerging smart studies, to smart city approaches and findings.
cities. explore the initiatives strategies for
perspectives and fostering
experiences of citizen
citizens and engagement in
stakeholders smart city
involved in the initiatives.
development of
smart city
initiatives driven
by the Internet of
Things (IoT).
Lasbrey, A., To review the Systematic FDI inflows GDP growth, 𝐹𝐷𝐼 → GDP Could explore Research could explore the
Enyoghasim, literature on the literature review (+) the social and environmental
M., Tobechi, relationship approach to heterogeneous impacts of FDI inflows on

34
A., between FDI and identify and effects of FDI sustainable development
Uwajumogu, economic analyze relevant on different outcomes.
N., Chukwu, growth, spanning studies sectors,
B., & the period from investigating the regions, and
Kennedy, O. 1980 to 2018. link between FDI types of
(2018) inflows and economies,
economic considering
growth. factors such as
institutional
quality, human
capital, and
industrial
structure.
Li, C., & To investigate the Econometric FDI inflows Total factor 𝐹𝐷𝐼 → TFP Comparative There may be a need for further
Tanna, S. impact FDI on modeling productivity (+) studies across research to address potential
(2019) productivity in techniques to (TFP), labor 𝐹𝐷𝐼 → LP (+) different limitations, such as endogeneity
developing analyze the productivity regions and issues and data quality concerns.
countries. relationship sectors could
between FDI provide
inflows and insights into the
productivity heterogeneous
levels in effects of FDI
developing on
countries. productivity.
Ma’in, M., & To investigate the Econometric FDI inflows GDP growth rate 𝐹𝐷𝐼 → GDP Future research There may be a need for further
Mat Isa, S. S. impact of FDI on modeling (+) could explore research to address potential
(2020) economic growth techniques to the sectoral and methodological limitations and
in Malaysia. analyze the regional to validate the findings across

35
 relationship dynamics of different time periods and
between FDI FDI impacts on economic contexts.
inflows and economic
economic growth growth in
in Malaysia. Malaysia,
considering
factors such as
industrial
specialization,
regional
disparities, and
sectoral
linkages.
Praharaj, S., To investigate Qualitative Technological Perceptions of 𝑇 → PSC (+) Comparative Research could explore the role
& Han, H. and clarify the methods such as advancements, smart cities 𝑈𝐼 → PSC (+) studies across of communication strategies,
(2019) diverse interviews, urban 𝐺𝑆 → PSC (+) different media representations, and
perceptions and surveys, and infrastructure, 𝑆 → PSC (+) regions and cultural influences in shaping
definitions of content analysis governance demographic smart city perceptions.
smart cities in to explore the structures, groups could
India among understandings socioeconomic provide
various and perceptions conditions, and insights into the
stakeholders, of smart cities cultural values. factors driving
including among different variations in
policymakers, stakeholders. smart city
urban planners, perceptions.
and residents.
Rameli, A. To discuss the Conceptual and Technological Liveability of 𝑇 → LUE (+) Future research Research could explore the role
(2022) concept of smart analytical innovations, urban 𝐼𝐼 → LUE (+) could explore of governance structures, policy

36
 cities in Malaysia approach, infrastructure environments in the frameworks, and community
and their drawing on investments Malaysia implementation participation in shaping the
contribution to existing and impact of outcomes of smart city initiatives
creating liveable literature, policy specific smart in Malaysia.
urban documents, and city projects
environments. case studies to and initiatives
examine the in Malaysia,
concept of smart examining their
cities and their effectiveness in
potential impact achieving
on urban urban
liveability in liveability
Malaysia. I goals.

Ridha, M. R., To examine the Econometric FDI inflows GDP growth 𝐹𝐷𝐼 → GDP Future research There may be a need for further
& Parwanto, effects of FDI, analysis, possibly (+) could explore research to address potential
N. (2020) human using panel data the limitations, such as data quality
development, and techniques or mechanisms issues and endogeneity
macroeconomic time-series through which concerns.
conditions on analysis, to FDI and human
economic growth investigate the development
in Indonesia. relationships impact
between FDI economic
inflows growth in
Indonesia,
considering
factors such as
technology

37
 transfer, skills
development,
and
productivity
enhancement.
Rizzo, A., & To analyze Johor Qualitative Government Johor Bahru's 𝐺𝑃 → JBR (+) Future research Further research to address
Khan, S. Bahru's response research policies, responses 𝐸𝐷𝑆 → JBR could delve potential gaps in understanding,
(2013) to transnational methods, such as economic (+) deeper into such as the implications of urban
and national case study development specific aspects development strategies for social
influences in the analysis, strategies of Johor inclusion, environmental
emerging Straits interviews, and Bahru's sustainability, and economic
Mega-City document responses to resilience.
Region. analysis transnational
and national
influences,
such as the role
of economic
integration,
cultural
exchange, and
political
dynamics in
shaping urban
development
outcomes.
Rong, S., Liu, To examine at the Econometric FDI Employment 𝐹𝐷𝐼 → E (+) Future research Lack of data availability
K., Huang, association analysis, possibly could explore
between using panel data the

38
S., & Zhang, employment, techniques or heterogeneous
Q. (2020) labour market time-series effects of FDI
flexibility, and analysis, to and labour
FDI in China. examine the market
impact of FDI flexibility on
and labour employment
market flexibility across different
on employment sectors,
in China. regions, and
demographic
groups in
China.

Su, Y., & Liu, To explore the Econometric FDI GDP growth 𝐹𝐷𝐼 → GDP Future research There may be a need for further
Z. (2016) association of analysis, possibly (+) could explore research to address potential
human capital using panel data the limitations, such as data
and FDI and techniques or mechanisms availability and measurement
economic growth cross-sectional through which issues.
in Chinese cities. analysis FDI and human
capital interact
and
complement
each other in
promoting
economic
growth in
Chinese cities.

39
Ye, C., Zhao, To look into the Econometric Smart city FDI 𝑆𝐶𝐼 → FDI Comparative Explore the role of governance
Z., & Cai, J. effect of building research to look infrastructure (+) studies across mechanisms, policy frameworks,
(2021) smart cities on the at the connection different and institutional arrangements in
standard of FDI between the regions or mediating the effects of smart
coming into development of countries could city initiatives on FDI quality
China. smart cities and provide and spillover effects on local
the calibre of FDI insights into the economies.
in China, maybe contextual
utilising panel factors shaping
data techniques the relationship
or time-series between smart
analysis. city initiatives
and FDI
outcomes

40
2.5 Relevant theories

Understanding how smart city efforts influence the economy—with a particular

emphasis on foreign direct investment in Iskandar Malaysia—requires a grasp of the

pertinent ideas. For this investigation, Yigitcanlar's (2018) conceptual framework of

smart cities (Figure 1) serves as the fundamental framework. Based on Chourabi et al.

(2012) and Yigitcanlar (2019) literature, this framework delineates three principal

catalysts for the development of smart cities: community, technology, and policy. These

catalysts are connected to five intended outcomes: productivity, sustainability,

accessibility, well-being, and liveability, in addition to governance. All these factors—

which each represent a different dimension—combine to form the idea of the smart city.

Figure 2.1
Smart cities conceptual framework

Furthermore, insights from Biloria (2021) emphasize the significance of

technology, policy, and people as critical factors for smart cities to attain desired

economic outcomes. This emphasises that a city may be considered intelligent and

economically productive if it makes investments in social and human capital in addition

41
to having a strong IT infrastructure that supports sustainable growth and improved quality

of life via participatory governance (Nam & Pardo, 2011). Presently, smart urban

technology applications and systems are increasingly viewed by city administrations

worldwide as potential tools to address a range of developmental challenges, spanning

economic, societal, and environmental domains (Yigitcanlar & Kamruzzaman, 2018).

This research is primarily concerned with investigating the major factors

influencing economic results. The South-Johor Economic Region has been the principal

hub for economic development since 2006, according to the Malaysian Federal

government (Saieed, 2024; Rizzo & Glasson, 2012). The Johor Bahru metropolitan area's

physical and economic growth is the primary goal of the Comprehensive Development

Plan, which is driving the Iskandar Malaysia programme (Rizzo & Glasson, 2012).

Statements from the Malaysian Investment Development Authority (MIDA) 2024, 2023,

Prime Minister Datuk Seri Anwar Ibrahim (SHADIQE, 2023) and Iskandar Investment

Bhd (IIB) President and CEO Datuk Idzham Mohd Hashim (IIB) 2023 emphasise the

strategic significance of Forest City's special financial zone (SFZ) status in attracting

foreign investment and promoting economic growth in Iskandar Malaysia.

2.6 Research framework

According to Yigitcanlar (2018), the conceptual framework of smart cities

identifies three primary factors that work together to advance and produce economic

benefits for a country: people, technology, and policy. The research framework aims to

delve into the notion of key factors proposed by smart city initiatives, which encompass

advanced technologies, the nurturing of human capital, and the enactment of supportive

policies, all contributing to Foreign Direct Investment (FDI) inflows.

42
 The research framework (Figure 2.2) serves as the cornerstone for exploring the

conceptual framework, facilitating an in-depth examination.

Figure 2.2
Research framework propositions

2.7 Propositions

Proposition 1: Smart city policies influence FDI attraction.

Studies like Wall et al. (2019), which highlight the significant and positive impact

of fiscal measures like tax incentives on foreign investors' engagement in renewable

energy projects, particularly in solar energy, demonstrate the critical role that policy

instruments play in attracting Foreign Direct Investments (FDI). For developing countries,

creating an investor-friendly environment is paramount to attract greater capital inflows.

Thus, evaluating the contribution of tax laws policy to increased competitiveness is one

of their main goals. Tax policy creators must continuously review tax regulations to

ensure the country remains attractive to foreign investments (Domazet & Marjanović,

2018). In Malaysia, particularly in Iskandar Malaysia, policy changes such as granting

Forest City special financial zone status are aimed at bolstering FDI in Iskandar Puteri

(Malaysian Investment Development Authority (MIDA) 2024, 2023). However, there is

43
a paucity of literature specifically addressing how smart city policies influence FDI

attraction.

Proposition 2: Technology infrastructure affect FDI inflows.

Empirical findings underscore the significant role of technology in shaping the

relationship between FDI and economic growth (Sultana & Turkina, 2020). Specifically,

findings highlight that within the manufacturing sector, FDI characterized by advanced

technological features correlates positively with host country growth (Marasco et al.,

2024). Conversely, there is also indication of a favourable association between FDI and

growth in host countries, even in cases where the technological sophistication is relatively

low (Marasco et al., 2024). Additional empirical evidence suggests that a nation's

centrality within the global FDI network correlates positively with its level of

technological advancement (Sultana & Turkina, 2020). There is further evidence

suggesting that regions experiencing high economic activity and facing significant

transport costs may attract foreign direct investment inflows through the adoption of

technologies such as 3D printing, as supported by a case study conducted by Abeliansky

et al. (2020).

Proposition 3: Human Capital development enhances FDI.

The significance of skilled labour in attracting FDI cannot be overstated (Haudi

et al., 2020; Zafar et al., 2019). For example, Sri Lanka's proficient English-speaking

workforce, China's technically skilled labor force, and India's large population with

English proficiency have all attracted investment. Similarly, Bangladesh, Vietnam, and

Thailand have seen investments in garment industries due to their abundant labor force.

India's IT sector, employing millions directly and indirectly, has also benefited from

44
skilled professionals, making them attractive destinations for FDI (Haudi et al., 2020).

Empirical findings also show that migrant managers, alongside professionals to a lesser

degree, notably impact both extensive and intensive FDI margins, with sectoral

differences highlighting a greater effect in sectors with smaller investment projects,

emphasizing the relevance of management skills (Cuadros & et. al.,2019).

Some literature, as argued by Lim and Ng (2022), suggests that it is Malaysian

politics, particularly the dynamics between the central and state governments, that

significantly influences the outcomes of attracting Foreign Direct Investment (FDI) from

Chinese investors into Iskandar Malaysia's real estate sector.

To assess the key factors influencing FDI, we will conduct interviews with

relevant stakeholders.

2.8 Chapter summary

To comprehend the influence of smart city efforts on foreign direct investment in

Iskandar Malaysia, Chapter 2 explores the fundamental concepts and conceptual

frameworks. The study clarifies the subject by exploring the existence of smart city efforts

on foreign direct investment (FDI) in the fast-rising Iskandar Malaysian region. Initiatives

to create "smart cities," which combine creativity, data, and technology to improve urban

living, are emphasised as important forces behind sustainability and economic expansion.

In light of the government's active promotion of smart cities and Iskandar Malaysia's

position as a leader in these development initiatives, the chapter emphasises the

significance of analysing this relationship within the Malaysian context.

Relevant concepts such as smart city initiatives, FDI, technology, human capital,

and policy frameworks are elaborated upon. The interplay of technology, human capital,

and policy frameworks in shaping smart city initiatives and attracting FDI is highlighted

45
as central to the research inquiry. The chapter further explores relevant theories, drawing

upon Yigitcanlar (2018)'s conceptual framework of smart cities and insights from Biloria

(2021), emphasizing the intertwined nature of technology, policy, and human capital in

driving economic outcomes in urban contexts.

The research framework outlines the key drivers—people, technology, and

policy—interconnected to influence FDI outcomes. It serves as a foundational structure

for the subsequent analysis, guiding the examination of how advanced technologies,

human capital development, and policy enactments shape FDI inflows in Iskandar

Malaysia. Propositions are formulated based on the conceptual framework foundations

and empirical observations, outlining hypotheses to be tested through empirical research.

In summary, Chapter 2 lays the groundwork for the empirical investigation by elucidating

the conceptual frameworks, and propositions guiding the analysis of smart city initiatives'

impact on FDI in Iskandar Malaysia.

46
 CHAPTER 3

RESEARCH METHODOLOGY

3.0 Introduction

This chapter elaborates on the methodology employed to explore the impact of

Smart City initiatives on the economy of Iskandar Malaysia. The research design is

structured to ensure that the information gathered is valid, reliable, and directly relevant

to the investigated problem, reflecting contemporary methodological standards (Creswell

& Creswell, 2018). This chapter will detail the appropriate model for the study, alongside

the methodologies utilized, which include the research instruments, population, sampling

methods and sample size, data collection procedures, and techniques for data

analysis. These components are critical in providing a comprehensive understanding of

how Smart City initiatives influence economic growth, technological advancement, and

human capital development in Iskandar Malaysia.

3.1 Research Philosophy

In exploring the qualitative dimensions of Smart City initiatives in Iskandar

Malaysia, the research philosophy adopted integrates both Constructivist and Critical

Realism frameworks. This synthesis offers a robust platform for understanding the

complex interplay between individual perceptions and the underlying structures that

influence these perceptions. By employing these philosophical underpinnings, the

research aims to capture a comprehensive narrative that encompasses both the subjective

experiences of stakeholders and the objective conditions that shape these experiences.

47
3.1.1 Constructivism in Qualitative Research

Constructivism posits that reality is socially constructed, emphasizing the

importance of human interaction and interpretation in the formation of knowledge

(Gergen, 2015). This philosophical stance is particularly suited to qualitative

research that seeks to understand the nuances of human experiences and the

meanings individuals ascribe to their interactions with Smart City technologies.

3.1.2 Application of Constructivism

Subjective Experiences: The study will focus on gathering rich, detailed

narratives from city planners, and council to understand their experiences with

Smart City initiatives. Through interviews, the research will delve into how

these stakeholders perceive changes brought about by Smart City

implementations.

Interpretive Analysis: Data analysis will be guided by methods such as

thematic analysis, which aligns well with Constructivism. This approach will

enable the identification of themes and patterns within the data, reflecting the

complex, varied perceptions and experiences of participants.

3.1.3 Critical Realism in Qualitative Research

While Constructivism provides the tools to explore the subjective

dimensions of Smart City impacts, Critical Realism offers a framework for

understanding the deeper, often unobservable mechanisms that influence

48
observable phenomena (Bhaskar, 1978). This approach acknowledges the

existence of real conditions or structures, whether they are directly perceivable.

3.1.4 Integrating Critical Realism

Unseen Mechanisms: Critical Realism will be used to explore the

structural, economic, and political factors that underpin the observable impacts of

Smart City initiatives. It helps to question and uncover the root causes of the

observed phenomena, such as the socio-economic conditions that facilitate or

hinder the effectiveness of these initiatives (Bhaskar, R. 2008).

Causality and Context: By recognizing the role of underlying mechanisms,

the research can provide a more nuanced understanding of how and why certain

outcomes are achieved, going beyond surface-level descriptions to explore

causality within the context of urban development (Easton, G. 2010)..

3.1.5 Methodological Approach for Qualitative Research

Data Collection Techniques: The research will primarily employ semi-structured

interviews, supplemented by observational studies and document analysis. This

mix of data collection methods ensures a rich, comprehensive dataset that captures

both the articulated experiences of individuals and contextual data (Kallio, H.,

Pietilä, A. M., Johnson, M., & Kangasniemi, M. 2016).

Analytical Strategy: Thematic analysis will be central in interpreting the data,

providing a systematic approach to identifying and analysing recurrent themes

that emerge from the interviews and discussions. This method aligns with the

49
 Constructivist approach by emphasizing the constructed nature of reality and the

importance of individual perspectives (Nowell, L. S., Norris, J. M., White, D. E.,

& Moules, N. J. 2017)..

The dual application of Constructivism and Critical Realism in this qualitative

study allows for a holistic exploration of Smart City initiatives in Iskandar Malaysia. This

research philosophy not only facilitates an understanding of how individuals perceive and

interact with Smart City technologies but also provides insights into the systemic and

structural conditions that shape these technologies' deployment and effectiveness. By

bridging subjective experiences with objective analysis, the study aims to offer

comprehensive insights that can inform policy-making and future urban planning

strategies (Creswell, J. W., & Poth, C. N. 2018).

3.2 Research Design

Qualitative research often utilizes interviews to gain insights into complex

phenomena within their real-life settings (Seidman, 2013). This study focuses on

interviews as a method to explore Iskandar Malaysia's Smart City initiatives. By

conducting interviews, the research gathers firsthand information from participants,

allowing for an in-depth understanding of the processes and outcomes associated with

these initiatives. Interviews facilitate a detailed exploration of perspectives and uncover

hidden aspects of the Smart City initiatives.

3.3 Research Instrument Development

3.3.1 Instrument Measurement

50
 In exploring the proposition factor of Smart City initiatives in Iskandar

Malaysia, particularly their influence on FDI, this study employs a qualitative

research design utilizing semi-structured interviews. The methodology is tailored

to provide deep insights into the dynamics between technological advancement,

human capital, and policy frameworks as key variables influencing FDI.

Interviews will be conducted with two key stakeholders: a member of the

city council and a city planner. These individuals are strategically chosen to

capture a comprehensive view of the Smart City initiatives from both a policy and

implementation perspective. Conducting the interviews in English, a prevalent

language in professional settings within Malaysia, ensures clarity in

communication and precision in capturing the nuances of responses related to

Smart City technologies and policies (Guest, Namey, & Mitchell, 2013).

The instrument for data collection in this study is a set of semi-structured

interview questions designed around three main variables:

Technological Advancement: Questions in this category aim to uncover how the

introduction of new technologies under the Smart City initiatives influences the

attractiveness of Iskandar Malaysia to foreign investors. For example:

"Can you provide an overview of the smart city initiatives undertaken in Iskandar

Malaysia?"

"In your opinion, what role does technological advancement play in attracting

foreign investors to Iskandar Malaysia?"

51
Human Capital: This set of questions explores the quality and availability of

skilled labour as a critical component of the region’s appeal to foreign

investment. Key questions include:

"How would you characterize the current state of human capital within Iskandar

Malaysia, particularly in terms of its attractiveness to foreign investors?"

Policy Frameworks: Questions under this theme investigate the specific policies

that have been implemented to support Smart City development and their impact

on FDI. Examples include:

"In your view, how have policies in Iskandar Malaysia supported the development

of smart cities and what impact have they had on foreign direct investment?"

Qualitative interviews are selected as the primary data collection method

due to their effectiveness in capturing detailed, context-rich information that is

essential for understanding the subjective experiences and opinions of individuals

involved in complex systems like Smart Cities (Maxwell, 2012). Semi-structured

interviews provide the flexibility to explore unexpected topics that arise during

discussions, thereby offering a deeper understanding of the interplay between

technology, policy, and human capital in shaping the economic landscape.

To enhance the reliability of the findings, the interview questions are

carefully designed to align with the research objectives and are reviewed by our

subject leader. This ensures that the questions can elicit the necessary information

to address the research questions effectively. The use of multiple sources of data,

including both interviews and document analysis, further supports the

52
triangulation process, enhancing the validity and comprehensiveness of the

research findings (Baxter & Jack, 2008).

The use of semi-structured interviews in this study allows for an in-depth

exploration of the perceptions and experiences of key stakeholders involved in

Smart City initiatives in Iskandar Malaysia. By focusing on the variables of

technological advancement, human capital, and policy frameworks, this research

design is well-suited to uncover the factors that influence foreign direct

investment in the region, providing valuable insights for policymakers and urban

planners.

In qualitative research, particularly when studying complex phenomena

like Smart City initiatives, it's essential to design an interview guide that not only

addresses the core variables but also anticipates the need for exploring emergent

themes and unforeseen challenges. In the context of this study on Iskandar

Malaysia, incorporating sections such as "Backup Questions," "Challenges and

Barriers," "Additional Factors and Future Trajectory," and "Investor Perceptions

and Effectiveness of Initiatives" into your interview guide enhances the depth and

breadth of data collection.

Backup questions serve as an essential tool in qualitative interviews,

ensuring that the conversation continues to yield valuable data even when initial

responses are brief or less informative than anticipated. These questions are

designed to probe deeper or explore alternative angles that may not have been

initially considered. They are particularly useful in instances where

interviewees may need prompting to reflect more extensively on their experiences

or to elaborate on responses that could lead to new insights. Including backup

53
questions ensures comprehensive coverage of the topics and maximizes the utility

of each interview session (Rubin & Rubin, 2012).

Including questions specifically aimed at identifying challenges and

barriers provides critical insights into the obstacles faced by Smart City

initiatives. Understanding these challenges is crucial for developing realistic

assessments of project feasibility and sustainability. It allows stakeholders to

learn from past mistakes and to strategize more effectively for future

projects. Identifying barriers also helps in understanding the resistance within

certain segments of the community or from institutional structures, which is vital

for implementing successful urban development projects (Yin, 2014).

Questions that explore additional factors and the future trajectory of Smart

City initiatives help to capture data on variables that may not be immediately

apparent. This section is particularly important for identifying emerging trends,

potential new challenges, and opportunities within the Smart City landscape. It

also allows stakeholders to speculate on future developments, providing a

forward-looking perspective that can be invaluable for long-term planning and

investment decisions (Flyvbjerg, 2006).

This section aims to gather direct feedback from investors or other

financial stakeholders on their perceptions of the effectiveness of Smart City

initiatives. Investor feedback can provide a measure of the economic impact

and attractiveness of these projects, offering a direct assessment of return on

investment and the economic viability of Smart City strategies. Understanding

investor perceptions also helps policymakers and planners to adjust their strategies

to better align with the needs and expectations of the investment community

(Maxwell, 2013).

54
 Incorporating these additional sections into your interview guide not only

enriches the data collected but also ensures that the research captures a holistic

view of the Smart City initiatives in Iskandar Malaysia. These questions

acknowledge the complexity of urban development projects and recognize the

diverse factors influencing their success. By planning for a broad range of

questions, the research is better positioned to adapt to the dynamic nature of

qualitative data gathering, ultimately leading to more robust and actionable

insights.

3.3.2 Instrument Design

Table 3.1

Interview questions

Questions Propositions
1. Can you provide an overview of the Technological Advancement
smart city initiatives undertaken in
Iskandar Malaysia?

2. In your opinion, what role does

technological advancement play in
attracting foreign investors to Iskandar
Malaysia?

3. Can you share specific examples of

technological innovations or projects that
have directly influenced foreign investment
decisions in Iskandar Malaysia?

4. Many experts describe the 'people,

technology, policy' framework as being
fundamental to smart city development.
How accurately does this characterization
reflect your understanding of the critical
factors underlying Iskandar Malaysia's
smart city initiatives?

1. How would you characterize the Human Capital

current state of human capital within

55
Iskandar Malaysia, particularly in terms of
its attractiveness to foreign investors?

2. From your experience, what are the

key factors that contribute to Iskandar
Malaysia's appeal as an investment
destination?

1. In your view, how have policies in Policy Framework

Iskandar Malaysia supported the
development of smart cities, and what
impact have they had on foreign direct
investment?

2. Can you provide insights into any

specific policies or regulations that have
either facilitated or hindered foreign
investment in Iskandar Malaysia?

1. From your interactions with foreign Investor Perceptions and Effectiveness of

investors, what are their perceptions of Initiatives
Iskandar Malaysia's smart city initiatives
and their impact on investment decisions?

2. How do you measure the success or

effectiveness of smart city projects in terms
of attracting foreign investment?

1. Can you share any insights or Additional Factors and Future Trajectory
experiences that suggest there may be
additional factors beyond technology,
people, and policy that contribute
significantly to the success of smart city
initiatives in attracting foreign investment?

2. Finally, from your experience, how

do you foresee the future trajectory of
smart city initiatives in Iskandar Malaysia
influencing foreign investment trends?

1. In your opinion, what are the main Challenges and Barriers

challenges or barriers faced by Iskandar
Malaysia in leveraging smart city
initiatives to attract foreign investment?

1. Is there any additional information Backup Questions

or insights you would like to share
regarding the relationship between smart

56
cities and foreign direct investment in
Iskandar Malaysia?

3.4 Data Collection

This qualitative study aims to assess the smart city initiatives on FDI in Iskandar

Malaysia. The data collection process will involve semi-structured interviews with key

informants who have knowledge and experience related to smart city projects and FDI

in the region.

3.4.1 Unit of Analysis

The unit of analysis refers to the primary entity or phenomenon under

investigation (Yin, 2018 ; Moser & Korstjens, 2018). In this research, the unit of

analysis is foreign direct investment (FDI) projects within Iskandar Malaysia's

smart city initiatives. These FDI projects are directly relevant to the study as they

represent the influx of foreign capital and investments into the region, which

significantly contributes to economic growth and development (Ma'in & Mat Isa,

2020).

According to the Malaysian Investment Development Authority (MIDA,

2023), Iskandar Malaysia attracted RM70.6 billion in FDI in 2022, accounting for

27% of the total FDI inflows into the country. This substantial FDI inflow

highlights the importance of understanding the factors that influence foreign

investors' decisions to invest in Iskandar Malaysia, particularly within the region's

smart city initiatives (Choon et al., 2024).

By focusing on FDI projects, this study aims to examine how the

integration of advanced technologies, the development of human capital, and the

implementation of supportive policies. The key components of smart city

57
 initiatives shape the investment landscape and attract foreign investment

(Ismagilova et al., 2019; Yigitcanlar et al., 2019). Understanding the relationship

between these initiatives and FDI inflows is crucial for policymakers and urban

planners to develop strategies that leverage smart city initiatives effectively,

fostering economic growth and sustainable urban development in Iskandar

Malaysia (Tan & Taeihagh, 2020).

3.4.2 Unit of Observation

The unit of observation refers to the sources from which data will be

collected (Moser & Korstjens, 2018). In this study, the unit of observation consists

of 5 key informants from stakeholders from Iskandar Malaysia, such as city

councils and government agencies, who are involved in or have knowledge about

FDI projects and smart city initiatives in Iskandar Malaysia.

The data collected from these informants through semi-structured

interviews will provide valuable insights into the research questions and help

assess the smart city initiatives on FDI in Iskandar Malaysia. Although the number

of interviews is limited, the informants' expertise and direct involvement in the

subject matter are expected to contribute to the richness and depth of the data

collected (McGrath et al., 2019). In qualitative research, the focus is on the quality

and relevance of the data rather than the quantity of interviews (Clark et al., 2021).

3.5 Population and Sampling

This section describes the target population and the sampling methods employed

in this qualitative study. The population for this research comprises foreign direct

58
investment (FDI) projects in Iskandar Malaysia, specifically those related to or influenced

by the region's smart city initiatives.

According to a report by The Star (Yun, 2024), since its inception in 2006,

Iskandar Malaysia has recorded a total cumulative investment of RM409.5 billion as of

September 2023, surpassing its initial target of RM383 billion set for 2025. Driven by

this success, Iskandar Malaysia has now set a new cumulative investment target of

RM636 billion for 2030, aiming to leverage initiatives such as the Special Economic Zone

and Special Financial Zone.

Of the RM409.5 billion in cumulative investments recorded so far, RM183.1

billion (45%) came from foreign sources, with China being the largest foreign investor,

contributing RM61.8 billion. This substantial influx of FDI projects has played a crucial

role in Iskandar Malaysia's economic growth and development, emphasizing the

importance of studying this population.

Focusing on the population of FDI projects is essential because foreign direct

investment is pivotal for economic growth, job creation, and technological transfer (Ma'in

& Mat Isa, 2020; Rong et al., 2020). Understanding the factors that influence foreign

investors' decisions to invest in smart city environments can provide valuable insights for

policymakers and urban planners to develop strategies that leverage these initiatives

effectively, fostering sustainable economic development and urban growth in Iskandar

Malaysia.

3.5.1 Sampling Frame

The sampling frame is the list or source from which the sample is drawn

(Robinson, 2014). In qualitative research, sampling aims to ensure the complete

representation of the phenomenon of interest rather than statistical

59
representativeness of a population (Heather et al, 2019). The sampling frame for

this study consists of key informants who are directly involved in the Urban

Planning and implementation of smart city initiatives in Iskandar Malaysia. The

selection of informants was guided by their expertise, roles and responsibilities

within the context of smart city development. The informants were chosen to

provide a comprehensive understanding of the smart city initiatives and FDI from

both local and federal perspectives.

Table 3.2
Sampling Frame & Characteristics

Key Informant
Role Organization Position Level Characteristics
Category
Involved in planning and implementing
Smart city planning Decision making Local authorities in Smart City smart city initiatives. (Knowledge of local
High
and management Officer Iskandar Malaysia Managers policies and regulations related to FDI
and smart city development).

National vision and Provides strategic perspective. Setting

policy framework for Decision making Head of Smart standards, providing guidance to local
Federal agency High
smart city Officer City authorities and ensuring alignment with
development national objectives.

To ensure a well-rounded and in-depth exploration of the research

objectives, the selected sampling frame is designed to capture a diverse range of

perspectives and insights related to smart city initiatives in Iskandar Malaysia. By

including both local and federal informants, the study aims to provide a balanced

understanding of the factors influencing smart city development and their

influence on attracting FDI. The varied roles and expertise of the informants

ensure that the research findings will reflect a comprehensive view of the

challenges, opportunities, and outcomes associated with smart city projects in the

region (Moser & Korstjens, 2018).

60
3.5.2 Sample Size

In this qualitative study, a sample size of five in-depth interviews was

determined for the pilot test phase. While the ideal sample size in qualitative

research is typically guided by data saturation (Guest et al., 2017; Hennink et al.,

2019), a small sample is acceptable for pilot testing, as the primary purpose is to

refine the research instruments and methodologies (Fakis et al., 2014; Malmqvist

et al., 2019).

The selection of five key informants for the interview is justified by their

direct expertise and involvement in FDI projects and smart city initiatives within

Iskandar Malaysia. Despite the limited sample size, their insights and experiences

are expected to provide valuable feedback to improve the interview guide and

overall data collection process before proceeding with the main study (Sampson,

2004).

Before proceeding to the actual test, two informants were selected for the

pilot test phase. This aims to identify potential issues or areas for refinement,

ensuring that the subsequent data collection and analysis are comprehensive and

aligned with the research objectives.

3.5.3 Sample Response Rate

In qualitative research, an adequate sample response rate is typically

between 45% and 50% (Vasileiou et al., 2018; Abrams et al., 2015). For this study,

the sample response rate is 100%, as the five key informants for this research

interview have been identified and all of them has been participant in the interview

section.

61
 However, it is essential to note that in qualitative studies, the sample size

and interview questions may evolve through a process known as snowball

sampling (Naderifar et al., 2017). After the initial interviews, the researcher may

identify the need to ask additional questions or include new participants based on

the insights gained. This iterative approach allows for a more comprehensive

exploration of the research topic and ensures that the data collected is rich and

relevant (Moser & Korstjens, 2018).

If additional questions or participants are deemed necessary after the pilot

test phase or interview, the researcher will adjust the sample size and interview

guide accordingly. This flexibility is crucial in qualitative research, as it enables

the researcher to adapt the study design based on emerging themes and findings

(Kallio et al., 2016).

3.5.5 Sampling Error

Sampling error refers to the potential discrepancies between the

characteristics of the selected sample and the broader population being studied

(Taherdoost, 2020). In qualitative research, while the primary focus is on

obtaining rich and in-depth data rather than statistical generalization, it is

important to acknowledge and mitigate potential sampling errors.

One potential source of sampling error in this study is the small sample

size during the pilot test phase. To address this, the researcher will carefully select

key informants who possess extensive expertise and direct involvement in FDI

projects and smart city initiatives within Iskandar Malaysia. By ensuring that the

informants have relevant and diverse experiences, the researcher can obtain

62
 comprehensive insights that are representative of the broader population of

interest (Moser & Korstjens, 2018).

Additionally, the researcher will employ techniques such as triangulation

and member checking to further reduce sampling errors. Triangulation involves

cross-verifying information from multiple sources, such as interviews, document

analysis, and observations (Carter et al., 2014). Member checking involves

sharing the interpreted data with the participants to ensure accurate representation

of their perspectives (Birt et al., 2016). These techniques help to enhance the

credibility and trustworthiness of the data, mitigating potential sampling errors.

3.6 Data Collection Procedures and Techniques

This section outlines how we collected information for our research using

qualitative methods. We aimed to understand people's experiences and opinions about

key factors, smart city initiatives and their impact on FDI in Iskandar Malaysia. The

interview process consists of three stages: pre-interview, during the interview, and post-

interview phases.

Before the commencement of the interview session and to refine our interview,

framework and validate the efficacy of our approach, a pilot test was conducted with two

key informants: city managers from select city councils within the Iskandar Malaysia

region. This ensured we gathered insights from those directly involved in these initiatives.

These informants, possessing in-depth knowledge and firsthand experience in the

implementation of smart city initiatives, provided invaluable insights during one-on-one

virtual interviews. Interviews serve as the primary mode of data collection, offering a

platform to delve into the intricacies of stakeholders' insights (Portigal, 2023). These

interviews were semi-structured, meaning we had a general plan for questions but allowed

63
for flexibility based on the conversation (Pressbooks, 2020). We asked open-ended

questions to encourage honest and detailed responses (Pressbooks, 2020).The relevant

interview questions were designed and formulated based on the research objectives.

These questions underwent review and validation by our subject supervisor prior to the

interview. The interview sessions were conducted online via a virtual platform, with each

session estimated to last around 30-60 minutes. The sessions will be recorded for analysis.

During this interview stage, firstly, we followed ethical guidelines throughout,

obtaining consent from all participants and ensuring their confidentiality. This created a

safe space for open discussions. The interview session commenced with an opening,

including a briefing and explanation of the interview process. Throughout the session, we

followed the process of interviewing the informants and recording the data until its

conclusion. Open-ended questioning techniques were employed to elicit comprehensive

information. We utilized the recording tools available in Microsoft Teams and transcribed

the ideas expressed by the interviewees. The duration of each interview session lasted

approximately 40 and 90 minutes, respectively. As the interviews concluded, we

summarized the key points with the interviewees. Finally, we expressed gratitude and

appreciation to the informants for accepting our invitation to participate in the interview.

Post-interview stage, the utilization of recording devices during interviews

facilitates accurate data capture, allowing for in-depth analysis and interpretation at later

stages. Braun & Clarke (2006) provide a six-phase guide (figure 3.1) which is a very

useful framework for conducting this kind of analysis. Thematic analysis serves as the

principal technique for data analysis, enabling the identification of recurring patterns,

emergent themes, and divergent perspectives inherent within the qualitative dataset.

Figure 3.1

64
The six-phase of thematic analysis (Braun & Clarke, 2006)

Phase 1: Data Transcribing

This initial phase involved immersing the researchers in the data by meticulously

transcribing textual and audiovisual materials (Braun & Clarke, 2006). The objective was

to develop an intimate familiarity with the dataset, enabling the researchers to discern

relevant patterns and themes (Maguire & Delahunt, 2017).

Phase 2: Code Generation

Following transcription, the data underwent systematic organization into manageable

units of meaning through code generation (Dawadi, 2021). Codes were developed

iteratively, guided by the research objectives. Notably, the analysis adopted a theoretical

thematic approach, focusing on predetermined themes aligned with the research

framework.

Phase 3: Themes

In this phase, the researchers identified overarching themes by synthesizing and

scrutinizing the emergent codes. Themes were selected based on their significance and

coherence, capturing key aspects of the data relevant to the research questions (Braun &

Clarke, 2006). Rigorous refinement ensured consistency and clarity across the thematic

framework.

65
 Phase 4: Thematic Mapping

Thematic mapping involved the deliberate integration of master themes, main themes,

and sub-themes to provide a comprehensive overview of the thematic landscape (Clarke

& Braun2017). Themes were assessed for internal coherence and external consistency,

ensuring robustness within the analytical framework.

Phase 5: Themes Definition

This phase focused on refining and defining themes to elucidate their essence and

relevance (Braun & Clarke, 2019). Emphasis was placed on crafting clear and distinct

narratives reflective of the data, aligning with the research objectives. Themes underwent

iterative refinement to ensure coherence and alignment with the overarching research

goals.

Phase 6: Theme Analysis

The final phase encompassed synthesizing thematic findings to construct a coherent

narrative (Braun & Clarke, 2019). Thematic analysis aimed to uncover underlying stories

within the data, supported by evidence and illustrative examples. The resulting narrative

offered insights into the complexities of the research phenomena, contributing to a

nuanced understanding of the study context.

3.7 Pilot Test

Qualitative interview data plays a significant role in social sciences, facilitating

verbal interactions between interviewers and interviewees. However, concerns often arise

66
regarding the validity and reliability of such data, particularly for inexperienced

researchers lacking systematic interviewing skills (Dikko, 2016). Validity, ensuring

trustworthiness and alignment with research objectives (Zohrabi, 2013), underscores the

importance of a well-designed interview instrument, as research conclusions heavily rely

on the information gathered. Reliability, on the other hand, necessitates consistency and

absence of bias in measuring intended concepts (Sekaran & Bougie, 2003), posing

challenges due to the subjective, narrative nature of qualitative data.

Mastering procedures like pilot testing is crucial for researchers collecting

qualitative data, aiding in refining interview approaches. In a study exploring the

influence of Smart Cities initiatives on FDI, pilot testing of a semi-structured interview

instrument was conducted with two informants to assess the proposition factors. The

results indicated the instrument's validity and reliability, while also highlighting areas for

refinement and modification in the research tool. This underscores the importance of

piloting interview instruments to ensure robust data collection and analysis.

3.7.1 Thematic Analysis from the Pilot Test

To assess validity and reliability, we employed three phases of thematic

analysis. The findings were satisfactory, particularly in Phase 3, where axial

coding was conducted based on the generated codes. Through this process, it

became evident that our analysis aligned with our research objectives, thus

affirming the reliability of our interview instrument.

Phase 1: Data Transcribing

Transcribing the first question (Q1): Can you provide an overview of the smart

city initiatives undertaken in Iskandar Malaysia?

67
 During the interviews, the informants were asked for their opinions on the

overview of the smart city initiatives undertaken in Iskandar Malaysia. Both

participants (n=2/2) agreed that Iskandar Malaysia was the first region to

introduce smart city initiatives, and the Federal government adopted the Smart

City framework, rolling out the Malaysia Smart City framework as a result. The

Federal government introduced the 7 smart city concepts to streamline the criteria

for smart city initiatives.

Answers from informants:-

Informant 1: “Iskandar Malaysia has start doing on the Local Urban Observatory

(LUO).. 10 years back before now, at that time in Malaysia no one is talking

about Smart City and we are the first one.. 2016, start the Smart City journey

in their own formula. Later on KPKT (Ministry of Housing and Local

Government), adopt smart city and start working on the Malaysia

framework.. 7 components concepts inside city planning to streamline

deployment and put in good practice and policy.

Informant 2: “being smart to work efficiently.. Federal introduced Smart

framework by enhance Johor Smart City project… introduced more

streamline services in smart city concept and list of criteria.. 11 concept and

after streamline smart city, it become 7 concepts.”

Transcribing the second question (Q2): From your perspective, how do these

smart city initiatives align with the broader economic development goals of

Iskandar Malaysia?

68
 During the interviews, the informants provided their views on how smart

city initiatives align with the broader economic development goals of Iskandar

Malaysia. Both informants expressed that smart city initiatives facilitate

digitalization to improve service provision and enhance efficiency, ultimately

resulting in quicker services and greater transparency. One informant further

expressed that this transparency would attract investment into Iskandar Malaysia.

Answers from informants:-

Informant 1: “Branding.. bring up the city with smart city initiatives, investor

confidence level increase... no longer paper based but you are going with

the digitalization... smart city application applying licensing and etc – it is

all digital, provide transparency... transparency increase the integrity and

then they will encourage invest into Iskandar Malaysia.”

Informant 2: “Coordination.. services provided from 3 weeks become 2 days..

with technology, it provided clearer step… how to make it, where to make

it, it is become more clear now on the services you will be getting”

Transcribing the third question (Q3): From your experience, what are the key

factors that contribute to Iskandar Malaysia's appeal as an investment destination?

During the interviews, the informants shared the key factors contributing

to Iskandar Malaysia's appeal as an investment destination. Both informants

emphasized the importance of leadership in attracting investment to the region.

One informant also highlighted that technology, policy, and human capital are

fundamental factors. Another informant mentioned the significance of data

69
availability for investors to evaluate, providing insights that would further attract

them to invest.

Answers from informants:-

Informant 1: “We cannot running out from the three, technology, policy and

people. The other important thing I would say is leadership – we are still

conventional organization where the leaders say yes, then the whole

mechanism will follow.”

Informant 2: “the leadership – he is the one who gives the directions – the vision.

Data – data will provide investor on the necessary information about their

investment about location, demographics and environmental info.”

Transcribing the fourth question (Q4): In your opinion, what role does

technological advancement play in attracting foreign investors to Iskandar

Malaysia?

During the interviews, the informants provided their opinions about the

role of technology in attracting foreign investors. Both informants expressed that

technological advancement is less important in attracting investors. One of the

informants mentioned that investors can always bring in the right technology to

the location, even if the place lacks it initially.

Answers from informants:-

Informant 1: “Technology is less priority.. because without technology that they

need, they can bring in the technology… because of the policy to encourage

them to be here.”

70
Informant 2: “We have technology but without information or data management,

investor will not know the place to invest.”

Transcribing the fifth question (Q5): How would you characterize the current

state of human capital within Iskandar Malaysia, particularly in terms of its

attractiveness to foreign investors?

During the interviews, the informants were asked about the role of human

capital in attracting foreign investors to Iskandar Malaysia. Both informants

mentioned that Malaysia possesses abundant talent, emphasizing the importance

of policies to retain this talent within the country. One informant highlighted that

foreign schools are setting up in the region because of the availability of talented

educators.

Answers from informants: -

Informant 1: “According to my strategic development framework, Iskandar Puteri

City Council has the highest number of workforce, young workforce and

young family compared to others, UTM campurs, UORD, American

Campus are the few foreign school… they are running to Singapore due to

currency so it is important to have a policy to bring them back.”

Informant 2: “We are asians, we are proactives and we are willing to work

overtimes… because of our good features, policy is required how to keep

the talent.”

71
Transcribing the sixth question (Q6): In your view, how have policies in Iskandar

Malaysia supported the development of smart cities, and what impact have they

had on foreign direct investment?

During the interviews, the informants were asked about their views on

policies in Iskandar Malaysia to support the development of smart cities and

influence FDI. Both informants emphasized that policy is the most crucial factor.

They highlighted that a supportive and consistent policy environment would

establish a robust system and instil confidence in investors for long-term business

investments in Johor.

Answers from informants: -

Informant 1: “Policy is still the most important thing, for eg. tax structure. Why

when they come here, why they suddenly dislike about us is because of the

system… it’s not the space that we provide, urban infrastructure, the

technology. Why investor prefer Singapore not Malaysia. There’s lot of

policy have to change to the system running here to support the business

should be similar as in Singapore.. reduce procedure...”

Informant 2: “Policy is important. If the policy is too rigid and always change will

drive investment. For eg forest city. Change of policy drive investor out and

government is setting up free trade zone to attract investor… it is policy and

leadership important to draw investor.”

Transcribing the seventh question (Q7): From your interactions with foreign

investors, what are their perceptions of Iskandar Malaysia's smart city initiatives

and their impact on investment decisions?

72
 During the interviews, the informants were asked about foreign investors'

perceptions of Iskandar Malaysia's smart city initiatives and their impact on

investment based on their interactions. One informant mentioned that smart

systems aiding their business operations would drive FDI. Another highlighted

the importance of standardized policies and systems across Iskandar Malaysia,

eliminating the need to navigate different council systems and processes. This

would ease the process of setting up businesses for investors and indirectly

encourage more investment in Iskandar Malaysia.

Answers from informants: -

Informant 1: “Iskandar Malaysia is the game changer and pushing for change in

this local ecosystem. Move Iskandar Malaysia to Smart City number one…

they know that when they choose this place you are going to certainly meet

the certain standard because of the smart city initiatives in Iskandar Puteri,

for eg low carbon initiatives and monitoring.. increase their confidence to

migrate to this area.”

Informant 2: “Johor set up Greater JB alliances consists of 3 city councils and 1

municipal – standardise the policies. They don’t have familiarise different

logo different system. Easy and standardise system will encourage them to

invest in Iskandar Malaysia.”

Transcribing the eight question (Q8): How do you measure the success or

effectiveness of smart city projects in terms of attracting foreign investment?

During the interviews, the informants were asked about how to measure

the success or effectiveness of a smart city in terms of attracting foreign

73
investment. Both informants mentioned considering factors such as the number of

industries through development planning process submissions. Another informant

mentioned that their organization also tracks success by licenses issued and office

space occupancy.

Answers from informants: -

Informant 1: “We can know from the number of industries, the license, and the

office space the occupancy”

Informant 2: “Any development must go through planning process submission, so

we know the number of type of companies. Foreign developers will bring in

more residential areas and commercial areas. Main anchor in Pasir Gudang

is Industries, all from foreign companies, for eg, one chemical industry been

there for 30 years and because of this it attract korea investor to come and

has been there for 13 years. And all these is because of economic plan and

policies boost up industries.”

Transcribing the nineth question (Q9): Can you share any insights or experiences

that suggest there may be additional factors beyond technology, people, and

policy that contribute significantly to the success of smart city initiatives in

attracting foreign investment?

During the interviews, the informants were asked to share if there may be

additional factors beyond the three factors that contribute to the success of smart

city initiatives in attracting foreign investment. One informant mentioned that

resource availability, such as land, is crucial for investment decision-making in a

74
location. Another informant mentioned that data is important for improving the

city and enabling investors to make informed decisions.

Answers from informants: -

Informant 1: “Investment promotion and why certain economy take place in

certain area is still very much influence the FDI to their investment decision

resource based theory. For eg, do we have big enough land to cater their

activity?”

Informant 2: “Data is important. Data provide visibility on what a we lack of, how

to improve at the same time provide insight to investor. For eg, investor will

always avoid prone flood area with the data availability.”

Transcribing the tenth question (Q10): Finally, from your experience, how do you

foresee the future trajectory of smart city initiatives in Iskandar Malaysia

influencing foreign investment trends?

During the interviews, the informants were asked to share their insights on

the future trajectory of smart city initiatives in Iskandar Malaysia and how they

influence foreign investment trends based on their experiences. Both informants

emphasized the importance of policy in shaping foreign investment trends, with

one mentioning that this could be achieved by using data analytics.

Answers from informants: -

Informant 1: “Continue to push forward and using analytic. How we use the data

to make people’s life better? How we use the data to help the investor to

improve their performance, to guide them on. With analytic, we are able to

75
 comes out with better policy, the resource planning, the cheaper operational

cost compared to Singapore.”

Informant 2: “what is the policies and how to implement it – the friendly and

consistent policy”

Phase 2: Code Generation

Table 3.3
Code generation

Pioneering Smart Cities initiatives

Government adoption and standardization
Q1
Framework Development and streamlining
Component of Smart City planning
Branding and perception
Q2
Efficiency and service improvement
Leadership
Q3 Technology, Policy and Human Capital
Data Availability
Technology as a secondary factor
Q4
importance of information and data management
Abundance of talent
Q5 Policy for talent retention
Asian work ethos
Policy
Q6 Tax structure and regulatory environment
Impact of policy changes
Free trade zone and incentives
Perception of Iskandar Malaysia as a Game Changer
Q7 Impact of Smart System on FDI
Importance of Standardized Policies and systems
Number of industries and development planning
submission
Q8
Licensing and office space occupancy
Economic plan and policies
Resources availability
Q9
Data availability and utilization
Utilization of data analytic
Q10
Policy implementation and consistency

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 Phase 3: Themes

Table 3.4

Axial Coding (Categories)

Phase 3:
Phase 2: Axial
Question
Coding Coding
(Categories)
Pioneering Smart Cities initiatives
Government adoption and standardization
Q1 Governance
Framework Development and streamlining
Component of Smart City planning
Branding and perception
Q2
Efficiency and service improvement Branding
Leadership
Q3 Technology, Policy and Human Capital
Data Availability Leadership
Technology as a secondary factor
Q4
Importance of information and data management Tech
Abundance of talent
Q5 Policy for talent retention
Asian work ethos Talent
Policy
Q6 Tax structure and regulatory environment
Impact of policy changes
Free trade zone and incentives Policy
Perception of Iskandar Malaysia as a Game Changer
Q7 Impact of Smart System on FDI
Importance of Standardized Policies and systems Perception
Number of industries and development planning
submission
Q8
Licensing and office space occupancy
Economic plan and policies Industry
Resources availability
Q9
Data availability and utilization Resource
Utilization of data analytic
Q10
Policy implementation and consistency Analytics

The pilot test aimed to validate the semi-structured interviews intended for use in

the subsequent research. However, it's important to note a limitation: the pilot test only

involved two informants, whereas the complete research aims to include five. Despite this

77
limitation, the study adhered to the pre-interview, during-interview, and post-interview

protocols, ensuring validity and reliability in line with qualitative research methodology.

The obtained results suffice for conducting future semi-structured interviews. The

significance of this pilot test lies in its provision of an opportunity for researchers to

practice interview techniques in accordance with the three stages of the interview session,

thereby ensuring preparedness for the actual interviews.

3.8 Summary

This chapter serves as a pilot study for the qualitative exploration of Smart City

initiatives in Iskandar Malaysia, laying the foundation for subsequent research.

Integrating Constructivist and Critical Realism frameworks, the research philosophy aims

to understand the complex interplay between subjective experiences and underlying

structures. Through a case study approach, key stakeholders are targeted for semi-

structured interviews, guided by thematic analysis. Sampling involves key informants

from city councils directly involved in Smart City projects and FDI. Ethical guidelines

are followed, and data collection procedures prioritize thematic analysis. The thematic

analysis, based on the pilot testing with two informants, follows three phases: data

transcribing, code generation, and identification of themes. This pilot study provides

valuable insights to refine the research elements for subsequent chapters, which will

include more interviews and data for a thorough analysis. The chapter sets the stage for a

deeper exploration of Smart City initiatives in Iskandar Malaysia, aiming to explore the

proposition of the factors and FDI.

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 CHAPTER 4

METHODOLOGY

4.0 Introduction

This chapter outlines the methodological framework employed to explore the

concept of smart city initiatives on Foreign Direct Investment (FDI) in Iskandar Malaysia.

Given the complexity and multifaceted nature of this research topic, a qualitative

approach was deemed most appropriate. This approach allows for an in-depth exploration

of stakeholder perspectives, experiences, and insights, which are crucial for

understanding the nuances of smart city initiatives and their influence on FDI. The

thematic analysis methodology is divided into several phases, each meticulously designed

to ensure the collection, coding, analysis, and interpretation of qualitative data.

4.1 Interpretive Paradigm

The data analysis for this study followed an interpretive paradigm, which aimed

to understand informants’' narratives within the specific context of Iskandar Malaysia's

Smart Cities initiative and their personal viewpoints. The informants, four of them are

planners in the city councils in Iskandar Malaysia and one of them is the former Head of

Smart Cities Head providing advisory services to the Federal Government, State

Governments, local authorities, offered insights based on their extensive professional

experiences and 'local knowledge.' Their professional backgrounds and extensive

working experiences offered valuable insights into how they responded to the topic of

Smart Cities and FDI.

By examining these local theories and professional experiences, the underlying

conceptual structures guiding participants' actions and narratives were revealed

79
(Christopher, 2017). Given the focus on Smart Cities and FDI in Iskandar Malaysia, the

interpretive framework was particularly suitable. It allowed for an in-depth exploration

of informants’ perceptions within their professional and environmental contexts. This

framework helped to highlight the differences between the theoretical models of Smart

Cities and the actual working models experienced by the informants. Sensitivity to what

informants considered important, their 'working theories,' and their interpretations was

prioritized.

Throughout the analysis, maintaining awareness of our own knowledge and

conceptual frameworks was essential. To ensure neutrality during interviews and avoid

misleading the participants, we made a conscious effort to remain unbiased. During the

transcription process, we meticulously reviewed the transcripts multiple times to fully

understand the content and avoid misinterpretation. To enhance the reliability and validity

of the data, three members of our research group independently examined the data and

results. This collaborative approach ensured neutrality and produced findings and

analyses that accurately reflected the informants' perspectives.

4.2 Data Analysis Process

The data analysis process for this study was designed to systematically interpret

the qualitative data gathered from interviews with the informants. This process involved

several key steps to ensure thorough and unbiased analysis, aligning with the thematic

analysis methodology.

1. Data Collection and Preparation

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The initial phase of data analysis began with the collection of detailed interview data

(Braun & Clarke, 2006). Each interview was audio-recorded with the consent of the

participants and subsequently transcribed verbatim. Transcripts were reviewed multiple

times to ensure accuracy and completeness (Maguire & Delahunt, 2017). Any

discrepancies or unclear portions were clarified through follow-up communications with

the participants.

2. Familiarization with the Data

The next step involved immersing ourselves in the data to gain a deep understanding of

the content (Maguire & Delahunt, 2017). This included reading and re-reading the

transcripts and listening to the audio recordings. Notes and initial impressions were

documented to capture emerging ideas and potential themes.

3. Coding

Coding is a crucial step in thematic analysis (Dawadi, 2021). We employed an inductive

approach to coding, allowing themes to emerge naturally from the data. Each transcript

was systematically analysed, and meaningful segments of text were labelled with

descriptive codes. This process was iterative, with codes being refined and adjusted as

new insights were gained.

4. Identifying Themes

Once coding was complete, the next step was to identify themes. Themes are patterns in

the data that are significant to the research questions (Braun & Clarke, 2006). We grouped

similar codes together to form overarching themes. This involved looking for both

explicit content and underlying meanings within the data.

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5. Reviewing and Refining Themes

The identified themes were then reviewed and refined to ensure they accurately

represented the data (Braun & Clarke, 2006). This involved comparing themes against

the coded extracts and the entire dataset to confirm their validity. Themes were refined,

combined, or discarded as necessary to ensure coherence and distinctiveness.

6. Defining and Naming Themes

After refining the themes, we defined and named them to clearly convey their essence.

Each theme was described in detail, including its scope and significance. This step

ensured that the themes were understandable and meaningful in relation to the research

objectives and questions (Braun & Clarke, 2006).

7. Interpretation

The final step involved interpreting the themes in the context of the study’s objectives.

This included linking the themes to the research objectives, research questions and

existing literature on Smart Cities and FDI. The interpretation aimed to provide insights

into how the Smart Cities initiative influences FDI in Iskandar Malaysia and to reveal the

differences between theoretical models and actual working experiences of the informants.

8. Ensuring Reliability and Validity

To enhance the reliability and validity of the findings (Zohrabi, 2013), three members of

our research group independently examined the data and themes. This triangulation

process helped to minimize biases and ensure the robustness of the analysis (Sekaran &

Bougie, 2003). Any discrepancies in the interpretation of data were discussed and

resolved through consensus.

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9. Presentation of Findings

The findings from the data analysis will be presented in the end of the chapter and Chapter

5, where each theme will be discussed in detail. The discussion will include direct quotes

from the participants to illustrate key points and provide a rich, contextual understanding

of the themes.

This structured approach to data analysis ensured a rigorous and comprehensive

interpretation of the qualitative data, providing valuable insights into exploring the

concept of the Smart Cities initiative on FDI in Iskandar Malaysia.

4.3 Within-case and cross-case

This section presents the characteristics of the organizations to which the

informants belong, providing context for their insights into smart city initiatives and FDI

in Iskandar Malaysia. The organizations represented include city councils and

municipalities from Iskandar Puteri, Pasir Gudang, Kulai, and Johor Bahru, as well as the

federal agency PLANMalaysia. The analysis highlights the strengths, roles, and status of

these organizations in the context of smart city development.

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 4.3.1 Within-case

Table 4.1
Informants’ characteristics

Informant Organization Role Strengths Status

Urban planning and development of Iskandar Puteri, a
key city in the Iskandar Malaysia region. The council's Known for its strategic location and rapid development, Proactive in deploying smart technologies, such as IoT
Iskandar Puteri
1 smart city planner focuses on integrating advanced positioning it as a hub for innovation and investment. devices for traffic and waste management, to improve
City Council
technologies to enhance urban living and attract foreign Preferred data centre location efficiency and sustainability.
direct investment (FDI).
Oversees the industrial and urban development of Pasir
Gudang, an area with a significant industrial base. The The council emphasizes creating a stable and
Pasir Gudang Pasir Gudang is a critical industrial zone, contributing
2 smart city planner from this council focuses on policies consistent policy environment to attract and retain
City Council significantly to the economic output of Johor.
and frameworks that support industrial growth and investors.
smart city initiatives.
Responsible for the urban planning and development of
Kulai, a growing urban area in Johor. The urban planner Kulai is strategically located near major transportation The municipality has initiatives aimed at developing
Kulai
3 from this municipality focuses on human capital routes, making it an attractive location for businesses skilled local workforce to support its smart city
Municipality
development and local talent enhancement to support and residents. ambitions.
smart city projects.
Manages the largest city in Johor, serving as the state's
economic and administrative center. The smart city Johor Bahru's strategic position across from Singapore
Johor Bahru The council focuses on improving urban infrastructure
4 planner from this council works on enhancing makes it a key gateway for international trade and
City Council to maintain competitiveness and attract FDI.
infrastructure and connectivity to support urban growth investment.
and investment.
Federal agency responsible for national urban planning
and smart city initiatives across Malaysia. The head of As a federal agency, PLANMalaysia plays a pivotal role The agency emphasizes data governance, inter-agency
PLANMalaysia
5 smart cities at PLANMalaysia provides strategic in setting national standards and ensuring coordination collaboration, and aligning local projects with national
Headquarter
direction and policy guidance for smart city among various local authorities. objectives.
development nationwide.

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4.3.2 Cross-case

The cross-case analysis involves comparing the characteristics of the

organizations represented by the informants to identify common themes and

unique perspectives. In this research, after engaging with the informants, we have

noticed both similarities and differences in their characteristics.

4.3.2.1 Common characteristics

4.3.2.1.1 Commitment to smart city development

All organizations are dedicated to advancing smart city initiatives

to improve urban living and attract FDI. They leverage technological

innovations, supportive policies, and strategic planning to achieve their

goals.

4.3.2.1.2 Focus on policy and governance

Both local councils and the federal agency stress the importance of

stable and consistent policies in fostering an attractive investment climate.

Effective governance and policy frameworks are seen as critical to the

success of smart city projects.

4.3.2.1.3 Importance of strategic location

The strategic locations of Iskandar Puteri, Pasir Gudang, Kulai,

and Johor Bahru are highlighted as key factors in attracting investment.

Proximity to major economic hubs and transportation routes enhances the

appeal of these areas for investors.

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 4.3.2.2 Differentiating Characteristics

4.3.2.2.1 Local vs federal perspectives

Local councils focus on immediate, practical aspects of smart city

implementation, such as infrastructure development and community

engagement. PLANMalaysia provides a macro-level perspective,

emphasizing national strategies, data governance, and long-term

sustainability.

4.3.2.2.2 Area -specific strengths

Iskandar Puteri's strength lies in its innovative use of technology

and strategic urban development as well as the prosperous of land

availability. Pasir Gudang's industrial base drives its focus on policies that

support industrial growth. Kulai emphasizes human capital development

to build a skilled workforce for smart city projects. Johor Bahru leverages

its position as a gateway for international trade to enhance its

infrastructure and connectivity.

4.3.2.2.3 Unique challenges and opportunities

Each council faces specific local challenges, such as budget

constraints and the need for community engagement. PLANMalaysia

addresses broader policy and coordination issues, such as data privacy and

inter-agency collaboration, impacting smart city initiatives at a national

level.

The within-case and cross-case provide a comprehensive understanding of the

roles, strengths, and perspectives of the organizations involved in smart city initiatives

86
and FDI in Iskandar Malaysia. These insights are essential for interpreting the findings of

the thematic analysis and understanding the variables influencing FDI in the context of

smart city development.

4.4 Phase 1: Data Transcribing from interviews

In Chapter 3, we employed three phases of thematic analysis for two informants

in pilot test, and the findings were satisfactory. We will continue transcribing interviews

for another three informants to complete our targeted sample size of five for this research

paper.

Transcribing the first question (Q1): Can you provide an overview of the smart city

initiatives undertaken in Iskandar Malaysia?

During the interviews, the informants were asked for their opinions on the overview of

the smart city initiatives undertaken in Iskandar Malaysia. Both participants (n=5/5)

agreed that Iskandar Malaysia was the first region to introduce smart city initiatives, and

the Federal government adopted the Smart City framework, rolling out the Malaysia

Smart City framework as a result. The Federal government introduced the 7 smart city

concepts to streamline the criteria for smart city initiatives. Based on the characteristic,

common characteristics include a strong commitment to smart city development, a focus

on stable policies and governance, and the strategic importance of their locations.

However, differences emerge in the local versus federal perspectives, with local councils

concentrating on practical implementation aspects, while PLANMalaysia focuses on

broader policy and coordination issues.

Answers from informants:-

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Informant 1: “Iskandar Malaysia has start doing on the Local Urban Observatory (LUO)..

10 years back before now, at that time in Malaysia no one is talking about

Smart City and we are the first one.. 2016, start the Smart City journey in

their own formula. Later on KPKT (Ministry of Housing and Local

Government), adopt smart city and start working on the Malaysia

framework.. 7 components concepts inside city planning to streamline

deployment and put in good practice and policy.

Informant 2: “being smart to work efficiently.. Federal introduced Smart City framework

by enhance Johor Smart City project… introduced more streamline services

in smart city concept and list of criteria.. 11 concept and after streamline

smart city, it become 7 concepts.”

Informant 3: “Johor is among the states that have responded to the Malaysian

government's challenge to implement smart city initiatives at the state level.

In line with that, the state of Johor has embarked on a smart city initiative

by launching the Johor State Smart City Blueprint 2030 in June 2023.”

Informant 4: “formulate the smart city blueprint for Johor back and I think it started back

in 2021.. I would say in terms of the smart city planning, they are quite

advanced.. it is among the earlier states that already have the smart city

blueprint as a framework for the smart city development.. the keyword here

is to accelerate the smart city implementation in the whole, especially under

the economy, Asia.”

Informant 5: “ Smart city initiatives in Iskandar Malaysia has been done before Federal

Framework launch in 2018. We started around 2010 in Johor. IRDA has

started of this together with us in 2012. That is documentation, in terms of

88
 Smart Initiative, MBJB has embarked long time ago before the

documentation eg, Command centre and etc.”

Transcribing the second question (Q2): From your perspective, how do these smart city

initiatives align with the broader economic development goals of Iskandar Malaysia?

During the interviews, the informants provided their views on how smart city initiatives

align with the broader economic development goals of Iskandar Malaysia. Four

informants expressed that smart city initiatives facilitate digitalization to improve service

provision and enhance efficiency, ultimately resulting in quicker services and greater

transparency. One informant further expressed that this transparency would attract

investment into Iskandar Malaysia. One informant expressed that the smart city project

helps create more job opportunities, therefore, it contributes to economic impact.

Answers from informants:-

Informant 1: “Branding.. bring up the city with smart city initiatives, investor confidence

level increase... no longer paper based but you are going with the

digitalization... smart city application applying licensing and etc – it is all

digital, provide transparency... transparency increase the integrity and then

they will encourage invest into Iskandar Malaysia.”

Informant 2: “Coordination.. services provided from 3 weeks become 2 days.. with

technology, it provided clearer step… how to make it, where to make it, it

is become more clear now on the services you will be getting”

Informant 3: “Johor has implemented important criteria and guidelines for planning and

development at the state level such as the Johor Sustainable Development

Plan (PPMNJ), Johor Smart City Blueprint 2030 and Johor State Structure

89
 Plan 2030 which are able to drive the implementation of smart city

initiatives more effectively.”

Informant 4: “Southmax won a lot of contracts in Johor, implementation through the

CCTV project in whole Johor.. it will create a lot of job opportunity, a lot of

the change of economic spillover throughout of of the whole.. a lot of data

center coming to Johor.. This is also a direct economic impact.”

Informant 5: “ease of obtaining information for investor who would like to invest, easy

to do research. The smart cities initiatives provide investor an easy access

“the do & don’t, where to information” to the Iskandar Malaysia information,

therefore, they can research and study the suitability of investing in Johor.

For eg, the current famous data centre, the technology provides the location,

guidelines for investor to understand.”

Transcribing the third question (Q3): From your experience, what are the key factors that

contribute to Iskandar Malaysia's appeal as an investment destination?

During the interviews, the informants shared the key factors contributing to Iskandar

Malaysia's appeal as an investment destination. Four informants emphasized the

importance of leadership in attracting investment to the region. Four informant also

highlighted that technology, policy, and human capital are fundamental factors. Two

informants mentioned the significance of data availability for investors to evaluate,

providing insights that would further attract them to invest. The location of Iskandar

Malaysia is also another factor that makes it a favourite spot for foreign investment, as

mentioned by three informants.

Answers from informants:-

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Informant 1: “We cannot running out from the three, technology, policy and people. The

other important thing I would say is leadership – we are still conventional

organization where the leaders say yes, then the whole mechanism will

follow.”

Informant 2: “the leadership – he is the one who gives the directions – the vision. Data –

data will provide investor on the necessary information about their

investment about location, demographics and environmental info.”

Informant 3:” A very strategic geographical location adjacent to Singapore..Political

stability and efficient administrative management.. Clear and investor-

friendly investment management and policies implemented at all levels”

Informant 4: “first factor on the certificate location.. any investor looking at the

availability of the land, so availability in terms of the Industry industrial part

availability in terms of the techno parks, so these are the things that are

already in Johor.. and proximity to Singapore.. the technology infrastructure

is everything is a well developed perfect in terms of not only connectivity

but beyond connectivity as well for example a lot of investment needs parts

highway industry partner I mentioned. the last one probably is the

government support in terms of the proactive policy and incentive”

Informant 5: “Data, the where to invest – location, streamline policies and incentives and

leadership. For example, Johor is the pioneer to launch the policy of data

centre even before federal, the guidelines, policies and incentives and

clearer, therefore, investor is more comfortable to invest and also because

of the location, proximity to Singapore and land availability. “

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Transcribing the fourth question (Q4): In your opinion, what role does technological

advancement play in attracting foreign investors to Iskandar Malaysia?

During the interviews, the informants provided their opinions about the role of technology

in attracting foreign investors. Three informants expressed that technology is important

for developing smart cities and engaging foreign investors in technology-based

businesses. However, two informants expressed that technological advancement is less

important in attracting investors because it is least important for non-tech-based

businesses. One of the informants mentioned that investors can always bring in the right

technology to the location, even if the place lacks it initially.

Answers from informants:-

Informant 1: “Technology is less priority.. because without technology that they need,

they can bring in the technology… because of the policy to encourage them

to be here.”

Informant 2: “We have technology but without information or data management, investor

will not know the place to invest.”

Informant 3: “Technology is an important thing in the development of smart cities.

Increased collaboration and private engagement”

Informant 4: “investors, they are very tech savvy, they are very concerned about the

sustainability and I believe they are also concerned about the innovation. So

with this kind of innovation couldn't happen if you don't have a very

particular technology to support how the innovation should come.. this is a

supporting I technology holes in terms of how it affects the FDI as well”

Informant 5: “Technological will attract more technology-based business not those

normal business. Other business, talent pool is more important.”

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Transcribing the fifth question (Q5): How would you characterize the current state of

human capital within Iskandar Malaysia, particularly in terms of its attractiveness to

foreign investors?

During the interviews, the informants were asked about the role of human capital in

attracting foreign investors to Iskandar Malaysia. All informants mentioned that Malaysia

possesses abundant talent, emphasizing the importance of policies to retain this talent

within the country. One informant highlighted that foreign schools are setting up in the

region because of the availability of talented educators.

Answers from informants: -

Informant 1: “According to my strategic development framework, Iskandar Puteri City

Council has the highest number of workforce, young workforce and young

family compared to others, UTM campurs, UORD, American Campus are

the few foreign school… they are running to Singapore due to currency so

it is important to have a policy to bring them back.”

Informant 2: “We are asians, we are proactives and we are willing to work overtimes…

because of our good features, policy is required how to keep the talent.”

Informant 3: “Talent development involves better public-private cooperation”

Informant 4: “we have a lot of university UT so UTM knowing that they are very

technology oriented, higher education’s so they can provide a skilled

workforce.. transit system that is going to connect me to the JB and

Singapore which is really be completed soon, I said this 2026 will be a game

changer as well.. a lot of expert in Singapore will prefer to stay in the Johor

and commute on daily basis to Singapore.”

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Informant 5: “we have a lot talent in Johor, artist, politician and etc. We like to lead and

become the no.1 in the region. Therefore, we have enough talent ready to

work or serve if there is any foreign investment come in.”

Transcribing the sixth question (Q6): In your view, how have policies in Iskandar

Malaysia supported the development of smart cities, and what impact have they had on

FDI?

During the interviews, the informants were asked about their views on policies in Iskandar

Malaysia to support the development of smart cities and influence FDI. All five

informants emphasized that policy is the most crucial factor. They highlighted that a

supportive and consistent policy environment would establish a robust system and instil

confidence in investors for long-term business investments in Johor.

Answers from informants: -

Informant 1: “Policy is still the most important thing, for eg. tax structure. Why when

they come here, why they suddenly dislike about us is because of the

system… it’s not the space that we provide, urban infrastructure, the

technology. Why investor prefer Singapore not Malaysia. There’s lot of

policy have to change to the system running here to support the business

should be similar as in Singapore.. reduce procedure...”

Informant 2: “Policy is important. If the policy is too rigid and always change will drive

investment. For eg forest city. Change of policy drive investor out and

government is setting up free trade zone to attract investor… it is policy and

leadership important to draw investor.”

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Informant 3:” The existing policies in the state of Johor are very good and are able to

provide advantages and attract more foreign investment into the state of

Johor in the future”

Informant 4: “the policy in investment of the smart city will play a major role in attracting

FDI. Because FDI involve a lot of investment, but they didn't only come for

to invest, but they also come to stay. So they need a professional workers.”

Informant 5: “the policies with many incentives has help the foreign investor to start up

their business easier, however we are continuously to look into our policies

to keep the investor in Johor.”

Transcribing the seventh question (Q7): From your interactions with foreign investors,

what are their perceptions of Iskandar Malaysia's smart city initiatives and their impact

on investment decisions?

During the interviews, the informants were asked about foreign investors' perceptions of

Iskandar Malaysia's smart city initiatives and their impact on investment based on their

interactions. Two informants mentioned that smart systems aiding their business

operations would drive FDI. Another three highlighted the importance of standardized

policies and systems across Iskandar Malaysia, eliminating the need to navigate different

council systems and processes. This would ease the process of setting up businesses for

investors and indirectly encourage more investment in Iskandar Malaysia.

Answers from informants: -

Informant 1: “Iskandar Malaysia is the game changer and pushing for change in this local

ecosystem. Move Iskandar Malaysia to Smart City number one… they know

that when they choose this place you are going to certainly meet the certain

95
 standard because of the smart city initiatives in Iskandar Puteri, for eg low

carbon initiatives and monitoring.. increase their confidence to migrate to

this area.”

Informant 2: “Johor set up Greater JB alliances consists of 3 city councils and 1 municipal

– standardise the policies. They don’t have familiarise different logo

different system. Easy and standardise system will encourage them to invest

in Iskandar Malaysia.”

Informant 3:” Foreign investors are very positive to invest in the state of Johor, especially

related to smart city projects. It is even more positive when the state of Johor

has successfully organized the Johor Smart City Forum 2023 (JSCF2023)

which was last seen to have a very big impact on investment potential in the

future. The impact is particularly good in terms of the entry of new

technologies and the value of more external investments every year.”

Informant 4: “As I mentioned to you, when I do the smart cities blueprint, that is a lot of

document policies have been formulated.. the investor can see these are very

investor friendly initiative that have been developed by Johor and a very

good policies that they could leverage on this kind of initiative by Johor

Government.. good policies in whole that support that not only for Smart

city but also attract the investment as well.”

Informant 5: “Johor is the pioneer of smart cities implementation and policies in place.

Because of the smart city and technology implemented in Johor, it is easy

to obtain information compared to others region.”

Transcribing the eight question (Q8): How do you measure the success or effectiveness

of smart city projects in terms of attracting foreign investment?

96
During the interviews, the informants were asked about how to measure the success or

effectiveness of a smart city in terms of attracting foreign investment. All informants

mentioned considering factors such as the number of industries through development

planning process submissions. Two informant mentioned that their organization also

tracks success by licenses issued and office space occupancy.

Answers from informants: -

Informant 1: “We can know from the number of industries, the license, and the office

space the occupancy”

Informant 2: “Any development must go through planning process submission, so we

know the number of type of companies. Foreign developers will bring in

more residential areas and commercial areas. Main anchor in Pasir Gudang

is Industries, all from foreign companies, for eg, one chemical industry been

there for 30 years and because of this it attract korea investor to come and

has been there for 13 years. And all these is because of economic plan and

policies boost up industries.”

Informant 3: “The number of new investment arrivals as well as the increasing number

of foreign companies ' interest to know more about the investment potential

in Johor. Johor received many proposals for smart technology related

projects to be implemented in Johor.”

Informant 4: “in terms of the investment volume.. I still remember one of the indicators

out of 85 indicators of the smart city in I scored 37132 is about the new

businesses being set up especially in two sectors.”

Informant 5: “The new foreign business set up within MBJB and the license being

approved.”

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Transcribing the nineth question (Q9): Can you share any insights or experiences that

suggest there may be additional factors beyond technology, people, and policy that

contribute significantly to the success of smart city initiatives in attracting foreign

investment?

During the interviews, the informants were asked to share if there may be additional

factors beyond the three factors that contribute to the success of smart city initiatives in

attracting foreign investment. One informant mentioned that resource availability, such

as land, is crucial for investment decision-making in a location. Another informant

mentioned that data is important for improving the city and enabling investors to make

informed decisions. Two informants mentioned that the government and political stability

are key factors, which some informants also mentioned in Question 2. One informant

emphasized again the importance of location in attracting foreign investment.

Answers from informants: -

Informant 1: “Investment promotion and why certain economy take place in certain area

is still very much influence the FDI to their investment decision resource-

based theory. For eg, do we have big enough land to cater their activity?”

Informant 2: “Data is important. Data provide visibility on what we lack of, how to

improve at the same time provide insight to investor. For eg, investor will

always avoid prone flood area with the data availability.”

Informant 3: “Another factor that needs to be looked at is in terms of the availability of

infrastructure and the ability of the city to absorb technology that will be

brought in for the implementation of smart city initiatives.”

98
Informant 4: “ the political will play a vital roles in shaping the right leadership to attract

the FDI to Johor.”

Informant 5: “Stability of politic to compete with other countries, eg Vietnam and

Thailand. Location is important also, for example, HQ business in

Singapore but warehouse will be setting up in Johor because of location.”

Transcribing the tenth question (Q10): Finally, from your experience, how do you foresee

the future trajectory of smart city initiatives in Iskandar Malaysia influencing foreign

investment trends?

During the interviews, the informants were asked to share their insights on the future

trajectory of smart city initiatives in Iskandar Malaysia and how they influence foreign

investment trends based on their experiences. The informants highlight the need for

leveraging technology, data and smart solutions, supportive policies and governance,

improved and infrastructure as well as maintaining competitiveness to attract foreign

investment to Johor.

Answers from informants: -

Informant 1: “Continue to push forward and using analytic. How we use the data to make

people’s life better? How we use the data to help the investor to improve

their performance, to guide them on. With analytic, we are able to comes

out with better policy, the resource planning, the cheaper operational cost

compared to Singapore.”

Informant 2: “what is the policies and how to implement it – the friendly and consistent

policy”

99
Informant 3: “I believe Johor will be one of the Smart State from Malaysia in the future.

It’s not only in terms of technology development, but also in terms of

Research and Development (R&D) and policy that can support growth in

the Asian region and beyond. Therefore, more foreign investment value will

be directed to the state of Johor in the future.”

Informant 4: “as I mentioned to you in Malaysia, now we are using ISO 37122 as a

indicator to measure the smartness of the city… So there are 85 indicators

and most of the local government now just get their smart City.. Any adapter

which is just 10 out of 85, so there are another 75 indicators need to be

implemented. So it is a very obvious that any smart city solution providers

should venture to have more completed smart City initiative.. It will

continue to attract investment to come in.. especially it's kind of

competitiveness because despite I mentioned earlier, it's kind of linear is

competing with the Singapore and Indonesia but at the same time it's kind

of like you it's competing internally as well within the other regions Klang

Valley as well.”

Informant 5: “We need to implement smart initiatives to become a safer and more liveable

city with good infrastructure in order to instil more confidence in foreign

investors and provide a more sustainable business environment in Johor

Bahru.”

4.5 Phase 2: Code generation to identify patterns

In this phase, we identify initial codes from the transcript in phase 1. The initial coding

process involves breaking down the data into meaningful and manageable segments. Each

code is a label that captures the essence of the segment it represents.

100
Table 4.1
Code generation

Phase 2:
Question
Coding

Early adoption
Q1 Federal framework
State initiatives
Branding confidence
Q2 Coordination efficiency
Development guidelines

Technology, policy and people

Data availability
Q3 Strategic geographical location
Political stability
Infrastructure

Infrastructure
Q4 Communication system
ICT integration
Education
Q5 Retention Policies
Workforce skills
Regulatory incentives
Q6 Policy stability
Policy framework
Standardized policies
Q7
Regulatory incentives
Economic impact
Q8
Business setup
Strategic location
Infrastructure
Q9 Proximity to Singapore
Investment insights
Analytics utilization
Tech solutions
Q10
Supportive governance

4.6 Phase 3: Themes categorization to find commonality

In this phase, we categorize the initial codes from the axial coding to identify

overarching themes and commonalities. This step synthesizes the data into meaningful

101
patterns that align with our research objectives, which focus on exploring the concept of

smart cities in Malaysia, identifying indicators of smart city initiatives, and examine

trajectory outcome of smart cities initiatives. During the thematic categorization, it

became evident that the initial three themes were central but did not fully capture all the

influencing factors. Thus, two additional variables were identified and integrated into the

analysis: location and data governance. Theses variables emerged as significant from the

stakeholder interviews and cross-case analysis, providing a more comprehensive

understanding of the factors impacting FDI in Iskandar Malaysia.

Table 4.2

Axial Coding

Phase 3:
Phase 2:
Question Axial Coding
Coding
(Categories)
Early adoption
Q1 Federal framework Framework
State initiatives
Branding confidence
Q2 Coordination efficiency Strategy
Development guidelines
Key Factors
Technology, policy and people
- Location
Data availability
- Data governance
Q3 Strategic geographical location
- Policy
Political stability
- Technological
Infrastructure
- Human Capital
Infrastructure
Q4 Communication system Technological
ICT integration
Education
Q5 Retention Policies Human Capital
Workforce skills
Regulatory incentives
Q6 Policy stability Policy
Policy framework
Standardized policies
Q7 Policy
Regulatory incentives

102
 Economic impact
Q8 Performance
Business setup
Strategic location
Factors
Infrastructure
- Data governance
Q9 Proximity to Singapore
- Location
Investment insights
Analytics utilization
Tech solutions
Q10 Future Landscape
Supportive governance

Technological Advancements

Technological advancements emerged as a critical theme across all cases.

Informants consistently highlighted the importance of ICT infrastructure, data

management systems, and the integration of technology in urban planning. Informant 1

emphasized that while technology is crucial, it needs to be supported by robust policies

to be effective, noting that investors can bring the necessary technology if supportive

policies are in place. This underscores the importance of a policy environment that

facilitates technological deployment. Informant 2 underscored the necessity of integrating

technology with proper data management systems, pointing out that without efficient data

management, technology alone cannot attract investors. This highlights the need for a

comprehensive approach that includes both technological infrastructure and data

management. Informant 3 focused on the role of technology in enhancing collaboration

and engagement with the private sector, vital for smart city development and making

Iskandar Malaysia a competitive destination for FDI. Across these cases, the common

theme is that technology, supported by effective policies and robust data management, is

crucial for attracting FDI. The synergy between technological advancements and

supportive policies enhances the region's attractiveness to foreign investors.

Human Capital Development

103
 Human capital development also emerged as a significant theme. The availability

of a skilled and proactive workforce, supported by educational institutions and effective

retention policies, is essential for the success of smart city initiatives. Informant 1

highlighted the region's strength in having a young workforce and numerous educational

institutions, stressing the importance of policies to retain this talent within the region.

This indicates that educational infrastructure alone is insufficient without policies to

retain skilled workers. Informant 2 emphasized the proactive and hardworking nature of

the local workforce, suggesting that these traits are crucial for supporting smart city

innovations. This points to the cultural and behavioural attributes of the workforce as

important factors. Informant 3 focused on the role of educational institutions in providing

a skilled workforce and the importance of connectivity between Johor and Singapore,

which can attract foreign experts to reside in Johor while working in Singapore. This

underscores the importance of regional connectivity in enhancing human capital. Across

these cases, the availability of a skilled workforce, supported by strong educational

institutions and effective retention policies, is seen as crucial for attracting FDI. Human

capital development, through education and retention policies, is essential for supporting

technological advancements and attracting foreign investors.

Policy Frameworks

The importance of policy frameworks also emerged as a central theme. Stable,

supportive, and predictable policies are crucial for attracting FDI. Informant 1 highlighted

the importance of having a stable and supportive policy framework, noting that rigid and

frequently changing policies can deter investors. This emphasizes the need for

consistency in policymaking. Informant 2 emphasized that effective governance and

investor-friendly policies are critical for attracting FDI, pointing out that policies need to

be stable and predictable to instil confidence in investors. Informant 3 focused on the role

104
of policy incentives and effective administration in attracting foreign investment, noting

that policies providing tax breaks and other incentives are essential for making the region

competitive. This highlights the significance of specific policy measures, such as tax

incentives, in attracting investment. Across these cases, supportive, stable, and

predictable policies are crucial for attracting FDI. Effective governance and specific

policy incentives enhance the region's attractiveness to foreign investors.

These themes—technological advancements, human capital development, and

policy frameworks—are interconnected and collectively contribute to creating a

conducive environment for attracting FDI in Iskandar Malaysia. By addressing these

elements simultaneously, policymakers and urban planners can enhance the economic

potential of smart city initiatives in the region. The integration of these cross-case findings

provides a comprehensive understanding of the factors influencing FDI attraction in

Iskandar Malaysia, demonstrating that a holistic approach to smart city development is

essential for maximizing investment potential.

Location

The strategic geographical position of Iskandar Malaysia, particularly its

proximity to Singapore, plays a significant role in attracting FDI. The availability of land,

water and electricity resources further enhances its attractiveness. Informants noted that

these locational advantages have made Iskandar Malaysia a key hub for data centres and

other investment. Additionally, geopolitical factors, such as the ongoing China-US trade

tensions, have made Iskandar Malaysia an attractive alternative for multinational

corporations. Informants consistently identified the strategic location of Iskandar

105
Malaysia a a major advantage. The proximity of Singapore, combined with the

availability of essential resources, was seen as a critical factor in attracting FDI. Cross-

case analysis revealed that this geographical advantage allows companies to benefit from

lower operational costs while still accessing the highly developed market of Singapore.

Informants also highlighted that geopolitical factor, such as trade tensions, have

redirected more multinational corporations to consider Iskandar Malaysia as a favourable

investment destination.

Data Governance

Effective data governance is critical for building investor confidence. The

availability, accuracy and transparency of data are essential for making informed

investment decisions. Interviews revealed that current challenges in data accuracy and

transparency is Iskandar Malysia can slow down the investment process. Investors require

reliable data to evaluate their investment confidently. Establishing clear date governance

policies and ensuring data availability can significantly enhance investor confidence. All

informants emphasized the importance of data governance in attracting FDI. Reliable and

transparent data were seen as crucial for making informed investment decisions. Cross-

case analysis indicated that current challenges in data management need to be addressed

to improved investor confidence. Informants suggested that establishing robust data

governance frameworks would not only facilitate better decision making but also enhance

the overall attractiveness of Iskandar Malaysia as an investment destination.

4.7 Phase 4: Thematic mapping of similarities and differences

In Phase 4 of the thematic analysis, we conducted a detailed mapping to

understand the similarities and differences between various themes influencing FDI in

106
Iskandar Malaysia. The analysis focused on five critical variables: technological

advancements, human capital development, policy frameworks, strategic location, and

data governance. These themes were derived from the initial codes and axial coding,

providing a comprehensive understanding of how these factors collectively impact FDI.

Table 4.3
Thematic Mapping

Phase 3:
Phase 2: Phase 4:
Question Axial Coding
Coding Thematic Mapping
(Categories)
Early adoption
Smart Cities Initiative
Q1 Federal framework Framework
(Theme 1)
State initiatives
Branding confidence
Smart Cities Initiative
Q2 Coordination efficiency Strategy
(Theme 1)
Development guidelines
Key Factors
Technology, policy and people
- Location
Data availability
- Data governance Indicators
Q3 Strategic geographical location
- Policy (Theme 2)
Political stability
- Technological
Infrastructure
- Human Capital
Infrastructure
Indicators
Q4 Communication system Technological
(Theme 2)
ICT integration
Education
Indicators
Q5 Retention Policies Human Capital
(Theme 2)
Workforce skills
Regulatory incentives
Indicators
Q6 Policy stability Policy
(Theme 2)
Policy framework
Standardized policies Indicators
Q7 Policy
Regulatory incentives (Theme 2)
Economic impact Implications
Q8 Performance
Business setup (Theme 3)
Strategic location
Factors
Infrastructure
- Data governance Indicators
Q9 Proximity to Singapore
- Location (Theme 2)
Investment insights
Analytics utilization
Tech solutions Implications
Q10 Future Landscape
Supportive governance (Theme 3)

Technological advancements are critical to the development of smart cities,

encompassing infrastructure improvements and ICT integration that enhance operational

efficiencies and improve the quality of life, essential for attracting FDI. Advanced

communication technologies like 5G networks are integral to effective ICT systems,

facilitating seamless connectivity and data management. However, there are notable

107
differences within this theme. Infrastructure improvements primarily address physical

and logistical needs, such as smart grids and transportation systems, while ICT integration

focuses on digital and data management systems that enhance service delivery and urban

management. Cross-case analysis revealed that informants consistently emphasized the

need for continuous investment in technology to maintain a competitive edge. The

implementation of advanced technologies, such as smart traffic systems and high-speed

internet, has been seen as a crucial factor in enhancing urban management and service

delivery. Multiple informants pointed out that without robust technological infrastructure,

attracting high-tech industries would be challenging. The consensus across cases

highlights that technological advancements are pivotal in creating an environment

conducive to FDI.

Human capital development emerged as another significant theme, highlighting

the availability of a skilled and proactive workforce supported by educational institutions

and effective retention policies. Educational initiatives aim to develop the necessary skills

for supporting technological advancements, indicating a strong linkage between

education and workforce skills. Additionally, retention policies and workforce skills

emphasize maintaining a capable and stable workforce within the region. However, there

are differences in focus. Educational initiatives are geared towards long-term skill

development through universities and technical schools, while retention policies aim to

prevent brain drain and ensure local talent remains within the region. The presence of

institutions like Universiti Teknologi Malaysia (UTM) and the influx of foreign schools

in Iskandar Malaysia underscore this synergy, highlighting the region's strength in

nurturing and retaining talent. All informants underscored the importance of developing

and retaining a skilled workforce. Cross-case analysis revealed a common concern about

brain drain to neighbouring Singapore due to better salary offerings. However, policies

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aimed at retaining talent and providing incentives for skill development were seen as

effective measures to counter this trend. Informants across different sectors agreed that

human capital is a crucial asset for attracting FDI, especially for technology-driven

industries.

Policy frameworks play a crucial role in shaping the investment climate of a

region. Stable, supportive, and predictable policies are essential for attracting FDI. Both

regulatory incentives and effective governance aim to attract and maintain foreign

investment through supportive measures and efficient administration. For instance,

policies that provide tax breaks and other incentives make the region more competitive

and appealing to investors. However, there are distinctions within this theme. Regulatory

incentives involve specific financial benefits like tax breaks and subsidies, while

governance focuses on the overall administrative efficiency and political stability of the

region. The creation of special economic zones and implementation of investor-friendly

policies have facilitated the adoption of smart city technologies, emphasizing the

importance of a stable policy environment. There was a unanimous agreement among

informants on the importance of stable and supportive policy frameworks. Effective

governance, coupled with financial incentives, was highlighted as a key factor in

attracting and retaining foreign investments. Cross-case analysis showed that inconsistent

and frequently changing policies deter investors, emphasizing the need for a predictable

policy environment. Informants noted that policies providing tax breaks and streamlined

administrative procedures are particularly effective in enhancing Iskandar Malaysia's

attractiveness to investors.

The strategic location of Iskandar Malaysia, coupled with robust data governance

practices, enhances its attractiveness to foreign investors. The proximity to Singapore and

the availability of land, water, and electricity resources are key locational advantages,

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while effective data management supports informed decision-making for both

policymakers and investors. Informants consistently identified the strategic location of

Iskandar Malaysia as a major advantage, allowing companies to benefit from lower

operational costs while accessing the highly developed market of Singapore. This

geographical advantage, combined with geopolitical factors, such as trade tensions, has

redirected more multinational corporations to consider Iskandar Malaysia as a favourable

investment destination. Cross-case analysis revealed that this geographical advantage

allows companies to benefit from lower operational costs while still accessing the highly

developed market of Singapore. Informants also highlighted that geopolitical factor, such

as trade tensions, have redirected more multinational corporations to consider Iskandar

Malaysia as a favourable investment destination.

Effective data governance emerged as a critical theme for building investor

confidence. The availability, accuracy, and transparency of data are essential for making

informed investment decisions. Interviews revealed that current challenges in data

accuracy and transparency in Iskandar Malaysia can slow down the investment process.

Investors require reliable data to evaluate their investments confidently. Establishing

clear data governance policies and ensuring data availability can significantly enhance

investor confidence. All informants emphasized the importance of data governance in

attracting FDI. Reliable and transparent data were seen as crucial for making informed

investment decisions. Cross-case analysis indicated that current challenges in data

management need to be addressed to improve investor confidence. Informants suggested

that establishing robust data governance frameworks would not only facilitate better

decision-making but also enhance the overall attractiveness of Iskandar Malaysia as an

investment destination.

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 By categorizing these variables into distinct themes and conducting cross-case

analysis, we were able to identify commonalities and differences in the perspectives of

various stakeholders. This thematic categorization and cross-case analysis provide a

comprehensive understanding of how technological advancements, human capital

development, policy frameworks, strategic location, and data governance interact to

influence FDI in Iskandar Malaysia. These insights are invaluable for policymakers and

stakeholders aiming to optimize smart city strategies to attract and sustain FDI, driving

economic growth and sustainable development in the region.

4.8 Phase 5: Themes definition

In this phase, we define and refine the core themes that emerged from our analysis.

These definitions provide a clear understanding of the meaning behind each theme and

set the scene for our study's goals, which centre on smart city projects and how they affect

FDI in Iskandar Malaysia.

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Table 4.4
Themes Definition
Phase 3:
Phase 2: Phase 4: Phase 5:
Question Axial Coding
Coding Thematic Mapping Themes Definition
(Categories)
Early adoption
Smart Cities Initiative Foundational structure for smart city
Q1 Federal framework Framework
(Theme 1) initiatives in Iskandar Malaysia.
State initiatives
Branding confidence
Smart Cities Initiative Tactical approaches to implement smart
Q2 Coordination efficiency Strategy
(Theme 1) city initiatives and attract FDI.
Development guidelines
Key Factors
Technology, policy and people
- Location
Data availability
- Data governance Indicators Critical elements contributing to Iskandar
Q3 Strategic geographical location
- Policy (Theme 2) Malaysia's investment appeal.
Political stability
- Technological
Infrastructure
- Human Capital
Infrastructure
Indicators Role of tech advancements in smart city
Q4 Communication system Technological
(Theme 2) development and FDI attraction.
ICT integration
Education
Indicators Development and management of skilled
Q5 Retention Policies Human Capital
(Theme 2) workforce in Iskandar Malaysia.
Workforce skills
Regulatory incentives
Indicators Regulatory frameworks supporting smart
Q6 Policy stability Policy
(Theme 2) city initiatives and FDI.
Policy framework
Standardized policies Indicators Regulatory frameworks supporting smart
Q7 Policy
Regulatory incentives (Theme 2) city initiatives and FDI.
Economic impact Implications Metrics for measuring success of smart city
Q8 Performance
Business setup (Theme 3) projects in attracting FDI.
Strategic location
Factors
Infrastructure
- Data governance Indicators Additional elements influencing smart city
Q9 Proximity to Singapore
- Location (Theme 2) initiatives' success in FDI attraction.
Investment insights
Analytics utilization
Tech solutions Implications Projected trajectory of smart city initiatives
Q10 Future Landscape
Supportive governance (Theme 3) and their influence on FDI trends.

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4.7.1 Smart Cities Initiatives

Smart Cities Initiatives encompass the comprehensive strategies, technologies,

and policies implemented in Iskandar Malaysia to enhance urban living, improve

efficiency, and attract foreign investment. This theme includes the planning,

implementation, and ongoing development of smart city projects.

Key components:

• Early adoption and strategic planning of smart city concepts

• Integration of technology in urban infrastructure and services

• Collaboration between government, private sector, and citizens

• Sustainable and innovative urban development approaches

Understanding this theme is crucial because it shows how Iskandar Malaysia positions

itself as a modern, efficient, and attractive location that foreign investors would be

interested in investing on it.

4.7.2 Indicators

Indicators refer to the measurable factors and characteristics that reflect the

progress, effectiveness, and impact of smart city initiatives in Iskandar Malaysia,

particularly in attracting FDI.

Key components:

• Technological advancements and digital infrastructure

• Human capital development and workforce skills

• Policy frameworks and governance structures

• Economic growth metrics

• Quality of life improvements

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 These indicators provide tangible measures of how smart city initiatives are

transforming Iskandar Malaysia and creating an environment conducive to foreign

investment.

4.7.3 Implications

Implications encompass the broader consequences and outcomes of smart city

initiatives and their impact on FDI in Iskandar Malaysia. This theme explores both the

direct and indirect effects of smart city development on the region's economic landscape.

Key components:

• Changes in FDI patterns and volumes

• Economic diversification and growth

• Urban transformation and sustainability

• Regional competitiveness

• Long-term socio-economic impacts

Understanding these implications is important for assessing the overall success of

smart city initiatives in achieving their goals, particularly in attracting and retaining

foreign investment.

By defining these themes, we establish a comprehensive framework for analysing

the relationship between smart city initiatives and FDI in Iskandar Malaysia. This

multifaceted approach allows us to explore the complex interplay of factors that

contribute to the region's development as a smart city and its attractiveness to foreign

investors.

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4.9 Phase 6: Theme Analysis

Phase 6 presents a comprehensive analysis of the key variables that emerged from our

thematic analysis of smart city initiatives and their relationship to Foreign Direct

Investment (FDI) in Iskandar Malaysia. Five main variables were identified, Technology,

Human Capital, Policy, Location, and Data Governance. Each variable comprises several

key measurements that collectively shape Iskandar Malaysia's smart city landscape and

attractiveness to foreign investors.

Figure 4.1
Conceptual Framework

4.9.1 Technology

The technology variable emerged as a critical factor in Iskandar Malaysia's

smart city initiatives, encompassing infrastructure, communication systems, and

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ICT integration. Our analysis revealed that technological advancements play a

pivotal role in enhancing the region's appeal to foreign investors.

Infrastructure development, particularly in digital and physical realms,

was found to be one of the key drivers for smart city initiatives. The

implementation of advanced technologies such as the Internet of Things (IoT) and

smart traffic management systems has significantly improved urban management

and service delivery (Ullah et al., 2021). For instance, the deployment of high-

speed internet infrastructure and smart grids has created a more efficient and

attractive environment for businesses.

Communication systems emerged as another crucial aspect of the

technology. The findings indicate that advanced telecommunication networks,

including 5G technology, are being prioritized to enable seamless connectivity

across the city. This aligns with the research suggesting that robust

communication infrastructure is essential for smart city development and

attracting FDI (Appio et al., 2019).

ICT integration was identified as the measurement within the technology.

The analysis revealed that Iskandar Malaysia is actively incorporating information

and communication technologies into various urban systems and services. This

integration is enhancing operational efficiencies and improving the quality of life

for residents, factors that are attractive to foreign investors (Yigitcanlar et al.,

2020).

4.9.2 Human Capital

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 Human capital is shown as a significant factor in Iskandar Malaysia's

smart city initiatives and ability to attract FDI. Education, retention policies, and

workforce skills were identified as the three key measurements within human

capital variable.

The education was found to be a cornerstone of human capital

development in Iskandar Malaysia. The presence of reputable educational

institutions, including universities and vocational training centers, plays a crucial

role in developing a skilled workforce. This aligns with findings from Su and Liu

(2016), who emphasized the importance of educational initiatives in supporting

technological advancements and attracting FDI.

Retention policies emerged as a critical aspect of human capital

management. The analysis revealed that Iskandar Malaysia faces challenges in

retaining skilled professionals, particularly due to its proximity to Singapore.

Informants consistently highlighted the need for effective policies to prevent brain

drain and ensure a stable talent pool. This corroborates recent research by Ridha

and Parwanto (2020), who found that human development significantly impacts

economic growth and FDI attraction.

Workforce skills were also identified as the measurement of human capital.

The findings indicate that Iskandar Malaysia boasts a young, proactive workforce

with a strong work ethic. However, the analysis also revealed a need for

continuous skill development to meet the evolving demands of smart city

technologies and foreign investors. This aligns with recent literature emphasizing

the importance of a skilled workforce in attracting high-tech industries and FDI

(Choon et al., 2024).

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4.9.3 Policy

The policy emerged as a crucial factor influencing FDI in Iskandar

Malaysia's smart city context. This analysis identified three key measurements

within this section, which are regulatory incentives, governance, and consistency.

Regulatory incentives were found to play a significant role in attracting

FDI. The analysis revealed that Iskandar Malaysia offers various financial and

non-financial incentives to foreign investors, including tax breaks and streamlined

administrative processes. This aligns with findings from Caragliu and Del Bo

(2019), who highlighted the importance of supportive policies in creating an

attractive investment environment.

The governance emerged as another critical aspect of the policy. The

findings indicate that effective and transparent governance structures are essential

for building investor confidence. Informants consistently emphasized the need for

efficient administration and political stability to attract and retain foreign

investments. This corroborates recent research by Tan and Taeihagh (2020), who

stressed the importance of good governance in smart city development and FDI

attraction.

Consistency in policies was identified as the third key measurement. The

analysis revealed that stable and predictable policies are crucial for long-term

investment planning. Informants highlighted that frequent policy changes could

deter potential investors. This aligns with recent literature emphasizing the need

for consistent regulatory frameworks to enhance a region's attractiveness to

foreign investors (Choon et al., 2024).

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4.9.4 Location

The location emerged as a unique factor influencing FDI in Iskandar

Malaysia. Our analysis identified three key measurements within this location

variable, strategic position, infrastructure, and proximity to Singapore.

The strategic position was found to be a significant advantage for Iskandar

Malaysia. The region's geographical location emerged as a key attractor for

foreign investors. This aligns with recent research by Pengfei et al. (2017), who

highlighted the importance of strategic location in enhancing a city's global

competitiveness.

Infrastructure, specifically the availability of essential resources like land,

water, and electricity, was identified as another crucial aspect of the location

theme. The findings indicate that Iskandar Malaysia's ample resources and well-

developed infrastructure contribute significantly to its appeal as an investment

destination. This corroborates recent studies emphasizing the role of infrastructure

in attracting FDI to smart cities (Ullah et al., 2021).

Proximity to Singapore also emerged as the key measurement for the

location. The analysis revealed that Iskandar Malaysia's closeness to Singapore

provides unique advantages, including access to a major economic hub and

potential for cross-border collaborations. However, it also presents challenges,

such as competition for skilled labour.

4.9.5 Data Governance

The data governance shown as an increasingly important factor in Iskandar

Malaysia's smart city initiatives and FDI attraction. Data availability, investment

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 insights, and analytics utilization were identified as the three key measurements

in this variable.

Data availability was found to be crucial for informed decision-making by

both policymakers and investors. The analysis revealed that Iskandar Malaysia is

working towards improving the accessibility and quality of data. However,

challenges in data accuracy and transparency were also identified. This aligns with

recent research by Krassimira et al. (2017), who emphasized the importance of

reliable data in smart city development.

Investment insights emerged as another critical aspect of data governance.

The findings indicate that Iskandar Malaysia is leveraging data to provide

valuable information to potential investors, enhancing their understanding of the

local business environment. This corroborates recent studies highlighting the role

of data-driven insights in attracting FDI (Peter et al., 2022).

Analytics utilization was identified as the third key measurement within

the data governance. The analysis revealed that Iskandar Malaysia is increasingly

applying data analytics in urban planning and management. This aligns with

recent literature emphasizing the importance of big data analytics in smart city

operations and investment attraction (Zaheer et al., 2019).

All these variables and their associated measurements provide a comprehensive

framework for understanding the factors influencing FDI in Iskandar Malaysia's smart

city context. They represent the key areas of focus identified through our thematic

analysis of interview data and document review.

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4.10 Summary

Chapter 4 presented a comprehensive thematic analysis of smart city initiatives

and their influence on Foreign Direct Investment (FDI) in Iskandar Malaysia. The

analysis followed a rigorous six-phase approach, from data transcription to theme analysis,

revealing three themes: Smart Cities Initiatives, Indicators, and Implications, five key

variables: Technology, Human Capital, Policy, Location, and Data Governance. The

chapter began by outlining the interpretive paradigm and data analysis process,

emphasizing the importance of understanding informants' narratives within the specific

context of Iskandar Malaysia's Smart Cities initiative. The data collection process,

involving in-depth interviews with five key informants, was detailed, highlighting the

rich insights gathered from city planners and government officials.

Through the six phases of thematic analysis, the chapter systematically explored

the collected data. The initial phases involved transcribing interviews and generating

codes, which led to the identification of overarching themes. The thematic mapping phase

revealed the thress themes and five key variables, their potential impact on FDI attraction.

A significant outcome of the analysis was the expansion of the initial conceptual

framework to include Location and Data Governance as critical variables alongside

Technology, Human Capital, and Policy. This finding underscores the importance of

contextual factors in shaping the effectiveness of smart city initiatives in attracting FDI.

The chapter provided detailed definitions for each variable and their associated

measurements. Technology encompassed infrastructure, communication systems, and

ICT integration. Human Capital focused on education, retention policies, and workforce

skills. Policy included regulatory incentives, governance, and consistency. Location

highlighted strategic position, infrastructure, and proximity to Singapore. Data

Governance emphasized data availability, investment insights, and analytics utilization.

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The analysis primarily focused on identifying and defining these variables and their

measurements.

By examining these themes, variables, and their potential roles in smart city

development, the chapter set a solid foundation for understanding the complex dynamics

of smart city initiatives and FDI attraction in Iskandar Malaysia. This comprehensive

analysis paves the way for more detailed discussions and recommendations in the

following chapters, where the interrelationships between variables and their combined

effect on FDI could be explored more fully.

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 CHAPTER 5

DISCUSSION, IMPLICATION AND CONTRIBUTION

5.0 Introduction

Chapter 5 synthesizes the findings of this study on the Smart Cities initiative and

its influence on Foreign Direct Investment (FDI) in Iskandar Malaysia. This chapter

provides a comprehensive overview of the key findings and critically examines the

propositions developed in earlier chapters. The discussion delves into the implications of

these findings from theoretical, practical, and regulatory policy perspectives, highlighting

how this research contributes to existing knowledge and practice. Additionally, the

chapter addresses how the research problem has been solved and whether the research

objectives have been met. By outlining the limitations encountered and providing

recommendations for future research, this chapter aims to guide subsequent studies in this

area. Finally, the conclusions drawn from this research underscore its significance and

potential impact on both academic and policy-making spheres.

5.1 Overview of findings

The thematic analysis of interviews with key stakeholders involved in smart cities

planning in Iskandar Malaysia revealed critical insights into the factors influencing FDI

through smart city initiatives.

The research findings indicate that the smart cities framework in Iskandar

Malaysia deviates significantly from the prior Yigitcanlar (2018) conceptual framework

in Chapter 2 of this study. While the Yigitcanlar (2018) smart cities framework

emphasized technological advancement, policy and human capital, Iskandar Malaysia’s

123
context introduces additional essential variables. The additional variables identified are

location and data governance.

Figure 5.1
Conceptual Framework

These findings underscore the importance of contextual adaptations in smart cities

frameworks and highlight critical variables beyond traditional technological and policy

dimensions that influence FDI attraction. Understanding these nuances is essential for

policymakers and stakeholders aiming to optimize smart cities strategies for economic

growth and sustainable development in Iskandar Malaysia.

5.2 Discussion of proposition

This section delves into the key findings from the thematic analysis, focusing on

the differences and additions discovered during the interviews. The initial conceptual

framework highlighted three main variables: technological, policy and human capital.

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However, through detailed insights provided by the informants, two additional critical

variables were identified: location and data governance. These variables reflect the unique

context of smart cities in Malaysia, which may differ from those in other countries. The

following discussion analyses each variable for the Smart Cities initiatives in Iskandar

Puteri.

5.2.1 Smart city initiative

The thematic analysis revealed a strong relationship between smart city

initiatives and the overall development goals of Iskandar Malaysia. Informants

unanimously acknowledged that Iskandar Malaysia was a pioneer in introducing

smart city initiatives, beginning with the Local Urban Observatory (LUO) and

evolving into a comprehensive Smart City framework adopted by the Federal

government. These initiatives align with the region's economic development goals

by facilitating digitalization, enhancing efficiency, and improving service

provision.

From my perspective, the success of smart city initiatives in Iskandar

Malaysia can be attributed to a combination of early adoption, strategic planning,

and effective collaboration between local and federal authorities. The

digitalization and efficiency improvements not only streamline urban

management but also create a favorable environment for investors, fostering

economic growth. Moreover, the focus on transparency and job creation addresses

key socio-economic challenges, making Iskandar Malaysia a model for other

developing regions aiming to implement smart city projects. However, to sustain

and further enhance these benefits, continuous innovation and adaptation to

emerging technologies and global best practices are crucial.

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 Smart cities have been shown to attract FDI due to their ability to enhance

the quality of FDI utilization and promote economic growth (Chong et al, 2021).

Studies have shown that smart city projects enhance urban management, increase

operational efficiency, and attract FDI by creating a favourable business

environment (Gregory et al, 2023). The integration of technology in urban

planning and service delivery has been widely recognized as a catalyst for

sustainable development and economic prosperity in various regions globally.

According to a comparative study by Adnan et al. (2016), the level of

implementation of smart cities may differ based on their priorities, functions, and

smartness. Iskandar Malaysia's smart city initiatives have not yet achieved the

same level as developed cities like Singapore and Seoul (Adnan et al, 2016). This

is partly because Iskandar Malaysia embarked on smart city projects later and is

situated in a developing country. While Iskandar Malaysia has made significant

strides, the pace and scope of its smart city initiatives lag behind those of more

developed regions. This highlights the challenges faced by developing regions in

implementing comprehensive smart city projects and suggests the need for

tailored approaches that consider local contexts and resource availability.

5.2.2 Technological

In Figure 5.1, the technological component is pivotal to the development

of smart cities, incorporating infrastructure, communication systems, and ICT

integration. Thematic analysis revealed that the success of Iskandar Malaysia's

smart city technology implementation is closely tied to the quality of its human

resources. As technological advancements drive the need for skilled workers,

human capital development initiatives play a crucial role in cultivating a

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workforce capable of managing and innovating within these technological

frameworks. The interconnectedness illustrated in the diagram highlights how

technological advancements are not standalone but interdependent with other

components such as human capital development, policy frameworks, location, and

data governance. Technological advancements necessitate a skilled workforce to

implement, manage, and innovate these technologies. This is represented by the

arrows connecting technological advancements to human capital development,

indicating the need for education, retention policies, and workforce skills.

Effective governance, regulatory incentives, and consistent policies are crucial to

support and regulate technological advancements. The arrows connecting

technological advancements to policy frameworks show how policies facilitate

and guide technology implementation. Strategic positioning, infrastructure, and

proximity to Singapore enhance the attractiveness of Iskandar Malaysia for

technological investments. This interconnectedness suggests that geographical

advantages support and complement technological advancements. The

availability, insights, and utilization of data drive technological innovation and

efficiency. The connection between technological advancements and data

governance indicates that data management practices are integral to the successful

deployment of smart city technologies.

From my perspective, the success of technological advancements in

Iskandar Malaysia’s smart city initiatives highlights the critical role of human

capital. Developing a skilled workforce is essential to harness the full potential of

these technologies. Continuous investment in education and training programs is

necessary to keep pace with rapid technological changes. Furthermore, fostering

a culture of innovation and collaboration between public and private sectors can

127
drive further advancements and ensure the sustainability of smart city projects.

While technology is a key enabler, it is the people behind these technologies who

ultimately drive progress and innovation. The diagram underscores the necessity

of integrated efforts across various domains to achieve comprehensive smart city

development. The technological advancement in Iskandar Malaysia has shown

significant progress, particularly in area such as IOT integration, smart traffic

management systems (Jalil, 2023; Jalil, ITMAX System's video surveillance

services contract from MBJB to lift earnings, 2023; Business Times, 2024;

Harinderan, 2024; Aman, 2023) and digital service delivery. Informants

highlighted the importance of continuos investment in technology to maintain a

competitive edge and attract FDI.

Technological advancements in smart cities can enhance infrastructure,

improve service delivery, and create a more attractive environment for businesses

and investors (Ullah et al., 2021). According to Angelidou (2015), technological

is one of the key forces of smart cities to drive socio-economic of the country.

Smart cities, with advanced technology, can impact the economy positively

through factors like FDI, as discussed in the paper "Smart City = Smart Citizen =

Smart Economy?, (2020)”

According to Joy et al. (2017), smart cities like Varanasi demonstrate that

traditional knowledge systems and creative-cultural products can drive the

economy alongside modern technology. This suggests that while technology is

important, it is not the sole crucial factor for economic development in smart cities.

5.2.3 Policy

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 In Figure 5.1, policy frameworks establish the regulatory and strategic

foundation essential for the successful implementation of smart city initiatives and

to attract FDI. The research findings indicate that supportive policy frameworks

in Iskandar Malaysia facilitate technological advancements. Policies that

encourage innovation, simplify bureaucratic processes, and offer regulatory

support for new technologies create an environment conducive to smart city

development. All informants agreed that policy is the most important element in

attracting FDI. They emphasized that unstable or inconsistent policies drive away

potential investors. The policy environment in Iskandar Malaysia has been

supportive, with clear guidelines and incentives for both local and international

investors. However, the need for adaptive and forward-thinking policies was

underscored by several informants. The variables interconnectedness between

policy frameworks and other components such as human capital development,

technological advancements, and data governance. Policy frameworks influence

education, retention policies, and workforce skills, which are critical for

sustaining technological advancements and smart city initiatives. Supportive

policies provide the necessary regulatory environment for technology adoption,

facilitating advancements in infrastructure, communication systems, and ICT

integration. Effective policies ensure proper data management practices, which

are essential for leveraging data in smart city projects and making informed

decisions. The diagram underscores the role of policy frameworks as the backbone

of smart city initiatives, highlighting their influence on various other components

essential for successful implementation and attracting FDI.

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 From our perspective, the importance of stable and supportive policy

frameworks cannot be overstated. They are crucial in creating a conducive

environment for technological innovation and investment. Adaptive policies that

evolve with technological advancements and market needs can ensure sustained

growth and competitiveness. In Iskandar Malaysia, while current policies have

been supportive, there is a continuous need for policymakers to anticipate future

challenges and opportunities. This proactive approach can help maintain investor

confidence and attract FDI, further driving the region’s economic development.

The interconnectedness in the diagram emphasizes that policy frameworks must

work harmoniously with other elements to achieve holistic smart city

development.

Policy frameworks are essential in influencing the development and

execution of smart city initiatives (Tan & Taeihagh, 2020). Supportive policies,

such as those offering incentives for technology adoption, investment in digital

infrastructure, and simplified bureaucratic processes, help create an environment

favorable to attracting FDI (Caragliu & Del Bo, 2019). In Iskandar Malaysia, the

smart city development policy framework is directed by the national Smart City

Framework and the strategic vision of the IRDA (Rameli, 2022).

According to Lingyu (2020) and Andrea et al. (2020), while smart city

policies are essential for economic development, their effectiveness depends on

various factors such as implementation strategies, policy direction, and the

specific context of the city. This suggests that even well-designed policies may

not always yield the expected results if not implemented effectively.

5.2.4 Human capital

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 In Figure 5.1, human capital, encompassing skills, education, and

expertise, is vital for the success of smart city initiatives. The analysis revealed

that effective policy frameworks supporting education and skill development are

essential for creating a capable workforce and attracting FDI. In Iskandar

Malaysia, the quality of human resources is crucial for the effective

implementation of smart city technologies. Human capital emerged as a pivotal

factor, with a strong emphasis on the need for ongoing training and education to

equip the workforce with relevant skills. The availability of skilled professionals

in technology and urban planning was identified as a strength. Human capital not

only attracts FDI but is also enhanced by it, as foreign investments bring in experts

and advanced technologies that upskill the local workforce. However, according

to informants Iskandar Malaysia faces challenges in retaining its talent pool due

to its proximity to Singapore and currency disparities. Many skilled professionals

prefer opportunities in Singapore, where salaries are more competitive. Thus, a

robust policy framework for talent retention is crucial for Iskandar Malaysia. The

diagram interconnectedness of human capital with other key components of smart

city initiatives. Human capital development is directly influenced by policy

frameworks that include education, retention policies, and workforce skills. These

elements collectively contribute to technological advancements, which

encompass infrastructure, communication systems, and ICT integration. The

diagram highlights how human capital is not an isolated factor but one that is

deeply integrated with policy frameworks, technological advancements, and data

governance. This interconnectedness underscores the necessity for a holistic

approach to smart city development, where human capital is nurtured and retained

131
through supportive policies and continuous investment in technology and

innovation.

From my perspective, human capital development is fundamental to the

successful implementation of smart city initiatives. In Iskandar Malaysia, while

there is a strong foundation of skilled professionals, the challenge lies in retaining

this talent. This requires not only competitive salaries but also creating an

environment that fosters continuous learning and development. The

interconnectedness depicted in Figure 5.1 emphasizes that human capital

development is closely tied to policy frameworks, technological advancements,

and data governance. Policies that support education, skill development, and

retention are crucial for maintaining a robust workforce capable of driving and

sustaining smart city initiatives.

Ridha and Parwanto (2020) found that human development, alongside FDI

and macroeconomic conditions, has a significant positive impact on economic

growth in Indonesia, highlighting the importance of investing in human capital to

attract foreign investment and promote economic development. Human capital is

a crucial factor for FDI in Smart Cities, as competences and knowledge

management play a key role in future Smart City development (Saverio et al,

2014).

According to Nguyen et al. (2020), smart cities can attract FDI through

various means beyond human capital. One approach is to focus on mobilizing

investment resources from different economic sectors, especially through private

resources and FDI. Additionally, the development of modern infrastructure,

innovative transformations in the economy, and effective investment projects can

enhance the investment attractiveness of regions, leading to increased FDI inflows

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(Nadezhda, 2023). These perspectives suggest that while human capital is

important, it is not the sole factor in attracting FDI. In the context of Iskandar

Malaysia, while a focus on human capital is crucial, it should be complemented

by investments in infrastructure, technology, and innovative economic

transformations to create a more attractive environment for investors.

5.2.5 Location

In Figure 5.1, the geographical location of Iskandar Malaysia significantly

impacts its potential to attract FDI. The proximity to Singapore and the

availability of land are key locational advantages. This finding underscores the

importance of geographical positioning in enhancing the city's global

competitiveness. The interview with informants revealed consistencies with our

research findings. Menteri Besar Datuk Onn Hafiz Ghazi noted that Johor has

attracted over 50 data centres in the past two years (SHAH, 2024). Johor has

become a key hub for data centre construction in Malaysia, benefiting from its

proximity to Singapore, affordable land, water, and electricity resources, and the

ongoing China-US trade tensions, which are drawing more multinational

corporations to the area (Gao & Ke, 2024; Yusof, 2024; Gomez, 2023; Chow,

2023). The diagram interconnectedness location is shown as a critical component

influencing other elements such as infrastructure, human capital, and data

governance. The strategic position of Iskandar Malaysia near Singapore,

combined with its robust infrastructure, enhances its attractiveness to foreign

investors. The availability of land and proximity to Singapore provide logistical

and economic benefits, making it a favourable destination for data centres and

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other investments. This interconnectedness highlights the importance of

geographical advantages in the broader framework of smart city initiatives and

their role in attracting FDI.

From my perspective, the emphasis on location as a critical factor in FDI

attraction is both logical and significant. Geographic positioning provides tangible

benefits such as reduced logistical costs and enhanced market access. Iskandar

Malaysia's proximity to Singapore, a major financial and technological hub, offers

a strategic edge. Additionally, the availability of land and resources aligns well

with investor needs for cost-effective and scalable operations. This perspective

reinforces the notion that location is not merely a backdrop but a strategic asset in

FDI decisions.

Location plays a pivotal role in attracting FDI to smart cities, with factors

like infrastructure, accessibility, and market proximity being crucial (Fulong,

2020; Khrystyna, 2023). Smart cities provide a favorable environment for

businesses by utilizing technologies such as machine learning for optimal location

selection, thereby enhancing decision-making processes and boosting business

success rates (Khrystyna, 2023). Additionally, the agglomeration and network

effects within cities enhance economic productivity and innovation, making cities

critical nodes for economic growth and cooperation, underscoring the importance

of location in attracting FDI (Pengfei et al., 2017).

The evolution of FDI theories increasingly emphasizes location

advantages, highlighting their importance in the international activities of firms

and the economic growth of both home and host countries (Oana et al., 2014).

However, there are nuanced perspectives that challenge the singular emphasis on

location. Frederic et al. (2014) pointed out that factors such as economic and

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administrative distance also influence FDI decisions, highlighting the significance

of proximity to alternative locations. Furthermore, the development of smart city

applications depends on IoT infrastructure and continuous data collection,

necessitating the addressal of location privacy concerns to gain citizens' trust and

adoption (Raed, 2018; Raed, 2017). Ultimately, while smart cities offer various

benefits for attracting FDI, considerations like distance, infrastructure, and

privacy preservation are crucial in shaping investment decisions and the overall

success of smart city initiatives.

5.2.6 Data governance

In Figure 5.1, data governance is identified as a crucial variable for smart

city initiatives. This involves data availability, investment insights, and analytics

utilization, which help investors understand the importance of information before

making investment decisions. Establishing clear data governance policies and

ensuring data availability are essential for building investor confidence.

Interviews with informants revealed that the availability of data adds value for

investors, allowing them to evaluate their investments and gain confidence in their

choices. However, in Iskandar Malaysia, the accuracy and transparency of data

are current challenges. This slows down the investment process, leading investors

to choose neighbouring countries like Indonesia, which offer more accurate

insights. The diagram interconnectedness data governance is represented as a

central element influencing and influenced by other components such as

technological advancements, policy frameworks, and human capital development.

The interplay between these elements underscores the importance of high-quality

data governance in smart city initiatives. For instance, robust data governance

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frameworks support technological advancements by ensuring reliable data flow,

which is crucial for technologies like IoT and smart traffic management systems.

Policy frameworks that promote transparency and data accessibility further

enhance the trust and confidence of investors. The integration of human capital

development ensures that there is a skilled workforce capable of managing and

interpreting data effectively. This interconnectedness highlights that improving

data governance not only directly impacts investor confidence but also enhances

other critical areas, making Iskandar Malaysia a more attractive destination for

FDI.

In my view, effective data governance is integral to the attractiveness of

smart cities for FDI. Transparent and accurate data not only aids in investor

decision-making but also builds trust in the city's administrative capabilities. The

current challenges in Iskandar Malaysia regarding data accuracy and transparency

illustrate the necessity for robust data governance frameworks. Addressing these

challenges by improving data management practices and ensuring data quality

will be crucial for enhancing the city's appeal to potential investors and fostering

a more conducive environment for investment.

Effective data governance in smart cities significantly impacts the

efficiency and effectiveness of city operations, thereby attracting FDI. Research

highlights that proper data governance mechanisms ensure accountability,

responsibility, and well-defined roles in managing urban data (Peter et al., 2022;

Zaheer et al., 2019; Krassimira et al., 2017; T. Osu et al., 2022; Sunil et al., 2022).

By utilizing ICT-enabled governance and Big Data management, cities can

harness urban data for informed decision-making and improved city planning.

High-quality data and robust governance frameworks not only enhance the

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 smartness of cities but also create a favourable environment for FDI by

demonstrating transparency, reliability, and innovation in urban management.

Despite the strong emphasis on data governance, some research suggests

that other factors may also significantly influence FDI beyond data quality and

transparency. In addition to data, other crucial factors for smart city development

include stakeholder involvement, scalable infrastructure, legal frameworks,

privacy, and governance concerns (Nilam et al., 2023). The quality of data sources,

data security, and the integration of diverse data types with varying information

quality levels pose challenges in effectively leveraging data for smart city

applications (Tiago et al., 2017; Payam et al., 2015). Therefore, to attract FDI,

smart cities must focus on data availability and address these multifaceted aspects

to foster an environment conducive to investment and sustainable urban

development.

5.3 Summary of the discussion

This section has synthesized the findings from the thematic analysis of smart city

initiatives and their impact on FDI in Iskandar Malaysia. The discussion highlighted the

unique context of Iskandar Malaysia, identifying five key variables influencing FDI, there

are technological advancement, policy frameworks, human capital, location, and data

governance. These variables reflect the distinct priorities and developmental stages of

Iskandar Malaysia compared to other cities.

Technological advancements and smart city initiatives have facilitated

digitalization, improved service provision, and attracted investments, aligning with the

broader economic goals of the region. However, Iskandar Malaysia's technological

progress is still catching up with more developed cities like Singapore and Seoul. While

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the policy frameworks in Iskandar Malaysia have been supportive, inconsistencies and

instability in policy implementation can drive away potential investors. This underscores

the need for adaptive and forward-thinking policies that encourage innovation and

simplify bureaucratic processes.

Human capital, essential for managing technological innovations, also benefits

from FDI, which brings expertise and technology, enhancing local workforce skills.

However, the region faces challenges in retaining its talent pool due to its proximity to

Singapore and currency disparities, making a robust talent retention policy crucial. The

strategic location of Iskandar Malaysia, particularly its proximity to Singapore, further

boosts its attractiveness to investors, though the competition with Singapore for skilled

professionals remains a significant hurdle.

Data governance, ensuring data availability and transparency, plays a vital role in

building investor confidence. Yet, the current challenges in data accuracy and

transparency in Iskandar Malaysia can slow down the investment process and divert

potential investors to neighbouring countries like Indonesia.

The research underscores the importance of contextual adaptations in smart city

frameworks and highlights the interplay between these variables in driving economic

growth and sustainable development. These findings provide valuable insights for

policymakers and stakeholders aiming to optimize smart city strategies in similar

developing regions. The nuances identified in this research suggest that while the

theoretical frameworks provide a foundation, practical implementation must consider

local contexts to effectively attract and sustain FDI.

5.4 Solving research problem

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 To address the research problem of understanding how smart city initiatives

influence FDI in Iskandar Malaysia, this study identified five critical variables:

technological advancements, human capital development, policy frameworks, location,

and data governance. These variables were explored through in-depth interviews with key

stakeholders, including government officials, city planners, and business leaders. The

cross-case analysis provides a comprehensive understanding of how these variables

interact to attract FDI.

Technological Advancements

Technological advancements are pivotal in attracting FDI by enhancing

operational efficiency and creating a favourable environment for investors. Cross-case

analysis revealed that robust ICT infrastructure, IoT integration, and digital service

delivery are essential components of smart city initiatives in Iskandar Malaysia. For

instance, the implementation of smart traffic management systems and high-speed

internet infrastructure significantly improves urban management and service delivery,

which are attractive to foreign investors. Informants from both the public and private

sectors emphasized the necessity of continuous investment in technology to maintain a

competitive edge. This aligns with studies showing that cities with advanced

technological infrastructure attract more FDI due to the perceived lower risk and higher

potential for returns. Thus, Iskandar Malaysia’s focus on technological advancements

directly contributes to its attractiveness to foreign investors.

Human Capital

Human capital emerged as another crucial factor influencing FDI. The presence

of a skilled workforce, supported by strong educational institutions, is essential for the

success of smart city initiatives. The cross-case analysis highlighted that policies aimed

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at retaining talent are vital, particularly given Iskandar Malaysia’s proximity to Singapore,

which offers higher salaries. Informants consistently pointed out that top universities and

vocational training centres play a significant role in ensuring a steady supply of skilled

labour. For example, partnerships between universities and the private sector facilitate

the development of industry-relevant skills, making the local workforce more attractive

to high-tech industries. One informant emphasized that the region has the highest number

of young workers and families, highlighting the importance of retention policies.

Furthermore, FDI itself can enhance human capital by bringing in new expertise and

advanced technologies, thereby upskilling the local workforce.

Policy Frameworks

Stable, supportive, and predictable policy frameworks are essential for attracting

FDI. Informants across different sectors highlighted the importance of policies that offer

incentives, streamline bureaucratic processes, and ensure effective governance. Cross-

case analysis revealed a consensus that stable policies and governance structures reduce

uncertainty and enable long-term planning for foreign investors. For instance, tax breaks,

grants, and simplified administrative procedures create an investment-friendly

environment. This is consistent with research indicating that consistent and transparent

policy frameworks are critical in attracting and retaining FDI. In Iskandar Malaysia, the

need for adaptive and forward-thinking policies that encourage innovation was

underscored. Unstable or inconsistent policies can drive away potential investors, making

the creation of robust policy frameworks crucial for enhancing the region's attractiveness

to FDI.

Location

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 The strategic geographical position of Iskandar Malaysia, particularly its

proximity to Singapore, plays a significant role in attracting FDI. The availability of land,

water, and electricity resources further enhances its attractiveness. Cross-case analysis

indicated that these locational advantages have made Iskandar Malaysia a key hub for

data centres and other investments. Informants noted that geopolitical factors, such as the

ongoing China-US trade tensions, have made Iskandar Malaysia an attractive alternative

for multinational corporations. For example, one informant mentioned that Johor has

attracted over 50 data centres in the past two years, benefiting from its strategic location.

This highlights the importance of geographical positioning in enhancing the city's global

competitiveness. Additionally, the development of infrastructure such as transportation

networks and logistic hubs can significantly boost Iskandar Malaysia's attractiveness to

foreign investors.

Data Governance

Effective data governance is critical for building investor confidence. The

availability, accuracy, and transparency of data are essential for making informed

investment decisions. Cross-case analysis revealed that current challenges in data

accuracy and transparency in Iskandar Malaysia can slow down the investment process.

Investors require reliable data to evaluate their investments confidently. Establishing

clear data governance policies and ensuring data availability can significantly enhance

investor confidence. Informants emphasized that robust data governance mechanisms

ensure accountability, responsibility, and well-defined roles in managing urban data,

leading to better decision-making and improved city planning. This is supported by

research highlighting that cities with high-quality data and transparent governance

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frameworks are more likely to attract and retain foreign investors due to the perceived

lower risk and higher potential for returns.

This research paper solving the research problem involved understanding the

interplay between technological advancements, human capital development, policy

frameworks, location, and data governance in shaping Iskandar Malaysia's attractiveness

to foreign investors. The cross-case analysis revealed that these factors collectively create

a supportive ecosystem for smart city initiatives, effectively attracting and sustaining FDI

in Iskandar Malaysia. By focusing on these critical variables, policymakers and

stakeholders can optimize smart city strategies to drive economic growth and sustainable

development in the region.

5.5 Answering research objectives

The study aimed to achieve three primary research objectives related to the

influence of smart city initiatives on FDI in Iskandar Malaysia. These objectives were

explored through qualitative methodologies, including in-depth interviews with key

stakeholders and thematic analysis, providing a comprehensive understanding of the

factors at play.

Research Objective 1: Explore the Concept of Smart City in Malaysia

The findings indicate that the concept integrates five critical variables:

technological advancements, human capital, policy frameworks, location, and data

governance. Across multiple interviews, stakeholders emphasized the importance of

robust ICT infrastructure and data management systems in shaping the smart city

framework. High-speed internet and advanced telecommunications infrastructure were

consistently highlighted as critical components that attract tech companies and enhance

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service delivery. Informants collectively noted that smart city initiatives, such as smart

traffic management and digital government services, create a business-friendly

environment that appeals to foreign investors. One government official highlighted that

"the integration of advanced technologies has significantly reduced operational

inefficiencies and increased transparency, which boosts investor confidence." This

underscores that while technology is central to the smart city concept, its effectiveness is

maximized when supported by comprehensive policies and efficient data management

systems.

Research Objective 2: Identify the Indicators of the Smart City Initiatives

The study identified several key indicators, including technological advancements,

human capital development, supportive policy frameworks, strategic location, and

effective data governance. Technological advancements encompass infrastructure

improvements, smart city applications, and ICT integration. Informants noted that

successful implementation of these technologies leads to improved operational

efficiencies and transparency, which in turn attract investments. For instance, the

implementation of IoT-based traffic management systems was highlighted as a significant

technological advancement that has reduced congestion and improved transportation

efficiency. Human capital development focuses on the presence of a skilled workforce,

educational institutions, and policies aimed at talent retention. Informants emphasized the

role of top universities and vocational training centres in ensuring a steady supply of

skilled labour. One business leader pointed out that "the availability of a young, tech-

savvy workforce is a major draw for high-tech industries." Supportive policy frameworks

involve stable governance structures, financial incentives, and streamlined administrative

processes. Informants stressed that policies offering tax breaks, grants, and reduced

143
bureaucratic hurdles are essential for creating an attractive investment environment. A

city planner noted that "consistent and transparent policies reduce investor uncertainty

and facilitate long-term planning." The strategic location of Iskandar Malaysia,

particularly its proximity to Singapore, enhances its attractiveness to investors.

Informants noted that the availability of land, water, and electricity resources, combined

with geopolitical factors like the ongoing China-US trade tensions, has made Iskandar

Malaysia a key hub for data centres and other investments. Effective data governance

involves proper mechanisms that ensure accountability, responsibility, and well-defined

roles in managing urban data. Informants emphasized that reliable and transparent data is

critical for informed decision-making and building investor confidence. One government

official stated, "Data transparency and accuracy are essential for attracting FDI, as

investors rely on this information to evaluate their investments."

Research Objective 3: Examine the trajectory outcome of Smart Cities initiatives

The study found that technological infrastructure, effective data governance,

human capital development, supportive policy frameworks, and strategic location are key

drivers. Robust technology infrastructure, including high-speed internet and IoT

integration, enhances operational efficiencies and transparency, making the city more

attractive to investors. Informants highlighted how advancements like digital service

delivery have improved urban management and service provision, contributing to a

favourable business environment. Effective data governance involves proper mechanisms

that ensure accountability, responsibility, and well-defined roles in managing urban data.

Informants emphasized that reliable and transparent data is critical for informed decision-

making and building investor confidence. One government official stated, "Data

transparency and accuracy are essential for attracting FDI, as investors rely on this

144
information to evaluate their investments." Human capital development was also

highlighted as crucial, with the presence of skilled professionals and strong educational

institutions being pivotal. Informants noted that partnerships between universities and the

private sector facilitate the development of industry-relevant skills. Policies that

incentivize companies to invest in employee training and development were also

identified as significant contributors to building a competitive workforce. Additionally,

supportive policy frameworks that offer financial incentives and reduce bureaucratic

hurdles were identified as key drivers. Informants stressed that consistent policies

enhance investor confidence and create a conducive environment for long-term

investments. The strategic location of Iskandar Malaysia, particularly its proximity to

Singapore, plays a significant role in attracting FDI. The availability of land, water, and

electricity resources, combined with geopolitical factors, enhances its global

competitiveness.

The study successfully addressed the research objectives by providing detailed

insights into the concept of smart cities in Malaysia, identifying key indicators of smart

city initiatives, and examining the drivers of successful smart city outcomes. The cross-

case analysis reinforced the critical role of these factors in shaping Iskandar Malaysia's

attractiveness to foreign investors. By focusing on technological advancements, human

capital development, policy frameworks, strategic location, and effective data governance,

policymakers and stakeholders can optimize smart city strategies to attract and sustain

FDI, driving economic growth and sustainable development in the region.

5.6 Fulfilling research objectives

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 The research objectives were successfully fulfilled through a detailed and

systematic analysis. This section demonstrates how each objective was achieved by

synthesizing findings from both in-case and cross-case studies, highlighting the interplay

of technological advancements, human capital development, policy frameworks, strategic

location, and effective data governance.

Achieving Research Objective 1: Exploring the Concept of Smart City in Malaysia

This objective was achieved by conducting in-depth interviews and thematic

analysis, which provided a comprehensive understanding of the smart city concept in

Malaysia. The study identified the core elements of smart cities, including advanced

technology integration, robust data governance, and strategic human capital development.

By examining specific initiatives such as high-speed internet infrastructure and smart

traffic management systems, the research highlighted how these elements collectively

define a smart city in the Malaysian context. Multiple informants consistently supported

these insights, confirming the critical role of these components in shaping the smart city

concept. Additionally, the strategic location of Iskandar Malaysia, particularly its

proximity to Singapore, and its infrastructure resources were identified as vital elements

that enhance its attractiveness to foreign investors. The analysis revealed that these

geographical advantages play a crucial role in defining the region's smart city framework.

Achieving Research Objective 2: Identifying the Indicators of Smart City

Initiatives

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 The study successfully identified key indicators of smart city initiatives through

qualitative analysis. Informants consistently pointed out the importance of technological

advancements, human capital, supportive policy frameworks, strategic location, and

effective data governance. For example, robust ICT infrastructure and strong educational

institutions were repeatedly mentioned as essential indicators. Policies aimed at retaining

talent and providing financial incentives also emerged as crucial. The cross-case analysis

reinforced these findings, showing that these indicators are widely recognized as critical

for the success of smart city initiatives and their ability to attract FDI. The strategic

location of Iskandar Malaysia, with its proximity to Singapore and availability of land,

water, and electricity resources, was also highlighted as a significant indicator. Informants

noted that these locational advantages, combined with geopolitical factors, make Iskandar

Malaysia a key hub for data centres and other investments. Effective data governance was

emphasized as essential for ensuring accountability, transparency, and reliability of data,

which are critical for investor confidence.

Achieving Research Objective 3: Examining the trajectory outcome of Smart Cities

initiatives

To achieve this objective, the study examined the drivers behind successful smart

city outcomes. The research identified technological infrastructure, effective data

governance, human capital development, supportive policy frameworks, and strategic

location as key drivers. Informants highlighted how advancements like IoT integration

and smart city applications improve operational efficiencies and transparency, making

the city more attractive to investors. The development of a skilled workforce through

educational institutions and training programs was also emphasized. Stable policy

frameworks providing financial incentives and reducing bureaucratic hurdles were found

147
to be significant drivers as well. The cross-case analysis confirmed that these drivers work

synergistically to enhance Iskandar Malaysia's attractiveness to foreign investors.

Additionally, the strategic location of Iskandar Malaysia, particularly its proximity to

Singapore, was identified as a critical driver. The availability of land, water, and

electricity resources, combined with the region's geopolitical context, further boosts its

competitiveness on the global stage. Effective data governance mechanisms ensure that

data is reliable and transparent, which is essential for building investor confidence and

facilitating informed decision-making.

The research objectives were fulfilled by providing a comprehensive analysis of

the smart city concept, identifying key indicators, and examining the drivers of successful

smart city outcomes. The findings underscore the importance of an integrated approach,

where technology, human capital, supportive policy frameworks, strategic location, and

effective data governance collectively attract and sustain FDI in Iskandar Malaysia. The

cross-case analysis further reinforced the critical role of these factors in shaping the

region's attractiveness to foreign investors. By focusing on these key variables,

policymakers and stakeholders can optimize smart city strategies to drive economic

growth and sustainable development in the region.

5.7 Implications of research

5.7.1 Theoretical Implications

The findings of this study significantly enhance the theoretical understanding of

the relationship between smart city initiatives and Foreign Direct Investment (FDI). By

identifying and analysing five critical variables—technological advancements, human

capital, policy frameworks, strategic location, and data governance—this research

extends existing theories on urban development and economic growth in impactful ways,

148
thereby emphasizing the implications of these findings for future research and

policymaking.

The study underscores the pivotal role of technological advancements within the

smart city framework. Existing theories on urban development often highlight the

importance of infrastructure and technology (Castells, 2010; Florida, 2014). This research

provides empirical evidence showing how specific technological advancements, such as

the integration of Internet of Things (IoT), high-speed internet, and smart grids, directly

influence FDI. By demonstrating that these technological infrastructures enhance

operational efficiencies and offer a high-quality living environment, the study reinforces

and extends the theory that advanced technological infrastructure is not merely a

facilitator but a crucial determinant of investment attractiveness. Cities investing in

cutting-edge technologies can create a competitive edge, thereby attracting more foreign

investors (Porter, 1990). This finding is consistent with Porter’s theory of competitive

advantage, which posits that technological innovations are key drivers of economic

competitiveness.

Moreover, the research emphasizes the significance of human capital

development in the context of smart cities. While existing literature acknowledges the

importance of a skilled workforce for economic growth (Becker, 1994; Lucas, 1988), this

study provides a nuanced understanding of how human capital specifically impacts FDI

in a smart city setting. The findings highlight the dual focus required on education and

retention policies to prevent brain drain and ensure a steady supply of skilled labor. This

contributes to human capital theory by emphasizing the need for continuous skill

development and competitive retention strategies to sustain foreign investments (Schultz,

1961). The study suggests that cities with robust educational infrastructures and policies

aimed at retaining talent are better positioned to attract and maintain foreign investment.

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This is supported by the theory that human capital development leads to increased

productivity and innovation, which are attractive to foreign investors.

Policy frameworks also emerge as another critical variable influencing FDI. The

study offers insights into the types of policies most effective in a smart city context.

Theoretical models of economic development have long recognized the role of supportive

policies (North, 1990; Rodrik, 2008), but this research elaborates on the specific

regulatory incentives and governance practices that enhance investment attractiveness.

By demonstrating the impact of stable, transparent, and supportive policies on investor

confidence, the study reinforces the importance of good governance and regulatory

support in theoretical models of FDI attraction (Dunning, 1993). For example, policies

that streamline business processes, offer tax incentives, and protect intellectual property

rights can significantly boost investor confidence. This evidence supports the notion that

well-designed policy frameworks are essential for creating an environment conducive to

foreign investment, aligning with Dunning’s eclectic paradigm, which highlights the

significance of location-specific advantages in attracting FDI.

Additionally, the strategic location of Iskandar Malaysia, particularly its

proximity to Singapore, provides valuable theoretical insights into the geographical

aspects of urban development and FDI. The study illustrates how strategic location can

serve as a significant competitive advantage, influencing investment decisions. This

finding supports and extends geographical theories of economic development that

emphasize the importance of location and connectivity (Krugman, 1991). Iskandar

Malaysia’s strategic location offers logistical advantages, access to major markets, and

an integrated economic zone with Singapore, making it an attractive destination for

foreign investors. This also aligns with the new economic geography theory, which posits

that geographical proximity to economic hubs enhances regional competitiveness and

150
attractiveness to FDI (Krugman, 1991). The study underscores the strategic importance

of geographical positioning in economic planning and investment attraction.

Finally, the study introduces the concept of data governance as a crucial

determinant of FDI in smart cities. While data governance has been discussed in the

context of information management and public administration (Khatri & Brown, 2010;

McDermott, 2014), this research positions it as a key factor in economic development

theories. The findings suggest that reliable, accurate, and transparent data are essential

for investor confidence and decision-making, thus extending theoretical frameworks to

include data governance as a critical component of smart city development (Zuboff, 2015).

Effective data governance ensures that data is managed securely and transparently, which

is crucial for attracting technology-driven investments. This inclusion of data governance

enriches the theoretical discourse on the factors contributing to smart city success and

investment attraction, aligning with theories that emphasize the role of information

transparency in reducing investment risks and enhancing market efficiency.

In summary, the theoretical implications of this study are multi-faceted. By

providing empirical evidence on the importance of technological advancements, human

capital development, policy frameworks, strategic location, and data governance, the

research extends existing theories on urban development and FDI. It underscores the

interconnectedness of these variables and their collective impact on creating an attractive

investment environment in smart cities. These insights contribute to a more

comprehensive understanding of the factors driving economic growth in the context of

smart urban development, offering valuable directions for future research. The study

highlights the need for integrated strategies that leverage technological innovation,

human capital, supportive policies, strategic location, and robust data governance to

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attract and sustain foreign investment, ultimately contributing to the theoretical and

practical knowledge of smart city development and FDI dynamics.

5.7.2 Practical Implications

The practical implications of this study are substantial, offering valuable insights

for policymakers, urban planners, investment agencies, and city authorities. By

identifying the key smart city initiatives that influence Foreign Direct Investment (FDI),

the research provides actionable recommendations for enhancing the attractiveness of

cities like Iskandar Malaysia to foreign investors.

Firstly, the study underscores the importance of technological advancements in

attracting FDI. Urban planners and policymakers should prioritize the development and

integration of advanced technologies such as IoT, high-speed internet, and smart

infrastructure. By creating a technologically advanced environment, cities can enhance

operational efficiencies, improve the quality of life for residents, and offer a compelling

value proposition to foreign investors. This aligns with the findings of Castells (2010)

and Florida (2014), who emphasize that cities investing in cutting-edge technologies can

create a competitive edge, thereby attracting more foreign investors. For instance,

implementing smart traffic management systems can reduce congestion, lower

transportation costs, and improve the overall business environment, making the city more

attractive to investors.

Moreover, the study highlights the significance of human capital development.

Cities need to focus on education and training programs that equip the workforce with the

necessary skills to thrive in a smart city environment. This includes not only technical

skills but also soft skills such as problem-solving and adaptability. By fostering a skilled

152
and adaptable workforce, cities can attract high-value foreign investments that require

advanced skills and expertise. This supports the theory that human capital development

leads to increased productivity and innovation, which are attractive to foreign investors

(Becker, 1994; Schultz, 1961). For example, partnerships between local universities and

tech companies can create a talent pipeline that directly benefits the local economy and

attracts foreign enterprises seeking skilled labour.

Policy frameworks also play a crucial role in enhancing FDI. The study suggests

that stable, transparent, and supportive policies are essential for building investor

confidence. Policymakers should focus on creating an enabling environment through

regulatory incentives, streamlined business processes, and robust intellectual property

protections. This aligns with Dunning’s (1993) eclectic paradigm, which highlights the

significance of location-specific advantages in attracting FDI. Policies that offer tax

incentives for technology adoption and provide grants for research and development can

significantly boost investor confidence and attract foreign capital. Additionally, policies

that ensure regulatory stability and transparency can mitigate investment risks and make

the city more appealing to international investors.

The strategic location of Iskandar Malaysia, particularly its proximity to

Singapore, is another practical implication emphasized by the study. Urban planners

should leverage this geographical advantage to create synergies with neighbouring

economic hubs. This supports the new economic geography theory, which posits that

geographical proximity to economic hubs enhances regional competitiveness and

attractiveness to FDI (Krugman, 1991). Developing infrastructure that facilitates cross-

border trade and collaboration can enhance the region’s attractiveness to investors. For

instance, enhancing transportation links and creating special economic zones can

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capitalize on Iskandar Malaysia’s strategic location, offering logistical advantages and

easy access to major markets.

Finally, the study introduces the importance of data governance in attracting FDI.

Effective data governance ensures that data is managed securely and transparently, which

is crucial for attracting technology-driven investments. Cities need to establish robust data

governance frameworks that protect data privacy and ensure data accuracy. This aligns

with the theories emphasizing the role of information transparency in reducing investment

risks and enhancing market efficiency (Khatri & Brown, 2010; Zuboff, 2015).

Implementing policies that mandate regular data audits and compliance with international

data standards can build investor trust and make the city a preferred destination for data-

centric enterprises.

In summary, the practical implications of this study are multi-faceted and provide

clear guidance for enhancing the attractiveness of smart cities to FDI. By focusing on

technological advancements, human capital development, supportive policy frameworks,

strategic location, and robust data governance, cities like Iskandar Malaysia can create an

environment conducive to foreign investment. These insights offer valuable directions for

policymakers, urban planners, and investment agencies aiming to leverage smart city

initiatives to drive economic growth and attract foreign capital.

5.7.3 Regulatory Policy Implication

The study's findings underscore significant regulatory policy implications

for enhancing FDI in Iskandar Malaysia through smart city initiatives. By

focusing on five critical variables—technological advancements, human capital,

154
policy frameworks, strategic location, and data governance—this research

provides a framework for regulatory policies that can foster an attractive

investment climate.

Firstly, the role of regulatory policies in supporting technological

advancements is crucial. Policymakers need to create a conducive environment

for the adoption and integration of advanced technologies. This involves not only

providing financial incentives, such as grants and tax breaks for technology

investments, but also ensuring that regulatory frameworks are flexible enough to

accommodate rapid technological changes. For instance, regulations should

support the deployment of IoT technologies, high-speed internet infrastructure,

and smart traffic management systems. The evidence from this study suggests that

clear and supportive regulatory policies can enhance the attractiveness of Iskandar

Malaysia as a hub for technological innovation and foreign investment (Porter,

1990; Castells, 2010).

Human capital development is another area where regulatory policies can

have a significant impact. Regulations that support educational initiatives and

workforce development are essential. Policymakers should consider regulations

that encourage partnerships between educational institutions and industries to

create training programs aligned with market needs. Furthermore, policies aimed

at retaining talent, such as work visa facilitation for foreign experts and incentives

for local talent retention, can help mitigate brain drain. The study highlights the

need for a regulatory environment that supports continuous skill development and

competitive compensation packages to attract and retain a skilled workforce,

which is crucial for sustaining FDI (Becker, 1994; Schultz, 1961).

155
 Stable and supportive policy frameworks are vital for creating a

predictable and attractive investment environment. The research indicates that

regulatory stability and transparency are key factors influencing investor

confidence. Policymakers should focus on establishing and maintaining consistent

regulations that provide clear guidelines and reduce bureaucratic red tape. This

includes implementing streamlined processes for business registration, licensing,

and approvals. Additionally, regulations that offer financial incentives, such as

tax breaks, subsidies, and grants, can significantly enhance the region's

competitiveness. Effective governance practices, including anti-corruption

measures and accountability mechanisms, are also critical for fostering a

trustworthy regulatory environment (North, 1990; Dunning, 1993).

The strategic location of Iskandar Malaysia presents unique regulatory

policy implications. Policymakers should leverage the region's proximity to

Singapore and other strategic advantages by enhancing cross-border regulatory

harmonization. This involves creating compatible regulations that facilitate trade

and investment flows between Iskandar Malaysia and neighbouring regions. For

example, simplifying customs procedures and reducing tariffs can encourage

more foreign businesses to establish operations in Iskandar Malaysia.

Additionally, regulatory policies that promote infrastructure development, such as

transportation and logistics networks, can further enhance the region's

attractiveness to multinational corporations (Krugman, 1991; Scott, 2006).

Effective data governance is crucial for building investor confidence and

supporting informed decision-making. Regulatory policies should focus on

establishing robust data governance frameworks that ensure data accuracy,

transparency, and security. Policymakers need to create regulations that mandate

156
 data sharing standards, protect privacy, and prevent data breaches. The study

suggests that reliable and transparent data governance can significantly enhance

the attractiveness of Iskandar Malaysia as an investment destination.

Implementing regulations that promote open data initiatives and real-time access

to economic indicators can help investors make informed decisions and reduce

investment risks (Khatri & Brown, 2010; Zuboff, 2015).

The regulatory policy implications of this research are extensive and

provide a roadmap for creating a conducive environment for FDI through smart

city initiatives. By focusing on supportive regulatory frameworks for

technological advancements, human capital development, stable and transparent

policies, strategic location advantages, and effective data governance,

policymakers can optimize smart city strategies to attract and sustain foreign

investments. These insights are crucial for not only Iskandar Malaysia but also

other regions aiming to leverage smart city initiatives to drive economic growth

and sustainable development.

5.8 Contributions of research

This research contributes significantly to urban development, smart city research,

and FDI attraction. The study findings offer valuable insights that span theoretical,

practical, and regulatory policy domains, enhancing our understanding of how smart city

initiatives influence FDI in developing economies.

5.8.1 Theoretical Contributions

Our research significantly advances the theoretical understanding of

smart city initiatives and their impact on FDI by proposing an integrated

157
framework. This framework uniquely combines technological advancements,

human capital development, policy frameworks, strategic location, and data

governance, providing a more nuanced and comprehensive perspective on the

factors influencing FDI in smart city contexts. By focusing on Iskandar

Malaysia, our study extends the application of smart city and FDI theories to a

specific developing economy context, demonstrating how these concepts interact

in a real-world setting and contributing valuable insights to the growing body of

literature on smart cities in emerging markets.

Furthermore, this research extends the application of the Resource-Based

View (RBV) theory to smart city initiatives, illustrating how unique resources

such as advanced technological infrastructure, skilled human capital, strategic

location, and effective data governance can create competitive advantages in

attracting FDI (Elia et al., 2019). Additionally, our study validates and expands

upon Institutional Theory by highlighting the critical role of stable and

supportive policy frameworks in attracting FDI. It provides empirical evidence

of how formal institutions shape the investment environment in smart cities,

offering a more robust understanding of institutional dynamics in urban

development and FDI attraction.

5.8.2 Practical Contributions

The research delivers substantial practical contributions by providing a

comprehensive guide for city planners and policymakers on developing smart city

initiatives that effectively attract FDI (Yigitcanlar et al., 2022). It offers critical

insights into prioritizing technological investments, human capital development,

and policy formulation, enabling decision-makers to allocate resources more

158
efficiently. Moreover, the study contributes practical strategies for attracting FDI

within the context of smart city development, emphasizing the importance of

creating a holistic ecosystem that synergistically combines technological

infrastructure, a skilled workforce, and supportive policies.

The research also presents a novel framework for human capital

development in smart cities, underscoring the importance of education, skill

development, and talent retention strategies. This framework provides actionable

guidelines for policymakers and educators to align human capital development

with the evolving needs of smart cities and foreign investors. This study offers

valuable, practical insights into implementing and leveraging technological

advancements to create an environment that is increasingly attractive to foreign

investors, potentially accelerating economic growth and urban development.

Besides, our study also highlights the practical importance of leveraging strategic

location advantages and implementing effective data governance practices in

attracting FDI to smart cities. These insights can guide urban planners and

policymakers in optimizing their city's geographical assets and data management

strategies to enhance their appeal to foreign investors.

5.8.3 Regulatory Policy Contributions

This research makes substantial contributions to regulatory policy by

developing a comprehensive framework for smart city initiatives aimed at

attracting FDI. It provides policymakers with a detailed blueprint for creating

supportive and stable regulatory environments, which are crucial for sustained

foreign investment. Our research offers nuanced insights into designing effective

159
incentive structures to attract and retain foreign investment in smart city

projects, highlighting the types of incentives that are most effective in the

context of Iskandar Malaysia and potentially other similar developing urban

areas.

Furthermore, the study contributes to the development of innovative

governance models for smart cities, emphasizing the critical importance of

transparency, efficiency, and adaptability in regulatory frameworks, as

highlighted in recent smart city governance literature (Tomor et al., 2019). It

demonstrates the significance of integrating policies across various sectors such

as technology, education, and urban planning to create a cohesive smart city

strategy that effectively attracts FDI.

Besides, our research emphasizes the need for regulatory frameworks that

address location-specific advantages and data governance issues, providing

policymakers with guidance on creating regulations that maximize a city's

geographical benefits while ensuring robust and transparent data management

practices. Importantly, our research advances the understanding of how regulatory

agility and responsiveness can enhance a region's attractiveness to foreign

investors in rapidly evolving smart city environments, providing a roadmap for

policymakers to create more dynamic and investor-friendly regulatory ecosystems.

All these contributions significantly advance the field of smart city

research and FDI attraction, particularly in the context of developing economies.

By providing an integrated framework that combines technological advancements,

human capital development, policy frameworks, strategic location, and data

governance, this study offers a unique perspective on the dynamics of smart city

initiatives and their impact on FDI. These findings not only enhance theoretical

160
 understanding but also provide practical guidance for policymakers and urban

planners in leveraging smart city initiatives to attract and retain foreign investment.

5.9 Limitations

While this research provides valuable insights into the roles of technological

advancements, human capital development, policy frameworks, strategic location, and

data governance in attracting FDI, it's important to note that the relative importance of

these factors may vary in different contexts. Future research could explore how these

variables interact and their comparative influence on FDI attraction in various smart city

environments.

5.9.1 Methodology Limitations

The primary methodological limitation of this study lies in its qualitative

nature and relatively small sample size. The research relied on in-depth interviews

with five key informants, which, while providing rich and detailed data, may not

capture the full spectrum of perspectives on smart city initiatives and FDI in

Iskandar Malaysia. As mentioned by Vasileiou et al. (2018), small sample sizes

in qualitative research can limit the generalizability of findings, although they

often provide deep, context-rich information.

Another limitation stems from the study's reliance on self-reported data

from interviews, which may introduce elements of subjectivity and potential bias.

Informants' responses could be influenced by their personal experiences, roles,

and perspectives, which may not always align with objective realities. This aligns

161
with observations by Creswell and Creswell (2017) regarding the potential for

bias in qualitative interview data.

While the study attempted to triangulate data through document analysis,

the primary data source remained interviews. Additional data sources, such as

quantitative surveys or direct observations, could have provided further validation

of the findings. This limited triangulation represents another methodological

constraint of the study.

5.9.2 Applicability Limitations

The focus on Iskandar Malaysia as a case study, while providing valuable

insights, also introduces certain limitations in terms of the broader applicability

of the findings. The study's findings are specific to Iskandar Malaysia and may

not be directly applicable to other regions or countries, particularly those with

significantly different economic, social, or political contexts. This limitation is

consistent with the challenges of case study research noted by Yin (2018), who

emphasizes that while case studies offer depth, their generalizability can be

limited.

Besides, Iskandar Malaysia is at a particular stage of smart city

development, and the findings may be most relevant to regions at a similar stage,

potentially limiting their applicability to more advanced or less developed smart

city initiatives. The study's insights on policy frameworks are closely tied to the

Malaysian context. The effectiveness of similar policies may vary in countries

with different governance structures or regulatory environments. Furthermore, the

research primarily considered FDI as an economic outcome. Other potential

impacts of smart city initiatives, such as social or environmental outcomes, were

162
 not extensively explored, which may limits the comprehensiveness of the study's

findings.

Despite these limitations, the research provides valuable insights into the

relationship between smart city initiatives and FDI, offering a foundation for

future research in this area. The limitations identified here also present

opportunities for further studies to address these gaps and expand our

understanding of smart city development and its economic impacts.

5.10 Recommendations for Future Research

Based on the findings and addressing the limitations of this study, we propose

several key directions for future research. These recommendations are prioritized based

on their potential to significantly advance our understanding of smart city initiatives and

their impact on FDI.

Future research could explore the interplay between the identified variables,

technological advancements, human capital development, policy frameworks, strategic

location, and data governance, accessing their collective impact on FDI attraction in smart

cities. Longitudinal studies tracking the evolution of these factors over time could provide

valuable insights into their changing dynamics and influence on FDI (Yigitcanlar et al.,

2019). The research could benefit from a mixed-methods approach, combining

qualitative insights with quantitative data. This could involve large-scale surveys of

foreign investors and local stakeholders, complementing the in-depth interviews

conducted in this study. Such an approach would provide a more comprehensive

understanding of the relationship between smart city initiatives and FDI (Creswell &

Creswell, 2017).

163
 Secondly, comparative studies examining multiple smart cities in different regions

or countries could enhance the generalizability of findings. This would allow for the

identification of common factors and unique contextual elements influencing the success

of smart city initiatives in attracting FDI. Future research could also study deeper into the

specific technological components of smart cities and their impacts on FDI. This could

involve examining how emerging technologies such as 5G, Internet of Things (IoT), and

artificial intelligence contribute to a city's attractiveness to foreign investors (Appio et al.,

2019).

It could provide a more holistic understanding of smart city outcomes if the studies

focus on the social and environmental impacts of smart city-driven FDI. This could

involve examining how FDI influenced by smart city initiatives affects local employment,

quality of life, and environmental sustainability (Yigitcanlar & Kamruzzaman, 2018).

Lastly, research into the policy mechanisms that most effectively support smart city

development and FDI attraction would be beneficial. This could include studies on the

design and implementation of incentive structures, regulatory frameworks, and

governance models that foster an environment conducive to both smart city growth and

foreign investment.

Among these recommendations, we believe that comparative studies across

multiple smart cities and longitudinal research tracking the evolution of smart city

initiatives over time are particularly crucial. These approaches would not only address

the limitations of our study's specific focus on Iskandar Malaysia but also provide a more

comprehensive understanding of how smart city development influences FDI across

different contexts and over extended periods. Additionally, research into the specific

mechanisms of how technological components impact FDI could provide valuable

insights for targeted smart city strategies. By pursuing these research directions, scholars

164
and policymakers can gain more comprehensive insights to guide the development of

smart cities and strategies for attracting foreign investment.

5.11 Conclusions

This chapter has provided a comprehensive discussion of the findings,

implications, contributions, and recommendations stemming from our research on smart

city initiatives and their impact on FDI in Iskandar Malaysia. Our study revealed the

complex interplay between technological advancements, human capital development,

policy frameworks, strategic location, and data governance in shaping Iskandar

Malaysia's appeal to foreign investors. We found that while each of these factors plays a

crucial role, their effectiveness is maximized when they operate in synergy within a

cohesive smart city strategy.

The implications of our research extend beyond Iskandar Malaysia, offering

insights into the broader relationship between smart city development and FDI attraction

in emerging economies. Our findings suggest that policymakers and urban planners

should adopt a holistic approach to smart city initiatives, considering not only

technological aspects but also human capital development, supportive policy frameworks,

strategic location advantages, and robust data governance practices.

This study makes significant contributions to both theoretical understanding and

practical application in the field of smart city development and FDI attraction.

Theoretically, it extends the application of concepts such as the Resource-Based View to

smart city contexts and provides empirical evidence of how formal institutions shape the

investment environment in smart cities. Practically, it offers actionable insights for

policymakers and city planners on developing effective smart city strategies to attract FDI.

165
 However, we also acknowledged the limitations of our study, particularly in terms

of its qualitative nature and focus on a single case study. These limitations, while

constraining the generalizability of our findings, also open up avenues for future research.

Our recommendations for future research emphasize the need for comparative studies

across multiple smart cities, longitudinal research to track the evolution of smart city

initiatives over time, and more in-depth investigations into specific technological

components and their impact on FDI.

In conclusion, this chapter has synthesized our research findings into a coherent

narrative that highlights the importance of integrated approaches to smart city

development for attracting FDI. As cities worldwide continue to pursue smart initiatives,

the insights provided in this chapter can serve as a valuable resource for both researchers

and practitioners in the field.

166
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