Economic Impacts of Introducing a New Low Carbon City in Johor Bahru, Malaysia - A CGE Modelling Approach

The Johor Bahru metropolitan area is an industrial and commercial hotspot in the region and almost any significant industrial brand has a branch here. However, the effectiveness of good and effective industrial policy has never been quantified to integrate economy and environment. Taking into account the idea ‘think globally, act locally’, with an emphasis on economy, environment integration, and introducing a Low Carbon City, by building a computable general equilibrium (CGE) model, this study successfully examined the economic impacts of new production and the usefulness of economic measure based on the simulated macroeconomic and sectoral factors. An input-output (I-O) table and social accounting matrix (SAM) is the cornerstone in designing a CGE model. Lack of input-output table has badly hampered any effects in the arena of CGE modelling in Johor Bahru City. This study, therefore, attempted to utilize the most updated 2005 input-output table of Malaysia to prepare an input-output table of Johor Bahru City along with using several statistics, including the national population census, manufacturing census and commerce census for developing an input-output table for economic analysis. Modelling results showed that the total industrial output including city GDP has increased 0.07% and 0.08% respectively in 2005. Additionally, the decreasing trends of the prices of major commodity products such as solar power( -1.53 %), electric vehicle ( -0.77%) and in cogeneration (-0.32 % ) were observed significant. Thus, new industrial formation and subsidy plan have proven as the most significant contributors. Therefore, the present research suggests to apply this model into Johor Bahru City’s economy to integrate economy and environment in a city named ‘Low Carbon City-JB’.