Strengthening economic connectivity with the Johor‑Singapore Special Economic Zone

23 December 2024

Viewed as a win-win initiative that benefits businesses and communities from both countries, the Johor-Singapore Special Economic Zone (“JS-SEZ”) aims to facilitate cross-border flows of goods, ease the movement of people, and strengthen the investment ecosystem within the JS-SEZ. Companies can tap Singapore’s offerings as a business and financial hub, and benefit from Johor’s abundant supply of land and workforce and Malaysia’s market.

Malaysia and Singapore moved closer towards the formation of the JS-SEZ when both countries signed a Memorandum of Understanding (“MOU”) on 11 January 2024 to work on the JS-SEZ to strengthen economic connectivity between Johor and Singapore. Both countries also agreed to work towards a full-fledged Agreement on the JS-SEZ. The JS-SEZ rides on the strong growth of Johor and significant investments in the region by Singapore.

Malaysia and Singapore will explore several initiatives that will support the JS-SEZ. These include:

• A one-stop business/investment service centre in Johor to facilitate the application processes for various approvals and licences necessary for Singapore businesses to set up in Johor. In this regard, the Invest Malaysia Facilitation Centre Johor has commenced operations at its interim office at the Iskandar Regional Development Authority.
• Adoption/implementation of a passport-free quick-response (“QR”) code clearance system on both sides, to facilitate more expeditious clearance of people at land checkpoints. In this regard, Johor and Singapore have started implementing QR codes for immigration clearance in phases.
• Adoption of digitised processes for cargo clearance at the land checkpoints.
• Co-organising an investor forum to gather feedback from Singapore and Malaysia businesses on the JS-SEZ. One such forum took place in Kuala Lumpur on 10 July 2024.
• Facilitating Malaysia-Singapore renewable energy cooperation in the JS-SEZ.
• Curating training and work-based learning initiatives to address talent and skills gaps for relevant industries in the JS-SEZ.
• Developing joint promotion events between Johor and Singapore to promote trade and investment into the JS-SEZ.

Malaysia and Singapore are each other’s second largest trading partners, with bilateral trade growing 18.9% year-on-year to S$153 billion in 2022. Singapore was Johor’s second-largest foreign investor from January to June 2022 and contributed to around 70% of Johor’s total foreign direct investment in the manufacturing sector.

In a report released by the Singapore Business Federation in July 2024, about 90% of 160 Singapore businesses surveyed found Johor an attractive place for investment.

Advantages arising from JS-SEZ

It has been observed that the JS-SEZ will offer twinning opportunities for businesses in Singapore to establish complementary operations in Johor. In doing so, businesses can tap on Singapore’s offerings as a tech, business, and financial hub while harnessing the land and resource advantages in Johor. The JS-SEZ could also serve as a gateway for Singapore businesses to better serve their clients in Malaysia. Businesses can also look forward to moving both goods and talent across the border in a shorter time, thus enhancing operational efficiency.

The expectation is also for the JS-SEZ to create 400,000 new high-income job opportunities and to raise household incomes in Johor.

Proposed location and economic sectors for JS-SEZ

The Malaysian Government is deliberating on the area and sectors to be covered by the JS-SEZ.

According to Johor Chief Minister Datuk Onn Hafiz Ghazi, Johor has proposed establishing the JS‑SEZ in the Iskandar Malaysia region and Pengerang, an area of around 3,500 sq km and involving six local councils, namely, Johor Baru, Iskandar Puteri, Pasir Gudang, Kulai, Pontian, and Pengerang.

Johor also proposed the following 16 economic sectors:

Future developments

A special meeting of the Malaysia-Singapore Joint Ministerial Committee for Iskandar Malaysia (JMCIM) was convened on 7 November 2024 to advance discussions on the JS-SEZ. The meeting discussed the draft JS-SEZ Joint Agreement, which Malaysia and Singapore will work towards signing possibly in January 2025.

Conclusion

The objective of the JS-SEZ is to build on the complementary strengths of Singapore and Johor to better compete for global investments together. These could come from a range of sectors, including manufacturing, transport and logistics, the digital economy, and energy.

The plans to develop the JS-SEZ into a vibrant area of growth offer immense opportunities for investment in Johor, not only from Singapore, but also from countries in the region such as China. A thriving economic region next to Singapore can play a pivotal role in enhancing Singapore’s value proposition to international investors while sharpening Singapore’s competitive edge. This dynamic would create a mutually beneficial relationship where both Singapore and Johor can complement each other, fostering a more robust regional economy. 

Reference materials

The press release announcing the signing of the MOU on 11 January 2024 is available on the website of the Ministry of Trade and Industry www.mti.gov.sg.