Singapore and Malaysia Sign MOU for Johor-Singapore Special Economic Zone (JSSEZ)
Singapore and Malaysia are jointly developing the Johor-Singapore Special Economic Zone (JSSEZ) in southern Johor. Economists believe this move will attract more multinationals aiming to secure a robust supply chain as part of their risk-management strategy.
Geopolitical tensions, coupled with China’s new economic policy likely triggering another US-China trade war, have heightened business uncertainty.
Both nations signed an MOU for JSSEZ in January 2024, following discussions at the 10th Singapore-Malaysia Leaders’ Retreat in October 2023. According to RHB Research, Johor’s proximity and cost-efficiency have made it an appealing investment destination for multinational corporations (MNCs). In particular, those MNCs with regional offices in Singapore.
Regional MNCs are considering relocation and decentralization post-pandemic for risk management and uninterrupted production. Many Singapore SMEs hope for digitized cargo clearance processes at land checkpoints, which can enhance competitiveness and profitability.
The Johor Bahru-Singapore Rapid Transit System (RTS) Link will enhance cross-border connectivity and ease congestion on the Causeway, commencing passenger service by end-2026.
Analysts see a win-win scenario for Singapore-based companies tapping Malaysia’s resources and Malaysia gaining investment capital and technology from Singapore. Johor aspires to replicate Shenzhen’s success, transforming into a high-tech metropolis. The JSSEZ’s success hinges on well-crafted policies and effective implementation, according to economist Walter Theseira from the Singapore University of Social Sciences. Special economic zones have had mixed records and require aligned incentives for development goals.
Global tech companies like Microsoft and Nvidia’s investments in Johor reflect confidence from foreign investors. Despite timeline uncertainty, optimism grows in Johor’s property sector, driving up land prices and demand. Malaysian property developer Mah Sing Group is optimistic about JSSEZ development’s role in boosting economic activities and the property market.
Both governments are exploring a passport-free QR code system for quicker immigration clearance between Singapore and Malaysia within JSSEZ. Other initiatives include simplifying Singapore businesses’ setup in Johor, digitized cargo clearance, and a potential investors’ forum.
In a joint statement, Singapore’s Ministry of Trade and Industry and Malaysia’s Ministry of Economy emphasize collaboration for economic growth through JSSEZ.
The idea of a special economic zone and passport-free travel isn’t new. In 2015, Malaysia had the MACS Card, allowing hassle-free travel between the two nations. Unfortunately, Malaysia discontinued it with the change of government in 2018.
Similarly, the special economic zone concept was introduced in 2016 by former PM Najib Razak, likening Johor to New Jersey and Singapore to Manhattan. However, the Pakatan Harapan administration put it on hold in 2018.
Some Singaporeans remain skeptical of Malaysia’s commitment, citing the stalled High-Speed Rail project as an example of government indecisiveness.
In conclusion, only time will tell if these plans are followed through by PM Anwar Ibrahim’s government.
