Singapore and Malaysia sign MOU to establish a Johor-Singapore Special Economic Zone

The MOU will guide negotiations between both countries in detailing how the Zone can help boost the economy in Johor and Singapore.

Singapore and Malaysia have signed a Memorandum of Understanding (MOU) to establish a Johor-Singapore Special Economic Zone (JS-SEZ). 

Signed by Malaysia's Minister of Economy Rafizi Ramli and Singapore’s Minister for Trade and Industry Gan Kim Yong, the MOU will guide negotiations between both countries in detailing how to create a Special Economic Zone to boost the economy in Johor and Singapore.

Based on these negotiations led by Malaysia's Ministry of Economy and Singapore's Ministry of Trade and Industry (MTI), the two countries are expected to conclude a JS-SEZ agreement by the end of this year. 

In a Facebook post following the signing, Minister Rafizi noted that the JS-SEZ was first pitched by him in July 2022, and was welcomed by Johor Chief Minister and Singapore's Minister for National Development Desmond Lee.

"The economic potential of Johor (and Malaysia) becomes higher if we work together with Singapore to find points of mutual strength that complement each other."

He further elaborated on the main benefits of JS-SEZ to be developed.

First, the interconnection between Johor and Singapore will enable the movement of people, goods and more vigorous trade between the two countries. On top of economic purpose, smoother connectivity will also ease the issue of congestion on the Johor Causeway which causes hundreds of thousands of Johor citizens to wake up early to travel to work in Singapore.

Beyond easier immigration processes and high-capacity transport infrastructure, the JS-SEZ may lead to new job opportunities involving Singaporean and international companies in Johor. This will ease the pressure of such human movement in the future, as more people will work in Johor, as opposed to having to cross the border for work.

There will also be more opportunities to attract more international investment as investors can use the facilities offered in both countries to build their operations, without having to invest twice or open two companies.

Lastly, the JS-SEZ is also expected to increase the demand for renewable energy which will accelerate the construction of renewable energy capacity towards the energy transition.

In a press release by Singapore's MTI, Minister Rafizi was quoted as saying: "I have full confidence that this initiative will herald the commencement of a transformative chapter in our bilateral economic relations, fostering unparalleled connectivity and prosperity for both our great nations."

Minister Gan added: "The JS-SEZ underscores what Singapore and Malaysia can achieve when our governments and business communities work closely together.

"It will serve as a bridge for both sides to tap on each other’s complementary strengths and seize opportunities to grow together. I look forward to the JS-SEZ Agreement and the benefits for our businesses and people."

As stated in the release, Malaysia and Singapore are each other’s second largest trading partners, with bilateral trade growing 18.9% year-on-year to S$153bn in 2022. Singapore was also Malaysia’s top source of foreign direct investment (FDI), contributing 20.5% to Malaysia’s total FDI in 2022.

Lead image / Minister of Economy Rafizi Ramli