The proposed Johor-Singapore Special Economic Zone (JS-SEZ) is expected to have a great impact on various industries, such as data centre, electronics and renewable energy, according to DBS research. The JS-SEZ was first announced during the 10th Singapore-Malaysia Leaders’ Retreat in October, and a memorandum of understanding was signed by both countries in January to work on a full-fledged agreement for the zone. The proposed JS-SEZ will be located in Malaysia’s Iskandar region, covering six districts with a total area of 3,505 sq km.
Under the JS-SEZ, initiatives such as special tax arrangements, training incentives, and passport-free clearance for smoother travel are being explored. The data centre sector is expected to benefit greatly from the proposed zone, in turn benefiting firms in technology services as well. DC Byte’s 2024 Global Data Centre Index has ranked Johor as the fastest-growing data centre in Southeast Asia. The state’s electrical and electronics sector, which is one of the 16 priority industries in the Progress Johor 2030 economic master plan, is also anticipated to benefit from the JS-SEZ. Johor’s electronics manufacturing sector is currently the third largest in Malaysia, trailing behind Penang and Selangor.
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The renewable energy sector is also likely to benefit from the JS-SEZ, as it has been identified as a key area of cooperation between Singapore and Malaysia. The establishment of the zone could further deepen existing collaborations, such as the two-year electricity import trial between Singapore and Malaysia, which was announced last year. As activities in these different sectors pick up, it is expected that the JS-SEZ will stimulate more demand for industrial properties in Johor.
The completion of the Johor Bahru-Singapore Rapid Transit System (RTS) at the end of 2026 will boost connectivity between Johor and Singapore. This will significantly cut travel time between the two cities to just 15 minutes, making travel more efficient. The JS-SEZ offers the opportunity to leverage the strengths of both countries. Johor has an abundance of space, is growing faster than Singapore in terms of population, and has lower labor costs. On the other hand, Singapore offers strong capabilities as a financial centre and business hub.
The proposed zone is expected to appeal strongly to Singaporean businesses, with a survey by the Singapore Business Federation finding that a majority of businesses find Johor attractive and a significant number already have operations there. However, some challenges need to be addressed for the success of the JS-SEZ, such as manpower problems and issues related to the movement of goods between Singapore and Johor. Steps have already been taken to address these issues, such as the establishment of the Invest Malaysia Facilitation Centre in Johor. Singaporean businesses have suggested a joint investment promotion agency and a business platform to facilitate collaboration and networking opportunities for companies entering Johor.