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January 29, 2024

Malaysia and Singapore Sign MoU on Johor-Singapore Special Economic Zone

Singapore business district
Singapore business district
January 29, 2024

On January 11, Singapore and Malaysia signed a memorandum of understanding (MoU) to create a special economic zone in Johor. The Johor-Singapore Economic Zone (JS-SEZ) aims to strengthen cross-border economic connectivity and cooperation between Singapore and Malaysia, boosting business connections against the backdrop of growing FDIs in the region. JS-SEZ presents an opportunity to enhance the flow of goods and people, bolster the business ecosystem, and elevate the economic attractiveness of both Johor and Singapore. Specifically, Malaysia can utilize its neighbor’s investment capital and technology know-how to make Johor a new engine of growth, while Singapore can tap into Malaysia’s abundant supply of land and labor pool for economic development. As of June 2022, Singapore was Johor’s second-largest foreign investor and contributed to around 70% of the state’s total foreign direct investments in the manufacturing sector. A definitive full-fledged agreement between both countries is expected to follow suit, and an update will be provided at the 11th Malaysia-Singapore Leaders’ Retreat.
Both countries are exploring several initiatives that will build towards the special zone, including a one stop business service center, passport-free clearance systems, digitized cargo and customs clearances, renewable energy cooperation, and joint promotion events. The MoU also establishes a Johor-Singapore SEZ Committee co-led by Singapore’s Ministry of Trade and Industry and Malaysia’s Ministry of Economy. In addition, the Johor Bahru-Singapore Rapid Transits System (RTS) Link Project, expected to commence passenger service by December 2026, also signifies a shared commitment to improving connectivity between Singapore and Johor. The success of the JS-SEZ hinges on the nature of the incentives provided and the way the policies are put into action.

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