Cross Border SEZ Between Singapore and Malaysia Reaches Agreement
The first cross-border SEZ (special economic zone) in Southeast Asia is on the brink of development, with Malaysia and Singapore anticipating a surge in new investment and a boost to economic growth.
At a recent conference in Kuala Lumpur, Economy Minister Rafizi Ramli, representing Malaysia in bilateral discussions with Singapore, announced that both nations have made significant strides in the final legwork. He expressed confidence that a deal would be signed and the zone would be revealed in September.
Johor Chief Minister Onn Hafiz Ghazi stated during a press conference that the zone’s final geographic composition was virtually complete.
In January 2024, Malaysia and Singapore signed a memorandum to construct the economic zone. The goal is to allow the free movement of people and products between Singapore, which is land-constrained, and the resource-rich state of Johor. The deal signing is expected to take place before the planned year-end leaders’ retreat, which will include Singaporean Prime Minister Lawrence Wong and Malaysian Prime Minister Anwar Ibrahim.
According to Rafizi, Malaysia completed its proposals in May and awaited Singapore’s response. Singapore and Johor share the busiest land border in the world. Every day, thousands of Johorean Malaysians commute to Singapore for work.
SEZ to Significantly Benefit Investors from Both Sides
Rafizi stated that Malaysia is organising fiscal incentives for companies in the SEZ, which will be announced in the budget speech. Following an investment forum organised by the Johor State Government and the Ministry of Economy, Rafizi and Onn Hafiz gave a briefing. The event included executives from various industries, including finance, tourism, electronics, etc.
The Singapore Business Federation is hosting a session on the SEZ for prospective investors, with the trade ministry of Singapore in attendance. The city’s Ministry of Trade and Industry has yet to comment.
Onn Hafiz, the Chief Minister of Johor, had earlier suggested that the economic zone encompass a sizable area of 3,505 square kilometres (1,353 square miles). As a result, it would be bigger than Shenzhen, the SEZ that borders Hong Kong. The Johor-Singapore cross-border SEZ would include 16 economic sectors, including manufacturing, healthcare, and electrical and electronics.
In the lead-up to the cross-border SEZ, Johor, the home state of Malaysia’s outspoken King Ibrahim Iskandar, has already begun drawing investors. Thanks to the global surge in artificial intelligence, the state has received numerous data centre investments, including from Microsoft Corp. and Nvidia Corp.
ChemOne, a Singapore-based company, is also developing a sizable energy complex within Pengerang’s petrochemical hub. Johor has also proposed including Pengerang in the cross-border SEZ.
The projected high-speed rail link between Kuala Lumpur and Singapore will significantly benefit the state. The Malaysian government is presently evaluating proposals from various commercial parties for the project.
Exciting developments in the Johor-Singapore SEZ are just around the corner. If you want to know how your business can benefit from it, 3E Accounting offers expert cross-border business advisory services. Contact us today
