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Invest in the Johor-Singapore Special Economic Zone (JS-SEZ): A Hub for Growth and Opportunity
Investing in the Johor-Singapore Special Economic Zone (JS-SEZ) presents a compelling opportunity due to its competitive cost advantage, strong government support, strategic location, and attractive policies & incentives.
The JS-SEZ is a designated area in Johor, Malaysia, established to foster economic collaboration and investment between Malaysia and Singapore. Following the signing of the JS-SEZ agreement, the Government of Malaysia announced an incentive package effective 1 January 2025, aimed at attracting high-value investments into Johor.
Competitive Cost Advantage: The JS-SEZ offers affordable real estate, competitive labor costs, and a favorable tax regime, making it a cost-effective destination for businesses.
Strong Government Support: Both Malaysia and Singapore are committed to the success of the JS-SEZ, with funding for key efforts such as promotion and infrastructure development. The Invest Malaysia Facilitation Centre – Johor (IMFC-J) will act as a one-stop center to streamline investment processes and approvals.
Strategic Location & Strong Connectivity: Businesses in the JS-SEZ benefit from advanced infrastructure, including technology-enhanced clearance processes, automated immigration lanes, and paperless trade documentation. The region serves as a key hub where goods can be efficiently exported via Johor or Singapore.
Attractive Policies & Incentives:
Investors in the JS-SEZ can benefit from:
- Special Corporate Tax Rate – Companies undertaking new investments in qualifying manufacturing and service activities, such as AI and Quantum Computing Supply Chain, Medical Devices, Aerospace Manufacturing, and Global Services Hub, will benefit from a special tax rate of 5% for up to 15 years.
- Flagship Development Focus: Additional tailor-made incentives will be provided to businesses operating in key flagship areas within the JS-SEZ.
- Special tax rate for knowledge workers: Special tax rate of 15% for 10 years for eligible knowledge workers working in JS-SEZ.
- Lower Entertainment Duties – The Johor State Government has agreed to introduce lower entertainment duties starting from 1 January 2025 to enhance investment in the tourism and entertainment sector.
These incentives position the JS-SEZ as a dynamic business hub, leveraging the region’s robust infrastructure, skilled workforce, and strong bilateral collaboration to drive innovation and economic growth.
MIDA has released a guideline detailing the tax incentives available for projects within designated flagship zones of the JS-SEZ, and the details of the tax incentive are as follows:-
|
Projects |
Flagship | Tax Incentive |
| A. Manufacturing Business Incentive Scheme:
i. AI and Quantum Computing Supply Chain; ii. Medical Devices; iii. Pharmaceutical; or iv. Aerospace Manufacturing and MRO Services |
Flagship F – Kulai – Sedenak (AI and Quantum Computing Supply Chain, Medical Devices, and Pharmaceutical)
Flagship E – Senai – Skudai (Aerospace Manufacturing and MRO Services) |
New Company
New investment in the manufacturing sector with capital investment (excluding land) above RM1 billion – Tax rate of 5% for 15 years. New investment in the manufacturing sector with capital investment (excluding land) between RM500 million to RM1 billion – Tax rate of 5% for 10 years.
Existing Company New investment in the manufacturing sector with capital investment (excluding land) above RM500 million for existing company in Malaysia relocating overseas facilities (for a new business segment not expansion of existing products) into Malaysia – Investment Tax Allowance of 100% on the qualifying capital investment (excluding land) incurred within 5 years, against 100% statutory income, for 5 years. |
| B. Global Services Hub
i. Regional P&L; ii. Strategic Business Planning; iii. Corporate Development; and iv. Regional or Global Treasury and Fund Management conducting cash pooling activities via onshore intermediaries. |
Flagship A (Johor Bahru Waterfront) and B (Iskandar Puteri) |
Tax Incentives Special tax rate of 5% for a period up to 15 years
Eligibility Criteria / Conditions i. Annual operating expenditure of at least RM50 million; ii. Company must Serve / Business Control of at least 10 Network Companies; iii. Annual sales turnover of at least RM500 million and forex in-flow into the local banking system as proposed; iv. A minimum of 50% of high-value positions (with a minimum monthly basic salary of RM10,000) shall be filled by full-time Malaysian employees as proposed. |
| C. Integrated Tourism Project | Flagship G (Desaru – Penawar) | Type of Incentives
Investment Tax Allowance (ITA) of 100% qualifying capital expenditure incurred within 5 years. The allowance can be offset against 70% of the statutory income for each year of assessment.
Eligibility Criteria / Conditions i. Company which does not have an existing entity or related entity undertaking same hotel or tourism project in Malaysia; ii. Paid-up capital of at least RM2.5 million; iii. Investment in capital expenditure (excluding land) of at least RM500 million; iv. Company undertaking integrated tourism project which consists of the following: a) Hotel with minimum number of rooms of 80 which consists of standard, superior, deluxe and suite; and b) Minimum 1 tourist attractions (i.e. water park, outdoor park consists of rides and/or games, convention centre with capacity minimum of 3,000 participants, or outdoor sport excluding golf course and driving range). |
| D. Smart Logistics Complex
Smart logistic operator who invests in development of smart logistics and carry out any of the eligible logistic activities: i. Regional Distribution Hub; ii. Integrated Logistic Services; iii. Dangerous Goods Storage; iv. Cold Chain Facilities |
Flagship C (Tanjung Pelepas) | Incentives
Investment Tax Allowance (ITA) of 100% qualifying capital expenditure incurred within 5 years. The allowance can be offset against 100% of the statutory income for each year of assessment.
Eligibility Criteria / Conditions i. Investment in capital expenditure (excluding land) of at least RM500 million; ii. The built-up area of the smart warehouse complex must be at least 50,000 m2 and equipped with at least three (3) enabling elements technologies under the IR4.0; iii. Use the application of modern construction techniques i.e. achieving a score for the Industrial Building System (IBS) that has been set by the Construction Industry Development Board (CIDB); iv. Total full-time workforce must consist of at least 80% Malaysian citizens; v. A minimum of 30% of total high-value positions (with a minimum basic salary of RM10,000) shall be filled by full-time Malaysian employees. |
| E. Manufacturing – Downstream Specialty Chemicals:
i. Base chemical – methanol, ethylene, propylene, benzene, aromatics; ii. Organics intermediates – C1 to C6; iii. Specialty chemical; iv. Fertilisers; v. Polymers/plastics; or vi. Oleochemical/ biochemical |
Flagship D (Tanjung Langsat – Kong-kong) | Type of Incentives
Special Tax Rate for a company with capital investment (excluding land) of RM500 million and above in the manufacturing sector; 1. Tier 1: 5% Special Tax Rate for up to 10 years (5 years + 5 years) 2. Tier 2: 10% Special Tax Rate for up to 10 years (5 years + 5 years) OR Income tax exemption equivalent to Investment Tax Allowance (ITA) for a company with capital investment (excluding land) of RM500 million and above in the manufacturing sector; 1. Tier 1: Income tax exemption equivalent to Investment Tax Allowance (ITA) of 100% on the qualifying capital investment (excluding land) for up to 10 years (5 years + 5 years). The allowance can be offset against up to 100% of statutory income for each assessment year. 2. Tier 2: Income tax exemption equivalent to Investment Tax Allowance (ITA) of 60% on the qualifying capital investment (excluding land) for up to 10 years (5 years + 5 years). The allowance can be offset against up to 100% of statutory income for each assessment year.
Eligibility Criteria / Conditions i. A new company or an existing company undertaking diversification activities in relation to the eligible activities/products under this cluster; ii. The company is required to have a minimum paid-up capital of RM2.5 million at the point of submission of application to MIDA. |
| F. Additional Incentives | Flagship A (Johor Bahru Waterfront) and B (Iskandar Puteri)
Flagship G (Desaru – Penawar)
All Flagships |
a. 40% stamp duty exemption on the instrument of transfer/financing agreement for the purchase of a commercial property in Flagship A and B that remains unsold as at 31st December 2024. The stamp duty exemption to be provided under Section 80(1) under the Stamp Act 1949.
b. A deduction equivalent to amount not exceeding RM1 million for each year assessment in respect of cash contribution or contribution in-kind by qualifying person who sponsors a hallmark event. The hallmark event referred to is an event of regional or international significance which is carried on in Flagship G and supported/verified by MOTAC. For contribution made between 1 January 2025 to 31 December 2034.
c. ACA in respect of renovation costs incurred on a building or part of a commercial building located in Flagship A-G for the purpose of qualifying company’s business. Qualifying companies are companies that have been approved any tax incentives under PIA 1986 or ITA 1967 between 1 Jan 2025-31 December 2034 and operating in Flagship A-G. This incentive to be utilised only once throughout their business operation in JSSEZ. To include expenses on:
Initial allowance:20%, Annual Allowance: 40% |
| G. Knowledge Worker Incentive | All Flagships | Incentives
15% flat tax rate on chargeable employment income for a period of 10 years. Eligibility Criteria / Conditions i. Malaysian/Non-Malaysian citizen; ii. Not generating employment income in Malaysia 24-months prior iii. Salary abroad/in Malaysia >RM20,000 per month iv. Subject to academic qualifications / years of professional work experience v. Subject to MyCOL profession and JS-SEZ qualifying sectors |
