Singapore and Malaysia have embarked on a collaborative endeavor to establish a Special Economic Zone (SEZ) in Malaysia's Johor state, strategically located adjacent to the Singaporean border. This initiative aims to fortify economic ties and bolster connectivity between the two nations, especially in the face of global economic challenges. Malaysia has set a tight deadline for Singapore to agree on the key parameters of this venture.
A feasibility study is currently underway to delineate the SEZ's precise focus, evaluate investor interest, and gauge market demand. The Johor-Singapore Special Economic Zone (JS-SEZ) holds the potential to incorporate special tax arrangements and other measures designed to facilitate the seamless movement of goods across borders.
This collaborative effort follows the recent leaders' retreat in late October, where Malaysian Prime Minister Anwar Ibrahim and Singaporean Prime Minister Lee Hsien Loong convened in Singapore for the 10th Singapore-Malaysia Leaders' Retreat. This marked a significant milestone in their bilateral relations, with both leaders aiming to leverage this partnership for mutual economic benefits. This interaction was particularly noteworthy as it marked their first bilateral engagement post-pandemic.
Media reports indicate that a memorandum of understanding (MoU) for the next phase of the Johor-Singapore Special Economic Zone (SEZ) is scheduled to be signed on January 11, 2024.
The planned SEZ seeks to facilitate the movement of goods and people across the Johor-Singapore Causeway, simultaneously enhancing the overall ecosystem of Iskandar Malaysia and Singapore. Established in 2006, Iskandar Malaysia serves as the primary southern development corridor in Johor.
The Johor-Singapore Special Economic Zone is set to be situated within Malaysia's Iskandar region, which the government actively promotes as an appealing investment destination. It aims to strengthen sectors such as electronics, healthcare, financial services, and business-related services. Malaysia currently boasts five investment corridors, each catering to specific sectors and industries.
In 2022, Singapore and Malaysia held the distinction of being each other's second-largest trading partners, with bilateral trade reaching US$83.53 billion during that year. Furthermore, Singapore emerged as a major source of foreign direct investment (FDI) for Malaysia, contributing 8.3 percent to Malaysia's total investments for that period.
In addition to the Johor-Singapore SEZ, both countries are poised to collaborate on the development of renewable energy capacity and facilitate cross-border electricity trading. Key areas of focus include the exchange of low-carbon and renewable energy technologies, carbon capture and storage, and carbon credits. Singapore is also exploring the possibility of importing renewable energy from Malaysia's Sarawak state, contemplating the feasibility of cross-border power cables for electricity exchange. Both nations have already upgraded their power cable infrastructure to facilitate smooth energy transmission.
This joint effort signifies a commitment to not only economic cooperation but also sustainable energy development, further strengthening the bonds between Singapore and Malaysia in pursuit of mutual growth and prosperity.