93% of Businesses Eye Opportunities in Proposed Johor-Singapore Special Economic Zone, SBF Report Reveals
The Singapore Business Federation (SBF) today launched the ‘Greater Together: Two Economies, One EcoSystem’ report at the Johor-Singapore Special Economic Zone (JS-SEZ) Joint Investor Forum, which revealed overwhelming interest in the proposed Johor-Singapore Special Economic Zone. The forum was jointly organised by SBF and Invest Johor and attended by around 200 businesses that have operations in Johor or are looking to invest in Johor.
Based on findings from our engagement with 160 Singaporean businesses across various industries, the report sought to gather insights, feedback and suggestions to enhance the SEZ development and achieve win-win outcomes for businesses on both sides of the causeway. Key findings revealed that 93% of respondents view Johor as an attractive investment destination, with 50% already operating in the state.
In January 2024, Singapore and Malaysia signed a Memorandum of Understanding (MOU) to work on a JS-SEZ to strengthen economic connectivity between the two countries. It aims to enhance cross-border flow of goods and people and bolster the regional business ecosystem to support investments. With both governments committed to signing the agreement in the near future, the report provides timely insights into business sentiment as the initiative moves towards implementation.
Mr Teo Siong Seng, Chairman of JS-SEZ Singapore Business Working Group, said: "The enthusiastic response to our report clearly signals the JS-SEZ's great potential for our region. This isn't just another project--it's a potential game-changer for both Malaysia and Singapore. This is about more than just closer integration—it's about crafting an economic powerhouse that harnesses our complementary strengths on a sustainable basis. By bridging our economies, we're creating new opportunities that will benefit businesses on both sides of the Causeway."
From the findings of the report, SBWG identified three key success factors for the JS-SEZ:
- Drawing on complementary economic strengths: The SEZ should leverage Johor's favourable operating costs and land availability alongside Singapore's strengths in connectivity, branding, talent pool, and headquarters functions. Target sectors include manufacturing, logistics, digital industries, healthcare, education, and more.
- "Two Economies, One EcoSystem": Steadfast commitment from both Singapore and Malaysian governments will be crucial to ensure success of the JS-SEZ. This approach requires coordinated governmental frameworks, structures, and processes. A designated governing body with authority and autonomy will be important to ensure tailored governance for businesses within the SEZ.
- Embracing Experimentation and Agility: Given that the JS-SEZ is navigating unchartered waters of closer economic integration, embracing flexible approaches such as a policy/regulatory sandbox would create the largest possible inclusive economic space with maximum flexibility.
Gaps in current manpower landscape in Johor
While enthusiasm is high, the report also revealed significant challenges to overcome, including talent shortage. Nearly 60% of businesses engaged reported difficulties in sourcing technical and skilled workers in Johor, with additional issues in attracting Singaporean talent to work across the border. Furthermore, 60% of businesses attributed the manpower crunch to employment pass issues, and 58% cited issues with skill-gaps in the Malaysian labour force, and 21% indicating salary mismatch as a factor.
SBWG recommended creating a unique labour ecosystem that leverages the strengths of both economies. This ecosystem would combine Singapore’s management and R&D capabilities with Johor’s technical skills for execution and operations supporting various industries.
Additionally, key proposals included developing harmonised workforce regulations, investing in each other’s workforce to enhance manpower capabilities and bridge skill gaps, and establishing talent acquisition programmes. These measures aim to build a flexible and competitive labour market benefiting both economies.
Fig 1. Factors contributing to manpower crunch
Easing cross-border people movement between Singapore and Johor
The findings highlighted the need for improved cross-border movement. Johor-Singapore land crossings handle over 300,000 travellers daily, leading to significant congestion and delays. In fact, 36% of businesses engaged expressed hopes for better connectivity in terms of a special immigration lane for people, to facilitate smoother travel.
Drawing lessons from the Hong Kong-Shenzhen model, SBWG advocated for streamlined customs and border clearance processes, including implementing a passport-free QR code clearance system and digitised cargo clearance. The upcoming Johor Bahru-Singapore Rapid Transit System (RTS) Link, slated for 2026, was also viewed as pivotal in addressing these logistical challenges.
Other suggested improvements include developing enhanced border crossing hubs with automated clearance using biometrics, and investing in efficient multi-modal connectivity. Additionally, the report emphasised renewed interests within Malaysia to develop the Singapore-Kuala Lumpur High Speed Rail (HSR) project and to enhance last-mile connectivity within the SEZ.
Fig 2. Anticipated features in JS-SEZ, specific to connectivity
Facilitating smoother movement of goods
The report also detailed that the movement of goods between Singapore and Johor is hindered by traffic congestion, as well as differing import tax regimes and customs procedures. 55% of businesses engaged cited difficulties in handling tax issues, and 48% of businesses indicated that more expedient cargo clearance would be crucial to enabling the efficient flow of goods.
Based on these insights, SBWG recommended implementing streamlined customs and border clearance procedures, harmonising tax and tariff policies, developing integrated transport networks and logistics infrastructure, and enhancing digitalisation and e-commerce enablement. Specific proposals included exploring how to streamline customs and border clearance procedures, aligning tax and tariff structures, and investing in world-class logistics hubs and multimodal transportation links.
Fig 3. Challenges in cross-border movement of goods
Streamlined processes needed to realise investment potential of JS-SEZ
The current investment facilitation landscape between Singapore and Johor was identified as fragmented and complex, with businesses reporting obstacles in obtaining necessary permits and licences. According to the findings, 58% of businesses engaged expressed a desire for a joint investment promotion agency to market the zone and facilitate investor engagement, and 33% desired a platform to facilitate collaboration and networking opportunities amongst each other for self-help and support.
SBWG recommended several measures to enhance investment facilitation in the JS-SEZ. These recommendations include streamlining investment approvals and offering attractive tax incentives, developing robust legal and regulatory frameworks, providing comprehensive business facilitation services, and enhancing the interoperability of financial systems.
Fig 4. Potential solutions to address challenges with investment opportunities
Mr Lim Ming Yan, Chairman of SBF, said: "JS-SEZ has immense potential which is built on the geographical proximity and deep business and cultural ties between Singapore and Malaysia. To realise this potential, SBF is pleased to present our report highlighting three key success factors and over 40 actionable recommendations across crucial areas such as manpower, logistics, and investment facilitation. These suggestions are based on feedback from many of our members and SBF is fully committed to collaborating with partners on both sides of the Causeway to unlock the JS-SEZ's full potential and drive prosperity for our region."
