Malaysia’s plan to finalise the Johor-Singapore Special Economic Zone (JSSEZ) agreement by September will have to be aborted, as negotiations continue over several sticking points. The discussions are set to take place at the 11th Singapore-Malaysia Leaders’ Retreat, that is likely in December 2024.
Among the issues where both sides have yet to bridge the gap are contributions to a facilitation fund for companies looking to expand operations to Johor and skilled workforce provisions.
While Singapore and Malaysia had signed a memorandum of understanding in January targeting a deal by the end of 2024, Malaysia’s Minister of Economy Rafizi Ramli said in July that the final agreement was expected to be inked in September.
The JSSEZ, which was officially announced in October 2023 during the Malaysian Prime Minister’s visit to Singapore for the 10th leaders’ retreat, is an integrated zone for business and investment to ease the movement of people and goods across the border. The project is likely to cover Iskandar Malaysia and Pengerang, spanning 3,505 sq km across southern Johor, more than four times the size of Singapore. The proposed area would span across six districts - Johor Bahru, Iskandar Puteri, Pasir Gudang, Pontian, Kulai and Kota Tinggi.
Although the JSSEZ is expected to lure new investments, spur trade and generate employment opportunities, persistent challenges in ironing out negotiations have affected the deadline initially set by Malaysia.
A survey of 160 businesses done by the Singapore Business Federation has shown that Singapore companies are keen to invest in Johor but face challenges such as talent shortages, cross-border movement needs and a fragmented investment landscape. Although the findings, announced in July, showed that 93 per cent of respondents view Johor as an attractive investment destination, talent shortages were a major concern. Nearly 60 per cent of the businesses reported difficulties in sourcing skilled workers in Johor.
The proposal to establish the JSSEZ comes after Iskandar Malaysia, which was conceptualised as an economic growth corridor in 2006, failed to hit investment targets, particularly after Covid-19 pandemic border restrictions.
Analysts say potential projects should include the construction of a third bridge connecting the heavy industrial area of Pasir Gudang in Malaysia to Singapore’s Changi Airport, potentially unlocking wider export markets for both countries. Other underexplored areas include joint research in modern agriculture and urban farming by higher education institutions of both countries and leveraging Johor’s abundant land to enhance food security.
The potential for synergy is tremendous. The model should be Shenzen-Hong Kong (“SHK”) corridor. The difference is that SHK is one country with two systems. In our case, it is two countries with one system! But if we are collaborative and cooperative, we could have the potential for an innovation and technology park; healthcare and bio-medical science clusters; solar farms and R&D; and many other areas working with universities in Educity Iskadar and Singapore. But will egos get in the way? We shall see by end of 2024 if it is a vision to be realised or another pipedream.
References:
Malaysia’s September target for Johor-Singapore SEZ deal pushed to year end, The Business Times, 16 August 2024
Johor-Singapore SEZ: Pengerang’s potential as hub for ‘spillover’ business renews optimism for area’s development, Amir Yusof, CAN, 2 June 2024
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