Singapore and Malaysia strengthen economic connectivity with focus on Johor 

Singapore and Malaysia inked an agreement on Thursday which aimed at expanding economic connectivity between the countries.

The agreement will see the creation of a special economic zone between Singapore and the neighbouring Malaysian state of Johor.  

The Johor-Singapore Special Economic Zone will facilitate the cross-border flow of goods and people between the two nations. 

“[It will also] bolster the business ecosystem and elevate the economic attractiveness of both Johor and Singapore,” Malaysia’s Minister of Economy Mohd Rafizi Ramli said in a press release.  

“I have full confidence that this initiative will herald the commencement of a transformative chapter in our bilateral economic relations, fostering unparalleled connectivity and prosperity for both our great nations.” 

The memorandum of understanding was signed by Ramli and Singapore’s Minister for Trade & Industry, Gan Kim Yong.  

Both nations have agreed to work towards a full-fledged agreement on the JS-SEZ and provide an update at the 11th Malaysia-Singapore Leaders’ Retreat later this year. Last year’s Malaysia-Singapore Leaders’ Retreat took place in October. 

Alongside the agreement, the two neighbours are working on a slew of other initiatives which will build stronger economic ties. 

These include the adoption of a passport-free QR code clearance system on both sides; the digitisation of cargo clearance processes at land checkpoints; and a business service centre in Johor to help expedite red tape for Singapore businesses looking to set up in Johor. 

Singapore is a large investor in the Malaysian state, with Singapore being Johor’s second-largest foreign investor from January to June in 2022. Singapore contributed to around 70% of Johor’s total foreign direct investment in the manufacturing sector that year. 

On a broader scale, both Malaysia and Singapore are each other’s second-largest trading partners. In 2022, trade between the two countries grew 19% from a year prior to SGD153 billion.  

In 2022, Singapore was Malaysia’s leading contributor to foreign direct investment, accounting for 21% of Malaysia’s overall FDI. 

“The JS-SEZ underscores what Singapore and Malaysia can achieve when our governments and business communities work closely together. It will serve as a bridge for both sides to tap on each other’s complementary strengths and seize opportunities to grow together,” Singapore’s Gan said.