On January 7, Malaysian Prime Minister Anwar Ibrahim and Singaporean Prime Minister Lawrence Wong witnessed the signing of the Johor-Singapore Economic Zone (JS-SEZ) agreement at the 11th Malaysia-Singapore Leaders’ Retreat in Putrajaya. The JS-SEZ will attract global investment and aims to create 20,000 skilled jobs in its first five years. The plan includes expanding 50 projects in the first five years and 100 projects in the first decade.

Johor-Singapore Economic Zone

The establishment of the JS-SEZ enhances the economic cooperation between Malaysia and Singapore. It serves as a key platform for economic exchange, promoting the free flow of goods, capital, technology, and talent. This will deepen the interdependence and complementarity of both countries’ economies.

Four Areas of Cooperation

a. Economic Cooperation

Investment will be promoted in 11 sectors, including manufacturing, logistics, food security, tourism, energy, digital economy, and green economy. Over five years, 50 projects will be expanded, creating 20,000 jobs. The zone will accelerate renewable energy trade and explore new free zone developments.

b. Flow of People and Goods

Malaysia’s existing passes, like the Digital Nomad Pass, will be enhanced. Measures include:

– Improving immigration flow;

– Implementing automated entry and paperless customs;

– Exploring commercial vehicle use of secondary lanes;

– Promoting data sharing to facilitate goods flow.

c. Talent Development

The JS-SEZ will attract talent based on industry needs, focusing on skills training and education.

d. Improving Business Convenience

Malaysia will establish an investment coordination center.

Nine Flagship Zones and 16 Economic Sectors

1. Flagship Zone A (Johor Bahru)

Key areas: Business services, digital economy, healthcare.

Focus: Develop business services, including registration and consultation; promote digital economy fields like cloud computing, AI, and big data; enhance healthcare services.

2. Flagship Zone B (Iskandar Puteri)

Key areas: Manufacturing, business services, digital economy, education, healthcare, tourism.

Focus: Promote advanced manufacturing, business services, and digital economy. Also, expand education, healthcare, and tourism sectors.

3. Flagship Zone C (Tanjung Pelepas, Tanjung Bin)

Key areas: Manufacturing, energy, logistics.

Focus: Develop manufacturing linked to energy and logistics, with a focus on clean energy research and logistics services.

4. Flagship Zone D (Pasir Gudang)

Key areas: Manufacturing, energy, logistics.

Focus: Develop manufacturing, energy, and logistics to strengthen regional competitiveness.

5. Flagship Zone E (Senai-Skudai)

Key areas: Manufacturing, digital economy, education, logistics, tourism.

Focus: Leverage resources and industry foundation to expand manufacturing, digital economy, education, logistics, and tourism.

6. Flagship Zone F (Sena)

Key areas: Manufacturing, business services, digital economy, education, energy, food security, healthcare, logistics, tourism.

Focus: Diversified development across sectors, with a focus on energy, food security, healthcare, and tourism.

7. Flagship Zone G (Forest City)

Key area: Financial services.

Focus: Develop a specialized financial district offering comprehensive financial services, including banking, securities, and insurance, alongside financial-tech integration.

8. Flagship Zone H (Bengkalan Oil Complex)

Key areas: Manufacturing, energy, logistics.

Focus: Develop oil-related manufacturing and energy sectors, along with logistics to support oil industry growth.

9. Flagship Zone I (Desaru)

Key areas: Education, food security.

Focus: Enhance educational resources and agricultural products to support sustainable economic growth.

In summary, the nine flagship zones of JS-SEZ focus on various sectors, such as manufacturing, digital economy, education, healthcare, and tourism. This diversification aims to drive comprehensive regional development.

Malaysia’s Tax Incentives

In Malaysia, corporate tax rates range from 15% to 24%, while Singapore’s rate is 17%. Personal income tax rates in Malaysia are up to 30%, with non-residents taxed at 30%. The Malaysian government has introduced tax incentives for businesses in the JS-SEZ, offering special corporate tax reductions for new investments in high-value manufacturing and services. Eligible companies can enjoy a 5% tax rate for up to 15 years, with additional rewards for businesses in key areas. These incentives will take effect on January 1, 2025. Knowledge-based employees in the zone may also receive a 15% personal income tax reduction for ten years.

Conclusion

The JS-SEZ presents new growth opportunities for Chinese enterprises in Singapore. Many Chinese companies in industries like semiconductors, chemicals, and electronics have already set up in Johor to take advantage of lower operational costs, abundant land, and skilled workers. Chinese businesses looking to expand into the JS-SEZ should understand the local policies and regulations in both Malaysia and Singapore.

Will the JS-SEZ become “Southeast Asia’s Shenzhen”? Time will tell!

Comrise

At Comrise, we offer tailored solutions for the full-time, part-time, direct-hire, contract, and permanent talent that your business needs. For 40 years, we have delighted our clients and candidates by focusing on customer satisfaction, innovation, and flexible workforce solutions!

If you’re looking for new job opportunities click here, or if you’re looking for a reliable partner to help you secure top-notch candidates for hard-to-fill roles, click here. For more information, feel free to contact us, click here.