Economic Focus: Johor-Singapore Special Economic Zone: 1+1>2

• Johor-Singapore SEZ presents a paradigm shift for multi-year growth opportunity to emerge as the epicentre of thriving ASEAN economies
• Strong Malaysia-Singapore bilateral relations with firm commitments to embrce unprecedented opportunity to uplift economic growth amid shifting global dynamics
• Win-win proposition with multi-faced positive spillover to mark the begining of a second economic take-off

Collaboration of two key ASEAN states

ASEAN has consistently proven its resilience and appeal as a leading destination for FDI despite the overall decline in global FDI flows. The renewed uncertainties arising from increasing unilateralism and protectionism in the global landscape has made ASEAN, a traditionally non-aligned bloc, a rising economic hotspot. More importantly, ASEAN's rising prominence as a major hub for global supply chain underscores its competitive advantage in positioning itself as a critical partner for multinational companies to navigate a changing world order. Malaysia and Singapore - the two richest in ASEAN by GDP per capita - are alaready closely integrated in terms of trade, business and labour movement which is evident with the high traffic volume exceeding 300k people daily at the Johor-Singapore Causeway. The establoshment of the Johor-Singapore Special Economic Zone (JS-SEZ) covering a land area of 357k ha crucially presents a rare multi-year growth opportunity to be the epicentre of thriving ASEAN economies, creating powerful synergy combining Singapore's global connectivity and Johor's growing industrial base.

New leadership are aligned

Sceptism is not unexpected given the high aspirations of Iskandar Malaysia since its inception. We believe it is markedly different this time around as both Malaysia and Singapore have expressed strong politcal and economic commitment to the JS-SEZ which was first mooted in May 2023, before the signing of MoU in Jan 2024 and official agreement in Jan 2025. The JS-SEZ blueprint is also expected to be completed by the Malaysian government by 3Q25. Both countries are likely to adopt a long-term approach for JS-SEZ, targeting 100 projects in first 10 years, as more action plans are taken to address the key structural pain points faced by businesses including enabling smoother transfer of goods and people, scaling up the work force and making the regulatory and approval process faster and easier for investors. Much has been achieved over the past 1.5 years, including the set-up of Invest Malaysia Facilitation Centre - Johor, the implementation of QR-code immigration clearance and streamlined customs procedures for land intermodal transhipments. Meanwhile, the completion of Rapid Transit System (end-2026), Gemas-JB double track rail (Sep 2025), elevated Autonomous Rapid Transit (2027) and the potential revival of KL-SG HSR will all contrbute to the promising future of JS-SEZ as the leading ASEAN investment destination.

Johor is riding on a new wave of industrialisation

Investment-driven spending has now emerged as a new growth driver for Malaysia under the Madani Economy Framework, encompassing the New Industrial Masterplan (NIMP) 2030 and the National Energy transiton Roadmap (NETR), benefitting the Johor state as a traditional industrial powerhouse. In 2023, Johor's GDP, accounting for 9.5% of Malaysia's GDP grew by 4.1% in 2023, outpacing the national growth of 3.6%. Importantly, Johor punches above its weight as approved investments account for 13% while claiming a lion share of 20% of Malaysia's exports in 2024. As JS-SEZ continues to progress in the coming years with its carefully-curated development plans, we beleive this is set to be the next catalyst for Malaysia's second ecnomic take off.

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