[JOHOR] SINGAPORE and Malaysia have inked a memorandum of understanding (MOU) to work on the Johor-Singapore Special Economic Zone (JS-SEZ), paving the way for improved cross-border flows of goods and people, as well as increased investment.

Separately, both sides are exploring initiatives such as a passport-free QR code clearance system at the land checkpoints to facilitate more efficient clearance of travellers.

The MOU was signed on Thursday (Jan 11) by Singapore’s Trade and Industry Minister Gan Kim Yong and Malaysia’s Minister of Economy Mohd Rafizi Ramli at the DoubleTree Hilton hotel in Johor.

It was witnessed by Singapore Prime Minister Lee Hsien Loong and Malaysian Prime Minister Anwar Ibrahim, during the former’s working visit to the southern Malaysian state.

Following the MOU, Singapore and Malaysia have agreed to work towards a “full-fledged” agreement on the JS-SEZ, said both ministries, with an update to be provided during the next Malaysia-Singapore leaders’ retreat.

In working towards the future legally-binding agreement, both countries will develop a framework to iron out details such as the economic sectors of mutual interest for cooperation, as well as the JS-SEZ’s relevant geographical coverage.

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

Rafizi said the JS-SEZ is an “unprecedented opportunity to… elevate the economic attractiveness of both Johor and Singapore”.

He added: “I have full confidence 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.”

Under the MOU, Singapore and Malaysia will enhance cross-border flows of goods and people, as well as strengthen the business ecosystem within the JS-SEZ to support investments.

Both sides will promote a more “seamless and expedited” flow of goods, said Singapore’s MTI in a separate statement. At the last leaders’ retreat held in Singapore October 2023, PM Lee said this may mean special tax arrangements and bonded warehouses.

For people, the aim is to enable freer movement – for professionals, managers, executives and technicians, for example – to support investments and business operations.

As for strengthening the business ecosystem within the JS-SEZ, this could mean talent and vocational training for workers, and economic support for businesses, said MTI.

The MOU also established a joint committee to oversee its implementation, co-led by MTI and Malaysia’s Ministry of Economy. The committee will report to the Joint Ministerial Committee for Iskandar Malaysia, co-chaired by Singapore’s National Development Minister Desmond Lee and Malaysia’s Rafizi.

In addition to the agreement, Singapore and Malaysia will explore several other initiatives that will “build towards the JS-SEZ”.

For instance, a one-stop business and investment service centre could be set up in Johor to facilitate the application processes for the approvals and licences necessary for Singapore businesses to set up there.

Land checkpoints on both sides could adopt passport-free QR code clearance for travellers, or digitised processes for cargo clearance.

Both countries are looking at holding a co-organised investors’ forum to gather feedback from Singapore and Malaysia businesses on the JS-SEZ, and joint promotion events to promote trade and investment into the zone.

Both will also look into facilitating renewable energy cooperation in the JS-SEZ, and curating training and work-based learning initiatives to address talent and skills gaps for relevant industries in the JS-SEZ.

“These early initiatives demonstrate the collaborative spirit between both sides and mutual interest in the JS-SEZ to drive economic growth,” said the ministries.

The special economic zone rides on the strong growth of Johor and significant investments in the region by Singapore, said the ministries. In 2022, Johor recorded RM70.6 billion (S$20.3 billion) worth of investments across sectors such as electrical and electronics; medical equipment; food manufacturing; and data centres.

Singapore was Johor’s second-largest foreign investor from January to June 2022, and contributed to around 70 per cent of Johor’s total foreign direct investment in manufacturing.

Malaysia and Singapore are each other’s second-largest trading partners, with bilateral trade growing 18.9 per cent year on year to S$153 billion in 2022.

In 2022, Singapore was also Malaysia’s top source of foreign direct investment, making up 20.5 per cent of the total.