Malaysia, Singapore launch special economic zone to boost investment

Malaysian Prime Minister Anwar Ibrahim, right, speaks during a press conference with Singapore Prime Minister Lawrence Wong at the prime minister’s office in Putrajaya, Malaysia, Tuesday, Jan. 7, 2025. (AP Photo/Vincent Thian, Pool)

Putrajaya, Malaysia — Malaysia and Singapore on Tuesday announced an agreement to establish a special economic zone on their border to boost investment and the movement of people and goods.

Set up in Malaysia’s southern Johor state and linked by a causeway to Singapore, the zone is centered on one of the world’s busiest land border crossings, with an average of more than 300,000 people passing through daily.

The region — which at 3,571 square kilometers (1,380 square miles) is almost five times bigger than Singapore — will provide the wealthy but land-scarce city-state’s firms with much-needed space to expand.

READ: Malaysia, Singapore agree to jointly develop special economic zone

It also gives them access to cheaper labor costs and a larger pool of workers, while Malaysia gets better access to Singapore’s sea and air connectivity.

“It is an important project which will build on the complementary strengths of Singapore and Johor, so that we can both be more competitive, enhance our value proposition, and jointly attract more investments to our shores,” Singapore Prime Minister Lawrence Wong said at a news conference with his Malaysian counterpart Anwar Ibrahim.

“There are many strengths that we can harness from both sides.”

Anwar described the zone as a “unique initiative” because “very rarely you find two countries working together as a team”.

Malaysia’s economic ministry said border movements will be eased with automated immigration lanes and paperless clearance for goods.

Policies and incentives including tax breaks, grants and easier regulations will also be set up, it added.

Malaysia’s Economic Minister Rafizi Ramli told reporters the two sides hoped to attract 50 projects at the economic zone within the first five years of its inception, which would result in 20,000 skilled jobs being created.

Malaysia will establish and manage an infrastructure fund to support companies looking to set up in the zone, while Singapore will design funding support to help Singaporean firms looking to invest there.

Many multinational corporations have their regional headquarters in Singapore and the city’s Changi Airport is nearer to Johor than the Kuala Lumpur International Airport.

Despite its prosperity, however, Singapore is constrained by its small size and lack of natural resources.

Geoffrey Williams, founder of a business consultancy that bears his name, told AFP that the zone “is a commonsense approach to liberalization of trade and investment” between the neighbors.

But he said the target of creating 20,000 skilled jobs in five years would “hardly make an impact” on the almost two million underemployed Malaysians, mostly graduates and skilled workers.

“By their nature new investments, especially in high technology industries, create very few jobs because of automation, digitalization and robotization,” he said.

Wong, meanwhile, said Singapore remained open to a new proposal from Malaysia on the building of a high-speed rail between the countries after an earlier plan was scrapped in 2021 owing to disagreements.