OVERWHELMING INTEREST IN JOHOR-SINGAPORE SEZ AMONG SINGAPORE BUSINESSES - REPORT

There is overwhelming interest in the proposed Johor-Singapore Special Economic Zone among Singapore businesses, according to a Singapore Business Federation (SBF) working group report released.

Key findings of the JS-SEZ Singapore Business Working Group (SBWG) 'Greater Together: Two Economies, One EcoSystem' report revealed that 93% of respondents view Johor as an attractive investment destination, with 50% already operating in the state.

According to the SBF statement, the report was based on findings from SBWG's engagement with 160 Singapore businesses across various industries from March to June 2024, which sought to gather insights, feedback and suggestions to enhance the JS-SEZ development.

The SBWG identified three key success factors for the JS-SEZ - drawing on complementary economic strengths, steadfast commitment from both Singapore and Malaysia governments, and the importance of embracing experimentation and agility.

The report also highlighted significant challenges that need to be addressed to ensure JS-SEZ's success, such as gaps in the manpower landscape in Johor, easing the cross-border movement of people and goods, as well as the fragmented and complex investment facilitation landscape between Singapore and Johor.

In the area of manpower, the group recommended creating a unique labour ecosystem that leverages the strengths of both economies - combining Singapore's management and research and development (R&D) capabilities with Johor's technical skills for execution and operations supporting various industries.

Key proposals include developing harmonised workforce regulations, investing in each other's workforce to enhance manpower capabilities and bridge skill gaps, and establishing talent acquisition programmes.  “Nearly 60% of businesses engaged reported difficulties in sourcing technical and skilled workers in Johor, with additional issues in attracting Singaporean talent to work across the border,” the statement said.

Businesses also attributed the manpower crunch to employment pass issues (60%), skill gaps in the Malaysian labour force (58%), and salary mismatch (21%).

To improve cross-border movement, the SBWG advocated for streamlined customs and border clearance processes, including implementing a passport-free QR code clearance system and digitised cargo clearance. The upcoming Johor Bahru-Singapore Rapid Transit System (RTS) Link, slated for 2026, was also viewed as pivotal in addressing these logistical challenges.

Other suggested improvements include developing enhanced border crossing hubs with automated clearance using biometrics and investing in efficient multi-modal connectivity. “In fact, 36% of businesses engaged expressed hopes for better connectivity in terms of a special immigration lane for people, to facilitate smoother travel,” the report said.

To facilitate smoother movement of goods, the SBWG recommended implementing streamlined customs and border clearance procedures, harmonising tax and tariff policies, developing integrated transport networks and logistics infrastructure, and enhancing digitalisation and e-commerce enablement. Some 55% of businesses cited difficulties in handling tax issues and 48% indicated that more expedient cargo clearance would be crucial to enabling the efficient flow of goods.

The current investment facilitation landscape between Singapore and Johor was identified as fragmented and complex, with businesses reporting obstacles in obtaining necessary permits and licences.

“58% of businesses engaged expressed a desire for a joint investment promotion agency to market the zone and facilitate investor engagement, and 33% desired a platform to facilitate collaboration and networking opportunities amongst each other for self-help and support,” according to the report.

To overcome this, SBWG recommends streamlining investment approvals and offering attractive tax incentives, developing robust legal and regulatory frameworks, providing comprehensive business facilitation services, and enhancing the interoperability of financial systems.

Commenting on the report, SBWG chairman Teo Siong Seng said businesses had been very forthcoming during the survey, signalling their interest in the success of the JS-SEZ. "This is not just another project. It is a potential game-changer for both Malaysia and Singapore. By bridging our economies, we are creating new opportunities that will benefit businesses on both sides of the Causeway," he said.

Malaysia High Commissioner to Singapore Datuk Dr Azfar Mohamad Mustafar said JS-SEZ gives leverage to both Singapore and Malaysia in the region but feedback from the industry is important for its success.

"In the past, when we did this, we tried to do it on each other's side. For example, when we do Iskandar Malaysia, we try to get investors from Singapore to come to Malaysia but I think the model is no longer workable for the future we are facing. We need to look at Singapore and Malaysia, especially Johor as a unit, so investors looking at the region can look at Malaysia and Singapore as places where they can invest," he added.