The Johor-Singapore Special Economic Zone (JS-SEZ) agreement has been signed by leaders of Singapore and Malaysia in Kuala Lumpur city centre, nearly a year after the memorandum of understanding was inked, and after two signing delays.
This signing comes as part of the 11th Malaysia-Singapore Leaders’ Retreat, taking place from Jan 6 to Jan 7, where Prime Minister and Minister for Finance Lawrence Wong is hosted by his counterpart Prime Minister and Minister of Finance Anwar Ibrahim to exchange several agreements of bilateral nature — one of which is the JS-SEZ.
On Jan 7, PM Wong and Anwar witnessed the exchange of the agreement in Putra Jaya, the home of all federal-level government ministries and civil servants in Malaysia. The exchange between the leaders was broadcasted on PM Wong's YouTube channel.
Both PMs delivered their opening remarks, in which they both shared enthusiasm for investing in a shared future.
“We both agree that bilateral cooperation must continue to deliver concrete benefits to both our peoples, and that’s the basis on which we worked on the JS-SEZ or special economic zone,” says PM Wong.
“It's an important project that 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 and by doing so it will create good jobs and more opportunities for our peoples,” he continues.
See also: Singapore, Malaysia to finalise deal creating vast economic zone
Nine flagship zones in the Johor-Singapore Special Economic Zone (JS-SEZ) have been announced, alongside the commitment of two separate funds from the Singapore and Malaysian government into the economic zone. This detail was released at a media briefing on Jan 3.
The Singapore government will design funding support to facilitate Singaporean companies expanding into the JS-SEZ, and the potential twinning operations of multi-national companies in Singapore and the JS-SEZ.
Meanwhile, the Malaysian government will establish a fund for purposes of infrastructure support, and a one-stop centre to facilitate investments called the Invest Malaysia Facilitation Centre - Johor (IMFC-J) will be set up.
See also: OCBC joins JS-SEZ excitement; SMEs say moving business to Johor is a 'must do before elimination'
In an interview with The Edge Singapore on Jan 6, Malaysian Minister of Economy Rafizi Ramli said that the ultimate figure of each fund will not be disclosed as both parties have agreed to design the funds according to the need of investments along the way.
“Malaysia will provide an infrastructure fund in order to facilitate and expedite investments into the JS-SEZ because it is our responsibility anticipating that a lot of the physical investments will happen on Johor’s part of the Special Economic Zone, and we have to make sure that the infrastructure is ready,” says the minister.
The nine flagship zones have been identified as Johor Bahru city centre; Iskandar Puteri; Tanjung Pelepas; Pasir Gudang; Senai; Sedenak; Forest City; Pengerang Integrated Petroleum Complex (PIPC) and Desaru.
Each zone will have its own targeted economic activity. For example, Johor Bahru city centre will be focused on business services and health, while PIPC will focus on manufacturing, logistics and energy.
A special corporate tax rate will be given to companies that undertake new investments and value added activities within the JS-SEZ, and a special personal income tax rate will be announced at a later date by the Malaysian ministry of finance.
The much anticipated signing of the JS-SEZ has been closely watched by analysts, small and medium-sized enterprises (SMEs) and investors on both sides of the border and internationally. It has drawn an equal amount of enthusiasm and skepticism.
