On 7 January 2025, Singapore and Malaysia formalized an agreement on the Johor-Singapore Special Economic Zone (JS-SEZ) during the 11th Malaysia-Singapore Leaders’ Retreat. This milestone follows nearly a year after the initial memorandum of understanding was signed, and comes after two delays in the signing process. The agreement was inked by Singapore’s Deputy Prime Minister Gan Kim Yong and Malaysia’s Minister of Economy Rafizi Ramli.
The JS-SEZ spans 3,571 square kilometers across Johor’s east and west coasts—an area roughly four times the size of Singapore. It encompasses nine flagship zones, each tailored to different economic sectors: Johor Bahru City Centre, Iskandar Puteri, Forest City, Pengerang Integrated Petroleum Complex, Tanjung Pelepas–Tanjung Bin, Pasir Gudang, Senai–Skudai, Sedenak, and Desaru.
The JS-SEZ Agreement aims to enhance the region’s competitiveness for global investment by:
The Johor-Singapore Special Economic Zone (JS-SEZ) is designed to unlock cross-border economic potential through a range of strategic features:
Singapore-based companies stand to gain significantly from the enhanced cross-border connectivity enabled by the Johor-Singapore Special Economic Zone (JS-SEZ). This initiative facilitates the seamless movement of goods and people, allowing businesses to expand operations across borders and leverage the complementary strengths of both Singapore and Johor. By twinning operations—such as situating high-value functions in Singapore and cost-efficient activities in Johor—companies can optimise productivity and competitiveness.
The project has garnered strong momentum on both sides of the Causeway, underscoring its potential to deliver mutual benefits through strategic collaboration. Reflecting this growing interest, the joint JS-SEZ project office—established by Singapore’s Ministry of Trade and Industry (MTI), the Economic Development Board (EDB), and Enterprise Singapore—has received over 140 enquiries from both domestic and international companies.
In addition, more than 150 Singaporean companies and representatives participated in a business mission to Johor in February, organised by the Singapore Business Federation (SBF) and the Singapore Manufacturing Federation (SMF).
On Malaysia’s side, the Invest Malaysia Facilitation Centre Johor (IMFC-J) has received over 300 investor enquiries, with approximately 100 specifically focused on the Forest City Special Financial Zone. Forest City is one of nine designated one-stop centres designed to streamline the investor journey within the SEZ, supported by both state and federal government agencies.
Once envisioned as a $100 billion futuristic eco-city and marketed as a “dream paradise for mankind,” Forest City faced significant challenges—including low occupancy, financial instability, and environmental concerns—that led to its reputation as a “ghost town.” However, its repositioning within the framework of the SEZ has sparked renewed interest and optimism, suggesting the potential for a meaningful revival driven by strategic incentives and improved governance.
While interest in the Johor-Singapore SEZ has surged, businesses are awaiting further announcements to determine their eligibility for special privileges within the zone. Malaysia has taken the lead in outlining its incentive framework. The Malaysian Investment Development Authority (MIDA) has published a tax incentive package requiring a minimum capital investment of RM500 million for projects in selected sectors to qualify. This threshold, while attractive to large corporations, presents a challenge for many small and medium-sized enterprises (SMEs).
To attract high-value investments, Malaysia’s Ministry of Finance and the Johor State Government announced a preferential corporate tax rate of 5% for companies engaged in qualifying manufacturing and service activities. These include sectors such as artificial intelligence, quantum computing, medical devices, and aerospace manufacturing. This incentive is valid for up to 15 years.
In addition, eligible knowledge workers employed within the JS-SEZ will enjoy a reduced personal income tax rate of 15% for 10 years. Johor has also committed to offering higher starting salaries for diploma and degree holders—ranging from RM3,500 to RM4,000—nearly double the national average. To further boost tourism and leisure investments, entertainment duties will be reduced, although specific details are still forthcoming
On Singapore’s end, while tax incentives specific to the SEZ have yet to be announced, several supportive measures are already in place. Singaporean companies can tap into existing enterprise support schemes such as the Market Readiness Assistance (MRA) Grant, which subsidises up to 70% of eligible costs for overseas expansion, and the Enterprise Financing Scheme (EFS), which provides access to working capital and project loans. Additionally, a dedicated JS-SEZ project office—jointly established by MTI, Enterprise Singapore, and EDB—serves as a resource hub to guide businesses in exploring opportunities and navigating available support.
Singapore has also implemented facilitative measures to improve cross-border operations, including streamlined customs procedures for land-based cargo transfers and passport-free QR code clearance at land checkpoints, significantly enhancing the movement of goods and people.
Beyond bilateral cooperation, the Johor-Singapore SEZ is strategically positioned to serve as a gateway to broader ASEAN and global markets. With Singapore already acting as a hub for regional headquarters and Johor offering scalable industrial capacity, the SEZ is poised to strengthen regional supply chains and attract third-country investors. This cross-border zone complements wider regional trade frameworks such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), enhancing its appeal to multinational corporations seeking a foothold in Southeast Asia.
By integrating infrastructure, talent, and policy support across borders, the JS-SEZ is set to become a launchpad for companies aiming to scale across ASEAN—offering a unique blend of operational efficiency, market access, and strategic location.
As the Johor-Singapore Special Economic Zone (JS-SEZ) continues to take shape, businesses and investors can expect greater clarity and momentum in the months ahead. The bilateral agreement signed in January 2025 is set to be formalised by the third quarter of 2025.
As Singapore and Malaysia continue to actively engage with industry stakeholders to refine the zone’s implementation, with ongoing forums, trade missions, and public-private collaborations, businesses are advised to stay tuned for updates from the JS-SEZ joint project office, as well as announcements from agencies such as Enterprise Singapore, EDB, and MIDA, which are expected to release further guidance on eligibility, incentives, and operational support.
While some regulatory and administrative details are still being ironed out, the groundwork laid so far signals a promising future for cross-border collaboration. For companies looking to expand, the JS-SEZ offers a unique opportunity to be part of a transformative regional initiative—one that is poised to redefine ASEAN’s economic landscape.
At Fidinam, we’re closely monitoring developments around the Johor-Singapore Special Economic Zone and the evolving opportunities it presents. Whether you're considering expansion, exploring incentive eligibility, or planning cross-border operations, our team is here to help you navigate the landscape and position your business for success in this dynamic regional hub.
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