Malaysia, Singapore sign Johor economic zone deal to bring two SE Asian neighbours closer

Malaysia and Singapore announced on Tuesday an agreement on a special economic zone in the southern Malaysian state of Johor, aiming to support investment and free up movement of goods and people between the countries.

The Southeast Asian neighbours first agreed in principle to jointly develop the economic zone a year ago.

Tuesday’s agreement was announced during a visit to Malaysia by Singapore Prime Minister Lawrence Wong and senior cabinet ministers.

“It’s an important project … we can both be more competitive, enhance our value proposition, and jointly attract more investments to our shores,” Wong told a joint press conference with Malaysian counterpart Anwar Ibrahim.

“When negotiating the agreement, both sides have actively engaged stakeholders to ensure that the SEZ has the conditions to help our businesses grow together for the longer term."

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Anwar said the SEZ was unique initiative as it was rare for two countries to team up on a single project.

The two countries are aiming to attract high-value investments into Johor in sectors ranging from manufacturing and logistics to tourism and energy transition, Malaysia’s Economic Minister Rafizi Ramli told reporters.

They are targeting 50 projects at the economic zone within the first five years of its inception, and the creation of 20,000 skilled jobs.

Malaysia will set up and manage an infrastructure fund to support companies looking to set up there, while Singapore will create its own fund to facilitate investments and support Singaporean companies operating in Johor, Rafizi said.

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Thousands of Malaysians commute every day to small but wealthy Singapore for work and study, causing frequent traffic congestion on the causeway between the countries, one of the world’s busiest border crossings.

The two leaders also invited proposals for high-speed rail between the two countries, which Anwar said should be led by the private sector, with limited government involvement.