SERC Advocates Efficient Management and Incentives for Johor-Singapore SEZ Success

The Johor-Singapore Special Economic Zone (JS-SEZ) is poised to play a pivotal role in strengthening the economic partnership between Malaysia and Singapore. Key to its success, according to the Socio-Economic Research Centre (SERC), is ensuring the zone operates free from political interference and is guided by clear, professional management.

SERC’s executive director Lee Heng Guie, speaking at a media briefing on Malaysia’s Quarterly Economy Tracker and the Outlook for 2024, emphasized the importance of setting clear objectives and benchmarks for the JS-SEZ. “The management of the zone should be left to professionals to ensure efficiency and goal attainment,” he stated.

This announcement comes in the wake of a Memorandum of Understanding (MOU) signed by Malaysia and Singapore, formalizing their cooperation on the JS-SEZ. The MOU aims to fortify the business ecosystem and support investments in the region. However, the specific scope and area of the JS-SEZ are yet to be detailed.

Lee highlighted Malaysia’s competitive edge in business costs, with Johor offering more favorable rates for manpower, industrial land, and electricity compared to Singapore. Despite this advantage, he stressed the need for pragmatic and efficient management within the zone.

“To optimize business operations in the JS-SEZ, regulations must be streamlined, registration and licensing processes should be expedited, and customs procedures need to be efficient,” Lee advised. He further suggested the establishment of a robust one-stop agency, led by high-grade officers, to facilitate business processes and explore tax incentives to lure investors.

Lee also recommended introducing a special low corporate tax rate and an import duty exemption on machinery for investors in the JS-SEZ. Additionally, he urged the government to consider liberalizing foreign employment policies to attract specialized talents to the zone.

The research house proposed fostering collaborations between companies, universities, and research institutions, providing training and educational

opportunities within the SEZ. Such partnerships are crucial for driving innovation and skill development in the region.

Reflecting on the industry potential within the JS-SEZ, SERC identified several sectors poised for growth, including manufacturing, energy, digital and data centers, logistics, financial services, business services, education, healthcare, and tourism. These sectors align with the diverse industrial landscape of the Iskandar Development Region.

Lee also pointed out the opportunity for joint ventures in renewable energy, specifically floating solar panel farms. This aligns with the National Energy Transition Roadmap and opens doors for cross-border renewable energy trading. “Given Singapore’s expertise in large solar farms, Malaysia can benefit greatly from this collaboration,” he added.

The SEZ could also see an expansion in the data center sector. This follows YTL Power International Bhd’s announcement of a partnership with US tech giant Nvidia Corp to build an AI data center in Johor.

Singapore’s significant investment in the Iskandar region, being the second-largest foreign investor from 2006 to September 2022, further highlights the potential for increased economic collaboration and investment in the JS-SEZ.

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