KUALA LUMPUR (Jan 11): The Johor-Singapore Special Economic Zone (JS-SEZ) must be free from political interference to ensure its success in fostering a strong, sustainable and mutual-beneficial partnership between Malaysia and Singapore, according to the Socio-Economic Research Centre (SERC).
“Just like any company, when you are running the zone, you must set clear goals and benchmarking. Leave it to the professionals to manage and run the zone,” said SERC executive director Lee Heng Guie at the media briefing on Malaysia’s Quarterly Economy Tracker (Oct-Dec 2023) and Outlook for 2024.
Earlier on Thursday, Malaysia and Singapore signed a Memorandum of Understanding (MOU) to formalise the cooperation of both countries on the JS-SEZ to strengthen the business ecosystem and support investments.
However, the scope and area of the JS-SEZ are not immediately clear.
Lee said Malaysia has the upper hand when it comes to the cost of doing business, as Johor can offer more competitive costs for manpower, industrial land and electricity tariff in comparison with Singapore.
However, he has stressed that the zone’s management must be efficient and pragmatic.
“The regulations for doing business in the Special Economic Zone must be streamlined, as in how to shorten the registration process and how to get the licences. The Customs procedures must also be efficient.
“Most importantly, we must have a highly effective one-stop agency staffed by high-grade officers to facilitate the business process and look into tax incentives to attract investors to put money in this zone,” he said, adding that the government should introduce a special low corporate tax rate for investors and exempt import duty for machinery in the JS-SEZ.
Furthermore, the research house has urged the government to consider the liberalisation of foreign employment policy for specialised talents to attract talents to the SEZ.
It has also encouraged collaboration and partnerships between companies, universities and research institutions by providing training and educational opportunities for employees in the zone.
Based on the current distribution of the industries located in the Iskandar Development Region, SERC has identified several sectors that would benefit from the JS-SEZ, including manufacturing, energy, digital and data centres, logistics, financial services, business services, education, healthcare and tourism.
Lee pointed out that both countries can explore opportunities to collaborate in floating solar panel farms, in line with the National Energy Transition Roadmap which will allow cross-border renewable energy trading.
“Singapore has one of the largest solar farms, and this is something that Malaysia can learn from Singapore,” he added.
He said the SEZ could potentially see the establishment of more data centres, following YTL Power International Bhd’s announcement that it will collaborate with US-based tech giant Nvidia Corp to build an AI data centre in Johor.
According to SERC, over 20 countries have invested in the Iskandar region, with Singapore being the second largest foreign investor from 2006 to September 2022.