KUALA LUMPUR: JP Morgan says the Johor-Singapore special economic zone (SEZ) will likely be a multi-year growth story just as how Shenzhen SEZ has developed over the past 45 years.
It also said the Johor-Singapore SEZ provides high-growth sector specific opportunities, outside of property land bank play.
The SEZ is promising given a more conducive regulatory and policy environment with proactive collaboration, the US investment bank added.
The firm expects regulatory harmonisation and tax incentives to pave the way.
"The JS-SEZ has had several working visits by the country officials, and government agencies have been involved in discussions and feedback sessions with private-sector representatives, with proactive follow-up actions.
"If the JS-SEZ moves ahead, it is likely to be a multi-year growth story with refinements along the way, just as how Shenzhen SEZ has developed over the past 45 years," it said.
JP Morgan noted that the development of the SEZ aligned with its increasingly constructive outlook in Malaysia.
"The positive response to the Johor-Singapore SEZ initiative is evident in rising property share prices, with the KL Property index overall up 65 per cent since July 2023 and companies with large land-banks in Johor having seen two to four times share price increases," it said in a note.
The firm highlighted five sectors that have value proposition and growth potential namely real estate investment trusts, infrastructure and transportation, healthcare, renewable energy and tech-related.
It also noted that connectivity via the Rapid Transit System (RTS) Link marks the start of more infra projects to unlock the full economic potential of the SEZ.
The Johor-Singapore SEZ officially commenced with a Memorandum of Understanding (MOU) signed on Jan 1 this year.
Negotiations are in their final stage for a legally binding Memorandum of Agreement expected in September, with fiscal package incentives to be incorporated into the 2025 Budget announcement on Oct 18.