KUALA LUMPUR: The Johor-Singapore Special Economic Zone (JSSEZ) will be the game changer for Malaysia in the long run, creating opportunities for increased cross-border labour activities and investment flows between the two economies.
Singapore, facing a shortage of labour, heavily relies on foreign workers and with ample savings and capital, Singapore is expected to channel investments into Johor, benefitting both nations in the long term.
Asean+3 Macroeconomic Research Office (AMRO) chief economist Hoe Ee Khor said Singapore is a labour-constrained economy and depends very much on foreign workers.
"While Singapore has a lot of savings and capital, Malaysia will benefit from investment flowing from Singapore into Johor. These will be a long-term boost for both economies," he told a virtual media briefing during AMRO's January quarterly update of the Asean+3 Regional Economic Outlook.
Malaysia and Singapore signed a Memorandum of Understanding on January 11, 2024 to work on a JSSEZ to strengthen economic connectivity between Johor and Singapore.
Maybank Investment Bank in its research note said that the JSSEZ will target sectors related to electronics, financial services, business-related services and healthcare.
Both countries will work towards a full-fledged agreement and provide an update at the 11th Malaysia-Singapore Leaders' Retreat, probably in the second half of 2024, it added.
Elsewhere, Malaysia and Singapore will also work on several initiatives that build towards the JSSEZ.
Although the area which will be designated under JSSEZ remains unknown, Maybank IB suggests that it could be located at Sedenak and/or Iskandar Puteri areas.
There is even a possibility that the JSSEZ could involve the whole Iskandar Malaysia region that spans 4,749km2 covering Johor Bahru, Kulai, Iskandar Puteri, Pasir Gudang and part of Pontian.
This development is seen as a move towards leveling the playing field for all landowners in these regions.