KUALA LUMPUR: Malaysia's government has made progress on two out of the seven initiatives outlined in the Johor-Singapore Special Economic Zone (JS-SEZ) Memorandum of Understanding (MOU) in April, according to UOB Global Economics & Markets Research.
The two initiatives were to establish the Investment Malaysia Facilitation Center Johor (IMFC-J) and implementing QR code-based immigration clearance for Malaysians travelling to Singapore, starting in June 2024.
IMFC-J will help to boost investment cooperation between the federal government and state agencies, streamline business and investment dealings in Johor, as well as pave the way for enhanced economic partnerships.
The IMFC-J is planned to be set up in Forest City, which was granted a Special Financial Zone (SFZ) status in August 2023, and slated for completion in 2024.
The QR code-based immigration clearance for Malaysians travelling to Singapore from June 2024, follows Singapore's implementation of similar measures in March 2024 and aims to ease travel for the many daily commuters between the two regions, said UOB.
This passport-free QR code system is part of the MOU's goal to achieve seamless connectivity and transport between Singapore and Johor.
The government has also announced the hosting of the ASEAN Tourism Forum at Forest City (Johor Bahru) on January 19-25 2025, which will showcase Forest City's potential as a premier destination for tourism and hospitality.
"This recognition of Forest City as a venue for tourism and major events could be part of the joint promotion events as mentioned in the JS-SEZ MOU (one of the seven initiatives)," said UOB in a note.
Meanwhile, the government is also mindful of the importance of incorporating the ForestCity SFZ and the JS-SEZ into the planning process of the revived KL- SG HSR project to ensure sustainable development as well as synergy with strategic areas for regional growth.
Moreover, the Gemas-Johor Bahru electrified double-tracking rail project (Gemas-JB EDTP), expected to be completed by 2025, is also eyed to be one of the game changers for Johor.
This would run from Peninsula Malaysia's southernmost tip all the way to Padang Besar on the Thai border, thereby enhancing significantly the efficiency of moving people and cargo in the west coast of Peninsular Malaysia.
With the establishment of the JS-SEZ and Forest City SFZ, the government projectsthe economic growth in Johor to pick up at a faster pace to be a developed state inMalaysia by 2030.
The state government targets to raise Johor's gross domestic product by 7.8 per cent per annum to RM260 billion by 2030, from RM142.1 billion in 2022 and pre-pandemic average growth rate of 5.1 per cent between 2016 and 2019.
Between 2022 and 2023, the Johor state government approved RM113.7 billion in investments, which was 19.0 per cent of Malaysia's total approved investments of RM597.2 billion in the same period.
These investments focused on four sectors, namely machinery & equipment, foodprocessing, E&E and chemical & petrochemical.
For Iskandar Malaysia (the expected location of JS-SEZ), it has recorded total cumulative investments of RM409.5 billion as of September 2023, surpassing the region's target of RM383 billion by 2025. About 58 per cent or RM236.8 billion of the cumulative investments have been realised.
"Given that Iskandar Malaysia has achieved its initial target for investments well ahead of time, it suggests that its potential is yet to be fully realised, and JS-SEZ will be a key catalyst for further achievements ahead," said UOB.
Johor Menteri Besar Datuk Onn Hafiz Ghazi, revealed that the JS-SEZ would be closely linked with the Forest City Special Financial Zone SFZ) to bring more investment opportunities, job creation and development projects to Johor.
These two zones will likely be interconnected with a T-shape integrated transport network (i.e. Johor Bahru - Singapore Rapid Transit System (RTS), revised Kuala Lumpur-Singapore High-Speed Rail (KL-SG HSR) project and proposed Light Rail Transit (LRT) system).
"Both JS-SEZ and Forest City SFZ are planned as main catalysts to power up and elevate Johor to be a developed state in Malaysia by 2030. "With positive spillovers to other economic regions, this will help drive Malaysia's economic development more rapidly," said UOB.
Priority sectors in Johor's master plan include electronics, life sciences, advanced manufacturing, digital economy, green economy, halal industry, electric vehicles, aerospace, and logistics.
The state will also focus on environmental, social, and governance (ESG) criteria, seeking more investments in renewable energy and green technology to support new industries like data centers.
Further details about government policies for the SEZ, investment prospects, specific locations, suitable initiatives and packages, as well as business feedback on the JS-SEZ, have not been released.
Incentives related to JS-SEZ implementation are expected to be announced during Budget 2025 in October.-ends-s