SINGAPORE — Malaysia and Singapore have agreed to set up a special task force to study the establishment of a Johor-Singapore Special Economic Zone, Minister of National Development Desmond Lee said on Friday (July 14). 

The economic zone will bring "tangible benefits in terms of jobs, in terms of livelihoods, in terms of better life for both people living in Johor and Singapore", said Mr Lee, who was speaking to the media at a doorstop interview alongside Malaysian Minister of Economy Rafizi Ramli. 

The task force will draft the terms of reference, as well as the broad areas of collaboration for the economic zone.

The establishment of the special task force was announced at the 16th meeting of the Malaysia-Singapore Joint Ministerial Committee for Iskandar Malaysia (JMCIM), of which Mr Lee and Mr Rafizi are co-chairs. 

Mr Lee said that the JMCIM has had "many years of collaboration". 

"The many work groups have done very good work, whether it's on transport connectivity for the people, whether it's on innovation, whether it's on business ecosystem, environment, tourism, technical and skills training, and all that," he said.

"Many of these will also be geared in support of the Special Economic Zone vision." 

Singapore’s Acting Minister for Transport Chee Hong Tat, Johor’s chief minister Onn Hafiz Ghazi, and senior officials from both countries were also present at the meeting. 

According to a statement by the JMCIM on Friday, the special task force will be led by the Ministry of Trade and Industry from Singapore and Ministry of Economy from Malaysia, with the support of relevant government agencies on both sides. 

The JMCIM added that the establishment of an economic zone will "build on the strong growth of Johor and significant investments in the region by Singapore".

For instance, Johor recorded RM70.6 billion (S$20.6 billion) worth of foreign investments in 2022 alone, across various sectors such as electronics, medical equipment, food manufacturing and data centres.

"Singapore was Johor’s second-largest foreign investor, and contributed to around 70 per cent of Johor’s total foreign direct investment in the manufacturing sector," added the committee.

For instance, since international borders reopened following the Covid-19 pandemic, the Industrial Cooperation Work Group has been involved in attracting cumulative investments worth RM5.1 billion, which are expected to create 1,700 jobs in Iskandar Malaysia.

The JMCIM said that the Johor-Singapore Special Economic Zone will build on the foundation set by such work groups to drive sustainable growth, develop human capital, and improve infrastructure and connectivity.

It was reported by Malaysian media in May that Mr Rafizi had been mulling the creation of a Johor-Singapore economic region to strengthen the Malaysian state’s economic potential, and that the idea was jointly mooted by the Johor, federal and Singapore governments at a meeting, though it was not stated when this meeting took place. 

BOTH SIDES STAND TO BENEFIT: RAFIZI

Speaking to the media on Friday, Mr Rafizi said that both Singapore and Johor have their own economic advantages, and both stand to benefit from the proposed arrangement. 

While Singapore as a business hub has "better reach in some areas", Johor's strength is that it has resources, he said. 

"If we were to go separately on our own, we will be limited in terms of the possibility of investments and economic value that we can create," he said. 

"But (being) complementary to each other... that's something that I feel will bring much greater prosperity to the people of Singapore and the people of Johor." 

He added that the task force will put forth a "more definitive vision" of the economic zone and present it to leaders from both sides of the Causeway during the 10th Singapore-Malaysia Leaders’ Retreat in October. 

Mr Rafizi said that this vision is crucial for the economic zone to function. 

"If we want to operate and function as an economic union, as an economic region, we have to try our best to allow for interconnectivity and interoperability, so that it is as seamless as possible," he said.

This includes ensuring that there is much better movement of people and goods between the two jurisdictions, and this may involve "harmonisation" of the immigrations and customs system, he added. 

More than 300,000 Malaysians enter Singapore daily from Johor and back for work, while Johor is a popular weekend or day trip destination for Singaporeans.

SPECIAL ECONOMIC ZONE COULD ENTAIL MORE SEAMLESS IMMIGRATION, SMOOTHER BUSINESS DEALS: ECONOMISTS

Economists said that such a deal, if successful, would be a "win-win" situation.

"Both sides have complementary factors to offer," said OCBC chief economist Selena Ling. "Singapore has the skills set and investment flows and Johor has the manpower and land resources." 

While no details have been provided by the respective governments, economists believe that some cross-border policy changes could result from the zone, should it come to fruition.

For one thing, it could entail more seamless immigration between both jurisdictions, said independent economist Song Seng Wun. 

"If more things are streamlined, whether it’s in the documentation of people to people travel, the traffic clearance at the (checkpoints)... that can connect people living and working on two sides much better," said Mr Song. 

He noted that the establishment of this economic zone could also coincide with the opening of the Johor Bahru–Singapore Rapid Transit System, which is on track to launch in 2026. 

He said that there could also also be a smoother facilitation of business deals between firms across the Causeway, but how such deals can be made easier depends on the discussions between both governments. 

"From a Singapore standpoint, it is about how we can leverage the connectivity to neighbouring countries to create opportunities for businesses in Singapore," he said. 

Mr Song added that the benefits to Singapore may not only come from Johor, but from global firms being more willing to set up shop in Singapore given the new economic zone. 

"For businesses who are looking into manufacturing, the proximity of an official economic zone in Johor close enough to Singapore may be an added advantage, in having headquarters in Singapore and provision of resources from Johor," said Mr Song.