The Johor-Singapore SEZ (JS-SEZ), launched earlier this year, marks a landmark collaboration between Singapore and Malaysia aimed at deepening economic integration. By combining complementary strengths, the zone is poised to accelerate growth in high-value industries such as advanced manufacturing, digital services, and clean energy. Major companies have already signalled that they will invest in the JS-SEZ, amid expectations that the zone will generate high-quality jobs and bolster growth. While the JS-SEZ offers significant opportunities for businesses, its success will depend on effective execution, policy alignment, and the ability of companies to adapt to a dynamic cross-border environment.
In this FAQ, Yap Wee Kee, Partner, Capital Markets Group, KPMG in Singapore, discusses how the JS-SEZ will reshape the flow of goods, services, talent and capital, and examines the zone’s potential to become an important growth engine for the region.
1. How can the JS-SEZ boost supply chain resilience and help businesses navigate tariff uncertainties?
The JS-SEZ offers a strategic platform for companies to strengthen supply chains and mitigate the impact of global trade disruptions. By integrating operations across Johor and Singapore, businesses can “twin” their production and logistics functions, balancing costs, labour, and infrastructure to build more resilient supply chains.
Streamlined customs procedures and harmonised regulations will reduce bottlenecks, while robust export documentation processes ensure compliance with evolving trade rules. These features make the SEZ particularly attractive for industries like advanced manufacturing, logistics, and biotech, which are sensitive to global trade shifts.
Considerations: Businesses will need to familiarise themselves with cross-border processes and ensure they have the right expertise to navigate regulatory requirements effectively. For smaller firms, leveraging shared resources and facilitation centres within the SEZ can help ease this transition.
2. What key advantages will the JS-SEZ's cross-border connectivity bring to businesses?
The JS-SEZ’s connectivity upgrades are set to redefine cross-border operations. The Rapid Transit System (RTS) Link, expected to open by 2026, will significantly reduce travel time between Johor Bahru and Singapore, making daily commutes for workers and executives more practical. Digitised cargo clearance and single-permit systems will streamline the movement of goods, improving speed to market and reducing operational costs.
For businesses, this level of integration unlocks new efficiencies. Companies can access Johor’s growing workforce while retaining strategic oversight from Singapore, creating a larger and more flexible talent pool. Improved transport links also enhance the SEZ’s appeal to global investors seeking seamless access to ASEAN markets.
Considerations: While the infrastructure developments are ambitious, businesses should remain adaptable to evolving timelines and ensure they have contingency plans to manage workforce and logistics needs during the transition.
3. How can the JS-SEZ's tax and non-tax incentives attract high-quality investments and drive sustainable growth?
The JS-SEZ offers one of the most competitive incentive packages in Southeast Asia, designed to attract high-value investments and foster long-term growth. Companies in strategic sectors such as logistics, advanced manufacturing, and global services can benefit from corporate tax rates as low as 5% for up to 15 years. Logistics operators investing in smart infrastructure, such as cold chain or dangerous goods storage, can also qualify for full investment tax allowances.
Beyond tax incentives, the SEZ provides a robust ecosystem for growth. One-stop facilitation centres streamline approvals, while infrastructure investments—from renewable energy exchanges to data parks—create a future-ready environment for businesses.
Considerations: Many incentives are tied to measurable outcomes, such as employing local talent or adopting Industry 4.0 technologies. Businesses should evaluate their ability to meet these conditions and align their strategies accordingly to maximise the benefits.
4. What strategies can the JS-SEZ adopt to help small and medium-sized enterprises (SMEs) stay competitive amid cost and labour pressures?
The JS-SEZ provides small and medium enterprises (SMEs) with a cost-effective platform to scale operations. By relocating backend functions to Johor, where labour and rental costs are lower, SMEs can maintain their strategic presence in Singapore while optimising production. Shared infrastructure within tech parks and logistics hubs further reduces costs and provides access to advanced facilities.
Improved connectivity also enables SMEs to tap into Johor’s workforce without uprooting entirely, ensuring flexibility in operations. The SEZ’s “plug-and-play” ecosystem integrates SMEs into global supply chains, opening doors to new markets and partnerships.
The JS-SEZ can also play a pivotal role in connecting SMEs with multinationals anchoring in the zone. By facilitating collaborations, the SEZ enables SMEs to contribute specialised services—such as manufacturing components, precision engineering, or logistics support—within the value chains of larger corporations. These partnerships allow SMEs to scale incrementally, access regional markets, and benefit from the expertise and networks of global players. The SEZ’s focus on fostering such synergies is particularly advantageous for Singapore SMEs, as the shared cultural and business practices between the two nations make integration into these collaborations more seamless.
Considerations: SMEs should assess their capacity to manage cross-border operations and leverage the SEZ’s resources effectively. Collaboration with facilitation centres and larger players within the ecosystem can help smaller firms navigate complexities and scale sustainably.
5. How can the JS-SEZ position the region as a leader in AI, advanced manufacturing and clean energy?
The JS-SEZ is uniquely positioned to lead in AI, advanced manufacturing, and clean energy by combining Singapore’s innovation ecosystem with Johor’s scalability. AI startups can benefit from Johor’s hyperscale data centres and Singapore’s expertise in research, while advanced manufacturing firms can integrate precision engineering with cost-effective production.
Clean energy initiatives, such as cross-border renewable energy trading and carbon-neutral infrastructure, position the SEZ as a hub for global clean tech players. These developments align with broader sustainability goals and enhance the SEZ’s appeal to environmentally conscious investors.
Considerations: Achieving leadership in these sectors will require sustained investment in R&D, talent development, and infrastructure. Businesses should approach these opportunities with a long-term perspective and align their strategies with the SEZ’s focus on innovation and sustainability.
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