Malaysia and Singapore unite to boost trade with special economic zone
Major trading partners Malaysia and Singapore agreed on a collaborative effort to establish a special economic zone. This endeavour aims to enhance trade between the neighbouring countries, which consider each other as their second most significant trading partner.
The proposed economic zone is slated to be located in Johor, a southern state of Malaysia. This zone will allow businesses to enjoy reduced regulation and minimal government interference, thus boosting trade activities and enhancing connectivity, as per the joint statement.
The agreement was signed on Thursday by Malaysia’s Economy Minister, Rafizi Ramli, and Singapore’s Minister for Trade and Industry, Gan Kim Yong. Both countries’ prime ministers were present during the event.
Ramli, in a statement, regarded the Johor-Singapore Special Economic Zone as a transformative chapter in the bilateral economic relations between the two countries.
To support this economic zone, both countries will consider implementing a passport-free QR code clearance system. This measure will enhance the speed of people’s clearance at land checkpoints.
The open border between Malaysia and Singapore is one of the world’s most accessible. In 2022, their bilateral merchandise trade reached an impressive total of US$90.3 billion. This figure surpasses the combined total commerce with other countries such as Indonesia, Thailand, the Philippines, and Vietnam. Over 350,000 travellers traverse the causeway connecting Johor and Singapore daily.
Direct Investment
As per the data from the first nine months of 2023, Singapore was the second-largest source of Malaysia’s foreign direct investment at 20.4 billion ringgit (US$4.4 billion).
Other joint efforts to look forward to include a one-stop business-investment service centre in Johor for Singapore businesses, digitised cargo clearance processes at land checkpoints, and co-organising an investors’ forum. Furthermore, both countries will facilitate renewable energy cooperation in the Johor-Singapore Special Economic Zone.
The neighbours also celebrated the completion of a connecting span for a new rail link, which is expected to commence passenger service by December 2026. It is projected to have a peak capacity of accommodating 10,000 passengers per hour per direction.
The anticipation of the memorandum’s signing led to the advancement of Malaysian stocks with significant exposure to Johor state. Sultan Ibrahim Sultan Iskandar, the incoming monarch of Malaysia from Johor, expressed his intention to use his influence to enhance infrastructure, including the high-speed rail project with Singapore.
From January to June 2022, Singapore was Johor’s second-largest foreign investor, contributing to around 70% of Johor’s total foreign direct investment in the manufacturing sector.
On Thursday, a milestone marking the construction of a 4 kilometres light rail link between Johor Bahru, the state capital, and Singapore, was also witnessed by Anwar and Lee, reported Bangkok Post.
