Malaysia's economic zone a boost for Southeast Asia

The southern Malaysian state of Johor may emerge as Southeast Asia's version of Shenzhen, experts say, with the Johor-Singapore Special Economic Zone, or JS-SEZ, expected to boost investments and partnerships between Singapore and Malaysia.

Ong Kian Ming, director of the philosophy, politics and economics program at Taylor's University in Malaysia, said the JS-SEZ will encourage Malaysian and Singaporean state-owned companies to invest in Johor.

"Government-linked companies in both countries often follow the signals given by their respective governments, especially where there are opportunities for profitable investments and partnerships," Ong said.

On Jan 11, Malaysian Prime Minister Anwar Ibrahim and Singaporean Prime Minister Lee Hsien Loong witnessed the signing of a memorandum of understanding in Johor Bahru city, which aims to develop a framework toward a legally binding agreement on the JS-SEZ.

It listed seven initiatives toward building the special economic zone, including implementing a passport-free QR code clearance system for both countries, creating a one-stop business and investment service center, and facilitating cooperation on renewable energy.

In a Facebook post, Lee said he is looking forward to both countries charting new areas of cooperation, including in trade and investment, tourism, innovation and digital and green economies, as next year marks the 60th anniversary of diplomatic ties between Singapore and Malaysia.

Ong, who is also Malaysia's former deputy minister of international trade and industry, said that if the seven initiatives were implemented correctly, they would serve as gamechangers in the economic relationship between the two countries.

"Seamless travel between Johor and Singapore, coupled with joint investment opportunities and pitches to foreign companies, would make Johor-Singapore the new Shenzhen-Hong Kong of Southeast Asia," he said.

Ian Yoong Kah Yin, a private equity investor and former investment banker in Malaysia, said the JS-SEZ is a win-win situation for both countries. Malaysia needs the investments while Singapore needs the additional land, electricity and labor that Johor can provide, he said.

"The best model for the JS-SEZ is the Shenzhen Special Economic Zone, the most successful economic zone in history," Yoong said. "The reasons for Shenzhen's success are excellent governance and allowing entrepreneurship to bloom. Malaysia and Singapore have much to learn from China."

Johor plays a "crucial role" in the Malaysia-Singapore relationship, said Tan Wee Tiam, head of research and investment services at KGV International Property Consultants in Johor.

The JS-SEZ can streamline cross-border trade and investment policies and improve the flow of trade, logistics, people, and technology transfer, Tan said.

prime@chinadailyapac.com