JS-SEZ — real work begins now


An aerial view of the Johor Causeway which links Malaysia to Singapore. “An enterprise solution” is needed for JS-SEZ that meets the needs of both countries. - THOMAS YONG/The Star

THE Johor-Singapore Special Economic Zone (JS-SEZ) could potentially bring Malaysia and Singapore massive gains. Kudos to those behind the scenes.

A joint committee of top politicians from both sides is in place to work things out, clearly signalling that this time around, things will proceed more smoothly.

The initial agreements have been signed, and the real work begins now.

The low-hanging fruit is clearly passport-free clearance on both sides of the border - the special zone pass holders will be able to move freely between the two regions.

Naturally, all national security issues would need to be addressed, so both governments will have to sit down and work out these details.

The control and strict rules governing eligibility for these passes will have to be implemented and enforced.

There are also smaller but important issues that need the private sector’s involvement.

Take telecommunications as an example. Ideally, those travelling through the JS-SEZ shouldn’t continue to be charged international roaming fees. Pass holders shouldn’t be charged additional fees and service should be seamless.

Then there is medical care. Singaporeans working in the JS-SEZ should have access to their Medisave insurance at more hospitals in Johor and with fewer limitations.

Logistics is another crucial area. A Singapore enterprise that brings its manufacturing into the JS-SEZ could use Johor’s ports, which would be cheaper. But how will that work out with the loss of business to Singapore ports?

The JS-SEZ should not be all about costs. It should not just be another low-cost production centre.

Economy Minister Rafizi Ramli, one of the key movers of the JS-SEZ, has understandably stressed that they want to attract investments in tech, electrical and electronics (E&E), medical equipment, food processing and data centres. They want high-growth and high-value businesses.

JS-SEZ also aims to attract investments from countries other than Singapore, according to Rafizi.

What about Johor’s labour force, or rather its lack thereof?

Consider the E&E sector. It took Penang years to establish itself as a world-class E&E hub. More companies keep going there because of the ecosystem, including the availability of engineers, although even that is becoming scarce in the state.

A good sign is the inclusion of training and work-based learning initiatives in the joint statement on the JS-SEZ. This is a crucial step and needs proper implementation and funding.

This echoes the efforts by the Economy Ministry to seek “wage empowerment” for those working in the JS-SEZ.

“What shouldn’t happen is that Singapore or other foreign companies come because they can hire locals for lower wages. The JS-SEZ plans need a concerted effort to empower locals so that they can get higher wages. This ties into the training plans that are being developed,” says an informed source.

Another important part is having a one-stop centre in Johor to process applications, including for licences, for Singapore and other foreign businesses to set up companies in the state.

According to economist Lee Heng Guie, this one-stop centre must be effective and manned by high-level officers to facilitate business processes and consider tax incentives. He suggested a special low corporate tax rate for investors and exempt import duty for machinery in the JS-SEZ.

The rules and regulations, when finalised and implemented, must consider the interest of both countries.

Previous plans to make Johor an investment destination could be perceived as one-sided as it was driven by Malaysia offering Singaporeans what we thought they needed.

Now the plan is to find, in business parlance, “an enterprise solution” that meets the needs of both sides. It will be a fine balancing act as both have some conflicting interests or concerns at times. If done well, it will set the stage for both foreign and domestic direct investments.

These are exciting times for Johoreans like the executive chairman of Paragon Globe Bhd, Datuk Seri Edwin Tan Pei Seng.

He notes that something as seemingly small as the planned QR code pass for JB-SEZ workers will already be a game changer.

“The other plans (for JB-SEZ) are spot on as they would address the issues of bottlenecks directly,” says Tan, who has built residential and commercial properties as well as industrial parks in Johor.

This article first appeared in Star Biz7 weekly edition.

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