Connectivity is a critical enabler for the success of the JS-SEZ.
THE Johor-Singapore Special Economic Zone (JS-SEZ), which was established on Jan 7, 2025, is a landmark bilateral initiative, representing high commitment from both sides to create a dynamic cross-border economic and business hub in South-East Asia.
It leverages on their complementary strengths to forge common development goals through three pillars – cross-border connectivity, facilitating the freer movement of people and goods as well as strengthening the business ecosystem.
The year 2025 was a year of new beginnings, growth, and contribution for both countries to make significant progress in establishing the framework of the JS-SEZ and attracting investments.
This article takes stock of the JS-SEZ’s key investments, current market sentiment and prospects.
Both Malaysia and Singapore have consistently maintained a significant lead in Asean, driven by their strategic location, competitive advantages in infrastructure, business efficiency, digital and green economy focus.
In the 2025 IMD world competitiveness rankings, Singapore was the most competitive economy in Asean (world No. 2), followed by Malaysia (world No. 23).
Malaysia leverages its manufacturing/digital strengths and resource base for growth while Singapore on its financial and technological expertise as well as skilled manpower.
Amid external challenges surrounding geopolitical fragmentation, including the US-China strategic rivalries and shifting global trade policies, the JS-SEZ is far from being challenged as a prominent investment destination.
It remains relevance for investors seeking to reconfigure and diversify supply chains and mitigate risks under the China Plus One strategy.
Since its establishment, the JS-SEZ has demonstrated remarkable resilience and commendable performance, with the rolling out of initiatives, investment policies and facilitation as well as targeted incentives positioning it as a catalyst for regional growth.
The invest Malaysia facilitation centre (IMFC-J) in the JS-SEZ became operational since February 2025, to streamline business operations, reduce bureaucracy, and attract investment.
Fast-tracked approvals for manufacturing licences within the SEZ can now be obtained within seven days. Singapore also set up a JS-SEZ project office in April 2025 to help Singapore-based companies expand into the zone.
Notable incentives are a special corporate tax rate of 5% for up to 15 years to companies undertaking new investments in qualifying high-value activities; 100% investment tax allowance on qualifying capital expenditure; stamp duty exemptions for commercial property transactions; accelerated capital allowance for renovation and a flat 15% personal income tax rate for eligible knowledge workers for 10 years.
In the first nine months of 2025, Johor has emerged as the top state garnering approved investment of RM91.1bil, with the JS-SEZ making up 74.6% of total amounting to RM68bil.
Of this, Singapore was the largest investor (RM28.5bil), followed by Italy (RM2.9bil) and China (RM700mil).
High-value investments
Investments are concentrated in high-value, high-impact sectors, including the digital economy (data centres, artificial intelligence or AI infrastructure), advanced manufacturing (electrical and electronics, chemicals, medical devices), logistics and financial services.
Between January and November 2025, the IMFC-J had received 808 enquiries, with 104 having potential investments value of RM29.5bil.
The highest number of investors’ enquiries are manufacturing, data centres and energy while the top three countries are China, Singapore and South Korea.
For the Special Financial Zone, there were 161 accumulated enquiries in the top three sectors, namely, small family office, capital market and financial institutions.
Efforts are also underway in developing the future-ready talent landscape, supplying manpower with the right skills, especially in high-demand areas like AI, Big Data and advanced manufacturing.
The goal to create 20,000 high-skilled jobs within the next five years may bode well for improving talent retention.
Hence, this drives the need for continuous upskilling and reskilling, collaboration between public-industry-academia.
The Johor Talent Development Council was formed to address skill gaps by bridging industry and education, offering a premium minimum salary of RM4,000 for diploma holders and RM5,000 for those with a Malaysian Skills Certificate equivalent to a degree, and fostering upskilling/reskilling through partnerships with universities as well as technical and vocational education and training initiatives.
It aims for high-value jobs in sectors like data centres, ensuring Johor benefits from the economic boom.
The first data centre technician programme was launched on March 1, 2025, which seeks to fill 200 job vacancies, with salaries ranging from RM3,500 to RM4,000 for a minimum diploma qualification.
Critical enabler
Connectivity is a critical enabler for the success of the JS-SEZ.
This requires substantial investment in the Rapid Transit System (RTS) link, ports, roads and digitalisation in terms of data platforms to streamline cross-border trade.
A passport-free QR code immigration system has been implemented as a trial at two major land checkpoints in Bangunan Sultan Iskandar and Sultan Abu Bakar Complex since September 2025.
The Gemas-Johor Baru electrified double-track line started services on Dec 12, 2025. The connectivity will be boosted by the operation of Johor Baru-Singapore RTS Link, expected by December 2026.
Set to connect Bukit Chagar and Woodlands North with a five-minute journey, the RTS has a capacity of 10,000 passengers per hour. The shortest interval for a train is 3.6 minutes.
While much progress has been made in the JS-SEZ, there are also questions on whether the JS-SEZ will continue to be a bright spot in the global landscape, marked by the geoeconomic fragmentation, the US-China’s strategic rivalries in competing economic and political blocs leading to greater market volatility.
Additionally, competition from other fast-growing economies like India and Saudi Arabia poses a threat to the JS-SEZ in its efforts to attract large multinational corporations.
Malaysia and Singapore must continue to enhance strategic integration on connectivity, developing advanced physical infrastructure and integrating smart, digital solutions to mitigate uncertainty and streamline business operations for global investors.
The following areas need attention to ensure the relevance and resilience of the JS-SEZ.
> Timely rollout of the JS-SEZ blueprint. The blueprint must be ready by the first quarter of 2026. Progress has been made on key initiatives. For ease of data information flows, a new online dashboard for tracking the progress of the SEZ to enhance transparency and tracking of implementation progress of key initiatives should be set up.
They include the status of applications, investment commitments, job creation, and infrastructure development within the zone as well as performance metrics.
> Address the “last mile” connectivity for Johor Baru-Singapore RTS Link. Singapore and Malaysia must plan to ease traffic congestion in anticipation of the rise in traffic once the RTS link starts operating.
Get ready for dedicated shuttles and other alternative transportation services around the Bukit Chagar area.
While the Bus Rapid Transit has been discussed as a practical, cost-effective solution, an elevated autonomous rapid transit system is the right focus to cater for high-demand corridors in Johor Baru.
> Broad property sector development. Johor’s property market has experienced increased demand across the residential, commercial, industrialised and specialised sectors following the development of the JS-SEZ, RTS link and electronic train service.
In the first nine months of 2025, commercial and industrial properties transaction value have increased substantially by 29.5% year-on-year (y-o-y) and 30.5% y-o-y, respectively (an average of 44% per annum and 27.7% per annum, respectively in 2023-2024).
Residential property transaction value increased by 3.4% y-o-y during the same period (13.9% in 2024 and 66.1% in 2023). Average house prices have increased strongly across-the-broad.
With the exception of residential properties, property overhang for Soho, serviced apartment, commercial and industrial continued to decline, reflecting the improved demand.
While there is no apparent sign of an overheating market bubble amid some speculative buying for some segment of properties, there is a need for transparency, aligning supply with demand, managing price spikes and ensuring affordability, data-driven policies to ensure long-term property development growth.
> Data centre sustainability. Johor’s data centre advantage depends on sustainability with a focus on water, energy, strategic zoning (industrial areas), and infrastructure development (fibre and cooling).
As of November 2025, Johor had approved 51 data-centre projects worth RM182.96bil, cementing its position as one of the region’s fastest-growing digital hubs.
Of these, 17 are operational, 11 are under construction, and 23 have received approval.
Owing to concerns over water supply and environmental impact, the state has imposed a freeze on new applications for specific types of data centres and requested a temporary halt to certain expansion projects.
It will no longer approve applications for water-intensive Tier 1 and Tier 2 facilities, which can use up to 50 million litres a day, which is enough to supply more than 300,000 households or meet the daily drinking needs of 25 million people.
Additionally, the rapid growth in data centre development is increasing pressure on resources and land prices.
While the inflated land prices have benefited property owners, it is unsustainable for logistics and manufacturing sectors as higher land costs will affect cost competitiveness, increase operational expenses and may deter long-term investment.
Lee Heng Guie is the executive director of the Socio-Economic Research Centre. The views expressed here are the writer’s own.
