Special Economic Zone Agreement Between Malaysia and Singapore

By Danial Azhar

KUALA LUMPUR (Reuters) – Malaysia and Singapore announced an agreement on a special economic zone (SEZ) in Johor, Malaysia, intended to enhance investment and facilitate the movement of goods and people between the two countries.

The Southeast Asian neighbors initially agreed in principle to develop the economic zone together a year ago.

The agreement was revealed during a visit by Singapore Prime Minister Lawrence Wong and senior ministers to Malaysia. Wong stated, “It’s an important project … we can both be more competitive, enhance our value proposition, and jointly attract more investments to our shores,” during a joint press conference with Malaysian Prime Minister Anwar Ibrahim.

Wong noted that both sides engaged stakeholders to create conditions for long-term business growth while negotiating the agreement.

Anwar highlighted the uniqueness of the SEZ, emphasizing that it is rare for two countries to collaborate on a single initiative. The countries aim to attract high-value investments in sectors such as manufacturing, logistics, tourism, and energy transition. Malaysia’s Economic Minister Rafizi Ramli revealed that they are targeting 50 projects within the first five years and the creation of 20,000 skilled jobs.

To support companies in the SEZ, Malaysia will establish and manage an infrastructure fund while Singapore will create its own fund to facilitate investments and support Singaporean businesses in Johor, according to Rafizi.

Thousands of Malaysians commute daily to affluent Singapore for work and study, causing frequent traffic congestion on the causeway, one of the world’s busiest border crossings.

The leaders also welcomed proposals for a high-speed rail between the two nations, with Anwar stating it should be led by the private sector with minimal government involvement.