KUALA LUMPUR, May 10 — The Johor-Singapore Special Economic Zone (SEZ) could be a formidable competitive advantage in attracting fresh foreign direct investment (FDI) from multinational companies (MNCs).
This can be achieved by integrating Singapore’s global financial, logistics and advanced manufacturing capabilities with Johor’s access to competitive labour, abundant land and cheaper energy resources.
Maybank Investment Bank (Maybank IB) said Singapore enjoys wide and deep connectivity to global capital sources, while also serving as a gateway to the Asian markets, given unrivalled transport and trade links.
“MNCs are currently diversifying their supply chains away from China, and looking for alternative production bases as global competition for investments has intensified with rising impetus for countries to re-shore and friend-shore production.
“Against this backdrop, governments are looking to strengthen their competitive strengths to capitalise on this shift in supply chains and attract more foreign investments,” it said in a note today.
Maybank IB opined that there is scope for Singapore’s South-east Asia Manufacturing Alliance (SMA) to be expanded to other industrial parks within the SEZ.
“Incentive schemes covering other sectors could also be considered. This will provide additional impetus for complementary investments in Singapore and Johor, building on incentives offered by Malaysian authorities,” it said.
According to Maybank IB, rising business costs in Singapore have increased the need for a hinterland, which Johor is well positioned to provide.
It said Johor is cost-competitive and is a major consideration for Singapore-based small and medium enterprises.
Salary levels in Johor are more than 80 per cent lower for manufacturing; and 40 per cent lower for hospitality, while businesses hiring Malaysian workers are not subject to the foreign worker levies and quotas that they would face in Singapore.
Average electricity tariffs in Johor are around 60 per cent lower for businesses than Singapore, and 80 per cent lower for households.
“Business costs in the island state have climbed markedly in the post-pandemic period, driven by rising global inflation, a tight labour market, rents and tax adjustments, and administrative wage policies.
“Rents in Iskandar (Johor) are 75 per cent lower than Singapore for offices, 65 per cent lower for factories and 85 per cent lower for housing. Office rents are roughly RM9 per sq ft in Iskandar, compared to S$11-S$12 (RM38-RM42) in Singapore,” it said.
On the other hand, it said residential rents in Johor are around a seventh of Singapore’s public housing (HDB apartment) rents, while ready-built factory rents in Johor are roughly a third of Singapore.
“To minimise red tape and provide more clarity on investment policies, Malaysian authorities are working on the Invest Malaysia Johor Facilitation Centre (IMFC-J), which is to be located in Forest City, and scheduled to be operational in the third quarter of 2024.
“The JB-Singapore Rapid Transit System Link is about 70 per cent completed and on track to meet the operational start date at end-2026. Travel time between Singapore and Johor Bahru will take just six minutes,” it said. — Bernama
