Modern city

How to seize Johor-Singapore Special Economic Zone’s opportunities

Authors

  • Samir Bedi

    EY Asean People Consulting Leader; Singapore Government & Public Sector Leader, Ernst & Young Advisory Pte. Ltd.

  • Andre Toh

    EY-Parthenon Asean Valuation, Modeling & Economics Leader

  • Gary Ong

    EY-Parthenon Associate Partner, Strategy and Execution, EY Corporate Advisors Pte. Ltd.

  • Chester Wee

    EY Asean International Tax and Transaction Services Leader

  • Johanes Candra

    Partner, Business Incentives Advisory, Ernst & Young Solutions LLP

4 minute read 26 Mar 2025
Related topics
Tax
Workforce
Government and Public Sector

The JS-SEZ would allow Singapore and Malaysia to jointly compete for global investments, and ecosystem collaboration is crucial for success. 

In brief

  • The JS-SEZ is expected to unlock new opportunities, but potential implementation challenges need to be addressed.
  • Strategic planning and collaboration between the Singaporean and Malaysian governments, industries and corporates is critical for its long-term success.
  •  Both governments can support businesses in the JS-SEZ by enhancing tax incentives, proactively addressing potential conflicts and offering clear guidelines.

The Johor-Singapore Special Economic Zone (JS-SEZ) represents a pivotal advancement in economic collaboration between Singapore and Malaysia, with the aim of harnessing their strengths, reinforcing their joint value proposition and competing for global investments together. This is expected to improve connectivity of cross-border goods, enable freer movement of people and strengthen the business ecosystem within Singapore and Johor. 

A Singapore Business Federation survey of over 160 Singaporean businesses from March to June 2024 found that 93% of respondents viewed Johor as an attractive investment destination, with 50% already operating in the state.1 The JS-SEZ is expected to unlock new opportunities, such as cost structure optimization through a reduction in material costs, labor cost optimization, and reducing utility cost and other overheads. Companies could also pool capacities across warehousing, distribution and freight with partners within the JS-SEZ to help achieve cost efficiencies. 

The economic zone could also alleviate labor shortages by providing access to a vast pool of skilled workers in Malaysia, supported by the ease of border immigration clearance. On this front, memorandums of understanding have been signed to enhance cooperation between learning institutes to develop talent. In addition, the JS-SEZ will simplify and digitize transit and customs clearance for goods and talent, allowing efficient transshipment between the countries. 

To facilitate investment, the Invest Malaysia Facilitation Centre Johor was established as a one-stop facilitation center to streamline business approval processes and reduce bureaucracy.

EY perspectives: Johor-Singapore Special Economic Zone

This report shares potential opportunities and challenges of the Johor-Singapore Special Economic Zone and EY recommendations to help drive its long-term success and sustainability.

Request a copy

Cautious optimism 

Alongside the opportunities, there is cautious optimism over the JS-SEZ due to potential implementation challenges and concerns.

1. Lack of certainty in implementation timeline 

The “project-by-project” phased approach for infrastructure development may lead to delays, add red tape and lengthen bureaucratic processes, which may disrupt operations and expansion plans. 

2. High infrastructure investment requirements 

Significant investment in utilities infrastructure is required to support the dynamic model of the JS-SEZ. 

3. Quality and compliance issues

Challenges exist in enforcing consistent quality standards and maintaining product integrity. There is also a shortage of skilled labor in certain industries in Johor.

4. Dilution of the “Made in Singapore” label 

There may be challenges in meeting the minimum manufacturing percentage in Singapore to qualify for the “Made in Singapore” label. This may lead to potential dilution of the label if inferior quality products are produced in the JS-SEZ. 

How EY can Help

  • Industry Strategy

    EY-Parthenon sector strategy consulting teams have deep sector strategy experience and can help your business challenge the status quo. Learn more.

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5. Knowledge on operationalizing business in the JS-SEZ 

Some small and medium-sized enterprises (SMEs) are apprehensive about splitting their operations between Singapore and Johor. Commercial playbooks for international operations can reduce such uncertainty.

 

Need for strategic ecosystem collaboration 

Strategic planning and collaboration between the Singaporean and Malaysian governments, industries and corporates is essential for the long-term success and sustainability of the JS-SEZ. This includes updates to policies regarding the movement of goods and talent as well as clear frameworks and incentives in relation to intellectual property to help drive innovation, reduce operational costs for businesses and enhance the competitive edge of the JS-SEZ.  

How EY can Help

Both governments can support businesses in the JS-SEZ by enhancing tax incentives and setting up expedited channels for tax dispute resolution to facilitate smoother related-party transactions and foster a more stable and predictable tax environment. By proactively addressing potential conflicts and offering clear guidelines, both governments can help businesses operate with greater confidence and efficiency, which could enhance the economic potential of Singapore and Johor and their workforces.


Summary

The JS-SEZ could unlock economic opportunities for Singapore and Johor by harnessing the complementary strengths of both markets. To drive long-term success and sustainability of the JS-SEZ, strategic planning and collaboration between the Singaporean and Malaysian governments, industries and corporates is crucial.

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    About this article

    Authors

    • Samir Bedi
      EY Asean People Consulting Leader; Singapore Government & Public Sector Leader, Ernst & Young Advisory Pte. Ltd.
    • Andre Toh
      EY-Parthenon Asean Valuation, Modeling & Economics Leader
    • Gary Ong
      EY-Parthenon Associate Partner, Strategy and Execution, EY Corporate Advisors Pte. Ltd.
    • Chester Wee
      EY Asean International Tax and Transaction Services Leader
    • Johanes Candra
      Partner, Business Incentives Advisory, Ernst & Young Solutions LLP
    Related topics
    Tax
    Workforce
    Government and Public Sector

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.