Can the Johor-Singapore SEZ truly succeed, or will red tape and infrastructure challenges stall its potential? With international firms demanding streamlined regulations and better facilities, are both sides aligned on making this economic hub a reality, or are these ambitious plans at risk? What are the critical factors that could make or break this SEZ?
Johor-Singapore SEZ: International firms call for reduced red tape, and improved infrastructure for the zone to be a success While recognizing Johor’s potential to become an economic hub through the proposed SEZ, firms told CNA that the state must introduce more business-friendly measures such as streamlining regulatory processes, offering more tax incentives and improving facilities for data centre operations.
Dutch tank storage company Vopak has long straddled its business on both sides of the Johor Strait. Over the last 30 years, it has based oil and gas operations in both Singapore and Pengerang in the southern part of the Malaysian state. Now, with discussions over the proposed Johor-Singapore Special Economic Zone (SEZ) advancing, Vopak’s president for business units in Asia and the Middle East expects the areas to become attractive to more foreign companies with a stake in the oil sector due to the expected geographical location of the zone.
Mr. Chris Robblee told CNA that Singapore and southern Johor are strategic locations to house refineries because they are located on major shipping routes and blessed with “deep-water marine accessibility”. “Both locations complement each other and facilitate the growth of oil trading and refining in the region,” he said.
Several business experts told CNA that the success of the proposed Johor-Singapore Special Economic Zone (SEZ) depends on its ability to woo foreign multinationals’ investment.
This is following Malaysia’s Economy Minister Rafizi Ramli’s recent remarks that it is important that the Johor-Singapore SEZ realises its potential to attract international investors.
“There will be companies from Singapore coming to Johor, but the bigger potential is companies from all over the world coming to Johor with a view of having the best of both worlds,” he said, referring to Singapore’s sophistication and Johor’s lower costs of operations.
Mr Rafizi pointed out that companies with such intentions, including those keen to navigate geopolitical tensions while finding a base in Southeast Asia, have previously turned to Vietnam.
“With the (Johor-Singapore) JS-SEZ, we can place Malaysia as a competitor to shift investors who previously went to Vietnam to enter Johor and Singapore,” he said. However, firms and business experts cautioned that Johor must work towards streamlining regulatory processes and improving its infrastructure in the data centre space to cement its status as an attractive location for multinationals with regional offices in Singapore or Kuala Lumpur.
This includes opportunities for companies to launch manufacturing operations, open data centres and build petroleum refineries by leveraging on Johor’s abundant land and cheap cost of doing business. There are various areas in which the Johor state government can offer incentives to attract more investment, according to Mr Robblee. He said that Johor can “streamline regulatory processes” by launching a “one stop shop” for permits and approvals as well as ensuring that the processes for decision-making are “transparent”. “Additionally, (we are hopeful that the SEZ would offer more) tax breaks and exemptions, investments grants and subsidies, low interest loans and financing and provision of incentives for foreign companies to facilitate job creation, transfer of knowledge and upskilling of the local workforce,” he added.
Vopak currently has 76 terminals across 23 countries. When asked if it has plans to expand further in Johor and Singapore if the SEZ comes to fruition, Mr Robblee said “At this stage, it is too early to comment on specific expansion plans. "However, we are continually evaluating opportunities that align with our business objectives and the evolving economic landscape.” He added that Vopak currently benefits from Malaysia tax schemes such as the Investment Tax Credit and Pioneer Status Program, but he outlined that additional tax incentives programmes related to infrastructure investments would offer “valuable opportunities”.
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