KUALA LUMPUR - Malaysia and Singapore agreed to jointly develop a special economic zone and explore a range of measures including passport-free travel to boost trade between the neighbours that each count the other as the No. 2 trading partner.
The pact to establish the area — where companies operate with little regulation or government interference — in Malaysia’s southern Johor state will boost business activity and improve connectivity, according to a joint statement.
Malaysia’s Economy Minister Rafizi Ramli and Singapore’s Minister for Trade and Industry Gan Kim Yong signed the agreement on Thursday in the presence of the prime ministers of the two countries.
The Johor-Singapore Special Economic Zone “will herald the commencement of a transformative chapter in our bilateral economic relations,” Rafizi said in the statement.
Malaysia and Singapore will explore measures that will support the special economic zone, including a passport-free QR code clearance system on both sides to improve the speed of clearance of people at land checkpoints.
Malaysia and Singapore share one of the world’s most open borders. Their bilateral merchandise trade totalled US$90.3 billion in 2022, which is more than the total commerce they each enjoy with Indonesia, Thailand, the Philippines and Vietnam combined. The causeway connecting Johor and Singapore sees more than 350,000 travellers daily.
Singapore was also Malaysia’s second-biggest source of foreign direct investment in the first nine months of 2023 at 20.4 billion ringgit (US$4.4 billion).
The neighbours also agreed to explore:
A one-stop business-investment service centre in Johor for Singapore businesses to set-up in Johor
Adopting digitized processes for cargo clearance at the land checkpoints
Co-organising an investors’ forum, as well as facilitating Malaysia-Singapore renewable energy cooperation in JS-SEZ
The neighbours earlier commemorated the completion of a connecting span for a new rail link, which is expected to commence passenger service by December 2026 and have a peak capacity of up to 10,000 passengers per hour per direction.
Malaysian stocks with substantial exposure to Johor state advanced in the weeks ahead of the memorandum’s signing.
Malaysia’s incoming monarch Sultan Ibrahim Sultan Iskandar, who hails from Johor, has also said that he plans to use his influence to improve infrastructure including the high-speed rail project with Singapore.
Singapore was Johor's second-largest foreign investor from January to June 2022, and contributed to around 70% of Johor's total foreign direct investment in the manufacturing sector, the joint statement said.
Earlier on Thursday, Anwar and Lee also witnessed the marking of a milestone in the construction of a 4-kilometre (2.49-mile) light rail link between state capital Johor Bahru and Singapore.