Malaysia and Singapore are accelerating the rollout of their new joint special economic zone in a bid to hedge against rising global trade uncertainty under US President Donald Trump’s administration.
Zafrul Aziz, Malaysia’s minister of investment, trade, and industry, said last week that the need for the Johor-Singapore Special Economic Zone (JS-SEZ) and the economic interlinkage between the two Southeast Asian neighbors are now more crucial than before.
“[Trump’s] ‘Liberation Day‘ is a reminder that in the face of geoeconomic and geopolitical uncertainties, we must accelerate reforms,” said Zafrul during his keynote at the JS-SEZ Joint Business and Investment Forum in Johor state’s capital city of Johor Bahru. “The need for JS-SEZ and our country’s economic interlinkage is now more important than ever. In fact, greater than ever.”
In January, the two countries formally agreed to develop the special zone, aiming to build up high-value industries such as healthcare and semiconductors, which they hope will benefit both nations. New investment in the special zone—which covers 3,571 square kilometers—is offered incentives by the Malaysian government, such as tax breaks, subject to specific conditions.
The SEZ targets 50 major projects in its first five years and 100 by 2035, building on the traditional “twinning” model between the two nations—in which companies locate high-end R&D and global business functions in Singapore while housing manufacturing and logistics in Johor.
Already, according to Johor’s chief minister Onn Hafiz Ghazi, the zone secured MYR 27.4 billion (USD 6.4 billion) in investment approvals in the first quarter of 2025 and another MYR 23 billion (SGD 5.4 billion) is in the pipeline for April.
“Through the establishment of the Invest Malaysia Facilitation Centre Johor (IMFC-J), we have streamlined our investment processes. … We have introduced a fast-track mechanism that significantly reduces bureaucratic delays for priority investments,” the chief minister said.
He added that the facilitation center is currently handling 42 projects under accelerated processing, which can now be achieved in 13–14 months, compared with two years prior. “This is not just about efficiency. It is a clear signal to investors: Johor is serious, responsive, and ready,” he said.
With the US tariff threats looming, he proposed at the forum two initiatives to strengthen the special zone’s competitiveness. One is the establishment of a Johor “regulatory sandbox,” a supervised, flexible space to test innovative technologies, policies, and business models in sectors. The sandbox would offer time-bound regulatory exemptions to fast-track development, overseen by federal and state agencies under the IMFC-J.
Ghazi also proposed the creation of an ASEAN industrial park within the zone, tailored to attract high-value investments from the Regional Comprehensive Economic Partnership (RCEP) member countries, which include ten ASEAN states, China, Japan, South Korea, Australia, and New Zealand. The park would focus on advanced manufacturing, green technology, and digital sectors, offering custom incentives like tax breaks, simplified talent mobility, and relaxed fund repatriation rules.
At the forum, Singapore deputy prime minister and minister for trade and industry Gan Kim Yong warned that the renewed US-China tariff escalation risks destabilizing the rules-based multilateral trading order, and smaller economies will always be at the losing end, “at the mercy of larger powers.”
“But in every crisis, there are opportunities. … As businesses begin to reconfigure their production and supply chain arrangements, new opportunities will emerge—for those who are nimble and fast to adapt to the new landscape,” Gan said.
He pointed out that several companies are already capitalizing on the SEZ’s twinning model. Archisen, a Singapore-based agritech firm, is collaborating with Johor’s FarmByte to build a smart indoor vertical vegetable farm in Nusajaya Tech Park, and it’s expected to yield over 300 tons of leafy vegetables annually.
Agrocorp is partnering with Japan’s Megmilk Snow Brand to set up a facility in Johor to produce 6,000 tons of plant-based protein from climate-resilient crops. South Korea’s SPC Group, which controls bakery chain Paris Baguette, has anchored its halal manufacturing in Johor and established its regional headquarters and innovation center in Singapore to support research and product development.
Singapore’s Economic Development Board (EDB) managing director Jermaine Loy called for economic integration between the two nations.
“Amid global uncertainty, it’s crucial that Malaysia and Singapore stay open to trade and investment. Regional economic integration matters now more than ever, and it is proof that we can succeed together, not alone,” he said. “The fundamentals are strong. But what matters is delivery.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.