KUALA LUMPUR, April 19 - The Johor Singapore Special Economic Zone (SEZ) will be a game changer for Malaysia as it could unlock the creation of economic value on both sides of the Causeway, according to an investment bank.
Maybank Investment Bank (Maybank IB) Research highlighted five main investment themes set to drive equity value: optimising hinterland access, stimulating north - south supply chain shifts, fast tracking the net zero transition, expanding infrastructure and property investments, and broadening the small and medium enterprise (SME) economy.
It describes the JS - SEZ as being backed by clear policy and strong execution to bring together Singapore’s global financial and logistics capabilities with Johor’s access to competitive land, labour and renewable energy.
“Regionally, this could be a competitive advantage in attracting fresh foreign direct investment (FDI) to the JS - SEZ, especially as supply chains migrate south, while also fast tracking net zero transition.
“Broad sector winners include banking, property and Real Estate Investment Trusts (REIT), industrials, renewables, technology and telecommunications,” said the investment bank in its report titled “Causeway to Opportunities”.
The report highlights the various advantages and expectations related to the JS - SEZ, which is mainly expected to foster stronger business connections and improved connectivity between Malaysia and Singapore.
Based on the sectors, it said both Malaysia and Singapore would stand to benefit from the JS - SEZ initiatives, with financial institutions expected to play a key role in facilitating these.
“The increased infrastructure investments as well housing and commercial facilities demand could be a boon to Singapore and Malaysia property developers and REITs,” it said.
The report added that data centre establishment should be positive for Singapore and Malaysia’s telecommunication companies, as well as electronics manufacturing players.
“Increased renewable capacity should spur Singapore industrials and Malaysia renewables,” said the report, adding that while easier travel could ease labour pressures and widen the mass market for Singapore’s gaming.
Maybank IB Research said the success of any SEZ was dependent by having the right location, hassle free logistics and strong policy frameworks.
“Historically entrenched ties between Johor Baru and Singapore already augments the locational advantage.
“Now a robust policy framework needs to be established that backs easier movement of capital and people,” said the report.
The report pointed out that the JS - SEZ could make it easier and more attractive for Singapore companies, multinationals and SMEs to invest in Johor, and it can also complement and sharpen Singapore’s FDI competitiveness.
“This would support Singapore’s role as a financial centre and logistics hub.
“At the same time, Johor could unlock substantial value from its access to land, labour and energy,” said the investment bank.
With both Malaysia and Singapore economies already closely integrated, the republic accounts for nearly 25 per cent of domestic FDI and is the second largest trading partner.
In January, the Johor state government proposed for JS - SEZ to be in Iskandar Malaysia, which includes the districts of Johor Baru, Pasir Gudang, Iskandar Puteri, Kulai, Sedenak and also Pontian.
The JS - SEZ is expected to improve the business ecosystems of both the Iskandar Malaysia region of south Johor and Singapore, especially in the electronics, financial services, business related services and healthcare sectors.
It is expected that the JS - SEZ will introduce special tax incentives as well as bonded warehouses facilities to encourage participation.
Other areas include exploring the ease of movement and passport free travel between Malaysia and Singapore under the SEZ.
Yesterday, Prime Minister Datuk Seri Anwar Ibrahim said JS - SEZ and the Forest City Special Financial Zone (SFZ) would be among the main drivers of the country’s continued growth.
Source: https://www.malaymail.com/news/malaysia/2024/04/19/special-economic-zone-with-singapore-will-transform-johor-and-unleash-its-economic-potential-says-maybank-ib/129563