On Tuesday (7 Jan), Singapore Trade Minister Gan Kim Yong and Rafizi Ramli signed the Johor-Singapore Special Economic Zone (JS-SEZ) agreement, with the purpose of attracting foreign investment and driving growth.

The agreement, which has been talked about since 2023, aims to complete 100 projects in 10 years, an ambitious goal laid out by both nations.

It will also:

• Strengthen economic ties between Singapore and Johor

• Facilitate freer movement of people (including workers and tourists)

• Position Johor as a regional hub for manufacturing, logistics, technology, and tourism

"Early estimates put JS-SEZ contribution to about US$28 billion in addition to our GDP every year. It can easily rival Klang Valley in the next ten years," said Rafizi Ramli during a fireside chat at the Forum Ekonomi Malaysia.

Key Points of JS-SEZ

1. Passport-free immigration system 

By mid-2025, foreigners may get to use a QR code clearance system on Johor and Singapore’s borders to provide faster clearance.

This will be a key step in digitizing the movement of people across the borders and reducing congestion in the Causeway, one of the busiest land crossings in the world.

To be clear, there is already a QR code system for Malaysians and Singaporeans—this feature will be rolled out to more people in the near future.

2. Improved passenger rail line

Apart from QR codes, the Rapid Transit System (RTS) link, which connects Johor and Woodlands Singapore, will be a game changer at reducing Causeway congestion.

As of August, the project is 83% complete and is expected to begin operations by Jan 2027. The fares will be “determined commercially” once the shuttle service is up and running.

A few more things you need to know:

• Shuttle spans 4 km

• Journey takes about 6 minutes

• Waiting time of 3.6 minutes per train

• Can ferry up to 10,000 people an hour each way

• Expected to ease congestion on the Causeway by 35%

3. Nine flagship zones to drive up high skilled jobs, boost property demand

The JS-SEZ agreement covers strategic areas across Johor, with key developments concentrated near the Johor-Singapore border.

The zone encompasses 3,500 sq km and is split into nine flagship areas, designed to provide seamless connectivity through bridges, highways, and ports, ensuring Johor’s accessibility to global markets.

This will increase the number of high skilled jobs and boost property demand in the Southern state.

4. Higher minimum wages for high skilled workers.

To foster talent, the Johor Talent Development Council (JTDC) will implement various programs to educate and train people to meet industry demands.

Plans are underway to increase Johor’s minimum wage to RM4,000 for diploma holders and RM5,000 for degree holders.

Priority will be given to high skilled industries, but I’m expecting this to trickle down to other industries as well.

5. The property sector (among others) will heavily benefit

MIDF expects JS-SEZ to ramp up development in the Southern state, which will lead to the expansion of businesses, creating more opportunities and driving up wages. Sectors that are expected to benefit the most include:

• Utilities

• Property

• Oil & Gas

• Construction

• Transport and Logistics

MIDF has also published several stock picks, with a 6% potential upside for GAMUDA, 15% upside for MAHSING, and 22% upside for IJM Corp in the next 12 months.

Apart from JS-SEZ, data centres are also becoming a thing in Johor.

From 2021 to June 2024, a total of RM90.2 billion has been poured in from international companies (ie. Google, Microsoft, ByteDance TikTok, Nvidia).

State wise, Johor is ranked the highest in data centre development. It has 29 data centres spanning over 2.32 million sq ft (equivalent to 40 football fields), occupying 461MW capacity. Another 8 are under construction.

Kuala Lumpur comes in second, with 47 data centres operational and another 11 under construction.

More interesting facts about Johor

According to the Department of Statistics (DOSM), the Southern state recorded the highest median wage growth in 2023, and its unemployment rate is among the lowest in the country.

Johor is also the largest contributor to Malaysia’s agriculture output, occupying a 17.1% share of national agriculture GDP in 2023.

In terms of total trade, Johor accounted for more than a quarter of Malaysia’s total trade flows as of 2024, second after Selangor.

That said, Johor’s median wages is still slightly below the national figure, indicating room for growth.

Would you work in Johor for a higher pay?

I conducted a poll in our WhatsApp group and asked our patrons whether they’ll move to the Southern state for a better pay.

The majority of you said that you will, depending on how high the pay is.

JS-SEZ looks promising, and if it succeeds in implementing all of its policies, it’s highly possible for Johor to overtake Kuala Lumpur in the next few years.

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That’s all for this week’s newsletter!

Disclaimer: The information contained in this newsletter is for informational and educational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice.