Chris Ho Wei Duan • February 14, 2024
Legal Update No. 001-2024
1. The inking of the Memorandum of Understanding (MOU) between Malaysia and Singapore on 11 January 2024 marks the official commencement of cooperation between the two nations on the JS-SEZ. Since the announcement of establishment of JS-SEZ, it has emerged as a focal point of economic activity in the region, drawing significant attention from investors and businesses.
2. Spanning across the southern tip of Peninsular Malaysia and Singapore, this strategic collaboration aims to leverage the strengths of both jurisdictions to create a dynamic economic powerhouse with the aspiration to replicate Shenzhen-Hong Kong model in the JS-SEZ. [1]
3. While the two countries’ governments continue to work closely on formalizing the implementation of the cooperation, the key areas and initiatives to be taken to make JS-SEZ a success have been identified as follows: -[2]
one-stop business/investment service centre in Johor to facilitate the application processes for various approvals and licenses necessary for Singapore businesses to set-up in Johor;
adoption / implementation of a passport-free QR code clearance system on both sides, to facilitate more expeditious clearance of people at land checkpoints;
adoption of digitised processes for cargo clearance at the land checkpoints;
co-organising an investors forum to gather feedback from Singapore and Malaysia businesses on the JS-SEZ;
facilitating Malaysia-Singapore renewable energy cooperation in JS-SEZ;
curating training and work-based learning initiatives to address talent and skills gaps for relevant industries in JS-SEZ; and
developing joint promotion events between Johor and Singapore to promote trade and investment into JS-SEZ.
4. Improving connectivity between the two neighbouring countries continue to be forefront in ensuring success of JS-SEZ. With the Rapid Transit System (RTS) project marking its important milestone towards completion with expected operational date by December 2026[3] strengthened by co-located custom, immigration, and quarantine (CIQ) facilities of both countries within the departing stations,[4] the efficiency and efficacy of movement of people is expected to boost the development of JS-SEZ. Besides improving train connection between the two countries, road transport is expected to be revolutionised with the expansion of the current Woodlands Checkpoint at Singapore with construction works expected to commence in 2025.[5]
5. The JS-SEZ will also be complemented by the Forest City Special Financial Zone (Forest City SFZ) which has been announced by His Most Honourable Prime Minister of Malaysia in August 2023.[6] [7] The two zones will complement each other by focusing on different aspects of economic development with Forest City SFZ focusing on financial services while JS-SEZ will be focusing on high technology manufacturing industries.[8]
6. While the legal establishment of the JS-SEZ and Forest City SFZ are yet to be finalised and legislated pending definitive legislative programme and/or bilateral agreements, the Malaysian-Johorean governments linked investment holding which focus on the current Iskandar Development Region, Iskandar Investment Bhd, welcomes the development of the prospectives JS-SEZ and Forest City SFZ in catalysing the investment and continuous growth of the region.[9]
7. With strengthening ties of both nations in other key economic development areas and developing legal issues i.e. personal data protection, cybersecurity and the digital economy, the continued mutual growth of businesses in both countries is without a doubt plausible.[10]
8. Our team continues to observe the development of JS-SEZ, Forest City SFZ and bilateral government communications and agreements as well as legislative programmes related thereto and will share relevant regulatory and legal updates related to JS-SEZ and Forest City SFZ from time to time for the benefit of our clients.
9. Our team is experienced with relevant advisory works pertinent to foreign direct investment in Malaysia including the state of Johor and areas involving JS-SEZ. Our team provides advisory services from incorporation, tax incentives-pioneering status applications, licensing and other matters arising from investing in Malaysia. Our team is also well versed in the relevant corporate laws, regulatory requirements as well as government liaison in ensuring our client’s investment in Malaysia are secured.