Malaysia Singapore Signed MoU on Johor-Singapore Special Economic Zone, Beneficial to Forest City’s Special Financial Zone Development

On January 11, 2024, Malaysia and Singapore signed a Memorandum of Understanding (MoU) in Johor Bahru to further promote the establishment of a Special Economic Zone in the state of Johor. The MoU was signed by Malaysia’s Economic Affairs Minister, Rafizi Ramli, and Singapore’s Minister for Trade and Industry, Gan Kim Yong, in the presence of Malaysian Prime Minister Anwar Ibrahim and Singaporean Prime Minister Lee Hsien Loong.

Beyond the signing, both nations will explore various initiatives to develop the Johor-Singapore Special Economic Zone. These include implementing a passport-free QR code system to expedite immigration processing at checkpoints and establishing a one-stop business/investment service center in Johor to streamline the application processes for Singaporean enterprises. Additionally, digitalized processes for cargo clearance at land checkpoints are being planned.

On the day of the MoU signing, Malaysian Prime Minister Anwar Ibrahim and Singaporean Prime Minister Lee Hsien Loong also witnessed the historic moment of the Rapid Transit System Link (RTS Link) project being symbolically “connected” between two countries, which will facilitate more convenient and efficient cross-border travel, tightening the connection between Malaysia and Singapore, and strengthening cooperation.

The close relationship between Malaysia and Singapore has significantly impacted Forest City, located in Johor Bahru. A mere bridge away from Singapore, and with a direct bus service recently initiated, Forest City is well-positioned to leverage its proximity to Singapore. Coupled with Johor’s pivotal air and seaport infrastructure, Forest City may well evolve into a new financial zone adjacent to the global financial center of Singapore, creating a complementary effect.

Additionally, Forest City is also situated in the economically vibrant Iskandar Malaysia region as well as the Johor-Singapore Special Economic Zone. Previously designated as a Special Financial Zone by the Malaysian government, Forest City enjoys the policy benefits of three special economic zones, highlighting its strategic location.

Companies accredited within the Iskandar Malaysia region can apply for corporate tax incentives, enjoy tax exemptions upon approval, and face no foreign ownership restrictions. Qualified skilled workers within the special financial zone benefit from a special income tax rate of 15%, receive a special residence visa, and enjoy expedited customs clearance. Forest City’s financial zone is also home to multiple international higher education institutions and high-end industrial parks, attracting a large number of international investors and knowledge workers, spurring local economic development.

Johor officials, including Woon Hafizz, have stated that if the Johor-Singapore Special Economic Zone and Forest City’s Special Financial Zone materialize, Johor could become the next Shenzhen, with Forest City playing a crucial role in Johor’s development.

Associate Professor Mohamad Ivan Fanany from the University of Malaysia believes that the Forest City Special Financial Zone will form a new financial ecosystem complementary to Singapore, similar to the Shenzhen-Hong Kong model. Such collaboration could become ASEAN’s dual financial engine. He also views Forest City as aligned with Environmental, Social, and Governance (ESG) standards, likely to attract international investors with a shared mission and vision for environmental protection, thus contributing to Malaysia’s sustainable development commitments.

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