Johor-Singapore SEZ a showcase of like-minded states working together amid Trump tariffs, protectionism: DPM Gan

JOHOR BAHRU: The Johor-Singapore Special Economic Zone (SEZ) is a showcase of how like-minded governments can collaborate and benefit amid global trade uncertainty arising from tariffs imposed by the United States, said Singapore’s Deputy Prime Minister Gan Kim Yong on Monday (Apr 21).

He added that the SEZ allows firms to beef up their supply chains and grow their businesses in spite of protectionist policies announced by US President Donald Trump. 

Mr Gan, who was speaking at an investment business forum held at the Persada Johor International Convention Centre, also announced the opening of a new joint project office by Singapore authorities to support their firms keen on expanding to the SEZ.  

“Today’s event is … both important and timely. Important – because, amidst a sharp rise in protectionism around the world, it demonstrates how like-minded countries can work with each other to overcome challenges facing us and unlock win-win benefits,” Mr Gan, who is also Minister for Trade and Industry, said in his keynote address.

“And timely – because the JS-SEZ presents an opportunity for businesses to explore how to strengthen how to strengthen their supply chains, so that they can better respond to the volatilities and continue to grow their businesses,” he added.

The Singapore and Malaysia governments inked a deal in January for the Johor-Singapore SEZ to promote and facilitate investments across 11 sectors: Manufacturing, logistics, food security, tourism, energy, digital economy, green economy, financial services, business services, education and health. 

The economic zone will span 3,571 sq km in southern Johor and comprise nine “flagship areas” catering to the different economic sectors. 

In an exclusive interview with CNA in February, Johor Chief Minister Onn Hafiz Ghazi said that the SEZ’s wide range of industries offers a buffer against global trade tensions. 

“I think if you look at the sectors, there is a clear show that we are diversifying into lots of industries, I think that should help manage the uncertainties that are happening in the world,” he said. 

On Apr 2, US President Donald Trump announced “Liberation Day” tariffs, which economists said could hurt economic growth in Southeast Asian economies. 

Malaysia was hit with 24 per cent reciprocal tariffs while Singapore faces a 10 per cent baseline levy on all exports to the US. 

On Apr 9, Trump reversed course and announced a 90-day pause on reciprocal tariffs. 

However, the US has pressed on with its trade war with China. Trump has slapped a 145 per cent tax on Chinese goods in what he calls reciprocal tariffs to close a trade deficit, and Beijing has retaliated with a 125 per cent levy on US imports. 

Mr Gan said on Monday that these developments have created a “backdrop of significant uncertainty” for the world economy and the “rules-based economic order on which our businesses and economies depend”. 

“If countries choose to trade with others only on their own preferred terms, we will always be at the mercy of larger economies,” he added. 

But in every crisis, there will be opportunities, he said.

“As businesses seek to reconfigure their production and supply chain arrangements, there will be new opportunities for those who are nimble and fast to adapt to the new landscape,” Mr Gan added. 

For example, Archisen, a Singapore-based agritech company, and Malaysian state-owned Johor Corporation (JCorp) subsidiary, FarmByte, are jointly developing a smart indoor vertical farm in Nusajaya Tech Park that is expected to produce over 300 tonnes of leafy vegetables per year, he said.

“The JS-SEZ builds on the strong, longstanding economic partnership between Malaysia and Singapore to open a new frontier of opportunities for businesses,” said Mr Gan. 

At the same time, Mr Gan said that Singapore is committed to strengthening the fundamentals of the Johor-Singapore SEZ in order to enhance its value proposition.

He pledged that both sides will aim to improve the flow of goods and people between Singapore and Johor by simplifying clearance processes and customs procedures. 

Both countries are keen to streamline approval processes, invest in talent development and establish a single touchpoint for businesses, he said.

A joint project office to support Singapore-based companies keen on expanding into the zone will be set up by Singapore’s Ministry of Trade and Industry, together with Enterprise Singapore and the Singapore Economic Development Board (EDB), he said. 

The office will complement the Invest Malaysia Facilitation Centre- Johor (IMFC-J) established by Malaysia.

The IMFC-J opened in end-February at Forest City. Johor Chief Minister Onn Hafiz had called it a one-stop office that offers business consultation services for companies keen on investing in the SEZ, and it is the first of its kind outside Klang Valley. 

“At a time of significant volatility, uncertainty and anxiety in the global economy, it is even more important that we team up with like-minded countries; double down on better connectivity and ease of doing business; and join hands with businesses and investors,” said Mr Gan. 

“This way, both Singapore and Malaysia can further bridge our economies through the JS-SEZ and strengthen our supply chains, so that we can be more dynamic and resilient together, and continue to create good jobs for peoples of both countries … across the Causeway,” he added. 

JOHOR PROPOSES ASEAN INDUSTRIAL PARK WITHIN SEZ 

In his speech at the forum, Johor Chief Minister Onn Hafiz said the state government has two proposals to "strengthen" the SEZ. 

The Johor government wants an ASEAN Industrial Park to be created within the SEZ that will be geared towards attracting investments from Regional Comprehensive Economic Partnership (RCEP) member countries in high-value sectors such as advanced manufacturing, green technology and digital economy.

RCEP members include all 10 Association of Southeast Asian Nations (ASEAN) member states as well as six trade partners Australia, China, Japan, South Korea and New Zealand. 

The park will aim to “drive technology transfer, boost competitiveness, and diversify supply chains across the ASEAN region”, said Onn Hafiz. 

"We also hope that it will offer customised incentives, such as tax breaks, simplified talent mobility, and temporary relaxation of fund repatriation rules, to make the park highly attractive to foreign investors," he added.

The state government also wants to create a Johor Regulatory Sandbox in the SEZ – a "supervised, flexible environment" for testing technologies, policies and business models, particularly in emerging sectors constrained by current regulations, he said.

"We can start with areas like the Ibrahim Technopolis (IBTEC), Ladang Air Manis and Forest City, to attract investment and foster cross-border innovation in areas such as fintech, smart logistics, renewable energy, and autonomous tech," said Onn Hafiz.

At a press conference on the sidelines of the forum, Malaysia's International Trade and Industry Minister Tengku Zafrul Tengku Abdul Aziz confirmed he would be travelling to Washington on Tuesday evening for tariff discussions with US officials.

He is not looking to commence negotiations "just yet", but is using the opportunity to outline areas of concerns and explain Malaysia’s role in supporting US companies which are based here, and have contributed to the US economy.

"Any negotiations cannot conclude in one week, but the 90-day pause gives us time to engage, and we will continue to engage," he added. 

A company looking to deepen its presence in Malaysia through the SEZ in spite of Trump’s tariffs is American chocolate maker Hershey's.

Thiaghu Selvaraj, the plant manager for Hershey's Malaysia, said that it has a research and development centre in Senai, Johor, and the facility has helped drive product innovation for the region.

"We see even greater potential to strengthen our supply chain and accelerate growth, especially by being located within the strategic Johor-Singapore SEZ. Our investments not only enhance our production capabilities but also create jobs, support local suppliers, and contribute to the broader economy," Selvaraj added.