Singapore-headquartered firms can use Johor-Singapore SEZ as manufacturing base: Alvin Tan

Companies can use the Johor-Singapore Special Economic Zone (JS-SEZ) as a manufacturing and processing base while keeping their headquarters and research operations here, said Minister of State for Trade and Industry Alvin Tan.

He was replying to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) in Parliament on the economic and employment benefits of the JS-SEZ. Mr Saktiandi had also asked which sectors will gain and whether the Government is concerned that some sectors will be adversely affected.

At the signing of the JS-SEZ agreement in January, Prime Minister Lawrence Wong had expressed hope that the new zone will create 20,000 skilled jobs for people on both sides of the Causeway.

The zone will also support the expansion of 50 projects in the first five years and a cumulative 100 projects in its first decade.

On Feb 5 in Parliament, Mr Tan said: “The Johor-Singapore Special Economic Zone seeks to capitalise on the complementary strengths of Singapore and Johor to strengthen Singapore’s competitiveness and create good jobs for Singaporeans.”

He said sectors such as manufacturing, logistics and the digital economy can benefit from the improved cross-border flow of goods and people, and the ease of doing business.

“Many Singapore-based companies already have twinning operations in Singapore and Johor. Firms could benefit from siting some of their operations in Johor to take advantage of the resources there, while focusing HQ and research functions in Singapore, where we have relative strengths,” he added.

Mr Tan gave the example of South Korea’s SPC Group, the parent company of Paris Baguette, which operates its regional headquarters and innovation centre in Singapore, while its regional production base is in Johor.

“We can also jointly attract new investments to the JS-SEZ, which may establish operations in Singapore or tap the services provided by Singapore.”

An example is Agrocorp, a Singapore-based food ingredient company that recently expanded its downstream capabilities with a new plant in Johor in collaboration with a Japanese partner.

Mr Tan said he has regular meetings with business leaders here, including those from the Singapore Business Federation who are taking a mission of more than 100 Singapore companies to Johor later in February. “So there’s also considerable investment interest,” he said.

In that regard, he said, eligible Singapore companies investing in the JS-SEZ can seek support from schemes such as the Market Readiness Assistance Grant and Enterprise Financing Scheme, which are run by Enterprise Singapore.

Malaysia has also introduced an incentive package for the JS-SEZ, including special corporate and income tax rates for qualifying investments, he noted. On Jan 8, it announced a series of tax incentives effective from Jan 1, 2025.

The measures include a special corporate tax rate of 5 per cent for up to 15 years, aimed at luring high-value investment in areas such as artificial intelligence, quantum computing supply chain, medical devices and aerospace manufacturing.

Mr Saktiandi posed a subsequent question on whether the Government is concerned that some specific sectors will be adversely affected, and whether certain investments or companies will likely relocate from Singapore to the JS-SEZ.

Mr Tan said Singapore’s inherent strengths, such as strong rule of law, regulatory and political stability, and a strong financial centre, are not that easy to replicate as they have been grown over decades.

He noted that the impact of the JS-SEZ should be looked at from a global perspective, amid increasing economic uncertainty and intensifying competition for talent, trade and investments.

However, it is imperative for Singapore to be more competitive, nimble and innovative, he added.

“If executed well, the Johor-Singapore SEZ will give us that additional competitive edge,” he said. “The final objective is to attract new companies, new investors that hitherto may not have considered Singapore as an investment destination.”

Still, the Government is monitoring any impact from the JS-SEZ and is in regular discussions with business leaders here and also Malaysia on those issues.

“So the discussions are ongoing. More details will be released,” he said.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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