Johor-S'pore Special Economic Zone faces challenges in manpower shortage, regulatory and logistical hurdles, says Maybank IB

• Maybank Investment Bank (Maybank IB) highlighted in a report that nearly 60% of Singaporean businesses operating in Johor face difficulties hiring skilled technical workers, citing a poll from the Singapore Business Federation in 2024. Employment pass issues and quotas were cited as significant barriers, it noted.

KUALA LUMPUR (Jan 27): Manpower shortages as well as regulatory and logistical hurdles will be among the challenges faced by the Johor-Singapore Special Economic Zone (JS-SEZ).

Maybank Investment Bank (Maybank IB) highlighted in a report that nearly 60% of Singaporean businesses operating in Johor face difficulties hiring skilled technical workers, citing a poll from the Singapore Business Federation in 2024. Employment pass issues and quotas were cited as significant barriers, it noted.

"In addition, businesses are facing difficulties in hiring expat workers, with Malaysia imposing a freeze on foreign worker employment quota applications since November 2024, as part of a stipulation under the 12th Malaysia Plan to cap the number at 157% of the country’s workforce," Maybank IB said in the report.

Further, the disparity in wages between Johor and Singapore adds to the challenge, as many Johoreans continue to seek employment across the border due to higher earnings potential. The report noted that Johor’s median monthly wage stood only at one-seventh of Singapore’s, though the JS-SEZ aims to narrow this gap with premium starting salaries of RM4,000 for diploma holders and RM5,000 for degree holders.

Malaysia and Singapore signed an agreement on Jan 6 for the development of the JS-SEZ. The special economic zone spans 3,588 sq km — nearly five times the size of Singapore — with an ambitious target to boost Johor’s economy by US$28 billion (RM122.58 billion) by 2030 and create 20,000 skilled jobs in its first five years.

While initiatives such as the Johor Talent Development Council (JTDC) promise to bridge skill gaps through curated training programmes and partnerships with Singaporean institutions, businesses are calling for more flexible immigration policies, according to Maybank IB.

"[Applications for] Malaysia’s foreign talent passes come with strict requirements, which may put the country at a disadvantage in attracting skilled expatriates compared to other countries’ generous 'golden visas'," Maybank IB said.

The research house suggested introducing an "SEZ Visa" with expedited processing and allowances for expatriates to meet specialised labour demands. “Granting businesses the flexibility to bring in staff from abroad will help kick-start their operations in the JS-SEZ, such as managers and subject matter specialists with expertise not easily found locally,” the report said.

Regulatory and logistical hurdles complicating cross-border flow of goods

Maybank IB pointed out the need for harmonised tax regimes and streamlined customs procedures to speed up cargo clearance time at the zone that is currently facing traffic congestion.

Maybank IB noted that authorities in both countries are working on digitised customs processes to accelerate cargo clearance at land checkpoints, with a pilot initiative introduced in December 2024 to reduce permit applications.

"Freer cross-border goods movement will be crucial to strengthen the JS-SEZ’s value proposition for manufacturers conducting “twinning” operations in Singapore and Johor," it commented.

In addition, developing additional transportation links such as more goods vehicular lanes, ferries and cargo rail would ease pressure on the two present land links, given increased traffic brought about by the JS-SEZ.

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