Cross-border economic integration sparks business plans in Singapore and Johor

The Tuas mega port in Singapore, set to be the world’s largest fully automated port, adds to the appeal for companies eyeing expansion in the region.

In a strategic move to capitalize on the strengthening economic and transport connectivity between Singapore and Johor, businesses on both sides of the border are gearing up for relocations and expansions. The anticipated completion of the 4km Rapid Transit System (RTS) Link by the end of 2026 is a focal point, enticing Malaysian businesses to position themselves closer to the upcoming light rail station at Bukit Chagar in Johor Bahru.

Catherine Tee, executive director of M Lighting Design & Renovation, sees this as an opportunity to boost her customer base, noting that a shift closer to the RTS station could potentially increase the number of Singaporean customers by an additional 10 per cent. However, the move comes with inherent risks, requiring careful planning, marketing strategies, and consideration of increased resource and manpower needs.

Other businesses, such as the Lemon Tree Restaurant, are adopting a more cautious approach, studying the landscape to assess the potential competition and weighing factors like rental costs, renovation expenses, and labour requirements before committing to expansion plans.

Mr. Teh Kee Sin, advisor of the SME Association of South Johor, acknowledges the limited resources of small- and medium-sized enterprises (SMEs) but emphasizes their agility in seizing opportunities. He highlights the nimbleness of SMEs, especially in sectors like retail and services that involve minimal preparation for relocation.

Dr Lee Nai Jia, head of real estate intelligence at PropertyGuru, points out that rental rates for retail spaces in Johor Bahru have remained flat due to the COVID-19 pandemic. However, he anticipates a potential upswing of up to 10 per cent once the RTS Link is operational, prompting some retailers to secure lease agreements now to lock in current rates.

On the Singaporean front, firms are eyeing the prospect of a new Special Economic Zone (SEZ) in Johor. Agrocorp International, an agricultural trading firm, plans to open a food processing facility in Johor Bahru to export its vegan cheese globally. The director of strategic investments, Vishal Vijay, highlights the region’s access to utilities and excellent port facilities as key factors influencing their decision.

While acknowledging challenges like traffic congestion at border checkpoints, Vijay expresses optimism about the SEZ potentially alleviating some of these issues, especially with discussions around passport-free travel and digitalized cargo clearance processes. The Tuas mega port in Singapore, set to be the world’s largest fully automated port, adds to the appeal for companies eyeing expansion in the region.

Jeremy Mun, Chief Operating Officer of electronics manufacturer Aztech Global, sees the smoother flow of people and goods as a solution to address manpower shortages. The potential for financial incentives, such as lower tariffs within the SEZ, could further enhance the profitability of businesses operating in the region.

As Malaysia and Singapore explore initiatives leading to the establishment of the SEZ, businesses eagerly await more details on the economic sectors of cooperation and geographical coverage. Further updates are expected at the 11th Malaysia-Singapore Leaders’ Retreat later this year, setting the stage for a new chapter of cross-border economic integration and business opportunities.