🇲🇾🇸🇬JS-SEZ: Unlocking High Value Growth And Fostering Win-Win Cross-Border Prosperity

• The much anticipated joint agreement to establish JS-SEZ has been formalised by both leaders of MY and SG following the 11th Malaysia-Singapore Leader’s Retreat today.

• Touted as the first-ever cross-country economic zone, JS-SEZ underscores both Malaysia and Singapore’s commitment to unlock high value growth and fostering win-win cross border prosperity

• The JS-SEZ rides on Singapore’s offering as a robust MNC business hub, and Johor to complement with competitive cost of doing business – with abundant supply of land, labour costs and favourable tax regime.

• Envisioned to be a successful industrialisation zone, JS-SEZ is expected to be >4x larger than Singapore and nearly twice the size of China’s Shenzhen. Meanwhile, 16 economic sectors have been proposed to be part of the zone which includes the new priority sectors i.e. Aerospace, EE&E, Chemical, Medical devices and Pharmaceuticals.

• This will be carried out at 9 flagship zones spanning JB City Centre, Iskandar Puteri, Tg. Pelepas - Tg Bin, Pasir Gudang, Senai – Skudai, Sedenak with 3 new flagship zones i.e. Forest City, PIPC and Desaru. Property summary to ensue with more details on these areas.

• In expediting approvals and streamlining processes, Invest Malaysia Facilitation Centre – Johor, will be establish to act as an one-stop centre in facilitating investments.

✅ Key Measures Proposed

• Pro-business policies and incentives including special tax breaks, grants and streamlined regulations.

• Special corporate tax rates will be offered to companies undertaking new investments in high-growth and high-value-added activities within JSSEZ. A special personal income tax rate will be announced at a later date. It is understood that the MOF is looking to revamp the tax structure to be more outcome-based, closely tied to the investments companies bring to the table.

• Foreign investor-friendly policies including robust IP laws and allowing 100% foreign equity in selected service sectors such as healthcare, social services, tourism, transport, business, and IT.

• Reduced friction from cross-border travel and trade via automated immigration lanes and paperless clearance for goods

• Enhanced immigration passes with Malaysia’s existing visas to be enhanced similar to the DE Rantau Nomad Pass

• Support from the MY Gov for the development of the JS-SEZ via a new infrastructure fund to support power, water, roads, electricity, gas and to some extent, land (It was mentioned that land falls under the jurisdiction of the state govt)

• Funding support from the SG Gov to facilitate the expansion of SG companies into the JS-SEZ and potential twinning of MNC operations in Singapore and the SEZ

• Targeting 50 high-value projects and 20,000 high-skill jobs created over the next 5 years

• The first wave will target global companies managing geopolitical risks, advanced E&E industries, data centers, Pengerang-related projects, tourism, and green electricity initiatives.

• A streamlined pathway will be available for investors to access green electricity. Instead of waiting for quotas, they can work directly with Genco TNB to secure green electricity through the CRESS program.

🚰 Impact/Beneficiaries

• Utilities: Corporate Renewable Energy Supply Scheme (CRESS) should benefit all solar players (Pekat, Malakoff, Solarvest, Samaiden), YTLP, TNB

• O&G: Dialog, beneficiary not only via its position in Pengerang, also plus its position in Tanjung Langsat

• Construction: JS-SEZ and updates on the proposed KL-SG HSR shall benefit mid-large cap construction stocks like Suncon, Gamuda, IJM, YTL

• RTS/ART: Public transport improvements in Johor are not part of the JSSEZ initiative and remain pending a decision from the federal government. We gather that negotiations for the Johor LRT/ART are ongoing, with no final decision yet. Developers involved with RTS currently are Suncon, IJM, Gadang, Econbhd. So further rail network developments may benefit these names with track records.

• Property: Developers with landbank under the JS-SEZ flagship zones are UEMS, IOIPG, Mah Sing, SP Setia, ECW, Lagenda, Sunway Bhd (refer to table).

• Technology: While details remain limited, the potential lies in attracting IC designers, OSAT providers, and EMS players. This is expected to follow the establishment of facilities by MNCs, paving the way for a robust technology ecosystem.

$UEMS / 5148 (UEM SUNRISE BERHAD)
$IOIPG / 5249 (IOI PROPERTIES GROUP BERHAD)
$SPSETIA / 8664 (S P SETIA BERHAD)