Singapore and Malaysia are working towards achieving economic integration with Johor's special zone.

• The completion of a rail link between Singapore and Johor Bahru could lead to an increase in the number of Singaporeans visiting or relocating to Johor in the future.
• The JS-SEZ, first proposed in January 2024, will facilitate passport-free travel and digitized cargo clearance between Singapore and parts of Johor, including Johor Bahru.

Sharon Kuok began her education in Singapore at the age of seven, traveling to and from her residence in Johor Bahru, the capital city of southern Malaysia, daily.

After attending the National University of Singapore, she spent over 30 years working in the city-state before retiring.

She resides in her hometown with her Singaporean spouse and their three dogs in a two-story semi-detached house. Although they frequently dine out and their grocery list consists of many imported items such as milk and cheese, their monthly expenses are approximately 30% to 40% lower than when they were in Singapore.

She chose Johor Bahru, Malaysia as her retirement destination because it is closer to Singapore and she believed it would be more affordable.

Some Singapore residents, such as Intan Syuhada, senior director at events company Messe Berlin Asia Pacific, have moved to Johor where living costs are much lower, while still commuting to Singapore for work daily via one of the two bridges that connect the two sides.

Earlier this year, Mercer ranked Singapore as the second most expensive city in the world for international workers to reside in, while Johor Bahru was placed at number 214 on the list of 226 cities. In Singapore, items such as cars, petrol, and utilities like electricity and water are significantly more expensive.

Frequently, individuals from Singapore are traveling to the Malaysian state for shopping and to utilize various services, including car maintenance, massages, and haircuts.

The completion of a rail link between Singapore and Johor Bahru and the implementation of the Johor-Singapore special economic zone (JS-SEZ) could lead to an increase in the number of Singaporeans visiting or relocating to Johor in the future years.

Passport-free travel

The JS-SEZ, first proposed in January 2024, will facilitate passport-free travel and digitized cargo clearance between Singapore and parts of Johor, including Johor Bahru, thereby reducing the time taken for people and goods to cross the border.

The Johor-Singapore Economic Zone (JS-SEZ) could bring about 100,000 new jobs in Johor and increase Malaysia's economy by $26 billion annually for the next six years, according to Johor officials.

The agreement between Malaysia and Singapore was expected to be finalized by September, but according to Singapore media, citing sources, the deal has been delayed due to several issues, including contributions to a fund for companies expanding to Johor and rules governing the movement of skilled workers.

Both countries are aiming to finalize the agreement in December, as their leaders are set to convene.

Rapid transit system

The upcoming rapid transit system (RTS) will facilitate movement between Singapore and Johor, with completion expected before the end of 2026. The system will be able to carry up to 10,000 passengers per hour in both directions, significantly reducing travel time from more than an hour to just minutes.

The RTS will greatly impact the success of the JS-SEZ because the Johor-Singapore border has one of the highest volumes of human traffic globally. According to Hasan Jafri, a Singapore-based analyst, having only two land links will not be sufficient if the JS-SEZ is to succeed.

Over 300,000 Malaysians daily travel to Singapore, where wages are usually three times higher, despite facing long traffic jams and complicated customs and immigration procedures that may take several hours to clear.

Due to the bottleneck, only a few Singapore-based companies engage in time-sensitive activities in Johor, as there is a risk of supply chain disruptions.

Historical baggage

Despite efforts to integrate their economies in the past, cooperation between Singapore and Johor was hindered by animosity between some previous Singaporean and Malaysian leaders. At that time, Malaysia viewed Singapore as a competitor and aimed to develop its own ports and high-tech industries, while Singapore was only willing to move lower value-added activities to its northern neighbor.

Jafri stated that the economic dynamics have changed, with Singapore's economy growing faster and Malaysia remaining stagnant. He emphasized that competition is intensifying from Vietnam and India, making it difficult for Malaysia to move up the value chain. To overcome this challenge, Jafri suggested that Malaysia should collaborate with Singapore.

The efficient functioning of the JS-SEZ may be affected by domestic pressures if the movement of people leads to a decline in Singapore retail sales and an increase in Johor inflation. Singapore businesses considering a move to Johor must also be aware of the risks associated with Malaysia's inefficient bureaucracy.

A study predicts that Singapore retail sales may decline by 3% to 4% after the completion of the RTS, as residents increasingly opt for shopping and leisure activities in Johor. On the other hand, Johor residents like Kuok and Intan worry that an influx of visitors and migrants from Singapore could lead to rising inflation and alter the local living conditions.

If JB becomes like Singapore, it would mean a persistent rise in the cost of living, which makes me uncomfortable, Kuok stated.

"I firmly believe that JB should retain its unique identity, and its messy and inefficient nature is one of its endearing qualities."