A WORK IN PROGRESS
That is not to say that the crystal ball is entirely clear at this juncture. The JS-SEZ has a long way to go before it can deliver on its promises.
Several key areas require attention. First, a clear timeline in terms of setting up the Invest Malaysia Facilitation Centre-Johor - a one-stop shop which will streamline and expedite the process for companies looking to establish in or expand to the JS-SEZ - will help to capitalise on the initial interest generated by the JS-SEZ.
Similarly, regulatory clarity will provide confidence to prospective investors. Businesses need to know the rules - especially around labour laws and work permits - before they can commit. Resolving any teething issues in a proactive and efficient manner will also go a long way in building investor confidence in the JS-SEZ.
Infrastructure, too, remains a concern. Mr Rafizi has outlined a “project-by-project” approach to developing infrastructure within the special economic zone, as opposed to the conventional arrangement of building infrastructure before attracting investments. This could obfuscate progress on infrastructure development, with the risks that the plans are not designed or executed in a more comprehensive manner.
Ultimately, the success of the JS-SEZ will hinge on addressing these “nuts and bolts” issues.
Complementing the JS-SEZ’s internal infrastructure with broader development across Johor will be crucial. For example, while the 4km Johor-Singapore Rapid Transit System (RTS) is expected to become operational by end-2026, additional road, bus and rail connectivity to the RTS and more broadly, within the state of Johor will help improve prospects for the JS-SEZ.
There’s also a broader question of balance. While the JS-SEZ is understandably focused on supporting new industries such as AI and high value-add technologies, there may be less sophisticated industries that are interested in investing in the zone to reap the advantages of a larger domestic market and lower tax rates. A roadmap for these industries would provide a solid foundation for investments.
And then there’s accountability. Regular, transparent reviews of the JS-SEZ will be important to gauge whether the authorities have been able to achieve their intended targets. Are the projects delivering on job creation? Are the flagship zones thriving as intended? Taking stock regularly will allow for improvements to better investment prospects for the JS-SEZ.
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