European, North Asian companies also eyeing the potential of JS-SEZ: UOB banker

Business Times

18-06-2025

[SINGAPORE] The Johor-Singapore special economic zone (JS-SEZ) is drawing interest from companies not just from Singapore, but also from Europe and North Asia.
Chiok Sook Yin, UOB's head of foreign direct investment (FDI) advisory in the chief executive officer's office, said on Wednesday (Jun 18) that the bank has noticed a number of European and North Asian companies that are using Singapore as a base to tap into Johor's potential, thus creating new opportunities for the bank.
The bank is also seeing increasing possibilities in the 'plus-one' strategy – in that companies are expanding beyond operating in 'China plus one' country into 'Vietnam plus one' and 'Europe plus one', she said.
Chiok's remarks came in a panel discussion on the role of regional financial institutions in driving foreign direct investments (FDIs) into Asean, held as part of the Nikkei Forum held in Medini in Malaysia's state of Johor.
Also speaking on the panel were Thean Szu Ping, executive director at Deloitte Malaysia, and Loong Chee Wei, head of research at Affin Hwang Investment Bank. The panel was moderated by FMT News managing director Azeem Abu Bakar.
The panellists also discussed opportunities and concerns that investors might have when setting up in the JS-SEZ.
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Affin Hwang's Loong said that companies which are in the supply chain for FDIs entering the JS-SEZ are finding opportunities there, including those in the electronic manufacturing services and medical devices sectors.
He also noted rising investments in data centres, which would benefit construction and property companies which are building these data centre parks and developing modern industrial parks.
Furthermore, there are also opportunities for companies in the business of outsourced airline maintenance works, he explained.
But Loong noted that government policy changes and talent shortages are key concerns for foreign investors. 'The good thing for Malaysia is that since the new government came into power, it has been very stable – and that is boosting confidence,' he said.
As for talent shortages, industries have to offer higher salaries, he added.
Deloitte's Thean listed three main considerations for foreign investors to look into when it comes to tax: company structures, transfer pricing and immigration and employment.
For example, companies may opt to site their manufacturing plant in Johor and their regional office and research and development centre in Singapore.
They would also need to consider transfer pricing – the price that a company's division charges another division for goods and services – because they would then be setting up multiple operations in different jurisdictions, she explained. 'Each country would want to tax an appropriate amount of income in that respective country, so setting up a good or correct transfer pricing policy right from the beginning is very important.'
Turning to immigration, she said that companies would likely move staff together with their operations to Johor, so they would need to look into the immigration and tax aspects of these individuals.
Thean added that specific companies operating in the JS-SEZ would be granted tax incentives that are more attractive than if they were to operate outside the zone, making it 'very beneficial' for the business environment.
Nevertheless, many other factors are in play when an investor wants to invest in a specific country, she pointed out.
'Incentives are usually just the icing on the cake.'