Why Johor is now an investor safe haven

Free Malaysia Today

20-06-2025

The Nikkei Forum Medini Johor 2025 brought industry experts to discuss the future of the Johor-Singapore Special Economic Zone (JS-SEZ).
ISKANDAR PUTERI : The Johor-Singapore Special Economic Zone (JS-SEZ) has been touted as the next major engine of growth for Southeast Asia.
Formally established in January through a bilateral agreement between Malaysia and Singapore, the zone aims to enhance cross-border economic connectivity.
Over the next 10 years, it is set to support 100 projects worth RM100 billion and create an estimated 100,000 jobs across high-value sectors such as manufacturing, the digital economy, logistics, clean energy, and tourism.
At the June 18-19 Nikkei Forum Medini Johor 2025, co-organised by Iskandar Investment Bhd (IIB), industry experts and panellists discussed how best to unlock the region's potential and ensure it stays on track.
FMT highlights several key themes and their implications for Johor and beyond.
Johor as a stable option in a fractured landscape
With its strategic location and stable policy environment, Johor, together with its neighbour Singapore, is increasingly seen as a compelling and secure investment destination.
IIB president and CEO Idzham Hashim said the JS-SEZ offers a secure entry point for global capital, especially amid rising geopolitical and economic headwinds.
Citing Johor's consistent ranking in Malaysia's top three destinations for foreign direct investment, he said the region's relatively low operating costs further enhance its appeal.
'The cost of doing business in Johor is almost 60% cheaper than in Singapore and almost 30% cheaper than in Kuala Lumpur.
'We have the ability to help (Singaporean businesses) scale up, reduce their cost of doing business, and give them the space they need to grow,' he said.
This positioning is supported by financial institutions facilitating inbound investment. One example is United Overseas Bank Ltd (UOB), which is helping investors enter the regional market.
Chiok Sook Yin, who heads UOB's foreign direct investment advisory unit, said the bank offers full-spectrum support for businesses expanding into the region.
'Besides having strong network connectivity, we have financial supply chain management solutions that help investors expand local sourcing and support new suppliers that follow (prominent) companies into Malaysia.
'We're also helping lower the barrier to entry for investors and addressing their concerns before they enter the markets they've targeted,' she said.
Deloitte Malaysia executive director Thean Szu Ping said the government is backing this push with robust fiscal incentives.
High-tech industries, she said, qualify for a preferential tax rate of 5% for up to 15 years. Capital-intensive sectors, meanwhile, will receive an investment tax allowance.
Policy continuity and clarity needed
The resignation of former economy minister Rafizi Ramli, who had played a key role in shaping the JS-SEZ blueprint, has raised questions about the zone's future direction.
Despite his assurances that existing initiatives would continue uninterrupted, industry leaders emphasised the need for unwavering policy commitment.
UEM Group Bhd managing director Amran Hafiz Affifudin described continuity as the 'most important enabler' of business confidence.
'As a member of the business community, we like to see continuity in policy, especially as an infrastructure company. Our investments are long-term, so clarity and continuity of policy are very important.
'We are a business with heavy capital expenditure. Policy stability is critical,' he said.
Johor investment, trade, consumer affairs and human resources committee chairman Lee Ting Han echoed this, noting that in today's unpredictable global climate, consistency attracts capital.
'In this era of uncertainty, investors and innovators seek environments where rules are transparent, decisions are predictable, and institutions are stable. Johor is ready to offer these,' he said.
Growing Japanese interest in the region
One of the most pronounced takeaways from the forum was the deepening interest of Japanese industry in Johor, reflected in the participation of companies like Mitsui Banking Corporation Malaysia, and AEON Co.
In his closing remarks, Prime Minister Anwar Ibrahim revealed that Japanese prime minister Shigeru Ishiba had recently identified Johor as a region of strategic interest.
Japanese ambassador to Malaysia Noriyuki Shikata pledged Tokyo's support for Johor's ambitions as a tech and infrastructure hub.
'Japan's liquefied natural gas cooling technology would offer an environmentally friendly and efficient cooling solution for Johor's data centres.
'By adopting this technology, the data centres in Johor could significantly improve energy efficiency while reducing their environmental impact as well as improving operational efficiency,' he said.
He also offered Japan's AI-driven traffic control systems and digitally optimised public transport networks to help Johor overcome congestion challenges and become a model city for mobility solutions, not just for Malaysia, but for Asean and beyond.
The momentum behind Japanese participation was further underscored by a memorandum of understanding signed between Invest Johor and Tokyo Stock Exchange-listed tech firm NEOJAPAN Inc to establish a Southeast Asian Centre of Excellence (SEA CoE) in Johor.
The initiative aims to train 1,000 local talents and create 300 high-skilled jobs.
Invest Johor CEO Natazha Hariss said the partnership is aimed at driving innovation and strengthening talent development across the JS-SEZ and will 'promote the JS-SEZ as a base for cutting-edge innovation and talent development'.