Singapore Businesses Want Less Red Tape in Malaysia Special Zone

Johor Bahru, capital of the state of Johor in Malaysia. (Ore Huiying/Bloomberg)

(Bloomberg) -- Singapore businesses want a planned joint special economic zone with Malaysia to slash red tape and help with labor and connectivity issues, according to a poll by the city’s top chamber of commerce.

Insufficient skilled labor, unclear tax rules and ease of movement were among gaps and challenges identified by 160 businesses surveyed by the Singapore Business Federation. Half of the respondents already operate in Malaysia’s Johor state, home of the planned zone. 

“While enthusiasm is high, the report also revealed significant challenges to overcome, including talent shortage,” the federation said. “Nearly 60% of businesses engaged reported difficulties in sourcing technical and skilled workers in Johor, with additional issues in attracting Singaporean talent to work across the border.”

The survey’s findings underscore the challenges Singapore and Malaysia need to overcome to make Southeast Asia’s first cross-border special economic zone a success. Hundreds of thousands of Malaysians already cross the world’s busiest land border to work in Singapore each day. 

The federation said its working group on the zone recommends passport-free travel, digitized cargo clearance, special immigration lanes, harmonized tax policies, and a joint investment promotion agency.

The business group organized an investors forum for the SEZ in Singapore on Thursday, attended by Singapore’s trade ministry and Malaysian investment authorities. At a similar meeting in Malaysia yesterday, officials said they’re on course to sign a deal with Singapore and unveil the zone in September. 

Read: Malaysia Says Near Singapore Deal for Special Economic Zone

The business group said around a third of its respondents also anticipate better connectivity via a mooted high-speed rail line linking both countries. Malaysia is currently considering proposals to revive such a project between Kuala Lumpur and Singapore.

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