The Johor-Singapore Special Economic Zone (JS-SEZ) is intended to create skilled job opportunities and support long-term regional competitiveness. However, questions persist about whether Singaporean workers will see significant benefits, especially as firms may favour lower-cost labour in Johor.
In Parliament on 4 February, Workers’ Party Member of Parliament Associate Professor Jamus Lim asked Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong to clarify two key points: (a) the expected number of new skilled jobs for Singaporeans under the SEZ over the next five years, and (b) how the government plans to mitigate the risks of companies potentially relocating operations to Johor.
Mr Gan, in a written response, outlined the government’s vision for the SEZ but did not provide specific projections on job creation or detailed mitigation measures.
A long-term view of complementary strengths
Mr Gan stated that the JS-SEZ seeks to capitalise on the complementary strengths of Singapore and Johor. Many Singapore-based firms already operate in Johor to benefit from its cost advantages while retaining high-value functions—such as headquarters, research, and development—in Singapore, where the country has a competitive edge.
The SEZ is also expected to attract new international investments, which could generate indirect benefits for Singapore’s economy. Mr Gan explained that businesses investing in the SEZ are more likely to establish ties with Singapore companies or use Singapore’s services, creating economic value and job opportunities. However, no timeline or job-specific breakdown was provided in the response.
Will firms favour lower-cost Malaysian labour?
A critical concern, though not explicitly addressed by Mr Gan, is whether the availability of cheaper labour in Johor could result in companies shifting jobs—particularly mid- and lower-skilled roles—away from Singapore.
This issue remains pertinent given that businesses are likely to be drawn to Johor’s significantly lower operational costs.
While Mr Gan acknowledged that many Singapore-based firms will continue to rely on Singapore for higher-value functions, questions remain about what measures, if any, will be in place to prevent job losses in roles that do not require a local presence, such as administrative support, logistics, or technical operations.
The government’s general approach seems to focus on making Singapore indispensable for higher-value activities, but without concrete policies, there is uncertainty about how mid-skilled workers will be protected if businesses move low-cost functions abroad.
Mitigation strategies: Is the plan sufficient?
Mr Gan’s response did not outline specific measures to mitigate the risks of firms shifting operations or replacing Singaporean workers with Malaysian labour. This raises important questions:
- Will there be incentives or conditions tied to government support, requiring firms to retain or hire Singaporean workers even as they expand into Johor?
- Are there plans to help displaced workers transition into new sectors through retraining and upskilling programmes, particularly in high-growth industries like clean energy or technology?
- How will the government monitor the impact of the SEZ on local employment, and will corrective measures be introduced if job losses become significant?
These questions remain unanswered, leaving observers and policymakers to consider whether further intervention is necessary to safeguard local workers.
Early initiatives and regional cooperation
Mr Gan highlighted several early initiatives aimed at improving cross-border connectivity and fostering business growth within the SEZ. These include:
- Passport-free QR code clearance at land checkpoints: Implemented in March 2024, this system has reduced congestion and improved the movement of people and goods across the Singapore-Malaysia border.
- Streamlined customs procedures: From 1 January 2025, businesses only need to apply for a single transshipment permit with Singapore Customs, reducing costs and delays.
- The Invest Malaysia Facilitation Centre-Johor (IMFC-J): This one-stop centre will streamline processes for companies seeking to establish or expand their operations in the SEZ.
- TVET partnerships: Training initiatives between Singapore and Johor institutions aim to equip workers with skills tailored to industry needs.
These measures are designed to enhance business efficiency and competitiveness, but none directly address concerns about the potential displacement of Singaporean workers.
Bilateral trade: Strong ties, but at what cost?
Singapore and Malaysia share a close economic relationship. In 2023, Malaysia was Singapore’s third-largest trading partner, with bilateral trade amounting to S$123.6 billion. Johor, in particular, attracted RM31 billion in foreign direct investment last year, with Singapore as a major contributor.
The SEZ builds on these strong ties, and the government hopes to position both Singapore and Johor as a competitive regional hub. However, if businesses increasingly favour Johor’s cost advantages without sufficient safeguards, Singapore could face challenges in maintaining local employment levels.
