Multinational corporations (MNCs) already thriving in both Singapore and Johor are reaping the rewards of Malaysia’s plentiful land, lower costs, and prime location for manufacturing, warehousing and logistics.

And now, with the signing of the landmark pact on Monday (6 Jan), they are looking to capitalise on smoother regulations, streamlined cross-border logistics, and enhanced investment incentives to fuel greater efficiency and scalability.

As more international businesses in Singapore set their sights on neighbouring Malaysia with the development of the Johor-Singapore Special Economic Zone (JS-SEZ), The Business Times spoke with companies already established in the region, as well as those intending to set up shop, to offer a glimpse of the opportunities that lie ahead as the zone takes shape.
 

More than 60 Singapore companies have already expressed interest in joining an upcoming business mission to the zone in mid-February, which is reflective of local businesses’ interest in the project, said Teo Siong Seng, chairman of the JS-SEZ Singapore Business Working Group, Singapore Business Federation (SBF).
 

Singapore steers, Malaysia powers

With Singapore serving as the headquarters for many global companies and their regional base overseeing operations across Southeast Asia, the city-state could be poised for deeper cross-border collaboration.

Take Shanghai-based RMS Marine Service, for example. The marine service provider, which uses warehouses and third-party storage in Singapore to serve its Southeast Asian market, is eyeing land in Johor to expand operations.

The end goal is to build a sizeable warehouse space, which would allow it to reap greater cost savings and efficiency from bulk-buying and storing.

“Ideally, it will develop to become the regional or even global distribution centre,” said Seow Zhiyuan, managing director of the group’s Singapore unit.

While day-to-day operations will remain in Singapore with vessels continuing to call at local ports, Malaysia will become the heart of RMS’ storage capabilities, with buffer and backup stocks housed in Johor, Seow explained.

Vessels typically call at Singapore ports on the western side, where the JS-SEZ is located, and “such a natural advantage makes the whole set-up very favourable”, he said.

Though the medium-term goal is for 80 per cent of its stock to be kept as buffer in Malaysia, the end goal is to be “as light as possible” in Singapore, he added.

“It’s ideally going to be several months of stock in Malaysia, maybe one week of stock in Singapore,” he said.
 

Who moved my cheese?

Compared with operations of similar size and scope, cost savings of about 50 per cent can be expected.

“For the same dollar that we are paying or incurring in Singapore, we can be a preferred employer in Malaysia by creating much better-paying jobs,” said Seow.

Malaysia’s lower-cost environment is also a factor for Singapore-headquartered global agri-commodity firm Agrocorp International.

The company, which specialises in the sale and processing of staple food products to food manufacturers, selected Johor Bahru as the site for its plant protein extraction facility. It is expected to be operational in mid-2026.

Agrocorp’s plant-based food brand HerbYvore currently manufactures all its dairy-free cheeses in Malaysia through a partnership with an established Johor manufacturer, at whose premises it has installed its equipment.

“We leverage on a lower-cost environment there to produce it such that it’s more price-competitive to consumers, both in Singapore and Malaysia,” said chief executive Vishal Vijay.
 

Plant-based products are broadly priced at a premium of about 20 per cent, while the company’s plant-based cheeses retail in Singapore at price parity to mid-priced dairy cheeses.

“(It is) good that our investment is officially part of the SEZ and we hope that the incentives will apply to new projects announced in the recent past as opposed to only new projects from today,” said Vijay.
 

Baking new opportunities

Proximity to Singapore and accessibility to space – at a more affordable price point at that – were key considerations that cemented South Korean fast-casual bakery and franchise Paris Baguette’s decision to buy two plots of land in Malaysia in 2021.

The first 16,000 square metre (sq m) land parcel – about three football fields – is intended for a manufacturing facility cum storage area.

It is expected to be fully operational in January, with a grand opening in February.

The second 24,000 sq m brownfield lot sits undeveloped and will support the group’s plans for future scale-up.

Malaysia ticked all the boxes.

Johor is near the group’s regional office in Singapore; foreign businesses can own land in Malaysia, which allows potential for scalability; and the factory can be halal-certified. The icing on the cake were halal incentives from the Malaysian authorities and innovation benefits from Singapore.
 

Malaysia became “a very natural choice”, said Hana Lee, chief executive of Paris Baguette AMEA (Asia-Pacific, Middle East, and Africa).

The cherry on top? Paris Baguette can now expand into two new markets: the Middle East (with its halal facility) and Australia (because of proximity).

And instead of keeping two months’ worth of stock, it is looking at a two-week lead time with weekly truck-ins from Malaysia to ensure freshness of goods, said Lee. Shipping time will reduce from two weeks to a few hours.
 

Navigating hurdles

As with all border crossings, concerns of congestion and operational inefficiency rank high.

The way Paris Baguette’s Lee sees it, a potential hurdle could be difficulty in “navigating the Malaysian environment” when it comes to securing the necessary approvals – although she maintained that one-stop centre Invest Johor has been instrumental in smoothing out such bumps.

Lee added that a more simplified approach to import and export taxes and customs processes could significantly speed up goods movement.

SBF’s Teo concurred that the set-up of the Invest Malaysia Facilitation Centre is welcome.

“This has been a perennial bugbear for our businesses, which have to navigate a fragmented process involving multiple agencies for approvals and licences,” he noted.

He added that early initiatives such as streamlined customs procedures for land intermodal transhipments help reduce paperwork and expedite goods processing.

The implementation of a passport-free QR code clearance process at Singapore’s land checkpoints has also eased congestion, he said.

The apex business chamber hopes the Malaysian authorities will “move forward quickly to reciprocate the arrangement in Malaysia’s land checkpoints and expand the clearance capacity and associated infrastructure to further ease the flow of people and goods”.

For Paris Baguette, another factor that would be spot-on in addressing hurdles is clearer regulatory compliance for already-operational businesses, as several current initiatives are more beneficial for those starting to invest.

Things such as a standardised checklist that businesses can follow through on an annual basis after the business is up and running would be helpful, said Lee.

RMS’ Seow hopes for special passes, say, for management personnel commuting routinely between both countries.

“With time, (such frequent commuting) will stabilise,” he said. “But when we talk about business, having the option is just as important as it gives the management a lot of comfort that if needed, people can exercise it.”

The key success driver would be the facilitation of people and goods across customs, he added, and the official signing of the JS-SEZ is “a great first step”.
 

Source: The Business Times ©️ SPH Media Limited. Permission required for reproduction.