OCBC sets up teams to help regional SMEs make foray into Johor-Singapore SEZ
The incentives being offered to companies to move there are still unclear, but the bank is optimistic
[JOHOR BAHRU] OCBC has launched dedicated teams in Singapore and Malaysia to support small and medium-sized enterprises (SMEs) looking to set up operations within the upcoming Johor-Singapore Special Economic Zone (JS-SEZ).
The bank has brought together 25 bankers – 15 in Singapore and 10 in Malaysia – to advise SMEs on starting up operations in the JS-SEZ. These teams will also facilitate connections between companies and partners within the zone.
Roy Tan, head of enterprise banking international at OCBC, said: “Clearly, (the JS-SEZ) is going to provide a growth impetus for OCBC on a year-on-year basis.
“Whether we can outgrow the competition – because every other bank is also looking at the JS-SEZ – I think each and every (bank) has a different play,” he said, noting that OCBC focuses on attracting investments from outside Asean.
The bank aims to assist SME clients from across its key markets – Singapore, Malaysia, Indonesia, China and Hong Kong – in entering the zone. It currently operates 38 branches in Malaysia, including eight in Johor.
By the end of 2024, the bank expects that it would have supported about 260 new mid-sized enterprises – in sectors such as services, construction, manufacturing and wholesale and retail trade – to establish operations in Malaysia.
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With growing interest in the JS-SEZ, the bank expects this number to rise by 20 per cent in 2025.
Optimism amid delays
The formal signing of the JS-SEZ agreement between Singapore and Malaysia has been delayed, following the postponement of the 11th Singapore-Malaysia Leaders’ Retreat.
Although specific incentives remain unclear, Singapore-based business leaders expressed optimism about potential cost savings from offshoring operations to Johor.
Seow Zhi Yuan, managing director at RMS Marine & Offshore Service (Singapore), said the company plans to explore financing options for setting up in the JS-SEZ – but noted that decisions will hinge on the incentives given.
The amount of capital expenditure investments will go up as more incentives are offered, he said.
The offshoring of certain business operations, such as manufacturing, to Johor could lead to significant cost reductions, depending on the incentives provided.
Labour costs in Johor could be about one-third to half of current manpower costs in Singapore, noted Seow.
Land and utilities in Johor are also substantially cheaper, he added.
The relative abundance of land, for instance, makes investments in solar panels more attractive, he added, with larger installations being able to provide greater coverage to power manufacturing facilities.
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