Johor-Singapore SEZ could be ‘game changer’ for SMEs, but details on support needed: OCBC
Smaller businesses looking to set up there could do with help in financing and capability building, says the bank’s global commercial banking chief
THE Johor-Singapore Special Economic Zone (SEZ) could be a “game changer” for Singapore’s small and medium-sized enterprises (SMEs) that enter the zone as suppliers to the multinational corporations (MNCs) setting up there, said OCBC’s head of global commercial banking Linus Goh.
He noted, however, that while Malaysia has already announced plans to attract global investments into the SEZ, Singapore has not given details of how it can support its businesses to get set up across the Causeway, beyond existing internationalisation schemes.
Speaking to the media upon the release of OCBC’s latest quarterly SME Index on Thursday (Jan 9), he said: “Malaysia has fired the initial salvo with the tax incentives. Is there something that perhaps would help the Singapore businesses transition themselves to (the zone)?”
The SEZ agreement was inked on Monday at the 11th Malaysia-Singapore Leaders’ Retreat in Putrajaya. The initiative aims to drive investments in 11 key sectors, including manufacturing, logistics and energy.
It targets the roll-out of 50 projects within five years and 100 projects within 10 years, creating 20,000 skilled jobs.
Besides companies from Singapore and Malaysia, the zone is expected to attract large MNCs that could serve as anchor players, creating an ecosystem in which local SMEs can carve out their roles in supply chains.
On Wednesday, the Johor state government and Malaysia’s Ministry of Finance announced a tax incentive package to attract SEZ investments, including a special corporate tax rate of 5 per cent for up to 15 years for companies investing in qualifying sectors.
Goh is hoping that Singapore would disclose its plans to support its own firms looking for a foothold in the SEZ, perhaps in Budget 2025.
He suggested that these measures could include financing support, capability building and “novel ways” of spurring investments by Singapore firms, such as by creating a platform for SMEs to pool resources to enter the SEZ.
Singapore SMEs intending to enter in the SEZ would “need a bit of help” from the government to create a viable cross-border operating model, he said.
OCBC is already positioning itself for SEZ-related opportunities. In December, the bank established dedicated teams in Singapore and Malaysia to assist SMEs looking to expand into the zone, starting with 25 bankers.
“We probably have to expand the coverage,” Goh said. If projects take off early, it will “definitely” provide a boost to OCBC’s loan book, he added.
