Singapore and Malaysia strengthen ties with MOU on special economic zone with Johor; RTS Link is 65% completed

[JOHOR] Singapore and Malaysia achieved several bilateral milestones on Thursday (Jan 11), with significant progress on the Johor Bahru-Singapore Rapid Transit System (RTS) Link and a memorandum of understanding (MOU) inked for a special economic zone between Singapore and Johor.

All this took place during Singapore Prime Minister Lee Hsien Loong’s working visit to the southern Malaysian state, which was also his first overseas trip in 2024.

Noting that Singapore and Malaysia will celebrate 60 years of bilateral relations in 2025, PM Lee said in a Facebook post that he looks forward to both countries “charting new areas of cooperation, including in trade and investment, tourism, innovation, and the digital and green economies”.

His first stop on the day-long visit was the RTS Link Marine Viaduct site at the Strait of Johor, for a ceremony commemorating the completion of a connecting span that links the Malaysia and Singapore ends.

PM Lee and Malaysian Prime Minister Anwar Ibrahim signed commemorative plaques to symbolise their shared commitment to deliver the RTS Link, which will further improve connectivity between Singapore and Malaysia.

“The completion of the RTS Link will certainly strengthen the friendship between Malaysia and Singapore, and drive economic growth and prosperity for both countries,” said Anwar in a Facebook post written in Malay.

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The cross-border project reached 65 per cent completion as at Dec 31, and is on track to begin operations by December 2026, both transport ministries announced on Thursday.

Singapore’s Acting Transport Minister Chee Hong Tat, who was part of PM Lee’s delegation, told reporters that the RTS Link “will make travel between the two countries more convenient and benefit both Singaporeans and Malaysians”.

Noting that 350,000 people cross the Causeway daily for work, education and social visits, Malaysian Transport Minister Anthony Loke said the RTS Link will reduce congestion on the Causeway by 35 per cent.

“We must ensure that our infrastructure meets the demands of one of the world’s busiest border crossings,” he added.

When completed, the 4 km cross-border rail shuttle service will connect Bukit Chagar station in Johor Bahru and the RTS Link Woodlands North station in Singapore, with a journey time of about five minutes.

The service will have the capacity to carry 10,000 passengers an hour in each direction, with Malaysia’s MRT Corp estimating first-year ridership at 41,400 passengers per day.

RTS Operations, a joint venture by Singapore rail operator SMRT and Malaysian public transport firm Prasarana, will run the rail shuttle.

Both countries have agreed that the fares, which are not yet finalised, will be determined by RTS Operations.

In determining fares, said Chee, the operator will have to take into account factors such as demand, the costs of providing an “efficient and reliable service for commuters on a financially stable basis”, and the fares charged by alternative travel options. Loke said the fares will “definitely be competitive”.

Cross-border flows

Later in the day, both prime ministers witnessed the signing of an MOU between Singapore and Malaysia for the Johor-Singapore Special Economic Zone (JS-SEZ), which aims to improve cross-border flows of goods and people, and increase investment.

“Together with the RTS Link, the SEZ will enhance cross-border links, support businesses, and create jobs on both sides of the Causeway,” said PM Lee in his post.

The MOU was signed by Singapore’s Trade and Industry Minister Gan Kim Yong and Malaysia’s Minister of Economy Mohd Rafizi Ramli at the DoubleTree Hilton hotel in Johor.

Both countries have agreed to work towards a “full-fledged” agreement on the JS-SEZ, with an update to be given at the next Malaysia-Singapore leaders’ retreat.

A framework will be developed to iron out details for this legally-binding agreement, such as the economic sectors of mutual interest for cooperation, as well as the zone’s geographical coverage.

“The JS-SEZ underscores what Singapore and Malaysia can achieve when our governments and business communities work closely together,” said Gan.

Rafizi said the JS-SEZ is an “unprecedented opportunity to… elevate the economic attractiveness of both Johor and Singapore”.

Under the MOU, both sides will promote a more “seamless and expedited” flow of goods, said Singapore’s MTI in a separate statement. At the leaders’ retreat last October, PM Lee said this may mean special tax arrangements and bonded warehouses.

For people, the aim is to enable freer movement – for professionals, managers, executives and technicians, for example – to support investments and business operations.

Meanwhile, strengthening the business ecosystem within the JS-SEZ could mean talent and vocational training for workers, and economic support for businesses.

The MOU also established a joint committee to oversee its implementation, co-led by MTI and Malaysia’s Ministry of Economy. The committee will report to the Joint Ministerial Committee for Iskandar Malaysia, co-chaired by Singapore’s National Development Minister Desmond Lee and Malaysia’s Rafizi.

Singapore and Malaysia will also explore several other initiatives that will “build towards the JS-SEZ”.

A one-stop business and investment service centre could be set up in Johor to facilitate applications for the approvals and licences necessary for Singapore businesses to set up there.

Land checkpoints on both sides could adopt passport-free QR code clearance for travellers, or digitised processes for cargo clearance.

Both countries are looking at holding a co-organised investors’ forum to gather feedback from Singapore and Malaysia businesses on the JS-SEZ, and joint promotion events to encourage trade and investment in the zone.

Both will also explore facilitating renewable energy cooperation in the JS-SEZ, and curating training and work-based learning initiatives to address talent and skills gaps for relevant industries there.

The JS-SEZ rides on the strong growth of Johor and significant investments in the region by Singapore, said the ministries.

In 2022, Johor recorded RM70.6 billion (S$20.2 billion) in investments across sectors such as electrical and electronics; medical equipment; food manufacturing; and data centres.

Singapore was Johor’s second-largest foreign investor from January to June 2022, and contributed to about 70 per cent of Johor’s total foreign direct investment in manufacturing.

Malaysia and Singapore are each other’s second-largest trading partners, with bilateral trade growing 18.9 per cent year on year to S$153 billion in 2022.

In 2022, Singapore was also Malaysia’s top source of foreign direct investment, making up 20.5 per cent of the total.