In January, Malaysia and Singapore agreed to set up a special economic zone in the Malaysian state of Johor, which borders Singapore. The hope is that the SEZ would attract high-value investments in key sectors like manufacturing, tourism, and data centers.

Both Singapore and Malaysia’s governments, as well as the state government of Johor, are now working together in a unified office to offer a single narrative for investors, expediting high-value projects and the movement of goods and people across the border.

Yet the Johor-Singapore special economic zone is not meant to be an “industrial park with a nicer brochure,” Lee explained.

“We really need to be able to connect our SMEs to global supply chains and to create brands owned within the zone,” he continued. “For the long run, we have to look at how we are going to create a regional champion.”

Investments in the zone reached a whopping 56 billion Malaysian ringgit ($18.5 billion) in the first half of 2025, with Lee projecting 100 billion ringgit ($24.1 billion) of investments by the end of the year, far ahead of the 48.5 billion ringgit invested in Johor during the entirety of last year. 

But convincing corporations to invest in the Johor-Singapore economic zone isn’t easy, and goes beyond just offering a cheaper place to do business. “They want a clear case of doing business,” Lee explained. 

Lee said that one of the key reasons the SEZ was special was that it offered assurance of long-term returns and sustainable investment opportunities. “Collectively, we can work on a five to ten-year time frame so that investors can have more clarity, so that it can survive at least one investment cycle, and they can recover their capital.”

Lee also addressed some infrastructure changes to address the challenges of the Singapore-Johor causeway. “We are doing some infrastructure improvements that connect Johor and Singapore via rail services. This can transit about 10,000 people per hour per direction and this should be operational by January 2027,” he explained. 

Lee added that both state’s implementation of the QR code clearance system has also enhanced mobility between the two states.  

“So far about 150,000 Malaysians have signed up for the system and we’re expecting about 500,000 by the end of the year,” he said. 

Both Malaysia and Singapore have selected 11 sectors for the new economic zone that include logistics, manufacturing, financial services, business services, digital economy, tourism, food security, education, health, energy and the green economy.