Singapore, Malaysia to develop border economic zone, in sign of ‘collaborative’ boost to ties

Singapore and Malaysia are in the process of developing a cross-border economic zone, a move that analysts interpret as a diplomatic and collaborative effort to strengthen ties between the two nations. Prime Minister Lee Hsien Loong of Singapore and his Malaysian counterpart, Anwar Ibrahim, discussed this substantial and promising project during a leaders' retreat. They expressed their anticipation to sign a memorandum of understanding as early as January. The special economic zone will be located near Johor Bahru, the capital city of the southern Malaysian state of Johor, which is approximately 25km north of Singapore. The project aims to enhance the flow of goods and people across the border, thereby boosting the economic appeal of the region.

The leaders have high hopes for the project, but they first need to conduct a feasibility study and negotiate the memorandum of understanding. They aim to complete these tasks by early next year. Analysts have noted that the tone and outcome of the leaders' retreat suggest that bilateral ties are moving in a positive direction. They are optimistic that both countries will be able to deepen cooperation in areas such as the special economic zone.

Hafidzi Razali, director at political risk consultancy BowerGroupAsia, noted that a joint statement issued after the retreat showed a clear commitment to previously announced initiatives. These include better traffic management, cross-border electricity trade, and improving water yields. The statement also indicated that the Anwar administration is adopting a more diplomatic and collaborative approach towards mutual interests compared to his predecessors. The Johor-Singapore special economic zone is poised to attract investors in areas such as healthcare, electronics, and finance. However, with specific details yet to be determined, analysts believe it's too early to project the likely economic dividends.