JS-SEZ aims to bolster supply chains amid trade uncertainty

[ASIA] Singapore's Deputy Prime Minister Gan Kim Yong believes that the Johor-Singapore Special Economic Zone (JS-SEZ) provides an opportunity for firms to enhance their supply chains in the face of tariff uncertainties.

Mr Gan, who is also Minister for Trade and Industry, delivered the keynote presentation at a business and investment summit in Malaysia's southern state of Johor on April 21, describing the event as "both important and timely" in light of escalating global protectionism.

As Southeast Asia gains prominence in global supply chain reconfiguration, the newly announced Johor-Singapore Special Economic Zone (JS-SEZ) is poised to become a cornerstone in regional industrial strategy. Multinational corporations are increasingly embracing a “China Plus One” approach to mitigate geopolitical and operational risks, and Johor’s strategic location—combined with its robust industrial base—positions it well to capture this emerging wave of investment. The JS-SEZ is expected to further catalyse this transition by offering an integrated business ecosystem bridging Malaysia and Singapore.

Rising tensions between the United States and China, marked by successive rounds of retaliatory tariffs, have significantly disrupted trade flows between the two economic giants. These developments are reverberating across Southeast Asia, particularly impacting companies in Singapore and Malaysia that are intricately woven into global supply chains linked to both the US and China.

Industry experts believe the JS-SEZ could serve as a buffer against such disruptions by enabling firms to diversify their operations while maintaining efficiency. Companies could, for example, leverage Singapore’s strengths in finance and technology, while capitalising on Johor’s cost-effective operations and skilled talent pool—a combination that enhances business resilience in an increasingly volatile trade landscape.

Projects like the JS-SEZ, observers note, reflect the potential for like-minded nations to collaborate on addressing shared economic challenges.

“The JS-SEZ offers businesses an opportunity to reinforce their supply chains, helping them better navigate uncertainties and continue expanding,” one speaker remarked during the forum.

Designed to facilitate cross-border trade and investment, the JS-SEZ will focus on high-impact sectors such as advanced manufacturing, logistics, technology, and the digital economy.

Data from the Malaysian Investment Development Authority (MIDA) indicates Johor has already attracted more than RM70 billion (S$20 billion) in investments over the past two years, with substantial inflows into the electronics and renewable energy sectors. The JS-SEZ is expected to build on this momentum, as global firms seek to minimise exposure to single-market dependencies amid escalating geopolitical risks.

Spanning 3,571 square kilometres in southern Johor, the zone promises streamlined customs processes, harmonised regulations, enhanced connectivity for people and goods, and tax incentives for businesses establishing operations there.

“This initiative deepens the strong and enduring economic ties between Malaysia and Singapore, creating a new platform for business growth,” said Mr Gan. He highlighted the opportunities for companies already based in Singapore to scale up in the JS-SEZ, develop new capabilities, or establish a dual presence across both locations.

Malaysia’s Minister of Investment, Trade and Industry, Tengku Zafrul Aziz, attended the Johor forum, which featured panel discussions on the JS-SEZ’s potential to become a regional investment hub, drive wealth creation, and bolster supply chain resilience.

Panelists also stressed the pivotal role of digital infrastructure in the zone’s success, citing cross-border data flow frameworks and smart logistics solutions as key differentiators that could make the JS-SEZ especially attractive to technology-driven industries. Other notable attendees included Deputy Minister Liew Chin Tong and Johor Menteri Besar Datuk Onn Hafiz Ghazi.

In a broader context, the ongoing trade conflict between the US and China continues to create global uncertainty. On April 2, US President Donald Trump imposed a wave of so-called reciprocal tariffs, triggering swift countermeasures from Beijing. While a temporary 90-day pause on tariffs for most countries was introduced on April 9, volatility in global trade persists. The US has since imposed a 145 per cent tariff on Chinese goods, with China retaliating with a 125 per cent levy on American products.

Singapore currently faces a 10 per cent baseline tariff on its exports to the US, while Malaysia has been hit with a 24 per cent reciprocal tariff—further underscoring the urgency for regional economies to adapt through initiatives like the JS-SEZ.