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Johor-Singapore SEZ to spur investments from mainland China, Taiwan, UOB says
- A managing director at the bank believes investors will want to take advantage of tax incentives offered within the special economic zone
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The electrical and electronics industry in the Malaysian state of Johor is expected to see a surge in investments from mainland China and Taiwan once the Johor-Singapore Special Economic Zone (JS-SEZ) becomes operational later this year, a senior banker said, as semiconductor firms adjust supply chains around the US-China trade and tech war.
There is intense competition across Southeast Asia to attract tech companies looking to establish new manufacturing sites for their chips, as escalating sanctions by Washington on China’s tech industry disrupt supply chains for various goods such as smartphones and electric vehicles.
Johor has already secured potential investments totalling around US$380 million from China earlier this year, with more likely to pour in to take advantage of tax incentives in the JS-SEZ, according to Lim Lay Wah, a managing director at Singapore bank UOB.
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“We see the Taiwanese, not just China plus one … also want to tap on that as well,” Lim said, referring to the investment strategy where firms run parallel operations in China and a second country to diversify sources of supply and production.
Last month, Malaysia’s Economy Minister Rafizi Ramli said that plans are progressing to finalise a deal with Singapore to develop the JS-SEZ by September, one month ahead of the annual retreat of leaders from both nations.
Talks on the JS-SEZ were started last year by Malaysia’s Prime Minister Anwar Ibrahim, who had initially proposed to turn the US$100 billion Forest City project into a special financial zone to tap investments from Singapore to rescue the troubled project.
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