Introduction

SINGAPORE: The establishment of the Johor-Singapore Special Economic Zone (JS-SEZ) is setting off waves of change as local firms extend their operations across the Causeway. With a promise of growth, sectors such as manufacturing, logistics, and food security are gearing up to make the most of this collaborative initiative.

Case Study: Archisen's Urban Farm

Take Archisen, a Singapore-based agritech firm, that is forging a partnership with the Malaysian state-owned Johor Corporation through its subsidiary, FarmByte. Together, they're on course to construct one of the largest urban farms in Johor, designed to operate indoors using advanced techniques such as vertical hydroponics, specialized grow lights, and climate control systems. This innovative approach will enable them to produce approximately 400 kg of ice plants daily for import to Singapore, providing a fresher, pesticide-free option that can be offered at competitive prices.

Growth and Opportunities

Sven Yeo, co-founder of Archisen, expressed optimism about relocating production to Malaysia, citing significant cost savings and increased capacity: "It's easily more than 50 times the kind of capacity that we're looking at." This move not only conveys a strategic shift for the company but also highlights the broader economic context: local produce can often be more expensive than imports, but with a Malaysian base, Archisen can keep their products fresh while making them more affordable for consumers.

Other Examples of Expansion

Others are following suit, illustrated by electronics manufacturer SP Manufacturing, which recently opened a new facility in Johor’s Senai town. As the company's second branch in Malaysia, it boasts the capability to operate up to four production lines. CEO Philip Ong emphasizes the resiliency this expansion provides, helping the company meet varied customer demands and adapt to the evolving Southeast Asian market, which is increasingly attracting semiconductor and electronics firms.

Survey Insights on Business Moves

Why are companies rushing to Johor? A survey by the Singapore Manufacturing Federation revealed that about 20 firms had established facilities in Johor even before the official launch of the JS-SEZ. Many are involved in sectors like electronics and wood manufacturing, which require ample space and manpower. Additionally, with many firms looking to diversify their supply chains beyond China, Johor serves as an attractive alternative.

Strategic Location Benefits

The feedback from business leaders suggests that the JS-SEZ is a strategic location. Lennon Tan, president of the Singapore Manufacturing Federation, highlighted that many firms view the SEZ as a chance to leverage the best of both worlds: Johor offers lower operational costs and availability of resources, while Singapore remains a hub for robust supply chains and capital access.

Maintaining Operations in Singapore

Importantly, the presence of Singaporean firms in Johor doesn’t mean they are abandoning Singapore. Agencies like Enterprise Singapore (EnterpriseSG) stress that these companies will maintain their headquarters and key operations in Singapore. Both Archisen and SP Manufacturing plan to retain local operations, focusing on research, development, and engineering.

Challenges Ahead

However, there are challenges that could affect this budding relationship. Concerns over continuous traffic congestion on the Causeway pose risks to the timely movement of goods and people, leading to hesitance among some smaller firms considering the JS-SEZ. Moreover, a shortage of skilled labor in Johor remains a pressing issue. In response, industry stakeholders are collaborating with local authorities to nurture local talent.

Cautious Approach for Smaller Businesses

For smaller businesses, many are adopting a cautious approach, being more tentative about diving into the JS-SEZ landscape too soon. As the infrastructure and operational capabilities evolve, local businesses are looking for assurance that investments will be supported and that their interests will be prioritized.

Support from EnterpriseSG

Despite the apprehension, EnterpriseSG is committed to assisting Singaporean businesses tapping into the opportunities offered by the JS-SEZ through various support schemes aimed at reducing the costs associated with expansion.

Conclusion

As the JS-SEZ takes shape, it may signal the dawn of a new era in cross-border collaboration and economic synergy, capturing the interest of companies eager for growth yet mindful of the challenges ahead. Stay tuned to see how this dynamic unfolds!