Building the bridge: How robust infrastructure will anchor the JS-SEZ's success
MALAYSIA'S Economy Minister has announced that a full blueprint for the Johor-Singapore Special Economic Zone (JS-SEZ) will be released by end-2025. This marks a pivotal step forward, and naturally raises expectations. With businesses watching closely and geopolitical hedging on the rise, real progress will depend on what both sides deliver next.
Some key steps are already underway. Digital customs have been upgraded, QR code clearance is live, investment facilitation centres are operating, and the Rapid Transit System (RTS) Link is set to cut Causeway travel time to just five minutes. These steps signal serious intent, and they provide a strong base to build upon.
But these are just first moves. Credibility now depends on momentum. The next phase should begin to address the harder, often trickier, aspects of infrastructure readiness. Without visible progress and closer collaboration on both sides, the JS-SEZ risks losing ground to business hesitation and global competition.
Fast tracks, not yet seamless
Few aspects of the next phase will matter more than the movement of goods. Commuters may soon ride the RTS Link to cross the Causeway in just five minutes – but trucks will not. Despite digital upgrades, cargo still faces congestion and red tape.
In a recent Singapore Business Federation (SBF) survey, nearly half the firms exploring the JS-SEZ flagged cargo movement as a key concern. This shows that logistics is no longer a passive facilitator; it now actively filters investment decisions. With such concerns rising, investors are watching closely, and continued delays may shift their calculus.
To address this, both sides could consider expanding their logistics toolkit. Dedicated truck lanes, enhanced ferry services, or even rail options could all be considered. Just as important is easing congestion in and around Johor Bahru and Woodlands, where delays can ripple across the entire supply chain.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Without seamless cargo movement on both sides of the Causeway, even the best-laid blueprint risks falling short. Malaysia and Singapore have already proven what's possible for passenger flows. Now is the time to match that momentum for cargo, before credibility, and capital, move on.
From warehouses to world markets
Land-side upgrades are a start. Leveraging Johor's seaports could further anchor the SEZ as a globally competitive logistics node.
Johor's 1,214 hectares of warehousing are already a key asset. This space allows firms to set up quickly and manage inventory near major shipping lanes. But with surging demand from industrial tenants, capacity may soon be stretched. Expanding bonded zones and storage facilities, even if phased, could help consolidate early gains and keep momentum on track.
Further coordination with Singapore's port system could unlock greater returns. Singapore is connected to more global top trade routes than any other South-east Asian port. The Tanjung Pelepas-Singapore corridor already ranks in the global top 50 in both directions, moving 135,000 tonnes of cargo daily between them. But for two major ports on one of the world's busiest trade arteries, that still leaves plenty of room to grow. For perspective, the Shanghai-Ningbo route, which also links two nearby ports, moves over twice that volume.
This gap is not merely logistical. Unlike China's unified system, Malaysia and Singapore must coordinate across sovereign lines, each with its own priorities, institutions, and political calculations. Unless bilateral collaboration gradually evolves in tandem with infrastructure ambition, the Tanjung Pelepas-Singapore corridor may take longer to realise its strategic potential.
Still, the stakes are increasingly clear. A truly competitive corridor will require both sides to pull in the same direction. Neither side can do this alone. With phased, pragmatic cooperation grounded in mutual interest, the JS-SEZ could become a high-performing trade platform, and a test case for bilateral supply chain collaboration in Asean.
Utilities cannot be an afterthought
Beyond logistics, power and water will be just as critical. High-demand sectors such as data centres are expanding fast in Johor, but their growth depends on reliable utilities. Right now, the system is already under strain.
Recent disruptions, such as the Sungai Johor water treatment plant shutdown, have already affected industrial areas and nearby data centres. On the energy side, the power grid is growing, but not fast enough. Nearly 30 per cent of new data centre proposals were deferred in late 2024 to avoid grid overload.
As investment interest grows, the predictability of utilities will become increasingly important. If planning lags behind demand, early gains could soon face headwinds. While the current 'project-by-project' approach may appear cost-efficient, it can introduce uncertainty as demand rises. What seems prudent today may quietly become a constraint tomorrow.
Regional grid integration could be part of the solution. Asean's pursuit of a multilateral power grid offers a way to balance demand and improve cross-border capacity planning. With Malaysia chairing Asean this year, the region is well-placed to build on its energy diplomacy – a momentum that, if sustained, could ease pressure on national systems and unlock broader gains, including for the SEZ.
Bridging hard and soft infrastructure
Hard infrastructure draws headlines, but it doesn't close deals on its own. For firms exploring the JS-SEZ, how things work day-to-day matters just as much as what gets built. Some of these practical concerns are already surfacing in early investor feedback.
In the same SBF survey, more than half of firms flagged uncertainty around tax rules and labour shortages, concerns that often reflect operational complexity on the ground.
These are not easily resolved, nor are they unique to the JS-SEZ. But over time, small frictions can shape big decisions. That's why even modest steps, taken early and properly executed, can count for more than waiting on the perfect plan. Firms don't expect perfection, but they do notice momentum.
Ultimately, the JS-SEZ's long-term success will be measured by its ability to deliver: in infrastructure, in regulatory clarity, and in day-to-day reliability. Sustained advantage will belong to those who turn ambition into execution, before opportunity moves elsewhere. Whether the JS-SEZ leads or lags in South-east Asia's next growth chapter will depend on the choices and collaborations made by both sides today.
The writers are researchers at the Asia Competitiveness Institute, Lee Kuan Yew School of Public Policy
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
2 hours ago
- Business Times
Honda supplier rethinks China relationship as trade war bites
[TOKYO] As the US-China trade war expands into the auto, steel and rare earths sectors, few companies are feeling the pressure more than top Japanese car parts supplier Daido Steel. The supplier to Honda Motor and other major marques is facing a trio of headwinds: a 50 per cent tariff on US imports of steel, a 25 per cent duty on foreign-made cars and a levy on parts, and China's tightening of exports of rare earths – minerals critical to make magnets for car motors. 'They have started putting up walls,' chief executive officer Tetsuya Shimizu said in an interview at Daido Steel's headquarters in Nagoya. 'This will have a massive impact on the stability of the global economy.' It's also having major implications for the sprawling network of speciality manufacturers that are critical to the global automotive industry and now find themselves stuck between feuding superpowers. For Daido Steel, the trade war has meant renewing a push to build rare earth supply routes outside of China, which accounts for almost 70 per cent of mined material and about 90 per cent of global refining of the metals. Some new routes are already starting to form, mainly from Australia, and Shimizu said there's potential in the US, Canada and Brazil. But progress has been slow due to high costs and low supply, he said, underscoring the immense challenge facing the world's efforts to wean from their dependence on China. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Daido's struggles also signal that the true toll of the trade war on the auto sector will be magnitudes more than the billions of US dollars forecast by top carmakers, including Ford Motor and Toyota Motor. And the constant of roller coaster of escalating, then de-escalating, tensions has left companies scrambling to maintain business ties under a cloud of uncertainty. When Trump initially imposed 25 per cent tariffs on steel imports in March, Shimizu was able to reassure clients in the US that business could continue as normal. Customers value Daido Steel's products enough to wait months for shipments to arrive and, if they could buy comparable goods domestically in the US, 'they'd already be doing it', he said. But his confidence vanished earlier this month when duties doubled. 'At some point, it stops making sense as a business,' Shimizu said. 'Asking customers to pare back orders or lean on inventory or lower production could negatively impact the entire enterprise, but that risk might be unavoidable.' Daido Steel earns most of its money supplying products to Japan's automakers, many of which sell cars in the US that are manufactured or assembled elsewhere. Collectively, the top Japanese auto brands are bracing for a US$19 billion hit from tariffs. Several Japanese carmakers have already started to shift or lower US production, leaving suppliers such as Daido Steel at the mercy of their customers' rapidly changing plans. In May, the steelmaker withheld full-year profit guidance for the current fiscal year and forecast a 34 per cent drop in first-half net income. 'It comes down to how carmakers respond,' said Mikine Kishi, general manager of the company's corporate planning department. 'If they decide they're not going to manufacture in Japan anymore, or that they will lower total production volumes, that would have an extremely big impact on our business.' The US and China appear to have reached a detente, and Trump has signed an order that prevents multiple tariffs from piling on top of each other. But rare earths are proving to be a particular sticking point in trade negotiations. China's export controls on seven individual elements, and magnets that contain even tiny amounts of them, left sectors from auto to defence urgently trying to find workarounds. Uncertainty over supply lingers, though Beijing said this month it's accelerating the review of rare earth export license applications and has approved some requests. Daido Steel had a head start in diversifying its supply chain. Back in 2010, China briefly imposed a de facto ban on exports of rare earths to Japan following a maritime dispute, kick-starting industry efforts to break their reliance on the nation. Success has been limited though: Japan depends on China for 60 per cent of its rare earths supply, down from 80 to 90 per cent. As well as seeking alternative supplies, Daido Steel focused on new technology to use fewer rare earths. One of the company's key products is a neodymium magnet that does not include heavy rare earths, including dysprosium or terbium, which has been used by Honda since 2016. Daido Steel also supplies magnets indirectly to automakers by way of Aisin and Denso, two of Japan's biggest suppliers. Daido Steel wants to expand production and industrial use of those magnets, betting that customers will increasingly look for non-Chinese supply. It also plans to build a manufacturing plant in the US, though Shimizu did not specify when or where that will happen. It would be a major disappointment if the US should slide into authoritarianism, Shimizu said, because that would mean the global economy will eventually have to revolve around America. 'I'm not sure there's enough time for supply chains to transition if the goal really is to produce everything in America for America,' he said. BLOOMBERG
Business Times
2 hours ago
- Business Times
Nasdaq 100 facing technical and geopolitical crosscurrents
THE Nasdaq 100 Index (NDX) enters the final week of June at a decisive technical inflection point, trading near 21,720 after rallying 32 per cent from its April lows. This robust uptrend – anchored by the 20-day Simple Moving Average (SMA) – now faces formidable resistance near the 22,000 to 22,222 zone, a level which has withstood four breakout attempts since December 2024. Investors are bracing for heightened volatility amid Middle-East tensions and as the Jul 9 end of US tariff deadline extension looms. Since April 2025, the 20-day SMA has consistently acted as dynamic support, propelling the index higher during each pullback. This moving average is currently around 21,560. A pullback to below 21,300 likely indicates the breach of the support level, potentially triggering a slide towards the 76.4 per cent Fibonacci retracement level at 20,880. The 50-day SMA near 20,380 would then be the next support level to monitor if there is any short term pull back to the 76.4 per cent Fibonacci level. The 22,000-22,222 barrier represents a triple technical threat: February 2025's all-time high, the 100 per cent Fibonacci retracement level, and a psychological milestone. Historical price action reveals this zone's significance – each prior rejection has triggered increasing selling pressure. A decisive close above 22,222 could unlock upside towards 22,800 and 23,250. However, momentum indicators flash caution. The Relative Strength Index (RSI) shows bearish divergence, with lower highs from May to June despite the index's higher peaks in the same period. If the RSI continues to dip to below 50, it could signal a deeper pullback as we enter the third quarter of 2025. The ongoing Israel-Iran hostilities continue to inject uncertainty into global equity markets. Any escalation threatening oil supply routes or energy infrastructure could reignite risk aversion. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The expiry of the US tariff suspension on Jul 9 presents a more immediate concern. The US and its major trading partners have yet to reach conclusive agreements. Market sentiment could improve if there is a further extension or progress in trade negotiations. In addition to the upcoming US tariff extension deadline, several key developments may influence market direction. These include the US Federal Reserve's recent update of two anticipated rate cuts in 2025 as well as the upcoming earnings season for US mega-cap technology companies. Both could serve as catalysts for the NDX's performance. The Nasdaq 100 Index stands at a crossroads. Its technical foundation remains solid, a strong bullish run for weeks, supported by the 20-day SMA. Yet the quadruple-top resistance at 22,000-22,222, fortified by bearish momentum divergence, deserves concern. Investors should consider exposure near resistance, and position for various outcomes from the Jul 9 tariff decision. Whether the index surges towards new highs or revisits the 20,880 support zone will depend largely on how geopolitical tensions and trade policy uncertainties unfold in the weeks ahead. The writer is manager, dealing & investor education, at PhillipCapital
Business Times
2 hours ago
- Business Times
Shipping on high alert in Middle East after US strikes on Iran
[ATHENS] The shipping industry was placed on high alert on Sunday (Jun 22) with warnings that Tehran could retaliate against commercial vessels following US airstrikes against Iran's nuclear facilities. Greece, home to more oil-tanker capacity than any other nation, cautioned its ship owners to think again if they are considering entering the Persian Gulf in the wake of US airstrikes. Vessels planning to sail through the Strait of Hormuz, the waterway that sits at the mouth of the region, should 'reassess passage' until the situation normalises, according to a circular seen by Bloomberg that its shipping ministry sent to vessel owners. It advised waiting in nearby safe ports. Naval forces in the area warned that ships, especially US-linked ones, could be at heightened risk. Shipping giant AP Moller – Maersk said it continues to transit Hormuz but is ready to re-evaluate its position based on the information available. The actions of the maritime industry – and its risk tolerance – will be a critical detail in the wake of the strikes because of Iran's proximity to the Strait of Hormuz, a conduit for a fifth of the world's oil and an unavoidable sea route into the Persian Gulf. Athens' warning is the latest sign of pressure on shipping markets as attacks on Iran escalate. Tanker earnings have already soared by almost 90 per cent since Israel first started conducting airstrikes on Jun 13. As one of the world's largest shipowning nations, advice to Greece's vessel owners would have a major impact on commodity transportation markets, especially oil. There's every chance shipowners will ignore the advice because the Persian Gulf is too-important a region for them to avoid and rates can always rise to compensate for the risk of sailing in the region. Operators that do decide to transit Hormuz should adopt the highest security level available and maintain the maximum possible distance from Iranian waters, Greece's ministry added. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up In Sunday's notice, the Greek ministry cited concern around a possible closure of Hormuz as a reason behind its message. Officials at three Greek tanker companies said they were still assessing the situation. One did indicate he might still allow his tankers to enter the region, while another said their ships would likely stay away. Greek government spokesperson Pavlos Marinakis said in a statement that the government, via the shipping ministry, advised Greek-flagged and Greek-owned ships in the area of the Strait of Hormuz to go to a safe port until the situation normalises. Bigger risk Naval groups are also warning of greater risk. On Sunday, the Joint Maritime Information Center (JMIC), a liaison between navies and merchant shipping in the region, said that the Washington's airstrikes mean US-linked ships sailing through the Red Sea and Gulf of Aden face a high risk of attack. Yemen's Houthi rebel group issued fresh threats against American commercial and naval ships earlier in the day. There had been a ceasefire between the US and the Houthis in early May, geared towards limiting the group's attacks on the US navy. US-linked ships should consider re-routing, the JMIC said in its update. Still, it said some US-associated vessels have successfully transited the Strait of Hormuz, 'which is a positive sign for the immediate future'. Separately, the European Union's naval force in the region raised its threat assessment for US-linked vessels as a result of the strikes. It now sees a severe threat to ships linked to the US and Israel and a low risk for all other ships. 'This does not exclude the possibility of all merchant vessels being targeted in the future,' it said in an update published by France's Mica Center, which helps co-ordinate global maritime security. BLOOMBERG
