Nearly three years have passed since the announcement of the Johor-Singapore Special Economic Zone (JS-SEZ), a joint economic initiative between Malaysia and Singapore aimed at attracting global investment by combining the complementary strengths of both economies. A key question now is: how has the JS-SEZ reshaped investment patterns across Johor, the rest of Malaysia, and Singapore?

ACI’s seminar, “Assessing the Impact of the Johor-Singapore Special Economic Zone on Foreign Direct Investment,” held on 16 September 2026, examined these questions using project-level greenfield foreign direct investment (FDI) data. The analysis tracks investment across Malaysian states and compares how investment changed following the October 2023 announcement according to each state’s geographic proximity to Johor. It also examines whether the response differs across the JS-SEZ’s promoted sectors and high-tech activities, before turning to the Singapore side of the cross-border zone.

The empirical findings point to an early investment response concentrated in Johor and nearby states, with sectoral gains that are broad-based but larger among promoted sectors. While the analysis finds no detectable increase in inward greenfield FDI into Singapore, Singapore-sourced projects into Johor rose sharply after the announcement, suggesting that Singapore’s role may increasingly operate through its firms investing across the border.

Key Highlights:

1. The Investment response emerged before formal implementation and is strongest around Johor. The JS-SEZ was announced in October 2023 and formally established in January 2025. Investment patterns nevertheless began changing following the announcement, with Johor experiencing the largest estimated increase in both FDI value and project counts. Nearby states also experienced limited positive spillovers, but the evidence becomes considerably weaker farther away. The early investment response therefore appears highly localised rather than evenly distributed across Malaysia.

2. Investment gains extend beyond the JS-SEZ’s explicitly promoted sectors. The 11 promoted sectors under the JS-SEZ show a larger estimated post-announcement response in project counts, but non-promoted activities also record positive gains. This suggests that the early investment response is relatively broad-based rather than confined to explicitly targeted sectors.

3. High-tech investment responded unevenly. The sectoral response is not uniformly concentrated in high-tech activity. Non-high-tech activities exhibit a clearer positive response, while high-tech manufacturing shows some positive evidence of higher FDI value following the announcement. For high-tech services, however, there is no clear causal investment effect.

4. Singapore-sourced investment into Johor rose sharply. Although the analysis finds no detectable increase in inward greenfield FDI into Singapore following the JS-SEZ announcement, Singapore-sourced investment into Johor rose sharply. Together, these results suggest that Singapore’s role in the zone may increasingly operate through Singapore-based firms investing and locating activities across the border, rather than through additional greenfield FDI entering Singapore itself.

By MA, Qi Xiang