Average approved investment size within the zone reached RM200 million per project, compared with RM80 million across Johor overall. — Bernama photo
KUCHING (May 27): Johor is seeing stronger momentum in higher-value manufacturing investments following the formalisation of the Johor-Singapore Special Economic Zone (JS-SEZ).
The team with Kenanga Investment Bank Bhd (Kenanga Research) said Johor recorded RM110 billion in approved investments in 2025, accounting for about a quarter of Malaysia’s total approved investments.
Manufacturing projects linked to foreign investors also formed around 20 per cent of Malaysia’s approved manufacturing investments.
“Johor is moving up the quality curve, not only in the area of incentivising high-value investments, but also in data centres,” it said.
It noted that more than 80 per cent of approved manufacturing projects in Johor during 2025 were located within the JS-SEZ area.
Average approved investment size within the zone reached RM200 million per project, compared with RM80 million across Johor overall.
Among notable investments cited were projects involving semiconductor equipment, battery technologies, sustainable aviation fuel and data centres.
The research house said the state’s investment strategy was increasingly focused on outcome-based incentives under the New Incentive Framework (NIF), which prioritises economic complexity, high-value jobs, domestic linkages and sustainability practices.
“The higher the quality of the projects, including focus on less developed areas, and with more spillover potential, they would likely be eligible to a better incentive package,” it said.
It added that Johor’s manufacturing ecosystem was also benefiting from closer integration with Singapore through “twinning” operations, where firms maintain headquarters or research functions in Singapore while relying on manufacturing and supply chain operations in Johor.
Companies highlighted in the report included 5E Resources, Wentel Engineering and ISF Group, which are expanding capacity to support industrial and data centre demand in Johor.
On the services side, data centre investments remained a major growth area.
The research house said 51 data centres had been announced in Johor as of November 2025, with 17 operational and 23 under construction.
However, Johor is shifting focus towards Tier 3 and Tier 4 data centres due to infrastructure and water resource considerations.
“Johor would welcome tier 3 and tier 4 data centres, but has a pause on tier-1 and tier 2, given that the latter group has been found to be more resource hungry in water,” it stated.
The research house also noted near-term risks from global geopolitical tensions, particularly the Middle East conflict, which could slow project rollout and raise input costs for manufacturers.
Even so, several companies were adapting through supply diversification and inventory management strategies to mitigate cost pressures.
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