[SINGAPORE] Manufacturers should not assume that the Johor-Singapore Special Economic Zone (JS-SEZ) will provide access to significantly cheaper labour, said Singapore Manufacturing Federation (SMF) president Lennon Tan.
Malaysia’s labour authorities expect incoming businesses to pay wages that are about two-thirds of those in Singapore, or roughly RM5,000 (S$1,528), he noted in an interview with The Business Times.
“People think Johor offers cheap labour and cheap land,” he pointed out. “Cheap land, yes, compared to Singapore. But cheap labour, no – Malaysia does not welcome labour-intensive industries.”
And while manufacturers may be attracted by the possibility of grants and support from both governments, such incentives are not for labour-intensive operations, he added.
Rather, they are generally reserved for higher-value and more automated projects, or those involving large investments.
Since the JS-SEZ was formalised in January, about 30 SMF members have committed to establishing a presence there. Some have already purchased land or engaged with the Malaysian Investment Development Authority.
A NEWSLETTER FOR YOU
Friday, 8.30 am
Asean BusinessBusiness insights centering on South-east Asia’s fast-growing economies.
“Johor is a new hinterland for Singapore manufacturers,” Tan explained.
In the past, manufacturers might have moved operations to places like Vietnam or Cambodia, which would require some members of its management team to relocate, he noted.
But Johor’s proximity to Singapore allows firms to have one management team overseeing both markets, with staff commuting daily instead of relocating.
Over time, managers can train the Johor team and reduce the frequency of their visits until those operations can run independently.
Tan acknowledged that some companies had “bad experiences” in Johor previously, with permits taking years and agencies shifting responsibility.
To smoothen the way, SMF will work with the Singapore government’s newly established Joint Project Office. The office serves as a one-stop centre for firms entering the JS-SEZ, providing resources on market entry and available support schemes.
Beyond regulatory issues, he added, physical connectivity between Singapore and Johor must also improve. “Most businessmen say we can tahan (endure) one hour of driving each way, but not three,” he quipped.
The upcoming Johor Bahru–Singapore Rapid Transit System Link is one potential fix, he noted.
The rail link is expected to be operational by the end of 2026.