Singapore, Malaysia weigh passport-free travel to boost commerce

The traffic from Malaysia to Singapore on the Johor Singapore Causeway seen from Singapore in the evening, on Sunday, Aug. 14, 2022. (Bloomberg)

By Anisah Shukry

(Bloomberg) — Malaysia and Singapore agreed to jointly develop a special economic zone and explore a range of measures including passport-free travel to boost trade between the neighbors that each count the other as the No. 2 trading partner.

The pact to establish the area — where companies operate with little regulation or government interference — in Malaysia’s southern Johor state will boost business activity and improve connectivity, according to a joint statement.

Malaysia’s Economy Minister Rafizi Ramli and Singapore’s Minister for Trade and Industry Gan Kim Yong signed the agreement on Thursday in the presence of the prime ministers of the two countries.

Lee Hsien Loong, left, and Anwar Ibrahim, right, witness the signing of the ageement in Johor Bahru on Jan. 11. (Photographer: Ore Huiying/Bloomberg)

The Johor-Singapore Special Economic Zone “will herald the commencement of a transformative chapter in our bilateral economic relations,” Rafizi said in the statement.

Malaysia and Singapore will explore measures that will support the special economic zone, including a passport-free QR code clearance system on both sides to improve the speed of clearance of people at land checkpoints.

Malaysia and Singapore share one of the world’s most open borders. Their bilateral merchandise trade totaled $90.3 billion in 2022, which is more than the total commerce they each enjoy with Indonesia, Thailand, the Philippines and Vietnam combined. The causeway connecting Johor and Singapore sees more than 350,000 travelers daily.

Singapore was also Malaysia’s second-biggest source of foreign direct investment in the first nine months of 2023 at 20.4 billion ringgit ($4.4 billion).

The neighbors also agreed to explore:

• A one-stop business-investment service center in Johor for Singapore businesses to set-up in Johor

• Adopting digitized processes for cargo clearance at the land checkpoints

• Co-organizing an investors’ forum, as well as facilitating Malaysia-Singapore renewable energy cooperation in JS-SEZ

The neighbors earlier commemorated the completion of a connecting span for a new rail link, which is expected to commence passenger service by December 2026 and have a peak capacity of up to 10,000 passengers per hour per direction.

Malaysian stocks with substantial exposure to Johor state advanced in the weeks ahead of the memorandum’s signing.

Malaysia’s incoming monarch Sultan Ibrahim Sultan Iskandar, who hails from Johor, has also said that he plans to use his influence to improve infrastructure including the high-speed rail project with Singapore.

—With assistance from Ram Anand.

©2024 Bloomberg L.P.