Johor-Singapore SEZ helps southern state beat Singapore, Malaysia’s growth: DBS

[SINGAPORE] The Johor-Singapore Special Economic Zone (JS-SEZ) is showing great potential, based on a DBS report released on Thursday (Sep 4).

The Johor state’s economy grew faster than Singapore and Malaysia’s in 2024 and attracted strong foreign investment as a result of the JS-SEZ, accounting for about 61 per cent of all approved investment there in the first half of 2025.

The state enjoyed 6.4 per cent gross domestic product growth in 2024, with the gap to national growth – 5.1 per cent across the year – the largest since 2016. Singapore’s economy grew 4.4 per cent in the same period.

While the SEZ agreement was signed in January this year, Singapore and Malaysia inked a memorandum of understanding a year ago.

The zone aims to drive investments in key sectors, namely manufacturing, logistics, food security, tourism, energy, the digital economy, green economy, financial services, business services, education and health.

Economist Chua Han Teng said Johor will be a “key contributor” to Malaysia’s 13th Malaysia plan, which targets a national growth average of 4.5 to 5.5 per cent.

Malaysia is targeting a 6 per cent growth in private investment from 2026 to 2030 “as it aims for high-income status”, compared to a 3.6 per cent growth in public investment.

Foreigners have continued to invest in Malaysia, exceeding 50 per cent of total investment on average across the past three years. Singapore has been the top source of such investments, comprising 40 per cent of all foreign investments in the first half of 2025.

Johor in particular has emerged as a data centre “hotspot”, added Chua. Singapore-based Princeton Digital, backed by Warburg Pincus, launched a US$1.5 billion Johor data centre last year, following other companies like Nvidia and Microsoft.

Chua cited the JS-SEZ as a catalyst for such investments, pointing out how Johor state accounted for 30 per cent of all investments in Malaysia in the first half of this year.

Investments into the services sector in Johor continued to grow, driving an increasingly large portion of overall investments in the state. As a result, Johor was ranked second among all Malaysian states in terms of construction activity at 18 per cent of national construction activity in the first half of 2025, said Chua.

The data centre boom was a likely reason for Johor’s “strong expansion” in construction work done, with the non-residential segment a key force.

His report also stated that Malaysia’s non-residential construction work was driven primarily by Johor. That “underscores Johor’s importance in Malaysia’s ongoing development to high-income nation status.”