JOHOR BARU, Oct 30 — Malaysia and Singapore said today they have agreed to jointly develop the Johor-Singapore Special Economic Zone (SEZ) and will undertake a feasibility study on its ecosystem enhancement between both countries.

In a joint press conference with Prime Minister Datuk Seri Anwar Ibrahim, Singapore Prime Minister Lee Hsien Loong said that both Malaysia and Singapore will sign a memorandum of understanding (MoU) on the important and promising project by early next year after the feasibility study is done.

"Firstly, improving the flow of goods between the two sides because the SEZ may mean special tax arrangements and bonded warehouses, therefore easier border flows.

"Secondly, better and easier arrangements on the flow of people who have to work on both sides of the Causeway," said Lee at a joint press conference with Anwar that was broadcast live from the 10th Malaysia-Singapore Leaders’ Retreat in Singapore.

He also said that the SEZ will enhance the ecosystem of the Iskandar Malaysia economic development region as well as Singapore.

Lee said the SEZ could be significant for Iskandar Malaysia by attracting investors’ attention to the area.

Companies in Singapore would be able to consider maintaining a presence in Malaysia with the SEZ, Lee said when adding that this could give them the flexibility that would be not possible if they were only on one side of the Causeway.

"So, we have great hopes. But first we have to do the feasibility study and we have to negotiate the MoU, and we're hoping to have that done by early next year,” he said.

Anwar said Malaysia expects to sign the MoU on the SEZ’s parameters early next year and would expedite the process where possible.

"We look forward to the agreement by mid-January,” he said.

In a joint statement later, both leaders also commended the Industrial Cooperation Work Group and agencies from both countries for working together closely to facilitate high-profile investments into and creating jobs in Iskandar Malaysia.

Singapore is the second largest foreign investor in Iskandar Malaysia, with S$9.5 billion (RM 33 billion) worth of investments committed between 2006 and June this year.

Plans for the proposed SEZ were first announced last month. Johor is intensifying efforts to improve the local market environment, making it more appealing to investors and boosting the region's prowess.

Anwar has been in Singapore from yesterday for the 10th Malaysia–Singapore Leaders‘ Retreat that is hosted by Singapore.

The two-day retreat, which is a key annual platform for both the prime ministers to meet and discuss bilateral issues, is the first one to be held since the Covid-19 pandemic restrictions.