KUALA LUMPUR, July 26 — Singaporean manufacturing firm Racer Technology has operated in Johor Baru for nearly 20 years.

CEO Willy Koh said the frequent political changes in Malaysia had previously led him to diversify operations to places like Batam due to uncertainties, said a report in Channel News Asia today.

However, he is now optimistic under Prime Minister Anwar Ibrahim’s administration, believing the Johor-Singapore Special Economic Zone (SEZ) will be sustainable long-term.

"As a business, we are looking at the long term. During the periods (of political uncertainty), a lot of foreign businesses in Malaysia diversified their projects, some went back to Singapore and in my case, I turned to Batam,” Koh was quoted as saying in the CNA report.

"Because of the political issues, as a company we have to diversify, this also reassures our customers that we have backup plans in case anything happens,” he said.

The SEZ aims to enhance economic cooperation between Singapore and Johor. In January, both countries signed a Memorandum of Understanding (MoU) to increase the cross-border flow of goods and people.

Concrete steps, such as implementing QR-code immigration clearance, have already been taken to fulfil the MoU’s terms.

At a recent investor forum, Malaysia’s Economy Minister Rafizi Ramli confirmed that the SEZ agreement is on track for signing in September.

The Johor government has proposed the SEZ encompass a 3,505 sq km area across six districts, more than four times the size of Singapore, with Johor Menteri Besar Datuk Onn Hafiz Ghazi saying the proposed area would span across six districts in the state: Johor Baru, Iskandar Puteri, Pasir Gudang, Pontian, Kulai and Kota Tinggi.

Malaysian agri-business owner James Tan emphasised the importance of improved connectivity and eased congestion for the SEZ’s success.

"They are working to ease the jam — QR code clearance, the use of e-gate scanners, all of this will make travelling between Singapore and Johor a breeze.

"Passport-free travel will increase the transportation of people and also ease bottlenecks for movement of goods” Tan, who transports vegetables and fruits from his farm in central Johor district Segamat to Singapore, was quoted as saying.

Historical cross-border projects like Iskandar Malaysia and the SIJORI Growth Triangle had limited success.

However, businesses are hopeful this time due to intensive government engagement and consultation.

President of the Singapore Manufacturing Federation Lennon Tan highlighted efforts from both governments to push SEZ initiatives forward.

"There is a lot more private sector consultation, industry consultation and this is true for both sides of the government,” Tan was quoted as saying.

"There are very deliberate efforts by high-profile government officials on both sides to endorse and push the SEZ initiatives forward so there’s reason to be hopeful that it will come to fruition,” he said.

The SEZ presents a new opportunity for businesses facing rising costs and inflation in Singapore. However, a significant concern remains the potential shortage of technical and skilled workers, with many preferring to work in Singapore due to better pay.

The Johor government plans to address this by launching a talent development council to groom graduates for specific industry needs.

Nonetheless, Koh anticipates the brain drain in Johor will worsen even with the SEZ, as better connectivity may encourage more Malaysians to work in Singapore.

Koh suggests allowing Singapore employees to travel freely under special expatriate passes to help mitigate the shortage of skilled workers in Johor.

Chloe Hong of Racer Technology acknowledges that many skilled workers will likely continue to seek better opportunities in Singapore.

Agri-business owner James Tan echoes these concerns, noting difficulties in hiring middle managers in Johor. He hopes the SEZ will raise income levels in Johor, reducing the need for locals to work in Singapore.