Skilled Labour Shortages and Bureaucratic Barriers Could Hinder JS-SEZ Development

The Johor-Singapore Special Economic Zone (JS-SEZ), envisioned as a key driver of regional growth, faces significant challenges due to workforce shortages, immigration policies, and logistical barriers, according to Maybank Investment Bank (Maybank IB). A recent report highlighted that nearly 60% of Singaporean businesses operating in Johor struggle to hire skilled technical workers due to strict employment pass requirements and Malaysia’s freeze on foreign worker quotas.

The disparity in wages between Johor and Singapore further exacerbates the issue, as many Johoreans opt for jobs across the border where salaries are significantly higher. While Malaysia and Singapore have agreed on policies to strengthen the SEZ, Maybank IB suggests that introducing a fast-track “SEZ Visa” for foreign specialists could accelerate development by attracting the necessary expertise.

Talent Shortage Slows Economic Zone’s Progress

Maybank IB’s report, citing a 2024 Singapore Business Federation poll, revealed that employment challenges pose a major concern for companies operating in Johor. The survey found that foreign talent recruitment remains constrained due to Malaysia’s freeze on new foreign worker quota applications, implemented in November 2024 under the 12th Malaysia Plan.

With Johor’s median wage being one-seventh of Singapore’s, companies face difficulties retaining local workers, many of whom cross the Causeway daily in search of better salaries. Although the JS-SEZ plans to offer premium salaries—RM4,000 (SGD1,198) for diploma holders and RM5,000 (SGD1,498) for degree holders—the gap remains substantial.

Proposed “SEZ Visa” to Attract Skilled Foreign Workers

To address the talent shortage, Maybank IB recommends the creation of a dedicated SEZ Visa to streamline the hiring of foreign managers and technical experts. The proposal suggests fast-track immigration processes, allowing key professionals to travel efficiently between Johor and Singapore headquarters.

Authorities have already introduced the Malaysia My Second Home (MM2H) residency visa for SEZ investors, featuring lower financial requirements. However, its restrictions on employment limit its usefulness in addressing skilled labour gaps.

Regulatory Barriers and Cross-Border Trade Hurdles

Beyond employment challenges, logistical inefficiencies and tax disparities further complicate the SEZ’s development. Harmonised customs regulations and digital processing systems are seen as essential to reducing bottlenecks at the Causeway. In December 2024, Malaysia and Singapore launched a digital customs pilot project aimed at reducing clearance times.

Maybank IB also highlighted the need for additional transport infrastructure, such as dedicated cargo rail lines and expanded vehicle lanes, to accommodate increased trade flow. Enhanced connectivity is crucial, particularly for manufacturing firms conducting “twinning” operations in both Singapore and Johor.”

Regulatory Barriers and Cross-Border Trade Hurdles

Beyond employment challenges, logistical inefficiencies and tax disparities further complicate the SEZ’s development. Harmonised customs regulations and digital processing systems are seen as essential to reducing bottlenecks at the Causeway. In December 2024, Malaysia and Singapore launched a digital customs pilot project aimed at reducing clearance times.

Maybank IB also highlighted the need for additional transport infrastructure, such as dedicated cargo rail lines and expanded vehicle lanes, to accommodate increased trade flow. Enhanced connectivity is crucial, particularly for manufacturing firms conducting “twinning” operations in both Singapore and Johor.

Johor Talent Development Council Aims to Close Skill Gaps

To address workforce challenges, Malaysia launched the Johor Talent Development Council (JTDC) in November 2024. The initiative seeks to bridge the skills gap through partnerships with Singaporean institutions and training programmes tailored to SEZ industries.

Additionally, Malaysia and Singapore have signed agreements to enhance technical and vocational education and training (TVET) programmes, ensuring that Johor’s workforce meets industry demands.”

For Singaporean companies expanding into Johor, easing employment restrictions would make JS-SEZ a more attractive investment destination. Faster processing of foreign talent visas would allow seamless workforce mobility, enabling firms to manage operations across borders effectively.

For international investors, logistical improvements and wage adjustments will determine whether the SEZ can become a competitive regional hub. Ensuring a smooth regulatory environment and efficient cross-border trade will be critical in unlocking JS-SEZ’s full economic potential.

Sources: The Edge Malaysia, SBR (2025)

Keywords: Johor Singapore SEZ, Manpower Shortage, Foreign Talent, Economic Growth, SEZ Visa, Investment, Trade, Logistics, Wage Disparity, Business Expansion