Emily Ma needs five minutes to depart the country.
Sitting on an extended bench at Woodlands Station in Singapore, the petite, elegant retiree doesn’t look tense. Close ties between her homeland and neighbouring Malaysia allow her to construct a base on each side of the border.
The shuttle train departs 13 times a day from Woodlands Station in Singapore, arriving in the Malaysian city of Johor Bahru just five minutes later. The bus takes an hour and non-residents can currently stay in any country without a visa for as much as 30 days.
“I go on vacation, meet friends or just relax,” Ma said. “These links are important because [Singapore and Malaysia] there used to be one family. In a way, we are still one family.”
Being a part of the identical country, these neighbours remain close trading partners with increasingly interconnected economies. As ASEAN countries deepen their ties through programs reminiscent of the Community’s Single Window Customs Program and cross-border QR payments organized through central bank cooperation, Malaysia and Singapore could soon develop even closer by making a transnational special economic zone between town -the state and the state of Johor
The combined GDP of the 2 related economies is already projected to exceed $1 trillion in the following five years, accounting for greater than 1 / 4 of your entire ASEAN bloc. The special zone continues to be in its early stages, first proposed unofficially by Malaysian Economy Minister Rafizi Ramli in May, but could represent a big step in the combination of the 2 countries.
While details on what such cooperation would involve are sparse, the difficulty is planned to be raised at an upcoming Malaysian cabinet meeting before being presented at the annual meeting of the Malaysia-Singapore Joint Committee on Economic Cooperation, which is anticipated to be held in mid-July.
“Malaysia and Singapore share strong ties in terms of trade and investment flows, tourism and labour flows,” said M. Niaz Asadullah, professor of development economics at Monash University Malaysia. “However, there is untapped potential for mutual economic benefits if Singapore can leverage its proximity to natural resource-rich Malaysia.”
Thousands of Singaporeans cross into Malaysia daily via the 1,056-kilometer railway and highway causeway that has linked the 2 cities on the Strait of Johor since 1924. Bus fares start at around $1.48 (SGD2).
The convenience of travel has created a long-term symbiotic exchange of labour, trade and folks between the 2 regions. As of 2014, an estimated 5,000 Singaporeans live and work in Johor Bahru. The recent depreciation of the ringgit against the relatively stable Singapore dollar has made the price of living within the Malaysian region comfortable in comparison with the expensive city-state.
But while travelling more freely is straightforward, proximity for business purposes continues to be marred by long queues, traffic bottlenecks and customs checks. Recent complaints show some Singapore bus passengers have spent as much as seven hours waiting at the Johor-Bahru customs checkpoint – a delay that might be alleviated by a special economic zone.
Strengthening ties between ASEAN countries
The announcement of the proposed region is a component of a concerted effort by Malaysian Prime Minister Anwar Ibrahim to strengthen his country’s ties with ASEAN and reduce dependence on Western economies.
As its closest neighbour, the city-state is Malaysia’s regional economic center and natural trading destination.
The two countries have deep historical ties – Singapore was originally a part of the Federation of Malaya after each country gained independence from Britain, but split in 1965. A January meeting with Singapore’s leaders ensured Foreign direct investment price of $4 billion from the Lion City.
“[Anwar’s] The latest efforts to renew bilateral relations with Singapore could also be motivated by… the ‘look East’ philosophy,” Asadullah said. “By strengthening economic ties with Singapore, this could help Malaysia accelerate its transition to high-income country status by 2028.”
For its part, Singapore has advantages from the resources and labour available within the Malaysian state, and lots of Singaporean corporations have already chosen to locate their assembly and production lines in Johor.
Johor: the cornerstone of trade
Johor’s role as a cornerstone in regional trade between Singapore and Malaysia has long been a part of the economic history of each country. In 1988, the border state announced a “twinning” policy with Singapore, which led to a 200% increase in investment in its neighbor then.
Since then, relations between the 2 sides have only deepened – especially amid broader economic recovery efforts after two years of pandemic-related border problems.
“The two-year lockdown in Singapore has had an impact on Johor,” said James Chin, professor of Asian studies at the University of Tasmania. “Now people are looking for a new impetus to push the Johor-Singapore growth triangle.”
Another factor motivating the deepening network of economic connections can be, as Minister Ramli announced, renewable energy.
This follows the May announcement to lift Malaysia’s renewable energy export ban, a part of the federal government’s ambitious goals to double renewable energy capability by 2050. However, the country’s renewable energy sector continues to be in its infancy, with coal and natural gas currently supplying 75% of Malaysia’s demand power demand.
Abroad, Singapore can be attempting to increase its use of renewable energy sources, but with limited success. Experts imagine that a symbiotic partnership between neighbours can unlock recent potential for each side.
“The limited land area poses a major challenge for Singapore when developing large-scale renewable energy projects,” explained Kim Jeong Won, a research fellow at the Institute of Energy Studies at the National University of Singapore. “Importing renewable electricity through regional power grids can help Singapore’s energy transition and implement low-carbon solutions in the region.”
Professor Asadullah also hopes that the brand new proposed economic region will help meet growing regional energy demand while encouraging mutually useful trade between Malaysia and Singapore.
“Land- and natural-resource-poor Singapore has a particular interest in developing an ASEAN-wide sustainable energy grid,” she said. “This will not only pave the way for greater bilateral clean energy trade but also encourage FDI from Singapore into the Malaysian renewable energy sector… and the overall development of green infrastructure.”
Smoother trading and transactions
The practicalities of how the 2 countries’ different economies, currencies and markets interact could make smooth trade within the region difficult. According to Asadullah, the success of the economic region would rely on reducing the prices of cross-border transactions and harmonizing labour and environmental standards.
The central banks of Singapore and Malaysia have linked QR systems on their countries’ smartphones to facilitate cross-border financial transactions.
“The key challenge is to coordinate the necessary institutional reforms,” said Natalya Ischenko, CEO of Robocash Group, a financial group specializing in providing financial services in Asia and Europe, adding that the consequences of QR development should “manifest themselves in a significant way” in the approaching yr.
It estimated that cross-border QR payment systems could facilitate trade between the 2 countries by at the very least 0.5% and e-commerce in Singapore by at the very least 2% per 30 days.
“[If so]foreign trade between Singapore and Malaysia will probably be between USD 136.9 billion and USD 147.3 billion by early 2024,” she said.
For China, the newest proposed economic tie continues a history of two countries united by politics, geography and impressive economic goals.
“Of course, it is sweet for the region. It’s a win-win situation for each side,” he said. “[But] The economic relationship between Johor and Singapore might be understood to mean that they’re interconnected. Whether they like one another or not, it doesn’t matter, they have to work together for prosperity.
