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07 Nov 2023  (2677 Views) 
Tan Kin Lian - Perspectives

Johor-Singapore Special Economic Zone
Singapore and Malaysia aim to sign the MOU on Johor-S’pore Special Economic Zone by early 2024.

The zone aims to improve the flow of goods and people between both sides of the Causeway, and enhance the ecosystem of the Iskandar development region and Singapore.

What does this mean for Singapore?

More business from Singapore will relocate to Johor, and Iskandar region in particular, to take advantage of the cheaper land and labor. More Malaysians that now work in Singapore will relocate and work in Johor.

With more economic activities, commercial and residential properties will appreciate in Johor. Currently, these properties in Singapore are 5 times of similar properties in Iskandar. This difference will narrow over the years.

Property prices in Johor will appreciate, Property prices in Singapore will drop from the current lofty level. The drop in Singapore will be good for the people, as the current prices are too high.

Will this mean less job opportunities for Singaporeans, when more business moves to Johore?
The job prospects for Singaporeans will not be adversely affected. At present, many Malaysians come to live and work in Singapore. In the future, many of them will work in Johor, instead of working in Singapore. Some Singaporeans may move to work in Johor as well.

The exchange rate the Singapore dollar and the Malaysian ringgit is now at 3.5. This is largely due to the flow of funds from Malaysia into Singapore. When Malaysia's economy perform better, the flow of money will reverse. We can expect the exchange rate to move in favor of Malaysia. Maybe, the RM will move to 3.0 or 2.5 to the SGD over time.

These changes will take many years to materialize. But it will be good for Singapore and for the people. It is not good when property and other prices are too high and the exchange rate for the SGD is too high.

When conditions are too extreme, it is not good for all parties. When the conditions moderate, it is better for all parties.

This is my simple way of looking at the events. I may be wrong.

Tan Kin Lian

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