In recent years, Singapore's high land and labor costs have prompted more and more companies to turn their attention to Johor, especially the Join Economic Zone (JS-SEZ).According to a recent survey of the Singapore Industry and Commerce Federation, more than 90%of Singapore business owners have a strong interest in the opportunities of Rouxin Special Economic Zone.Although this special economic zone can provide potential opportunities for Singaporean companies to relieve cost pressure, it also brings a lot of challenges.
The signing of the Rouxin Special Economic Zone Agreement, which was originally planned to be finalized in September this year, has now been postponed to December.It is understood that this delay is mainly due to the further clarification needs of the Office of the General Attorney General of the two parties on legal opinions, and the problems of the "Facilition Fund" problems have not been solved.The fund is jointly funded by Singapore and Malaysia, and both parties hope to obtain their own interests.
For Singapore, although the Rouxin Special Economic Zone can alleviate the high local operating costs, there is also the risk of the total domestic product (GDP) to Malaysia, especially for the retail industry.
According to the forecast of DBS Bank, Singaporea retailers may go to Johor Bahru for shopping because more and more Singaporeans go to Johor Bahru, which will lose up to 4%of sales, about S $ 2.1 billion.With the completion of the Xinrou Metro System (RTS) and the implementation of the Special Economic Zone of the Special Economic Zone, this trend will further intensify.
The time of the Singaporean election is getting closer and closer. For local small merchants who have felt stressful, this trend is particularly politically sensitive.Because these merchants occupy an important voter ratio in the elections, the government is expected to be very cautious in this critical period to minimize any possible political risks.Therefore, the Rouxin Special Economic Zone Agreement is very likely to be signed after the Singapore election, that is, the first quarter of 2025.
Another discussion topic of the Special Economic Zone of Johor is how much labor costs can be saved with the expansion of Singaporean companies in Johor?
Data show that Johor's salary level is gradually rising.For example, a undergraduate graduate of Johor, the salary of SMEs may be RM4,000 (about S $ 1250); in Singapore, the starting salary of the same degree is about S $ 3,000.At present, many Singaporean employers have set up companies in Johor and set their salary levels at about 70%of the Singapore market level, namely RM 7,000, which is 75%higher than the Johor Bahru market.This not only effectively solves the employment problems of Johor Bahru, but also enhances the retention of local talents.In the past, the common pain points of Johor Bahru enterprises were that even if they successfully recruited employees, many people would eventually flow to Singapore.This is mainly because the previous salary was formulated at the level of Johor Bahru's local market, and it was difficult to compete.
Today, as Singapore companies recruit talents in Johor Bahru with 70 % of Singapore's salary in Johor Bahru, this can not only retain local employees, but also attract outstanding talents in other states in Malaysia to work and live in Johor Bahru.This salary level will effectively alleviate the problem of talent supply in Johor Bahru.
The author is the chief consultant of Rouxin Special Economic Zone of a New Malaysian Accounting Tax Company
