JOHOR - SINGAPORE SPECIAL ECONOMIC ZONE (SEZ) - It's special alright - Overview by Nik Zafri

Note and Disclaimer : This article is part of a private online recent discussion between myself and interested parties. No confidential information, such as plans, drawings, or VR simulations or the likes are being disclosed in this article. I am sharing this piece voluntarily to promote Special Economic Zones (SEZ) to professionals and firms who may be exploring opportunities in this area. Additionally, I may serve as a key speaker on the subject. Inquiries and speaking invitations from any party are welcome, subject to terms and conditions.

The Johor-Singapore Special Economic Zone (SEZ) is a proposed cross-border economic zone that aims to integrate the economies of Johor, a state in southern Malaysia, and Singapore. This initiative is meant to promote closer economic cooperation and development between the two regions, capitalizing on their proximity and complementary economic strengths. 

In 2023, total trade between Malaysia and Singapore reached US$79.6 billion. Malaysia’s exports to Singapore were US$ 31.53 billion. The main exported goods were electrical and electronic equipment (US$9.38 billion), mineral fuels, oils, distillation products (US$9.73 billion), machinery, nuclear reactors and boilers (US$2.66 billion), pearls, precious stones, metals, coins (US$1.68 billion), and plastics (US$1.09 billion). 

Meanwhile, in the same year, Malaysia’s Exports to Singapore reached US$48.09 billion, and the main exported goods were electrical and electronic equipment (US$22.20 billion), mineral fuels, oils, distillation products (US$7.82 billion), machinery, nuclear reactors and boilers (US$4.69 billion), optical, photo, technical, medical apparatus (US$1.64 billion), and pearls, precious stones, metals, coins (US$0.89 billion). 

Source : ITC Trade Map

On January 11, 2024, Minister of Economic Affairs, Rafizi Ramli and Singapore’s Trade and Industry Minister signed a Memorandum of Understanding (MoU) outlining proposed joint initiatives to develop the region. The signing was witnessed by Malaysia's Prime Minister YAB Dato' Seri Anwar Ibrahim and Singapore's Prime Minister Lee Hsien Loong.

KEY FEATURES OF SEZ

Cross-Border Integration 

The Johor-Singapore SEZ is designed to foster greater economic integration between Johor and Singapore. This includes encouraging investment, trade, and labour movement across the border.

FOCUS AREAS AND SECTORS

The SEZ is expected to target specific sectors where Johor and Singapore can complement each other.

Manufacturing and Logistics

Johor’s Iskandar Malaysia Region already focuses on these sectors, benefiting from lower land and labour costs compared to Singapore.

Electronics and Electrical (E&E) Manufacturing 

This is one of the largest manufacturing sectors in Iskandar Malaysia, involving the production of semiconductors, consumer electronics, electrical components, and home appliances. For example, companies like Panasonic and Vishay Intertechnology have set up operations in Johor, producing components like capacitors, resistors, and sensors that are exported globally.

Automotive and Aerospace Manufacturing 

Iskandar Malaysia serves as a hub for automotive parts and component manufacturers. The region produces items like engine parts, electronics, tires, and other components. Companies like Berjaya Group and Toyota Tsusho have established facilities in Johor. Aerospace component manufacturers such as Upeca Aerotech also operate in Johor, producing parts for global aerospace giants like Boeing and Airbus. 

Food and Beverage (F&B) Processing

The food processing industry in Iskandar Malaysia involves processing raw agricultural products into packaged foods and beverages for export and local markets. This includes halal food production, given Malaysia's strength in the halal industry. For example, Nestlé has a significant presence in Johor, producing products like Milo, Maggi, and Nescafé for Southeast Asia.

Petrochemical and Chemical Manufacturing 

The region is also home to several petrochemical and chemical manufacturing plants, such as those producing plastics, resins, fertilizers, and industrial chemicals. Companies like Petronas have significant operations in Johor, particularly at the Pengerang Integrated Petroleum Complex (PIPC), which focuses on petrochemical and refinery activities.

Pharmaceutical and Biotechnology Manufacturing 

Iskandar Malaysia has been growing its footprint in pharmaceuticals and biotechnology, with companies involved in the production of generic medicines, medical devices, and biotech research. Biocon, an Indian biopharmaceutical giant, has established a large facility in Johor to manufacture insulin products for global markets.

LOGISTICS OF ISKANDAR MALAYSIA

Logistics involves the transportation, warehousing, distribution, and supply chain management of goods. The region benefits from its strategic location next to Singapore, access to ports, highways, and railways, and a growing network of logistics hubs.

E-COMMERCE FULFILLMENT CENTRES

The rise of e-commerce has led to the establishment of fulfillment centers in Iskandar Malaysia, where goods are stored, packed, and shipped to customers in Malaysia, Singapore, and the broader Southeast Asian region. Companies like Lazada and Shopee have invested in logistics infrastructure in Johor to support their operations.

Singapore and Malaysia are distinguished as leading mature e-commerce markets in Southeast Asia, characterized by high internet and smartphone penetration, affluent and tech-savvy consumer bases, sophisticated logistics and payment infrastructure, and supportive government policies. The e-commerce sector in Singapore is projected to grow at a Compound Annual Growth Rate (CAGR) of 11% over the next five years, while Malaysia's market is expected to experience a 14.32% growth rate during the same period.

Source : Growthops.Asia

TECHNOLOGY, SYSTEM AND PLANNED IMPLEMENTATION

Technology and Innovation - Leveraging Singapore’s status as a tech and innovation hub.  Technology and Innovation are key drivers of growth in both Johor’s Iskandar Malaysia and Singapore. Each region leverages its unique strengths to foster technological advancements and innovation, often complementing one another in areas like digital transformation, smart cities, artificial intelligence, and green technologies.

Data Centers and Cloud Computing - Iskandar Malaysia is emerging as a hub for data centers, benefiting from its strategic location, lower operating costs, and availability of land. Companies such as Bridge Data Centres and Keppel Data Centres have established facilities in Johor to cater to growing demand from Southeast Asia. These data centers support cloud computing, data storage, and disaster recovery services, catering to regional businesses and multinational corporations.

Smart City (Urban Intelligence) Initiatives - The Iskandar Malaysia is implementing smart city with elements of Urban Intelligence initiatives to improve urban living through technology. The Smart City Iskandar Malaysia (SCIM) framework focuses on smart governance, smart economy, smart mobility, and smart environment. Examples include the use of intelligent traffic management systems, energy-efficient buildings, and smart waste management solutions.

Innovation and Research Centres - Several innovation hubs and research centres in Iskandar Malaysia focus on advanced technologies. For instance, the Crescendo-HELP International School's Innovation Center fosters research in robotics, artificial intelligence (AI), and STEM education. The University of Southampton Malaysia Campus in Johor is involved in research and development (R&D) in engineering and technology.

Green Technology and Sustainability - Iskandar Malaysia promotes sustainable development and green technology through initiatives such as the Iskandar Malaysia Low Carbon Society project, which aims to reduce carbon emissions through the adoption of renewable energy, green building practices, and sustainable transport systems. The region also hosts solar panel manufacturers and other companies focused on clean energy solutions.

Advanced Manufacturing and Automation - The region is home to advanced manufacturing plants that use automation, robotics, and the Internet of Things (IoT) to enhance productivity and reduce costs. For example, companies in sectors like electronics, automotive, and aerospace are adopting Industry 4.0 technologies, such as D&S Solution (M) Sdn Bhd, which focuses on precision engineering and automation solutions.

Smart Nation Initiative - Singapore’s Smart Nation Initiative aims to transform the city-state into a leading digital economy and smart city through the integration of technology in governance, healthcare, transportation, and urban planning. Examples include a nationwide network of sensors and smart devices for public safety, autonomous vehicle trials, and digital payment systems.

Artificial Intelligence (AI) Development - Singapore is a regional leader in AI development, with government-led initiatives such as AI Singapore driving innovation. AI Singapore works on projects ranging from natural language processing to AI-driven healthcare solutions. Companies like Grab use AI to optimize ride-hailing and food delivery services.

Fintech and Digital Banking - Singapore is a global fintech hub, fostering innovation in digital banking, blockchain, and payment systems. Startups like Revolut, Nium, and TransferWise operate in the city, and major banks such as DBS and OCBC have launched digital banking platforms and robo-advisors.

1) Collaborative R&D and Innovation

Johor can serve as an extension of Singapore’s innovation ecosystem by providing space and cost advantages for research and development (R&D) facilities. For example, joint research initiatives in areas like AI, advanced manufacturing, and biotechnology could benefit from the resources and talent pools in both regions. 

2) Cross-Border Digital Economy

The close proximity and digital connectivity between Singapore and Johor enable cross-border digital trade, e-commerce, and fintech innovation. Singaporean startups and companies can leverage Johor’s infrastructure and workforce for regional expansion.

3) Smart City Development/Urban Intelligence 

Both regions can share best practices and collaborate on smart city solutions, such as intelligent transport systems, sustainable urban planning, and energy-efficient technologies, creating a seamless cross-border smart city ecosystem.

4) Supply Chain Optimization

Manufacturing and logistics hubs in Johor can support Singapore’s technology and innovation ecosystem by providing supply chain and distribution solutions for high-tech products, enabling cost-effective and efficient regional supply chains.

5) Education and Healthcare

Johor can serve as an expansion area for Singapore's education and healthcare services.

6) Tourism

Both regions aim to enhance tourism through shared marketing and improved connectivity. This will make the SEZ more viable, there are plans for infrastructure projects that improve connectivity between Johor and Singapore. For example:

 7) The Johor Bahru-Singapore Rapid Transit System (RTS) Link

A rail link connecting Johor Bahru and Singapore, set to ease traffic congestion and promote daily commuting.

8) Enhanced Road and Port Facilities

Upgrades to current road networks and port facilities to facilitate the movement of goods and people.

9) Simplified Regulations and Incentives

As a special economic zone, the SEZ may offer unique incentives to attract investors, such as tax breaks, streamlined regulations, and ease of doing business. These incentives would be designed to attract businesses that can benefit from a cross-border operational model, leveraging the advantages of both jurisdictions.

10) Labor Market and Workforce Synergy

The SEZ will likely include policies to promote the efficient movement of labor between Johor and Singapore, such as simplified visa processes or special permits for cross-border workers. This could help both regions address labor shortages and create a more dynamic workforce.

RELATION TO ISKANDAR MALAYSIA

The Johor-Singapore SEZ concept is closely related to the Iskandar Malaysia development, which is already a significant economic growth corridor in southern Johor. Iskandar Malaysia’s focus on industrial development, logistics, property development, and international education aligns well with the objectives of the SEZ, positioning it as a key component of this larger cross-border strategy.

CURRENT STATUS

While the idea of the Johor-Singapore Special Economic Zone has been discussed and promoted in various bilateral forums, it is still largely in the conceptual stage. Key projects like the RTS link are already underway, but a comprehensive, formal agreement defining the specifics of the SEZ, such as its regulatory framework, incentives, and governance structure, has not yet been finalized.

CONCLUSION

The Johor-Singapore Special Economic Zone is a proposed initiative to create a tightly integrated cross-border economic region between Johor in Malaysia and Singapore. It aims to capitalize on their geographic proximity and economic complementarities to drive growth, enhance connectivity, and foster bilateral cooperation. While the concept is promising, its full realization depends on continued negotiations and strategic planning between both governments.

SINKHOLES : KLCC TWIN TOWERS IS UNSAFE

I find it perplexing that some individuals, claiming as a "technical experts," are claiming that the entirety of Kuala Lumpur, and implying the KLCC Twin Towers, is unsafe. First of all, I have never encountered this (these) person (s) in any of the major projects I have been directly involved in. (We construction people do know one another)

(And yes, as many of you might have guessed, I am one of the key individuals who worked on the construction of the Twin Towers, the LRT tunneling from Ampang Park to Masjid Jamek, and several other significant projects.)

During the construction of the Twin Towers, we were engaged by numerous professional institutions and the relevant government agency, including the The Institution of Engineers, Malaysia (IEM), DOSH Malaysia, Public Works Department Malaysia [Jabatan Kerja Raya Malaysia], Dewan Bandaraya Kuala Lumpur, and many others.

We thoroughly explained all the safety measures taken, such as spending millions on cavity grouting (thanks to BAUER Group) to fill any possible underground voids on the construction area.

Unfortunately, some individuals, including this person and others I've encountered, are quick to criticize without ever mentioning the extensive/expensive work done like cavity grouting, or understanding the challenges faced by those involved in the construction. Reasons : They were never involved in the construction of these mega projects.

They claimed to be "technical experts," yet their credibility are disputed by the university itself. There is a reason for every aspect of the building's design, from the bustles to the skybridge and the complex piling process—and so much more details I can't fully elaborate on here as it will be time-consuming.

I'm not speaking on behalf of the many engineering consultants involved, KLCC Group of Companies, or the focal point - end-user PETRONAS, but I am concerned about the unprofessional opinions being circulated by such individuals, which are gaining undue popularity based on pseudo-facts.

We have here in KL - two of the tallest skyscrapers. If you've never seen the feasibility and viability study for 118, I'm certain you haven't seen the one for KLCC Twin Towers either.

While we honor the victim of the Masjid India incident and acknowledge the time and sacrifices made by our SAR team, who left their families to respond, it does not mean that everyone should use this tragic event to gain popularity.

Do also take your time to read :

https://nikzafri.blogspot.com/2024/08/when-sinkholes-happen-in-urban-areas.html

WHEN SINKHOLES HAPPEN IN URBAN AREAS

Photo Source : Sinar Harian

Sinkholes are sudden depressions or holes in the ground caused by the collapse of a surface layer. When they occur in urban areas, they can cause significant damage and pose serious safety risks.

Here's what typically causes sinkholes in cities and how they can be prevented.

COMMON CAUSES OF URBAN SINKHOLES

1) Underground Water Erosion

• Water Main Breaks - Leaking or broken water mains can erode the soil beneath the surface over time, leading to sinkhole formation.
  
  
• Sewage Leaks - Similar to water mains, leaking sewage pipes can erode the ground, weakening the surface above.
  
  
• Stormwater Infiltration - Heavy rainfall or poor drainage systems can cause water to infiltrate the ground, washing away the soil and creating voids.

2) Construction and Infrastructure Issues

• Excavation Work - Construction activities like digging or tunneling can disturb the ground and create weak spots that may collapse into a sinkhole.
  
  
• Old or Abandoned Infrastructure - Forgotten underground tunnels, mines, or other infrastructure can weaken over time, eventually collapsing.
  
  
• Poorly Compacted Soil - During construction, if the soil is not properly compacted, it may settle over time, leading to a sinkhole.

3) Geological Factors

• Karst Topography - In areas with limestone or other soluble rocks, natural processes can dissolve the rock, creating cavities that may eventually collapse.

• Underground Caverns - Natural caverns or voids can exist beneath the city, which might collapse under certain conditions.

PREVENTION OF SINKHOLES IN URBAN AREAS

1) Regular Inspection and Maintenance

• Infrastructure Monitoring - Regularly inspect water, sewage, and drainage systems to detect leaks or weaknesses early
  
  
• Ground Surveys - Conduct geotechnical surveys in vulnerable areas to identify potential risks before construction begins.

2) Improved Drainage Systems

• Stormwater Management - Implement effective drainage systems to prevent water accumulation and infiltration into the ground.
  
  
• Surface Water Diversion - Ensure that surface water is diverted away from buildings and infrastructure to reduce the risk of erosion.

3) Better Construction Practices

• Proper Soil Compaction - Ensure that soil is properly compacted during construction to prevent future settling.
  
  
• Use of Modern Technologies - Employ advanced techniques like ground-penetrating radar (GPR) to detect underground voids before construction.

• Reinforcement - Reinforce underground structures with materials that can prevent collapse.

3) Public Awareness and Reporting

• Education - Educate the public on the signs of potential sinkholes (e.g., cracks in the ground or building foundations) and encourage prompt reporting.
  
  
• Quick Response- Develop a rapid response system to address potential sinkholes before they become severe.

By combining regular maintenance, improved infrastructure, and public awareness, cities can significantly reduce the risk of sinkholes and mitigate their impact.

EXTENSION OF TIME, VARIATION ORDER (Sub-Topic : CORRUPT PRACTICES)

Having to experience working as a contractor, consultant and the client, request for an extension of time (EOT) by the contractor can have both advantages and disadvantages. EOT is also linked to variation orders (VOs).

VARIATION ORDERS

VO might involve changes to the scope of work, often lead to the need for an EOT. For example, if a VO requires additional work, the contractor might need more time to complete the project, necessitating an EOT.

Coordination Challenges

If not well-coordinated, EOT requests related to VOs can lead to complexities in project management, potentially causing further delays and disputes over the time impact of variations.

Potential for Additional Claims

A VO might lead to additional claims for time and cost. Contractors need to ensure that any impact of a VO on the project timeline is captured in an EOT request to avoid financial losses.

VO might lead to potential corruption

Inflated Costs

A contractor might inflate the costs associated with a VO in collusion with a client’s representative, with the inflated amount being used for kickbacks or bribes.

Unnecessary Variations

Unnecessary or excessive VOs might be introduced to create opportunities for illicit payments. For example, a client’s representative might request a VO that isn’t actually needed, justifying the expense to benefit financially.

Approval Process Manipulation

Bribes may be offered to expedite the approval of VOs or to ensure that they are approved without proper scrutiny, even if they are not in the best interest of the project.

Vigilance Strategies for Clients and Contractors

Transparent Processes

Both parties should ensure that the process for approving VOs is transparent, with clear documentation and justification for each variation. This includes detailed cost breakdowns and independent verification where possible.

Regular Audits

Conducting regular audits of VOs and related financial transactions can help detect irregularities. Independent third-party audits are particularly effective in ensuring objectivity.

Ethical Guidelines and Training

Establishing and enforcing strict ethical guidelines for all employees involved in the project, and providing regular training on anti-corruption practices, can help prevent bribery.

Whistleblower Protection

Implementing a robust whistleblower policy encourages employees to report any suspicious activities related to VOs without fear of retaliation.

Segregation of Duties

Ensuring that no single individual has too much control over the VO process can reduce the risk of corruption. This includes separating responsibilities for requesting, approving, and overseeing VOs.

Independent Review

Involving independent consultants or third-party reviewers to evaluate the necessity and cost of VOs can help ensure that they are legitimate and fairly priced.