Building a liveable Southern Corridor

Executive summary

Background

• The Johor–Singapore Special Economic Zone (JS-SEZ) represents a bilateral effort to attract investment through fiscal incentives and reduced cross-border frictions. The zone has succeeded in attracting substantial investment into advanced manufacturing and data centres, from both Singapore and international investors. There is scope, however, to broaden this cooperation beyond investment promotion to wider conditions that allow the Southern Corridor to develop into a liveable, integrated region.
• This paper identifies five challenges arising from deepening economic integration. First, talent attraction and retention in Johor remains constrained by mechanisms to address the structural wage gap with Singapore, notwithstanding current ad hoc bilateral efforts to expand the supply of skilled labour. Second, the price-to-income ratio for new housing in Johor has exceeded affordability thresholds, while serviced apartment overhang persists alongside continued construction, pointing to a misalignment between housing supply and local demand. Third, cross-border and intra-corridor transit bottlenecks remain unresolved with several major projects stalled as institutional responsibility for mobility planning remains fragmented. Fourth, rising electricity demand from new industries and export commitments requires stronger bilateral cooperation to safeguard domestic energy security. Fifth, in the absence of bilateral environmental governance, existing ecological degradation may accelerate, as the JS-SEZ footprint overlaps with flood-prone and ecologically sensitive zones.
• This paper proposes policy recommendations to address these challenges by extending cooperation beyond investment promotion to encompass educational collaboration, housing and mobility, and energy and environmental resilience. In doing so, it offers suggestions for how Malaysia and Singapore can deepen integration across a broader range of policy domains.
• More broadly, the long-term ambition for the JS-SEZ should be to develop into a thriving cross-border metropolis. This requires treating liveability as a shared object of bilateral cooperation rather than leaving these considerations disjointed from the core investment and economic development agenda. As the JS-SEZ evolves to incorporate these considerations, Malaysia and Singapore could establish the Southern Corridor as a model for cross-border connectivity in ASEAN and beyond.