[KUALA LUMPUR] The timing of the Johor-Singapore Special Economic Zone (JS-SEZ) is “a lot more conducive” today than some of the previous attempts to do something similar, said Chu Kok Wei, chief executive officer of group wholesale banking at CIMB.
Chu said there are not many good global examples of successful cross-border special economic zones, “simply because you need good timing” for them to succeed.
“In partnership, it’s very easy for us to say, we must be win-win on both sides, but it’s often not easy to really craft out a win-win proposition,” Chu said at a panel on Monday (Jul 21).
The panel was part of CIMB’s media day held in Kuala Lumpur. Also with him on the panel were Haniz Nazlan, CEO of group consumer banking, and Lawrence Loh, co-CEO of group commercial and transaction banking.
From a cost perspective, Chu noted that the cost divergence between Singapore and Malaysia has become a lot bigger, especially after the Covid-19 pandemic.
It has reached a point where it is no longer just a cost issue, but a capacity constraint, he said.
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“It’s not about how much you can pay; the supply is just not there.”
Attracting foreign investment
While Johor might not be the cheapest state in Malaysia to operate in, the cost differential continues to make a viable business case between Malaysia and Singapore, he said.
Furthermore, Chu noted the SEZ is not just about relocating from the industrial zones of Singapore into Johor, but also attracting foreign direct investments (FDI) from around the world.
“Geopolitical developments globally have prompted a lot of FDI inflows into Asean and, naturally, the special economic zone becomes one of the attractive potential destinations for that,” he said.
A bright spot would be outbound flows from China flowing into the special financial zone within the JS-SEZ, he added.
Meanwhile, Chu is optimistic that most activities in the JS-SEZ today are from private-sector business enterprises, since private-sector players are more inclined towards optimal decision-making than public-sector players.
In April, CIMB announced that it would commit RM10 billion (S$3 billion) in funding facilities to drive economic integration and unlock cross-border opportunities in the JS-SEZ.
In a separate session, CIMB group CEO Novan Amirudin said the commitment will cover all market segments – apart from data centres, the sector that is currently receiving one of the largest FDI.
He noted other opportunities, including family offices in the special financial zone, real estate development and people movement, after the completion of the Rapid Transit System Link.
