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Foreign Economic Policy with Malaysia / Integration with the Region

1. The window: get rich before we grow old — and before thegradient closes

-       Speaker,

-       Southeast Asia is about 680million people and a US$4 trillion economy.^[1]And it is young where we are old: median age of Malaysia and Indonesia around 31, Vietnam 34, the Philippines 27, against our own citizens' median of nearly44.^[2]

-       But youth is a window, not a promise. A demographic window buys a country growth — more workers — not wealth. Since 1990, fewer than one in three of the world's middle-income economies has made it to high income; the rest are stuck.^[3]The region has perhaps fifteen to twenty years to get rich before it grows old.

-       Singapore did climb that ladder by hosting — taking in large amounts of foreign investment to make goods and services for foreign markets. But it is now hitting a limit.

-       The markets everyone leaned on are being weaponised. ASEAN still trades with itself only about a fifth as much as it trades with the world — 21 per cent, against the European Union's 60 —and about three-quarters of our exports depend on external demand,^[4] just as the great powers begin wielding access to their markets as instruments of coercion.^[5] A region that produces mainly for markets it does not control can be squeezed at will.

-       And the ground under our own strategy is shifting too. Our hub model carries an assumption: that the gradient between Singapore and its neighbours — in competence, in institutions, in trust — is permanent. It is not. Penang firms today do nano-level vision inspection that the world's chipmakers buy. A Penang chip designer, Skye Chip, listed this year ninety-five times oversubscribed — the largest Malaysian IPO in sixteen years.^[6] Vietnam is climbing the ladder. For the region, this is great news. For a Singapore whose business model is to be the main place in the region where things work, it is a deadline.

-       Because a hub, unlike an owner, can be bypassed. Indonesia or Vietnam, at even half their potential, has the demographic weight to become the heart of Southeast Asia. And we have to outrun potential resurgent nationalisms that could close doors around us. A Singapore that is merely a well-run waypoint — hosting, brokering, never owning anything together with its neighbours — will find that the region learns, in time, to route around it.

-       So we should help build a Southeast Asian market of genuine middle-class consumers — we do not have one at scale today^[7] — because a market we help build is far less likely to be closed to us.

-       And we need Singaporeans and Singaporean firms to own a real piece of the value chains that serve it. To be essential to the region, and to share in what the region earns.

-       We must build a deeper, more structural integration with Southeast Asia.

2. The conviction that stops us

-       Part of what stops us is a posture.

-       In my maiden speech I asked why Singapore and Malaysia could not build an Airbus together — one enterprise, owned on both sides, the way France and Germany anchored theirs.

-       I know the truer hesitations. It is not necessarily that our neighbours cannot execute — Penang's equipment firms and Selangor's chip designers have put that to rest.^[8]The real reasons are older: memories of past issues, from water to the railway lands; a reflex to keep control of anything that matters; and a fear of bets stranded across a border if politics turns.

-       But if one is sceptical that the gradient between Singapore and our neighbours will last — I am — then joint industrial policy is exactly what a country builds while the gradient still favours it.

3. Why Malaysia, why now

-       I believe the strongest path to owning things together runs through our closest neighbour, Malaysia.

-       Malaysia's industrial strategy now deliberately targets the design end of semiconductors, setting up he region's first IC-design park in Selangor.^[9]

-       The integration is happening anyway — by drift. Two hundred and forty-five million checkpoint crossings last year, three-quarters of them by land.^[10]

-       New instruments in front ofus: theJohor-Singapore Special Economic Zone, and the RTS Link.

-       If we get them right, we canprove a model of structural bilateral integration that we can extend.

-       I will discuss three points.

4. First — make the Zone real

-       First, on the JS-SEZ.

-       This economic zone lets two governments run, inside a bounded space, an experiment.

-       The Zone has been a blanks late many have piled their hopes onto: some ideas put to me were high-tech food-growing zones, an ASEAN Friendship Hospital in Johor, an integrated medical hub on the Shenzhen–Hong Kong model.

-       But hopes need us to bring the Zone into greater focus.

-       First: where, exactly, is the Zone? Nine flagship areas have been announced, described at the level of districts; I have not seen a consolidated boundary map. If one exists, we should publish it.^[11]

-       Second: what does a Singapore company receive inside the JS-SEZ, over and above the new federal baseline? Malaysia's New Incentive Framework took effect for manufacturing on 1 March.^[12] If the federal incentives are as good as the Zone's, there is nothing special about the Zone.

-       Third, I believe we should soon sort out, with our Malaysian counterparts, one SOP to enter the Zone and one rulebook.

-       Right now there are multiple agencies and points of contact. On the Malaysian side, there is the Iskandar Regional Development Authority, Invest Johor, MIDA, and the Invest Malaysia Facilitation Centre Johor (IMFC-J). On the Singapore side, we have the EDB one-stop centre. We need policy clarity and joint rules of the road over how companies enter the Zone, whether from Malaysia or Singapore, so that the private sector can plan for it.

-       With a joint rulebook, we should measure joint success. In my view that means EDB or MTI should be responsible for total KPIs over the JS-SEZ, not just the Singapore-originated investments alone.

-       Of course, a large degree of self-interested thinking is inevitable and even desirable. The instinct in parts of our Government is to keep the high-value activity here and let the rest go. This is not wrong. But if we want the unfolding of a richer, more complex, more diverse value chain within a 60km radius than would currently be possible in 10 or 20 years, we will need to take a more collaborative approach.

-       What gets measured getsmanaged. I believe we should grade ourselves and the Ministry on the SEZ'ssuccess.

5. Second — semiconductors: co-own a front-end, or keep renting one

-       Next, we face a strategic question.

-       If the Zone is meant to be more than just a new method of foreign direct investment, but to foster a vibrant set of Singaporean and Malaysian businesses, in pursuit of broadening the middle class, does it build on the current set of bilateral strengths?

-       The foremost candidate forsuch an industrial deepening is semiconductors.

-       But here, using the instrument of the Zone may be an impedance mismatch, as in my view Penang’s semiconductor cluster is unlikely to relocate beyond the Klang Valley. So we will need a broader set of instruments.

-       What can we hope for from semiconductors as joint industrial policy?

-       In Singapore, we host. OurIC-design strength is mostly the design centres of foreign firms on our soil. We have not grown a chip-design champion of our own — and we had an indigenousfoundry once, Chartered Semiconductor, and sold it.^[13]

-       Meanwhile Malaysia is building some of what we lack. Its National Semiconductor Strategy puts indigenous IC design — about half of a chip's value-added — at the centre, withRM25 billion behind it and a 60,000-engineer training goal. Selangor's IC-design park, the largest in Southeast Asia, turns out hundreds of designers a year; the Penang design house whose listing I described came out of this push; and Singapore's own state-linked capital is already backing Malaysian design start-ups.

-       We have more reason to complement each other than to compete. Singapore hosts what the region's designers require: wafer fabs to prototype on, advanced packaging, capital, and customers. They hold what we require: design talent, by the hundred, at a fraction of our cost. Neither side has a complete, owned front-end alone.

-       First, I believe MTI should foster a design-to-fab-to-packaging chain that runs through Singapore — access and equity as one instrument: structured prototyping on our fabs and packaging lines, tied to a stake for our investors, public and private.

-       Second, the talent pipeline: our universities, NTU and NUS, should seek to set up an embedded institute in the Selangor cluster carrying a joint credential, with firms operating on both sides of the Zone sponsoring net-new training places whose employment options are exercisable in Johor, Selangor or Singapore. Producing new engineers for the region.

-       Third, I believe we should recognise in law a Malaysia-Singapore business entity, defined by a minimum stake on each side — 30-30, 40-40, 50-50 — and give it closer-to-local treatment in both countries' grants, financing and procurement. When people from both countries own part of the same success, each has reason to grow its own capability rather than poach it. We should seek to create rails that work for a recognised category of bilateral joint-firms across the two countries, and crowd in the private sector.

-       Fourth, in service of crowding in, we should reactivate the Malaysia-Singapore Business Development Fund. It was set up in 2004 for exactly this, enhanced in 2023, relaunched in 2024.^[14] As far as I know, it has not been used. Give it a fresh purpose: competitive seed awards into the first recognised Malaysia-Singapore ventures — many small bets, fast answers.

6. Third — the RTS: the people first, and the first co-owned asset

-       Next, on the RTS.

-       Integration will arrive as a train, in 2027, up to ten thousand passengers an hour each way.

-       Walk our heartland shops today and you can feel the dread coming. The provision shop, the TCM shop, the noodle stall, the barber, the tailor. They read the same reports we do. There is gallows humour in those shops now about the RTS and what it will do to Singapore retail — and a question: when the RTS opens, what happens to us?

-       DBS puts the leakage at S$1.5to 2.1 billion a year — three to four per cent of retail sales, everyday food and personal services hit hardest. Eleven million Singaporean trips into Johor in the first seven months of last year alone.^[15]

-       The Government's answer so far is to make retail more attractive at home — visual-merchandising programmes, placemaking grants, neighbourhood-centre upgrades, vouchers to spend at home. I support these initiatives. But we should be honest with ourselves: for a generation of retailers, it will make little difference.

-       I believe we can offer a different deal. Johor is planning the e-ART as a dispersal network out of Bukit Chagar, and I speculate that transit-oriented development will be done in the vicinity of their 32 stations.^[16] If so, I propose we invest in that plan: as part of the JS-SEZ bargain, Singapore takes an equity stake in the transit-oriented developments the line creates — Bukit Chagar and the thirty-two e-ART stations — and negotiates, in the same deal, reserved positions for our small retailers inside those developments — in the podium of these malls.^[17]

-       This has happened before. When Singapore and Malaysia resolved, in 2010, the twenty-year impasse over the1990 Points of Agreement on the railway lands, it was not settled in cash but in co-ownership: Khazanah and Temasek formed a joint company, sixty-forty, and built Marina One and DUO in the city centre.^[18]I am proposing a similar instrument.

-       The footfall those developments capture is largely from Singapore, so the deal has logic on both sides: Johor gains a committed capital partner for a network it is building anyway; we gain a share of where our own spending lands — and a place in it for the retailers that spending leaves behind.

-       Thus, we can give every exposed small retailer who rents rather than owns their premises — on the order of forty thousand provision shops, eateries and personal-care operators — a tradeable entitlement: a priority claim on a reserved position in those developments, to take up or assign to another small operator; or, for those who would rather not move, a cash floor drawn now or set against rent — enough to fund a real relocation or a year of rent. It goes to the tenant, not the owner of the unit: the renter carries the lost footfall with nothing to fall back on.

-       Retail is a more protected part of Malaysia's economy, so MFA and MTI would need to negotiate this within the same bargain. Malaysia has already carved foreign firms into Forest City, so it is not unprecedented.

-       We speak about the stakeholder economy. We can seek this compact, if it is possible, for our small retailers. This is a better deal than the fait accompli they currently await.

7. What we must decide

-       Speaker, in closing.

-       I don't pretend any of this is inevitable or easy.

-       Foreign economic relations are always challenging, with reduced control and increased unpredictability.

-       But we are in a unique moment, where the threat and leverage of market closure from the biggest powers are foremost on our minds.

-       And we are also reaching the limits of our growth on 750 square kilometres.

-       It would be a shame if the JS-SEZ and the tenor of our future cooperation with Malaysia were predominantly FDI-led, instead of being in service of tackling the true strategic challenges of the decade.

-       The creation of a true middleclass in Southeast Asia.

-       An integration of our country, to be indispensable to the future economic geometries of our neighbours.

-       An imperative to increase the complexity and diversity of our value chains.

-       And the fostering of astakeholder economy, and the search for a better bargain for our pioneeringgenerations.

-       This is the model ofintegration I believe we should seek with the region — one that best maximisesthe fifteen to twenty years Southeast Asia has before it ages out of itsdemographic dividend.

-       Thank you, Sir.

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^[1]ASEAN's scale, and its under-integration. Combined GDP about US$3.8 trillion and population about 677 million in 2023 —the world's fifth-largest economy, which the IMF's managing director called the fourth-largest, past US$4 trillion, in October 2025. Yet ASEAN trades with itself just 21.4% of its goods trade in 2024, against the European Union's roughly 60%, and about 77% of its exports depend on external demand (United States 16%, China 15%, EU 8.5%) — far less integrated than its rhetoric, and exposed if those external markets are weaponised. Honest scope: ASEAN's formal" fourth-largest economy" goal is dated 2045, not 2030. Sources: ASEAN Statistical Highlights 2025 and ASEAN Key Figures 2024 (ASEAN Secretariat); IMF (managing director's remarks, 26 Oct 2025).

^[2]Median age by ASEAN state, total population(UN World Population Prospects 2024, unless noted): Laos 25.6 · Philippines26.8 · Cambodia 27.0 · Myanmar 29.8 · Indonesia ~30 · Malaysia 31.3 (DOSM 2025)· Brunei ~32 · Vietnam 33.9 · Thailand 41.1. Singapore is the outlier: its citizen median is 43.7 (June 2025, NPTD Population in Brief 2025; resident 43.2, Sing Stat Population Trends 2025), while its total-population figure (~37) is pulled down by ~1.9m mostly young non-residents — so the citizen figure is the one that counts, and only Singapore publishes a citizen-only median.

^[3]The middle-income trap. The World Bank's World Development Report 2024 found that of the world's ~108 middle-income economies, only 34 became high-income between 1990 and 2023, and that since 1970 the median middle-income country's income per head has never risen above a tenth of the United States'. Its diagnosis: economies stall because they keep relying on investment and the assembly of foreign technology, and fail to make the harder shift to domestic innovation and value-capture (its "investment → infusion → innovation" sequence). The regional sign of it: Vietnam, ASEAN's model fast-grower, still books only about half the value of its own exports — 51% was foreign value-added in 2018 (OECD–WTO) — importing the parts, assembling, and re-exporting while the margin is captured abroad. Thailand (upper-middle income since 2011) and Malaysia (since the early 1990s) are the standing ASEAN cautionary cases. Honest scope: whether a distinct income "trap" exists as a statistical law is contested; it is used here as a lens, not a law. Sources: World Bank — WDR 2024 press release, 22Jul 2024; WDR 2024 Main Messages.

^[4]ASEAN's scale, and its under-integration. Combined GDP about US$3.8 trillion and population about 677 million in 2023 —the world's fifth-largest economy, which the IMF's managing director called the fourth-largest, past US$4 trillion, in October 2025. Yet ASEAN trades with itself just 21.4% of its goods trade in 2024, against the European Union's roughly 60%, and about 77% of its exports depend on external demand (United States 16%, China 15%, EU 8.5%) — far less integrated than its rhetoric, and exposed if those external markets are weaponised. Honest scope: ASEAN's formal" fourth-largest economy" goal is dated 2045, not 2030. Sources: ASEAN Statistical Highlights 2025 and ASEAN Key Figures 2024 (ASEAN Secretariat); IMF (managing director's remarks, 26 Oct 2025).

^[5]Recent instances of great powers using market access as leverage: China's 2020 tariffs and import curbs on Australian barley, wine, coal and lobster amid a diplomatic dispute; its 2017 pressure on South Korean firms (notably the Lotte group) over the THAAD missile-defence deployment; its 2010 curtailing of rare-earth exports to Japan; and the United States' Section 301 tariffs on Chinese goods from 2018, with successive tightening of advanced-semiconductor export controls from October 2022. Widely reported; cited here by instance and year rather than a single source.

^[6]Malaysia's National Semiconductor Strategy(May 2024) targets integrated-circuit design — about half of a chip's value-added, against roughly a quarter for front-end fabrication — as a domestic-investment priority, backed by about RM25 billion and a 60,000-engineertraining goal. Selangor's IC-design park in the Klang Valley, billed as Southeast Asia's largest (launched Aug 2024; second facility opened at Cyberjaya on 6 November 2025 by Prime Minister Anwar Ibrahim, alongside Southeast Asia's first Advanced Chip Testing Centre and a RM100m Selangor Semiconductor Fund — Malay Mail, 6 Nov 2025), held 302 engineers across 15 companies by April 2026, on track for 400 by end-2026 (The Edge via KLSE Screener, 27 Apr 2026); the training arm, the Advanced Semiconductor Academy of Malaysia (ASEM), had trained more than 500 people on free, state-sponsored scholarships by mid-2025 (Selangor state assembly reply, Jul 2025). Penang's home-grown Skye Chip listed on Bursa Malaysia in 2026 oversubscribed about 95 times — the largest Malaysian IPO in 16 years (Tech Wire Asia — Skye Chip IPO); Malaysia's RM1.1bn ARM access deal seeds indigenous design (Sky Chip, Opp star, Great Asic — The Edge — ARM access); and Singapore's Temasek-linked Vertex has backed Malaysian design start-ups (e.g. Great Asic). Malaysia's equipment strength is home-grown and real — Penang firms perform nano-level vision inspection for the world's chipmakers (e.g. ViTrox, Greatech). Singapore's complementary assets and gap: about 5% of global wafer-fabrication capacity, >10% of global chip output and ~20% of global semiconductor-equipment output, with advanced-packaging research at A*STAR's Institute of Microelectronics — but a thin indigenous design base (no national champion; the top fabless firms' Singapore design centres are foreign-owned), chip-engineer roles on MOM's Shortage Occupation List (November 2024), and 300-plus chip firms competing for a small local talent pool. The sold foundry: Temasek-controlled Chartered Semiconductor was acquired by Abu Dhabi's ATIC (announced September 2009, completed end-2009)and merged into Globa Foundries in 2010 (Network World). The open door, on the record: Selangor's investment chief — "we can't treat Singapore as a competitor, rather to complement your supply chain" (The Star, 15 Sep 2024). The Korea mechanism for the em bedded-institute design: Samsung and SK hynix fund contract semiconductor departments inside Korean universities — the sponsor pays for the department and scholarships, students sit the sponsor's screen, passers graduate into the sponsor's employment; those departments' entry scores now beat Seoul National University's sciences (Korea Times, 21 Jun 2026). Further sources: MIDA — National Semiconductor Strategy; SIDEC — IC Design Park; Singapore EDB — developing semiconductor talent.

^[7]The headline "190–200 million ASEAN middle class" (PwC 2018; WEF–Bain 2020) is an artefact of a loose threshold. The Asian Development Bank's much-cited band starts at about US$2 a day — barely above the poverty line — so it counts a large near-poor and" vulnerable" layer as middle class. On a genuine economic-security standard — the World Bank's, where the middle class are those with less than a10% chance of falling back into poverty — the number is far smaller. Indonesia, ASEAN's largest economy, is the clearest case: of about 260 million people, only ~52 million (20%) are middle class on that standard (consumption above~US$7.75/day, PPP), against an "aspiring middle class" of ~115million (45%) who are not yet secure, a "vulnerable" quarter and a poor tenth (2016 data). By an advanced-economy consumer standard — the report's upper "MC2" band of US$20–38/day — the secure ASEAN middle class is smaller still. So a genuine middle-class market is better read as something to e built than banked. Sources: World Bank — Aspiring Indonesia: Expanding the Middle Class (2019); Pew Research — A Global Middle Class Is More Promise than Reality (2015); ADB — The Rise of Asia's Middle Class.

^[8]Malaysia's National Semiconductor Strategy(May 2024) targets integrated-circuit design — about half of a chip's value-added, against roughly a quarter for front-end fabrication — as a domestic-investment priority, backed by about RM25 billion and a 60,000-engineertraining goal. Selangor's IC-design park in the Klang Valley, billed as Southeast Asia's largest (launched Aug 2024; second facility opened at Cyberjaya on 6 November 2025 by Prime Minister Anwar Ibrahim, alongside Southeast Asia's first Advanced Chip Testing Centre and a RM100m Selangor Semiconductor Fund — Malay Mail, 6 Nov 2025), held 302 engineers across 15 companies byApril 2026, on track for 400 by end-2026 (The Edge via KLSE Screener, 27 Apr 2026); the training arm, the Advanced Semiconductor Academy of Malaysia (ASEM), had trained more than 500 people on free, state-sponsored scholarships by mid-2025 (Selangor state assembly reply, Jul 2025). Penang's home-grown Skye Chip listed on Bursa Malaysia in 2026 oversubscribed about 95 times — the largest Malaysian IPO in 16 years (Tech Wire Asia — Skye Chip IPO); Malaysia's RM1.1bn ARM access deal seeds indigenous design (Skye Chip, Opp star, Great Asic — The Edge — ARM access); and Singapore's Temasek-linked Vertex has backed Malaysian design start-ups (e.g. GreatAsic). Malaysia's equipment strength is home-grown and real — Penang firms perform nano-level vision inspection for the world's chipmakers (e.g. ViTrox, Greatech). Singapore's complementary assets and gap: about 5% of global wafer-fabrication capacity, >10% of global chip output and ~20% of global semiconductor-equipment output, with advanced-packaging research at A*STAR's Institute of Microelectronics — but a thin indigenous design base (no national champion; the top fabless firms' Singapore design centres are foreign-owned), chip-engineer roles on MOM's Shortage Occupation List (November 2024), and 300-plus chip firms competing for a small local talent pool. The sold foundry: Temasek-controlled Chartered Semiconductor was acquired by Abu Dhabi's ATIC (announced September 2009, completed end-2009)and merged into Global Foundries in 2010 (Network World). The open door, on the record: Selangor's investment chief — "we can't treat Singapore as a competitor, rather to complement your supply chain" (The Star, 15 Sep 2024). The Korea mechanism for the embedded-institute design: Samsung and SK hynix fund contract semiconductor departments inside Korean universities — the sponsor pays for the department and scholarships, students sit the sponsor's screen, passers graduate into the sponsor's employment; those departments' entry scores now beat Seoul National University's sciences (Korea Times, 21 Jun 2026). Further sources: MIDA — National Semiconductor Strategy; SIDEC — IC Design Park; Singapore EDB — developing semiconductor talent.

^[9]Malaysia's National Semiconductor Strategy(May 2024) targets integrated-circuit design — about half of a chip's value-added, against roughly a quarter for front-end fabrication — as a domestic-investment priority, backed by about RM25 billion and a 60,000-engineertraining goal. Selangor's IC-design park in the Klang Valley, billed as Southeast Asia's largest (launched Aug 2024; second facility opened at Cyberjaya on 6 November 2025 by Prime Minister Anwar Ibrahim, alongside Southeast Asia's first Advanced Chip Testing Centre and a RM100m Selangor Semiconductor Fund — Malay Mail, 6 Nov 2025), held 302 engineers across 15 companies byApril 2026, on track for 400 by end-2026 (The Edge via KLSE Screener, 27 Apr 2026); the training arm, the Advanced Semiconductor Academy of Malaysia (ASEM), had trained more than 500 people on free, state-sponsored scholarships by mid-2025 (Selangor state assembly reply, Jul 2025). Penang's home-grown Skye Chip listed on Bursa Malaysia in 2026 oversubscribed about 95 times — the largest Malaysian IPO in 16 years (Tech Wire Asia — Skye Chip IPO); Malaysia's RM1.1bn ARM access deal seeds indigenous design (Skye Chip, Opp star, Great Asic — The Edge — ARM access); and Singapore's Temasek-linked Vertex has backed Malaysian design start-ups (e.g. GreatAsic). Malaysia's equipment strength is home-grown and real — Penang firms perform nano-level vision inspection for the world's chipmakers (e.g. ViTrox, Greatech). Singapore's complementary assets and gap: about 5% of global wafer-fabrication capacity, >10% of global chip output and ~20% of global semiconductor-equipment output, with advanced-packaging research at A*STAR's Institute of Microelectronics — but a thin indigenous design base (no national champion; the top fabless firms' Singapore design centres are foreign-owned), chip-engineer roles on MOM's Shortage Occupation List (November 2024), and 300-plus chip firms competing for a small local talent pool. The sold foundry: Temasek-controlled Chartered Semiconductor was acquired by Abu Dhabi's ATIC (announced September 2009, completed end-2009)and merged into Global Foundries in 2010 (Network World). The open door, on the record: Selangor's investment chief — "we can't treat Singapore as a competitor, rather to complement your supply chain" (The Star, 15 Sep 2024). The Korea mechanism for the embedded-institute design: Samsung and SK hynix fund contract semiconductor departments inside Korean universities — the sponsor pays for the department and scholarships, students sit the sponsor's screen, passers graduate into the sponsor's employment; those departments' entry scores now beat Seoul National University's sciences (Korea Times, 21 Jun 2026). Further sources: MIDA — National Semiconductor Strategy; SIDEC — IC Design Park; Singapore EDB — developing semiconductor talent.

^[10]The RTS Link — a cross-border MRT shuttle(Woodlands North to Bukit Chagar, ~4 km) — completes end-2026 and carries passengers from January 2027, at up to 10,000 per hour each way (MOT, 30 Jun2025). Cross-border volume is already vast: 245 million checkpoint crossings in2025, about three-quarters by land (ICA, 23 Feb 2026), and 11 million Singaporean entries into Johor in January–July 2025 alone (Johor State). DBS estimates the line will leak about S$1.5–2.1 billion a year, roughly 3–4% of Singapore retail sales, with everyday F&B and discretionary services hardest hit (DBS, Singapore Retail Outlook 2026, 4 Dec 2025); OCB Cargues the effect is overstated because the ringgit has appreciated more than10% against the Singapore dollar (Apr 2026). The Johor-side "e-ART" feeder is a 32-station, three-corridor (~49 km) elevated autonomous-transit network, cabinet-approved May 2026 at RM10 billion, with a realistic full build toward the mid-2030s; the near-term retail anchor is Coronation Square at the Bukit Chagar station — ~1.25 million sq ft of retail completing 2029 (CapitaLand, 24Nov 2025). The Government's current response is the Heartland Visual Merchandising and Vibrant Heartlands programmes, neighbourhood-centre upgrades, and CDC Vouchers (about S$907 million spent at ~23,000 heartland enterprises and hawker stalls since December 2021) (MTI written reply, 7 Jan 2025; RTS Link Taskforce, 16 Mar 2025). On the Causeway: it is routinely described in official and press accounts as the world's busiest land crossing.

^[11]The Zone's edges. The JS-SEZ agreement(January 2025) designates nine flagship areas across roughly 3,500 sq km (Johor Bahru, Iskandar Puteri, Tanjung Pelepas–Tanjung Bin, Pasir Gudang,Senai-Skudai, Sedenak, Forest City, Desaru, Pengerang), described at district level; no consolidated cadastral boundary map or eligibility gazette has been found in published materials. The legal instruments have come piecemeal instead— e.g. the Forest City family-office rules gazetted 3 October 2025, MITI'sJS-SEZ fast-track incentives announced October 2025, and the outcome-based incentive framework from 1 March 2026. Timing context: Johor's state assembly was dissolved on 1 June 2026 and the state election is set for 11 July 2026 (Bernama; Fulcrum — the 2026 Johor election) — Malaysian-side implementation decisions are effectively paused until after it. Sources: EDB — JS-SEZ overview; Reed Smith — JS-SEZ mid-2025 recap; MITI — new JS-SEZ incentives (14 Oct2025).

^[12]Malaysia's New Incentive Framework (NIF),announced by MITI on 29 January 2026, replaces the Promotion of Investments Act1986's profit-based tax holidays with an outcome-based model scored on a National Investment Aspirations (NIA) scorecard — job quality, technology transfer, supply-chain resilience, sustainability — and aligned with the OECD Pillar Two global minimum tax. It takes effect for manufacturing on 1 March2026 and for services in Q2 2026; new PIA manufacturing-incentive applications close after 28 February 2026. The open question for the JS-SEZ is whether its zone-specific incentives offer anything above this federal baseline. Sources: MITI — New Incentive Framework; MITI — press release, NIF effective 1March 2026; MIDA — New Incentive Framework (NIF).

^[13]Malaysia's National Semiconductor Strategy(May 2024) targets integrated-circuit design — about half of a chip's value-added, against roughly a quarter for front-end fabrication — as a domestic-investment priority, backed by about RM25 billion and a 60,000-engineer training goal. Selangor's IC-design park in the Klang Valley, billed as Southeast Asia's largest (launched Aug 2024; second facility opened at Cyberjaya on 6 November 2025 by Prime Minister Anwar Ibrahim, alongside Southeast Asia's first Advanced Chip Testing Centre and a RM100m Selangor Semiconductor Fund — Malay Mail, 6 Nov 2025), held 302 engineers across 15 companies by April 2026, on track for 400 by end-2026 (The Edge via KLSE Screener, 27 Apr 2026); the training arm, the Advanced Semiconductor Academy of Malaysia (ASEM), had trained more than 500 people on free, state-sponsored scholarships by mid-2025 (Selangor state assembly reply, Jul 2025). Penang's home-grown Skye Chip listed on Bursa Malaysia in 2026 oversubscribed about 95 times — the largest Malaysian IPO in 16 years (Tech Wire Asia — Skye Chip IPO); Malaysia's RM1.1bn ARM access deal seeds indigenous design (Skye Chip, Opp star, Great Asic — The Edge — ARM access); and Singapore's Temasek-linked Vertex has backed Malaysian design start-ups (e.g. GreatAsic). Malaysia's equipment strength is home-grown and real — Penang firms perform nano-level vision inspection for the world's chipmakers (e.g. ViTrox, Greatech). Singapore's complementary assetsand gap: about 5% of global wafer-fabrication capacity, >10% of global chip output and ~20% of global semiconductor-equipment output, with advanced-packaging research at A*STAR's Institute of Microelectronics — but a thin indigenous design base (no national champion; the top fabless firms' Singapore design centres are foreign-owned), chip-engineer roles on MOM's Shortage Occupation List (November 2024), and 300-plus chip firms competing for a small local talent pool. The sold foundry: Temasek-controlled Chartered Semiconductor was acquired by Abu Dhabi's ATIC (announced September 2009, completed end-2009)and merged into Global Foundries in 2010 (Network World). The open door, on the record: Selangor's investment chief — "we can't treat Singapore as a competitor, rather to complement your supply chain" (The Star, 15 Sep 2024). The Korea mechanism for the embedded-institute design: Samsung and SK hynix fund contract semiconductor departments inside Korean universities — the sponsor pays for the department and scholarships, students sit the sponsor's screen, passers graduate into the sponsor's employment; those departments' entry scores now beat Seoul National University's sciences (Korea Times, 21 Jun 2026). Further sources: MIDA — National Semiconductor Strategy; SIDEC — IC Design Park; Singapore EDB — developing semiconductor talent.

^[14]The dormant fund. The Malaysia-Singapore(Third Country) Business Development Fund was established in 2004; an enhancement letter was signed at the 10th Leaders' Retreat (30 October 2023,Tengku Zafrul and Gan Kim Yong, witnessed by PM Anwar and PM Lee), and the updated fund was launched in March 2024, jointly administered by MIDA and Enterprise SG. Its published parameters: co-funding of up to 50% of eligible costs, capped at RM200,000 per activity (missions, feasibility studies, pilots). No headline fund size and no drawdown figures are public. Sources: Enterprise SG — Malaysia-Singapore Third Country Business Development Fund; Free Malaysia Today — enhancement at the2023 Leaders' Retreat.

^[15]The RTS Link — a cross-border MRT shuttle (Woodlands North to Bukit Chagar, ~4 km) — completes end-2026 and carries passengers from January 2027, at up to 10,000 per hour each way (MOT, 30 Jun2025). Cross-border volume is already vast: 245 million checkpoint crossings in2025, about three-quarters by land (ICA, 23 Feb 2026), and 11 million Singaporean entries into Johor in January–July 2025 alone (Johor State). DBS estimates the line will leak about S$1.5–2.1 billion a year, roughly 3–4% of Singapore retail sales, with everyday F&B and discretionary services hardest hit (DBS, Singapore Retail Outlook 2026, 4 Dec 2025); OCBC argues the effect is overstated because the ringgit has appreciated more than10% against the Singapore dollar (Apr 2026). The Johor-side "e-ART" feeder is a 32-station, three-corridor (~49 km) elevated autonomous-transit network, cabinet-approved May 2026 at RM10 billion, with a realistic full build toward the mid-2030s; the near-term retail anchor is Coronation Square at the Bukit Chagar station — ~1.25 million sq ft of retail completing 2029 (CapitaLand, 24Nov 2025). The Government's current response is the Heartland Visual Merchandising and Vibrant Heartlands programmes, neighbourhood-centre upgrades, and CDC Vouchers (about S$907 million spent at ~23,000 heartland enterprises and hawker stalls since December 2021) (MTI written reply, 7 Jan 2025; RTS Link Taskforce, 16 Mar 2025). On the Causeway: it is routinely described in officialand press accounts as the world's busiest land crossing.

^[16]The RTS Link — a cross-border MRT shuttle(Woodlands North to Bukit Chagar, ~4 km) — completes end-2026 and carries passengers from January 2027, at up to 10,000 per hour each way (MOT, 30 Jun2025). Cross-border volume is already vast: 245 million checkpoint crossings in2025, about three-quarters by land (ICA, 23 Feb 2026), and 11 million Singaporean entries into Johor in January–July 2025 alone (Johor State). DBS estimates the line will leak about S$1.5–2.1 billion a year, roughly 3–4% of Singapore retail sales, with everyday F&B and discretionary services hardest hit (DBS, Singapore Retail Outlook 2026, 4 Dec 2025); OCBC argues the effect is overstated because the ringgit has appreciated more than10% against the Singapore dollar (Apr 2026). The Johor-side "e-ART" feeder is a 32-station, three-corridor (~49 km) elevated autonomous-transit network, cabinet-approved May 2026 at RM10 billion, with a realistic full build toward the mid-2030s; the near-term retail anchor is Coronation Square at the Bukit Chagar station — ~1.25 million sq ft of retail completing 2029 (CapitaLand, 24Nov 2025). The Government's current response is the Heartland Visual Merchandising and Vibrant Heartlands programmes, neighbourhood-centre upgrades, and CDC Vouchers (about S$907 million spent at ~23,000 heartland enterprises and hawker stalls since December 2021) (MTI written reply, 7 Jan 2025; RTS Link Taskforce, 16 Mar 2025). On the Causeway: it is routinely described in official and press accounts as the world's busiest land crossing.

^[17]The cross-border carve-out. Where the restrictions live: the Guidelines on Foreign Participation in Distributive Trade Services (KPDN; issued 2010, amended 2020) are administrative guidelines enforced through WRT (Wholesale, Retail Trade) approval and its linked gates (expatriate passes, premise licences), not primary statute (KPDN/MyGP — the Guidelines). The small heartland formats — mini-markets and supermarkets under 3,000 sq m, provision shops, 24-hour convenience stores and the like — are closed to foreign participation, while the 30%Bumiputera-equity condition attaches to the large open formats (hypermarketsRM50m paid-up, superstores, department stores) (MIDA, Distributive Trade Services). What a ministry created by guideline, a ministry can vary by guideline. Three findings sharpen the ask. First, the gateway: the foreign-participation trigger is more than 50% foreign voting rights — so an accredited Malaysia-Singapore joint entity at 50:50 or Malaysian-majority is not "foreign" under the rules as written; the Singapore retailer enters as minority partner in a local vehicle, and Malaysia's only needed contribution is comfort that accredited structures are not treated as circumvention (sources differ on the convenience-store treatment). Second, the precedents are Johor's own, twice: Khazanah's 2007Iskandar incentive package gave approved Medini-node companies explicit" exemption from the Foreign Investment Committee rules", offset by a Social Projects Fund supporting Bumiputera development (Khazanah press release, 22 Mar 2007); and Forest City went from Special Financial Zone announcement (20 Sep 2024) to a gazetted 0% family-office tax rate with a regulator-run register in about thirteen months (EY tax alert — Forest City SFZ incentives). The Medini design — carve-out plus a Bumiputera-development offset — is there usable playbook. Third, the treaty position: Malaysia's CPTPP Annex I schedules these very distributive-trade restrictions as non-conforming measures(CPTPP Annex I — Malaysia's schedule) — treaty-shielded, and for the same reason freely relax able for one zone or one accredited class without any treaty amendment. Honest scope: as of 2 July 2026 no public report shows Malaysia considering distributive-trade relaxation inside the JS-SEZ — the ask is novel— and the closed small formats exist to protect local small traders, so the carve-out must be curated, capped and complementary: reserved positions inside the TOD podium (Bukit Chagar's RM2.6 billion Sunway/MRT Corp development is exactly that space), not competing provision shops in the kampung. On the property side, Johor's 40% Bumiputera quota on commercial units with a 15%discount has produced a chronic overhang that Johor's own developers want addressed (EdgeProp — the Bumiputera overhang; EdgeProp — REHDA Johor on the discount).

^[18]The reverse precedent. The Points of Agreement on Malayan Railway land in Singapore were signed in 1990 and sat unresolved for two decades; on 24 May 2010, Prime Ministers Lee Hsien Loong and Najib Razakconcluded the deal that resolved them. Under it, Malaysia's Khazanah Nasional (60%) and Singapore's Temasek (40%) formed M+S Pte Ltd, which developed MarinaOne (Marina South) and DUO (Ophir-Rochor) on prime central Singapore parcels received in exchange for the vacated KTM railway lands (Tanjong Pagar,Kranji, Woodlands and the Bukit Timah parcels); a reciprocal Khazanah-Temasek vehicle invested across the strait in Iskandar. Sources: Khazanah — joint real-estate investments press release; Points of Agreement of 1990 — background.

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