Bridging borders 100 years on
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: Bridging borders 100 years on

Malaysia-Singapore Causeway Bridging borders 100 years on

Kuala Lumpur - EVERY morning, two to three 40-foot trailers from Malaysian dairy producer Farm Fresh depart from farms in Kota Tinggi and Desaru, each delivering 18,000 litres of fresh milk to Singapore.

Founder and group managing director Loi Tuan Ee credits the Johor-Singapore Causeway -- which is celebrating its 100th anniversary this month -- for this seamless operation. "The proximity, easy accessibility and lower logistics costs enable us to send fresh milk to our Singaporean customers daily," he told The Business Times.

The Malaysia-listed dairy producer, based in Johor, began exporting to Singapore six years ago. Today, the city-state is its largest export market, contributing around 5 per cent of total sales.

Farm Fresh's trailers are among 3,000 to 4,000 trucks transporting goods from Malaysia that queue daily at the Johor Bahru Customs, Immigration and Quarantine complex, waiting for clearance to enter Singapore.

The 1 km-long motorway crossing, also referred to as the Malaysia-Singapore Causeway, is one of the world's busiest border crossings, averaging 350,000 travellers and 100,000 vehicles daily. During peak periods such as school holidays, it handles more than 400,000 crossings daily. Singapore's Immigration and Checkpoints Authority (ICA) projects that this will rise to 400,000 daily travellers by 2050.

Some days, the numbers can be staggering. The recent Hari Raya Haji long weekend broke records with more than 530,000 people crossing on the Causeway and Tuas Second Link on Jun 14, said ICA.

More than just a bridge

The Causeway is more than a bridge for Jeffrey Lai, president of the Johor Bahru Chinese Chamber of Commerce and Industry.

"It's not just for workers travelling from JB (Johor Bahru) to Singapore every day... it also promotes the flow of investment, education and culture between both countries," said Lai, as he recalled pleasant bus journeys during his school days from Singapore to JB on Friday evenings.

Lai grew up in Singapore, where his parents moved to when he was just three. After they returned to JB to start a business, Lai remained in Singapore for his secondary school education, making the cross-border commute nearly every weekend to visit them.

"I still remember... every Sunday night, my father would drop me at the old customs complex, and I would take the number 170 bus from JB to Singapore," he reminisced.

Now residing in JB, he still uses the Causeway to visit relatives, friends and business partners here, and to enjoy his favourite Singapore chicken rice.

"The Causeway is an important link connecting both countries," he added, noting that more than 10,000 students cross the Causeway daily for their studies. They are not just Malaysian students from JB studying in Singapore, but also, increasingly, students from Singapore going to international schools in JB.

Kelvin Kee, executive director of international business division at Singapore Business Federation (SBF), said bilateral trade between Singapore and Malaysia has grown, not just for merchandise, but also in services and digital trade.

"Following the lifting of pandemic restrictions, we have seen the cross-border flow of people using the Causeway return to pre-pandemic levels, and even exceed such levels during peak periods," he told BT. He highlighted that Malaysia's proximity to Singapore offers business owners an attractive option for overseas expansion, with significantly lower costs for labour, overheads, rent and land.

Since the GlobalConnect@SBF programme launched in November 2019 to aid Singapore businesses in overseas expansion, the business chamber has facilitated 32 successful projects into Malaysia as at December 2023, across various sectors including manufacturing, retail, education and services.

Investment powerhouse

In 2023, Johor garnered a total investment of RM43 billion (S$12.4 billion) from 751 approved projects, with more than 70 per cent, or RM31 billion, coming from foreign direct investment (FDI). Over half of the FDI went to the service sector, while the manufacturing sector received 30 per cent.

Lee Ting Han, Johor state investment, trade, consumer affairs, and human resources committee chairman, said 70 per cent of the FDI in the state's manufacturing sector comes from Singapore.

With ongoing projects and robust tourism, the state government is confident total investment in 2024 will surpass last year's.

In the first quarter of 2024, 221 projects were approved, focusing on machinery and equipment, food processing, electrical and electronics, and chemical and petrochemical sectors.

Singapore is the second-largest investor in Malaysia and one of the biggest investment sources for Johor, especially the Iskandar region -- Malaysia's southern growth corridor.

From 2006 to September 2023, cumulative investment from Singapore to the Iskandar region reached RM45.8 billion -- about 25 per cent of total investments.

From Causeway to railway

While the Causeway remains the primary connection between the two cities, a significant catalyst for enhanced connectivity will be the JB-Singapore Rapid Transit System (RTS), set to begin operations by end-2026.

In an earlier interview with BT, Malaysia's Mass Rapid Transit Corp CEO Mohd Zarif said the 4 km journey on the light rail shuttle service will take about five minutes. If all goes well, travelling from Bukit Chagar station in JB to Singapore will take only 15 minutes.

Chua Hak Bin, regional co-head for macro at Maybank Investment Banking Group, expects the RTS, which is over two-thirds complete, to improve connectivity, reduce congestion and strengthen JB-Singapore ties.

The RTS will increase its capacity to 10,000 passengers per hour per direction, compared to the current KTM rail service's 640 passengers.

South-east Asia's Shenzhen

Another impending game changer is the Johor-Singapore Special Economic Zone (JS-SEZ), unveiled earlier this year by leaders from both countries. The establishment of JS-SEZ, nearly twice the size of China's Shenzhen at 3,505 sq km, hopes to turn Johor into South-east Asia's Shenzhen.

Observers are optimistic the special zone will create new opportunities in electronics, financial services, business services and healthcare, turning JB-Singapore into a magnet for foreign investment in South-east Asia.

Singapore's well-established legal framework, political stability, quality talent and state-of-the-art infrastructure have made it South-east Asia's hub. However, its high cost of living and business expenses may deter some investors.

Malaysia offers abundant resources such as land and manpower and, with its proximity to Singapore, is well-positioned to complement its neighbour.

Global competition for investments has intensified as countries re-shore and friend-shore production. Multinational companies are diversifying supply chains away from China, seeking alternative bases.

Chua said the JS-SEZ could offer a competitive advantage in attracting fresh FDI by integrating the strengths of both countries.

In a joint statement in response to BT queries, Singapore's Ministry of Trade and Industry (MTI) and Enterprise Singapore said both countries are working towards a "full-fledged" JS-SEZ Agreement and will provide an update at the 11th Malaysia-Singapore Leaders' Retreat later this year.

Johor has become a key investment destination for many Singapore companies due to stronger economic partnerships and improved connectivity infrastructure between both cities over the years.

MTI and Enterprise Singapore added: "The Singapore-Malaysia land links continue to be vital transport channels to support trade and talent flows between Singapore and Malaysia."

Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.