[KUALA LUMPUR] The Johor state government, in collaboration with Malaysia’s Ministry of Finance, has announced a comprehensive tax incentive package for the Johor-Singapore Special Economic Zone (JS-SEZ).
The landmark initiative, unveiled a day after the historic signing of the JS-SEZ agreement by Malaysia and Singapore, came into effect on Jan 1.
The package is designed to attract high-value investments and strengthen Johor’s position as a key economic hub in the region, said the Malaysian authorities in a joint statement on Wednesday (Jan 8).
Tailored to the needs of both global and domestic investors, the incentives aim to foster economic growth and enhance Malaysia’s competitiveness in sectors poised for future expansion.
The package includes a special corporate tax rate of 5 per cent for up to 15 years for companies investing in qualifying sectors, such as artificial intelligence, quantum computing supply chains, medical devices, aerospace manufacturing and global services hubs.
Businesses in designated flagship areas within the economic zone will also benefit from additional customised incentives.
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To attract talent to the SEZ, eligible knowledge workers will enjoy a special income tax rate of 15 per cent for 10 years.
Johor’s Menteri Besar Onn Hafiz Ghazi said the initiative is a pivotal step in elevating the state’s profile on the global investment stage.
“The federal and Johor state governments have collaborated to inject a much-needed stimulus into the JS-SEZ,” he said in a statement on Wednesday. “With Johor’s strategic advantages, this initiative will solidify the state’s position as a major trade and maritime hub in the region.”
As part of broader efforts to enhance Johor’s appeal, Onn Hafiz also announced a reduction in entertainment duties that kicked in on Jan 1.
Finance Minister II Amir Hamzah Azizan emphasised the government’s commitment to transforming Malaysia into a premier investment destination.
“The JS-SEZ tax incentive package is a reflection of our dedication to fostering mutually beneficial relationships that draw qualifying investments into key sectors,” he said.
“It will also create higher-income job opportunities by leveraging the synergies between Johor and Singapore.”
The JS-SEZ tax incentive package complements the New Investment Incentive Framework announced during Budget 2025 by Prime Minister and Finance Minister Anwar Ibrahim, which aims to propel investments in high-growth, high-value and sustainable industries.
More details on the tax incentive package and the flagship zones will be announced at a later date.
The agreement for the JS-SEZ was inked on Monday by Singapore’s Trade and Industry Minister Gan Kim Yong and Malaysia’s Economy Minister Rafizi Ramli.
The exchange of the SEZ document took place during the 11th Malaysia-Singapore Leaders’ Retreat on Tuesday in Putrajaya, and was witnessed by Singapore’s Prime Minister Lawrence Wong and Malaysian PM Anwar.
As part of the deal, both countries have agreed to drive investments in 11 key sectors such as manufacturing, logistics and energy, and made plans to expand 50 projects in five years, and 100 projects within 10 years.
The JS-SEZ aims to also create 20,000 skilled jobs and strengthen cross-border cooperation with the establishment of a one-stop centre to facilitate investments and businesses in the economic zone.
Both leaders were asked about the type of incentives being offered for the JS-SEZ in a press conference on Tuesday.
Responding, PM Wong said Singapore already has existing incentives for businesses which want to expand overseas.
“Businesses from Singapore can tap those incentives… in order to expand and have some operations in Johor that will synergise their operations in Singapore.”
More than financial incentives, the “compact relationship” between Singapore and Malaysia – as well as the clear policy objectives of the JS-SEZ – is also a great incentive for businesses, said PM Anwar.
