Malaysia and Singapore Collaborate on Green Economy through New Economic Zone

Malaysia and Singapore have unveiled the Johor-Singapore Economic Zone (JS-SEZ), a pioneering initiative aimed at deepening bilateral ties in key areas, including carbon credits and renewable energy. Announced on January 7 after a year of negotiations, the agreement seeks to promote cross-border cooperation, attract global investment, and generate 20,000 new jobs.

Drone photo of the Johor-Singapore Causeway, linking Singapore and Malaysia. AI generated picture.

The JS-SEZ will focus on 11 critical industries, such as the green economy, energy, and manufacturing. The ambitious plan includes the development of 50 projects within five years and 100 within a decade. Singapore’s Prime Minister Lawrence Wong emphasized the importance of leveraging the complementary strengths of both nations to drive competitiveness and attract international investment.

Economic collaboration between Malaysia and Singapore has been robust, with bilateral trade reaching $132.6 billion in 2023. Singapore emerged as the top foreign investor in Malaysia last year, accounting for 23% of its total FDI.

The partnership includes six memorandums of understanding (MoUs) and a letter of intent (LoI), with two agreements focusing on carbon reduction. These include carbon credit trading under Article 6.2 of the Paris Agreement, allowing cross-border transfers of carbon reduction efforts, and joint research into carbon capture and storage (CCS).

Furthermore, the countries are developing a Renewable Energy Certificates (RECs) framework to enhance electricity trading and support regional renewable projects.

A notable achievement occurred in late 2024 when Tenaga Nasional Berhad and Sembcorp Power signed an agreement to deliver 50 MW of green electricity to Singapore via the Energy Exchange Malaysia (ENEGEM). Plans to import 1 GW of hydropower from Sarawak to Singapore by 2032 underscore the region’s commitment to renewable energy collaboration.

This innovative partnership establishes a roadmap for sustainable development, positioning Southeast Asia as a leader in green economic transformation.