Response by Minister of State for Trade and Industry Alvin Tan on motion for adjournment on "Integration with the Region"

Introduction

1)             Sir, to me the key question of this Motion is: how do we ensure deeper integration with the region and in fact, not just ASEAN but Malaysia which is additive and not substitutive?

2)             And how do we ensure that integration does not simply move activity from Singapore to somewhere else, but also creates value in Singapore and our partners which would otherwise not be captured?

3)             Singapore has always been open to the world. I think, in the transport Motion, many of you have already said that. And with investment competition intensifying and supply chains reconfiguring, we must keep building our capabilities, strengthening our businesses and anchoring higher value activities here in Singapore. The Johor-Singapore SEZ (JS-SEZ), the Batam-Bintan-Karimun region, and the Vietnam-Singapore Industrial Parks are all examples that show how we work with our immediate neighbours to enlarge economic space for our companies and workers. This was something that the Member Edward Chia had said earlier on in his speech.

What is the JS-SEZ?

4)             But let me first give an overview about the JS-SEZ.

5)             It spans about 3,500 square kilometres, it includes Iskandar Development Region and Pengerang. I wanted to point out to the Member that, in fact, the boundaries of the JS-SEZ are available online.

6)             But the whole point about the JS-SEZ is about creating value together that neither side would have created or captured alone. Singapore has strong connectivity, trusted institutions, deep financing, technology, professional services, headquarters (HQ) functions and a skilled workforce. Johor, on the other hand, offers land, production capacity and other complementary strengths.

7)             But when we combine these strengths well, the Johor-Singapore region becomes more competitive than either side would be on its own.

8)             The Member talked about whether there are so many different touch points, but in fact, if you look at it on the Malaysia side, there is, as he mentioned, the Invest Malaysia Facilitation Centre – Johor (IMFC-J), which facilitates and supports companies investing in the zone, such as coordinating approvals and applications across Malaysian authorities at the federal, state and local levels.

9)             In Singapore, we also have a joint Johor-Singapore SEZ Project Office, which helps Singapore and Singapore-based companies explore twinning opportunities in the JS-SEZ. I have gone to many of these workshops and both offices work hand-in-hand together to facilitate investments coming through to Johor, to the zone; and from Singapore to the zone.

10)          Both sides have also introduced measures to reduce friction and improve connectivity, including in immigration clearance, customs facilitation and cargo processes.

11)          The refreshed Johor-Singapore Cooperation Ministerial Committee, co-chaired by Minister Chee Hong Tat and Malaysian Minister for Economy Akmal Nasrullah, will also provide strategic oversight for broader cooperation including the SEZ.

Why is Singapore Pursuing the JS-SEZ?

12)          On the reason why we are pursuing this and how this is a core strategy in integrating with the region, the JS-SEZ is all about tapping our complementary strengths for a win-win outcome. The JS-SEZ is focused on the Johor-Singapore corridor and building on the respective incentives and schemes offered by each country. Both countries are working on introducing practical solutions like smoother cross-border flow of goods and people.

13)          In Singapore, for Singapore companies, the true value is being able to twin operations: keeping the HQ functions, financing, innovation, branding and higher-value functions in Singapore, while using Johor's complementary strengths to scale more competitively.

14)          I understand the concerns also that deeper integration could move activities out of Singapore. But I think as the Member alluded to, we cannot also accommodate every activity within Singapore. Instead, our approach has and always been to keep Singapore as a key node while helping our companies scale and build resilience so that we can compete globally.

15)          This means organising practical and meaningful activities across both sides of the Causeway, so we can continue to play to our strengths as a financial, transportation and tech hub, and also to anchor HQ functions, R&D, intellectual property, talent development and other high value activities here.

16)          I give you two practical examples. Old Chang Kee, which is a food manufacturer in Singapore, has operated a production facility in Gelang Patah since 2016, complementing its Singapore operations and supporting its retail outlets in both markets. South Korea's SPC Group, the parent company of Paris Baguette and Shake Shack, houses its Southeast Asia HQ, innovation centre and training centres in Singapore, while operating its production base in Johor.

17)          And then we move into semiconductors which the Member had talked about quite significantly. Singapore is a key node in the global semiconductor value chain. We account for one out of five in every semiconductor equipment manufacturing and one out of 10 semiconductor chips. And we will keep strengthening Singapore's position as a key node in this global semiconductor value chain by attracting quality investments and anchoring higher-value activities here.

18)          Our strategy is not to replicate what is being done in Johor or Penang, but to work with Malaysia on complementary activities that strengthen the regional ecosystem for semiconductors, which is a very fast and evolving sector.

19)          Another example here to illustrate this point is STMicroelectronics which anchored its Asia Pacific HQ and wafer fab operations in Singapore, complemented by assembly and test operations, including high reliability automotive packaging in Johor. Their wafers fabricated in Singapore directly feed into packaging and qualification in Malaysia, enabling STMicroelectronics to bring products to market faster.

20)          The Member also talked about how we measure these investments or what are the KPIs for the JS-SEZ. Well, the JS-SEZ must deliver real investments, business activity and jobs. Singapore and Malaysia have jointly agreed to attract 50 projects in five years and 100 projects in 10 years. It has so far garnered significant and strong business interest. Last year, Johor recorded its highest ever approved investments, with over 70% of those investments attributed to the zone. Since signing the Memorandum of Understanding in January 2024, Singapore and Singapore-based companies have committed over $5.5 billion in investments into Johor.

21)          So, we are not just focused on the headline investment numbers but whether the JS-SEZ expands the overall pie for the region and for Singapore and Johor together competing for investments.

Managing the Risks and Ensuring Singaporeans’ Benefit

22)          On the RTS Link, I chair the RTS Link Taskforce to help Singaporeans and businesses benefit from the RTS Link. We have been widely engaging residents, merchants, trade associations, landlords and other stakeholders.

23)          Based on the feedback we’ve received, we are working on measures to further rejuvenate our heartlands, help our businesses become more competitive, transform, pivot and work with the private sector to promote business and commerce on both sides. Some of the work has already begun on the ground. We have spoken to the private sector players on both sides. And I think this is something which we can promote further to ensure that commerce flows on both sides.

24)          We will be sharing our findings and recommendations later this year.

25)          But I think we should be clear about the broader point. The way to respond to greater connectivity is not to retreat from competition, as the Member had alluded to; but to help our businesses to compete more effectively. Competition does not just come across from the Causeway. Already, it comes from digital platforms, international brands, AI-enabled services, e-commerce and changing consumer preferences.

26)          On his suggestions about different deals with the Malaysians, I think it is within their jurisdiction. I think we do what we can under the auspices of the JS-SEZ to ensure that our companies can invest there confidently and also anchor strong and high value activities here, complementing both Singapore and Malaysia, Singapore and Johor.

Conclusion

27)          Sir, the issue that we talked about this entire day is in fact not whether we should integrate with the region, but how we integrate with the region.

28)          The test is not whether every activity must be located here – of course, that would be unrealistic with our constraints – but whether Singapore remains where the highest value functions are anchored, where important decisions are made, where we can build capabilities and where we ultimately can create good jobs for Singaporeans.

29)          And if a company does choose the Johor-Singapore region instead of another location elsewhere in Asia and anchors its HQ functions, financing, innovation and R&D activities in Singapore, then I think that is additive integration.

30)          And if our companies can use Johor as a complementary base to scale, serve larger markets and strengthen their regional competitiveness while retaining their core capabilities here, that is also additive integration.

31)          And if our region as a whole becomes more attractive to global investors and Singapore captures the higher-value parts of that value chain, that is also additive integration.

32)          This is the approach, Mr Speaker, that we are taking to ensure that regional integration benefits Singapore and Singaporeans.