How Private Capital Is Powering the Johor-Singapore Special Economic Zone

One year after its launch, the Johor-Singapore Special Economic Zone (JS-SEZ) is emerging as a private capital magnet at the intersection of new trade corridors and AI-ready infrastructure. 

From analysis of our data on cross-border deal flows, corporate revenue exposures, and data centre capacity, we see investors reallocating capital toward larger, more strategic transactions that bind Johor’s cost competitive industrial base with Singapore’s financing and R&D ecosystem. This shift is turning the JS-SEZ from a bilateral policy initiative into a scalable platform for export-oriented growth, echoing (but not replicating) the structural role that Shenzhen’s special economic zone played in the 1980s.

This analysis provides an insight into the early stage of the policy's success by examining key data points: transaction volumes and values with RBICS classification to measure private capital market vibrancy, geographical revenue exposures to track the trajectory of export-oriented growth among public companies, infrastructure cloud services forecast, and data centre planned power capacity to gauge the SEZ's digital infrastructure readiness and scalability for technology-driven investments.

How is the JS-SEZ Rewiring Capital and Capacity?

The JS-SEZ (conceptually extended to a broader JS-SEZ corridor) is an institutionalised framework focused on capital, people, and infrastructure connectivity improvements, rather than merely a tax or incentives scheme. It strategically funnels investment into 11 key sectors across Singapore and Malaysia: Business Services, Green Economy, Digital Economy, Education, Energy, Financial Services, Food Security, Healthcare, Logistics, Manufacturing, and Tourism. 

This framework is driving momentum in high-growth areas such as data centres, AI, cloud infrastructure, renewable energy, logistics parks, and higher-value manufacturing clusters. In this symbiotic model, Johor provides cost-efficient space and capacity, while Singapore anchors R&D, finance, and headquarters functions.   

The JS-SEZ's strategic direction is further validated by the 2025 APEC Leaders' Gyeongju Declaration, which reaffirmed commitments to the Free Trade Area of the Asia-Pacific (FTAAP) agenda, emphasizing regional economic integration, digital trade, and supply chain resilience. This high-level multilateral support provides crucial air cover for the bilateral JS-SEZ initiative.

Crucially, the policy has introduced tangible, structural changes to facilitate this growth. Key mechanisms include implementation of the Regulatory Trade System (RTS)—a digitalised cross-border clearance platform—and introduction of a special visa/work permit scheme for skilled talent and investors operating within the SEZ. These concrete measures provide the necessary institutional support to unlock the policy's potential.

Has This Policy Brought Its Intended Economic Growth? 

From volume to strategic flows in private capital

FactSet private markets and M&A data show that despite a post-pandemic decline in deal counts, both total and average deal values in Singapore, Johor, and the broader JS-SEZ corridor have continued to rise. Following the cheap capital spike of 2021–2022, investors are now deploying larger amounts into fewer, more strategic transactions. That indicates a shift from opportunistic funding to long-term platform and infrastructure investments linked to the corridor.

The increase in total deal value from $56.3 billion in 2024 to $57.5 billion in 2025, even as overall deal volume fell, points to greater investor confidence in scaling high-conviction assets within the corridor. This trend signifies a move of capital inflows toward larger, more strategic deployments. 

The trend may be partially attributed to broader market maturity and post-cyclical recovery, hence the next phase of analysis centres on isolating the direct impact of the JS-SEZ by tracking deals that explicitly utilise the new SEZ incentives and mechanisms.

The "funding-to-factory" flywheel

FactSet deal and sector data clearly show Singapore is heavily skewed toward high-value intellectual property (IP) and capital formation, dominating in Financial Services (deal origination, structuring), Education (R&D, advanced knowledge centres), and Advanced Equipment sectors.

Malaysia (Johor) is focused on scale and infrastructure, leading in the Manufacturing, Logistics, and Energy sectors. This involves infrastructure asset build-out, capacity expansion, and supply-chain integration.

This complementary dynamic ensures that capital formed in Singapore is efficiently productised in Johor and then monetised across global markets, directly aligning with the shared ambition for export-oriented growth.

Export-led growth and market diversification

The vibrancy of the private market is mirrored in the public sector. Our Geographic Revenue data indicates that public companies within the JS-SEZ's strategic sectors are showing a steady increase in geographical revenue exposure toward the world's top three GDP contributors: the United States, the European Union, and China. 

That reinforces the private markets signal: Capital is being deployed into assets within the corridor, and those assets are increasingly monetising via demands from the world’s largest economies. This positions the JS-SEZ as a node in reconfigured global trade flows. 

AI-ready infrastructure ecosystem 

The JS-SEZ is strategically positioned to ride the waves of the global AI boom cycle. The policy's focus on AI-native industries (e.g., Electrical & Electronics, Medical Devices) is supported by a massive build-out of the underlying AI infrastructure layer.

FactSet technology data on planned datacentre capacity shows combined power in Johor, Kuala Lumpur, and Singapore projected to reach 21 GW by 2025, underscoring the corridor’s ambition to become a regional hub for AI and cloud workloads. 

Complementary cloud services revenue forecasts for APAC through 2027 point to a supportive demand backdrop, with rising compute intensity reinforcing both the digital infrastructure and energy transition dimensions of the JS-SEZ story.

Considerations for Investors

The JS-SEZ is evolving into a resilient policy platform that channels capital and capacity into higher-value manufacturing, logistics, and digital infrastructure assets, leveraging Singapore’s financing and technology base alongside Johor’s scalable industrial capacity.

This symbiotic model amplifies bilateral trade synergies—evident in the growing exposure to high-value EU and US markets—and positions the JS-SEZ to capture high-value investments in the next wave of digital and sustainable transitions.

The strategic outlook is significantly reinforced by multilateral support: the APEC’s Phase Three of the Supply Chain Connectivity Framework Action Plan (SCFAP III) strengthens regional supply chains, and the October 2025 US-Malaysia Critical Minerals MOU provides a crucial layer of supply-side security, de-risking the Malaysian component for US and allied investors in the semiconductor and sustainable energy sectors.

While the outlook is strong, investors must be cognisant of specific, actionable risks. The most critical is the supply chain vulnerability inherent in Malaysia's focus on semiconductor assembly, testing, and packaging, which remains highly dependent on the stable supply of high-value machinery and materials from abroad. 

Furthermore, the JS-SEZ faces direct competition from established and emerging regional hubs, notably Vietnam's high-tech parks and Thailand's Eastern Economic Corridor (EEC), both of which offer comparable incentives and infrastructure. The policy's long-term success hinges on its ability to maintain its competitive edge against those rivals.

Our integrated view of private markets deal flows, public company revenue exposures, and data centre capacity enables investors to track JS-SEZ corridor opportunities amid evolving supply chains and digital infrastructure requirements and the energy transition, underscoring ongoing monitoring of policy execution and capital allocation.

Article supported by Jennifer Hanscomb at FactSet. 

¹ APEC (2025) ‘APEC Artificial Intelligence (AI) Initiative (2026–2030)’. Leaders’ Declarations. Available at: https://www.apec.org/meeting-papers/leaders-declarations/2025/2025-apec-leaders--gyeongju-declaration/apec-artificial-intelligence-(ai)-initiative-(2026-2030).

² APEC (2022) ‘Phase Three of Supply-Chain Connectivity Framework Action Plan 2022–2026 (Endorsed, 23 August 2022)’. Available at: https://mddb.apec.org/Documents/2022/CTI/CTI3/22_cti3_012.pdf

³ Government of the United States of America and Government of Malaysia (2025) ‘Memorandum of Understanding between the Government of the United States of America and the Government of Malaysia Concerning Cooperation to Diversify Global Critical Minerals Supply Chains and Promote Investments’. Available at: https://www.whitehouse.gov/briefings-statements/2025/10/memorandum-of-understanding-between-the-government-of-the-united-states-of-america-and-the-government-of-malaysia-concerning-cooperation-to-diversify-global-critical-minerals-supply-chains-and-promote/

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