Singapore and Malaysia Separated Six Decades Ago. Can They Do Business Together Now?
From Lee Kuan Yew and the 1965 separation to the Johor–Singapore Special Economic Zone. Who pays for the roads, power and coordination that make cross-border business possible?
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Imagine a Singapore precision-parts company landing a large order. It plans to keep sales and design in Singapore and open a second production line in Johor. The finance lead wants to know how much rent the company will save. The plant manager wants to know who can cross the Causeway when a customer changes a specification. A resident near the proposed site has another question. The road is already busy. Who pays to widen it?
All three questions are reasonable. One is about this quarter. Another is about what the next ten years will look like for a neighbourhood.
Two countries, one business plan
Singapore separated from Malaysia in 1965. That December, Lee Kuan Yew told Parliament that a new working relationship was possible if the two countries weighed the value of each step for both sides. Put that history beside the present and a simple fact stands out. The two sides can be close neighbours and still answer to different publics. National Archives of Singapore, Lee Kuan Yew's 1965 parliamentary speech
In January 2025, the two countries exchanged the agreement for the Johor–Singapore Special Economic Zone. It aims to improve the movement of goods and people and make it easier for businesses to operate across the region. Singapore also set up a project office that year to help companies expand in the zone. One company can draw up a single plan for two sites. The two places will still keep separate books. Agreement factsheet · Singapore Ministry of Trade and Industry, parliamentary reply
Room to grow, and reasons to stay
For a Singapore company, Johor offers nearby space for production, storage or pilot lines. It also adds a daily handoff. If a batch of parts fails inspection, can both teams pull up the same records? Can the Johor team stop the line, or does it wait for a manager in Singapore? Rent can go straight into a spreadsheet. The time it takes two teams to solve a problem together is harder to estimate before they have done it.
Johor has a choice, too. It can pursue more factories and it can pursue work that keeps skills, purchasing and decision-making in the state. Sometimes the two come together. A production worker might move into process engineering, and a local supplier that qualifies for its first order might win a second. Malaysia's investment agency has highlighted an investor training Malaysian technical staff abroad before assigning them to Johor. What those staff get to do afterwards, and how far they can advance in Johor, are questions worth following. Malaysian Investment Development Authority, investment and training
How do you compare two sets of books?
Say an industrial park needs more power and wider roads before it can expand. The company expects new jobs. The local government wants to know who carries the cost if the production line opens two years late. I would put the terms for expansion in writing. Who pays first? What has to happen before the next round of spending? Who covers the bill if the investment shrinks? People who commute, use the roads or live nearby need a way to raise their concerns. They may feel the changes before a boardroom does.
One date to watch in 2027 is easier to picture. The operator of the Johor Bahru–Singapore RTS Link is targeting February for passenger service, subject to independent safety certification and final regulatory approvals. It is a separate bilateral project. Once trains are running, we can ask whether crossing gets easier for passengers. Freight clearance, power for industrial sites and repeat orders for local suppliers each need their own measure. Joint announcement from the Malaysian and Singapore transport authorities
If by the end of 2027 companies can resolve cross-border problems under agreed rules and people in Johor are finding lasting contracts or career opportunities, I would take that as a sign that cooperation is taking root. If sites expand quickly while local authorities keep covering shortfalls and companies have to call their own governments for exceptions, the deals may be done while the partnership is still being negotiated.
If you lived in Johor, what would you ask for before agreeing to spend public money on a wider road for a new factory?
Listen to the conversation
Listen to If We Both Profit, Who Pays?. In this Mandarin episode, M.K., Dorami and a dramatized Lee Kuan Yew discuss who bears the costs of cross-border growth.