Singapore and Malaysia Leaders Hold Summit on 7 Jan. (Photo: Anwar Ibrahim's facebook )
On Jan. 7, Singapore and Malaysia held a leaders' summit, where they officially announced the establishment of the Johor-Singapore Economic Zone (JS-SEZ) at the border of the two countries.
This initiative aims to attract more investments and create more job opportunities. Additionally, it will strengthen cooperation in areas such as electricity trading, carbon credits, and carbon capture, fostering the development of a green economy.
Singapore, Malaysia to create Cross-Border Economic Zone
After more than a year of negotiations, the JS-SEZ has finally taken shape. The specific cooperation includes promoting the flow of people and goods within the zone, enhancing talent cultivation, and improving the business environment.
The focus is on 11 major industries: manufacturing, logistics, food security, tourism, energy, digital economy, green economy, financial services, business services, education, and healthcare. The goal is to expand 50 projects within five years and accumulate up to 100 projects within ten years, creating an estimated 20,000 jobs locally.
Singapore Prime Minister Lawrence Wong stated that the plan will build on the complementary advantages of Singapore and Johor, helping to enhance the competitiveness of both countries and strengthen their value propositions to attract more investments.
Malaysia is Singapore's third-largest trading partner, with bilateral trade reaching USD 132.6 billion. Singapore is Malaysia's largest foreign investor, with investments amounting to MYR 43.7 billion (about USD 9.7 billion) in 2023, accounting for 23% of Malaysia's total foreign direct investment (FDI).
Malaysian Prime Minister Anwar Ibrahim, who witnessed the exchange ceremony, believes that the stable political situation and clear economic direction of both countries will attract businesses to invest in the newly established economic zone.
Singapore and Malaysia announced the establishment of the Johor-Singapore Economic Zone at the border and are working on a cross-border Renewable Energy Certificates (RECs) framework to facilitate electricity trade and support regional renewable energy projects. (Photo: iStock)
Expanding carbon credit, renewable energy certificates cooperation
In addition to the economic zone, the two sides recently signed six memorandums of understanding (MOUs) and one letter of intent (LOI), two of which are related to carbon reduction.
These include promoting carbon credit trading under Article 6.2 of the Paris Agreement, which allows one country to transfer its carbon reduction achievements to another to meet its Nationally Determined Contributions (NDCs).
Another cooperation focuses on carbon capture and storage (CCS). The Malaysian Ministry of Economy and the Singapore Ministry of Trade and Industry will establish a joint committee to promote carbon capture research and share practical experiences, paving the way for cross-border commercial operations of carbon capture.
Additionally, the Singapore Ministry of Trade and Industry and the Energy Market Authority issued a statement indicating that they will discuss with Malaysia the establishment of a certification framework for cross-border Renewable Energy Certificates (RECs). This aims to stimulate cross-border electricity trading and support the development of regional renewable energy projects.
The statement also mentioned the current situation of exporting green electricity to Singapore through the Energy Exchange Malaysia (ENEGEM) platform. The Malaysian national energy company Tenaga Nasional Berhad (TNB) and Singapore's Sembcorp Power signed a power purchase agreement at the end of 2024, with plans to deliver 50 MW within two years. The first batch of electricity was delivered to Singapore on December 13.
Through the ENEGEM pilot project, Singapore completed its first green electricity import combined with RECs. Official data shows that as of January 7, the project has successfully traded nearly 28 million kWh. TNB and Sembcorp Power will also conduct feasibility studies to enhance grid interconnection and infrastructure development.
The opportunities for green electricity trading between Singapore and Malaysia are expected to continue increasing. Prime Minister Wong also mentioned after the meeting that the plan to import electricity from Sarawak via undersea cables is still in preparation. Sarawak Energy Berhad (SEB) has stated that it aims to supply 1 GW of hydropower to Singapore by 2032.
Source: The Straits Times, The Business Times, MFA, Asian Power
