The JS-SEZ is intended to deepen cross-border economic activity, with DPM Gan describing it as a pursuit of a "win-win outcome" for both nations. For Malaysia, it holds the potential to attract billions of dollars in foreign investment, fuelling job creation and economic diversification. For Singapore, it promises greater access to land and talent, as well as lower operational costs.
The concept of SEZs gained prominence in the 1980s when China established Shenzhen, Shantou and Zhuhai as SEZs to attract foreign direct investment. These zones played a pivotal role in transforming China into the manufacturing powerhouse it is today.
Southern Johor's proximity to Singapore and strong economic and social ties with the city-state have led to comparisons with the relationship between Hong Kong and Shenzhen. Observers often highlight how the early development of the Shenzhen SEZ capitalised on the high land and labour costs in neighbouring Hong Kong - challenges Singapore is now facing.
"The constraints are that we (Singapore) are a country with innovation, but we lack space, people and the cost base to essentially see the right return on investment - all of that, Johor offers," says Aditya Laroia, CEO of Maybank Securities Singapore, in an interview with The Edge Singapore.
See also: JS-SEZ to bridge supply chain barriers in tariff wars
The Shenzhen SEZ helped transform a small town of about 30,000 in the 1970s into a global hub for supply and logistics services, financial services and high-tech industries. At its inception, the SEZ helped the Shenzhen economy outpace China's overall gross domestic product (GDP) growth, growing 58% from 1980 to 1984, compared to China's 10% growth.
With the JS-SEZ designed to make the region an economic powerhouse within the Asean region, Singaporean and Malaysian policymakers hope to replicate Shenzhen's success story and capitalise on a fast-growing Asian economy.
Maybank's JS-SEZ commitment
With the JS-SEZ now taking shape, the momentum has attracted strong interest from the financial sector. Several financial institutions have pledged support to facilitate cross-border capital flows between Malaysia and Singapore. Among them is Maybank, which aims to strengthen its role in driving global economic activity centred in Johor and Singapore by building on its longstanding presence. As a household name in Malaysia with a significant footprint in Johor and a well-established presence in Singapore, Maybank sees its heritage as a strategic advantage.
"Heritage matters," says Laroia. "We are essentially Malaysia's bank. So, the biggest value proposition is accessibility to the right seniority in policymaking and government. We also have a large presence in Johor itself so we don't have to start by putting in infrastructure, people and resources. We already have a lot of capability in Johor available and we understand the dynamics of doing trade in Malaysia."
See also: CIMB commits RM10 billion to accelerate growth in JS-SEZ
Maybank operates 37 branches, three Maybank Premier Centres, nine Maybank Service Centres and six Commercial Banking Centres across Johor. In Singapore, it has 18 branches and seven Maybank Premier Lounges - the highest number among foreign banks. Making "frictionless experiences" for clients has always been the name of the game. "If you create friction in the process, no one is going to use you," says Laroia.
Maybank has long played a key role in supporting Singapore's small- and medium-sized enterprises (SMEs), which account for around 99% of all businesses in the country. Around 20% of these are Maybank customers.
Building on this strong foundation, Maybank is well-positioned to support SMEs looking to expand into the JS-SEZ. Success for these businesses will depend on understanding the market, navigating regulatory requirements and identifying sector-specific opportunities they can leverage.
As Malaysia's bank, Maybank's strong presence in Johor ensures businesses have easy access to essential consultancy services. This offers stakeholders greater clarity in their management, which is crucial for success.
Laroia says the bank has taken a proactive approach by organising sector-specific conferences and holding meetings with policymakers in Johor. These initiatives provide existing and potential clients with ample opportunities to gain deeper insights into doing business in the region, helping them make well-informed decisions.
For instance, the bank held a real estate conference in April to bridge the gaps between the two countries and will also host an event in the third week of April for existing and potential clients to meet the political establishment of Johor.
Events like these are just a few of the many initiatives Maybank has launched to support SMEs, and they have proven highly popular. Since the announcement of the SEZ in October 2023, the bank has seen a 250% surge in inquiries from SMEs eager to learn more about doing business in Johor.
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"In terms of inquiries, people are asking, where can they access the value? What's the tax status? How do we get access to the right rule-making bodies? Essentially, the level of interest is confirmed by the number of inquiries, and they see this as a real opportunity," adds Laroia.
Following the theme of providing "frictionless experiences" for clients within the SEZ, the bank has developed financial solutions to drive SME growth in the region, with business-friendly initiatives such as green lane financing in Malaysia for loans of up to MYR20 million ($5.94 million).
Maybank has also worked on facilitating market access and expansion for SMEs by streamlining onboarding processes, enabling faster account openings in Singapore and Malaysia. The bank also provides dedicated advisory desks in Johor and Singapore, offering tailored business support.
The bank has seen significant value in real estate, high-tech manufacturing, data centre processing, and artificial intelligence (AI) and chip development. These areas align with the SEZ's focus on the digital economy and electronics, which are among its 11 priority sectors.
Hong Kong expansion and Asean focus
Southeast Asia has experienced rapid economic growth in recent decades, driven by industrialisation, increased foreign investment and integration into global supply chains. As a result, several Asean economies have steadily moved up the economic value chain.
The regulatory environments of several Asean nations have begun to evolve to attract more foreign investment, enhance transparency and align with global standards. For a long time, overseas investors entering Vietnam had to fully transfer funds before buying securities, which has hindered the upgrade of the Ho Chi Minh City Stock Exchange. Currently, the MSCI and FTSE indices still classify Vietnam as a frontier economy, which prevents funds and family offices from investing in many companies listed in the country.
In a drive to reclassify the economy, regulatory reforms are sweeping through Vietnam to revitalise and liberate its market. In November 2024, the country removed the requirement for full pre-funding on equity transactions for foreign investments, instead requiring investors to hold sufficient funds when placing buy orders for securities.
In 2022, the government introduced a decree on corporate bonds to tighten the eligibility criteria for individuals to qualify as "professional securities investors" and to enhance transparency in the bond market by imposing more detailed requirements.
World Bank estimates suggest that upgrades could attract inflows of between $5 billion ($6.6 billion) and $25 billion to the market by the end of the decade, as reforms pave the way for institutional investors. This has led Southeast Asian banks, including Maybank, to shift their focus towards expanding into Asean markets like Vietnam.
"For Vietnam, our research team is doing a lot of research around the developments that are happening and we have been facilitating increased stakeholder management activity, which means more corporate access opportunities for investors to meet corporates. Additionally, we are the only foreign broker with a local license in Vietnam. We are already deeply integrated in the foreign investor community and are local specialists, so it's the best of two worlds," says Laroia.
Maybank is also focusing on expanding into Hong Kong to better support regional growth and strengthen its prime brokerage business across Asia. "Even though we are based in Singapore, we think Hong Kong is still a vital capital market centre. It still has most of the banks, equity businesses and prime brokerages. Most of the banks have their prime brokerage headquarters in Hong Kong, and that is because, for years, it has had the fund management ecosystem established in Hong Kong," says Laroia. "If you want to be a big and important player in the hedge fund support structure and the prime broker services ecosystem, then you must have an established presence there."
Hong Kong is expected to remain a vital component of the bank's prime brokerage business. Maybank currently has a sales team in Hong Kong, which includes onboarding specialists who understand the structures regulating private open-ended fund companies as regulated by the Securities and Futures Commission. They have already onboarded a handful of new hedge funds last year.
While Singapore and Malaysia will still be the backbone of operations and a service centre, Laroia explains that providing accessibility to clients in Hong Kong by having a physical presence and exposure there is important to the bank in maintaining its credibility.
Hong Kong's prime brokerage services have played a key role in enhancing the bank's offerings, ultimately helping to expand its clientele in the region. "With prime brokerage, we have been able to elevate the quality of our offerings for other clients in Hong Kong. This means clients can do much more with a broader set of asset classes in terms of trading and financing," adds Laroia.
The client pipeline for 2025 in Hong Kong is strong, and Laroia believes that, given the relatively small customer base, doubling or even tripling last year's growth in their Hong Kong business will not be difficult.
