Developing such a framework will lay the groundwork for a legally binding agreement in the future, said MTI.

Mr Gan said: “The JSSEZ underscores what Singapore and Malaysia can achieve when our governments and business communities work closely together.”

“It will serve as a bridge for both sides to tap on each other’s complementary strengths and seize opportunities to grow together.”

Mr Rafizi noted that the special economic zone presents an “unprecedented opportunity” to enhance the cross-border flow of goods and people, bolster the business ecosystem, and elevate the economic attractiveness of both Johor and Singapore.

He said: “I have full confidence that this initiative will herald the commencement of a transformative chapter in our bilateral economic relations, fostering unparalleled connectivity and prosperity for both our great nations.”

The implementation of the MOU will be overseen by a JSSEZ Joint Committee that will be co-led by Singapore’s MTI and Malaysia’s Ministry of Economy.

The committee will report to the Joint Ministerial Committee for Iskandar Malaysia, which is co-chaired by National Development Minister Desmond Lee and Mr Rafizi.

MTI and Malaysia’s Ministry of Economy said in their statement that both countries agreed to work towards a full-fledged agreement on the JSSEZ, and an update will be given at the 11th Malaysia-Singapore Leaders’ Retreat.

The JSSEZ rides on the strong growth of Johor and significant investments in the region by Singapore, said both ministries. 

The southernmost Malaysian state saw RM70.6 billion (S$20.2 billion) worth of investments in 2022 alone, across various sectors including electrical and electronics, medical equipment, food manufacturing and data centres.

Singapore and Malaysia are each other’s second-largest trading partners, with bilateral trade growing 18.9 per cent year on year to $153 billion in 2022.

The Republic was also Malaysia’s top source of foreign direct investment, contributing 20.5 per cent in 2022.