Incoming Singapore PM may use Johor as launch pad for more investments, says analyst
17 Apr 2024
Malaysia’s trade and investment prospects with Singapore will likely be bolstered with the passing of the republic’s leadership from Prime Minister Lee Hsien Loong to his deputy Lawrence Wong.
Economists contacted by Business Times also said Singapore was expected to use Johor even more to support its investments in the country, particularly given the republic’s good relations with His Majesty Sultan Ibrahim, King of Malaysia.
Lee, 72, is stepping down on May 15 after two decades in office, handing the reins over to Wong, 51.
Malaysian Institute of Economic Research economist Dr Shankaran Nambiar expects Wong to continue Lee’s policies, particularly when it comes to trade and investment.
The emphasis will continue to be on growth, and that will mean ensuring that trade and investment are given serious consideration, Shankaran added.
“Therefore, Wong is expected to devote more attention to attracting foreign direct investment (FDI) and keeping the growth numbers on track. This will be more pronounced given the challenging external environment.
“Singapore will want to deepen trade relations, although Malaysia’s exports are already being re-exported via Singapore,” he told Business Times.
Nambiar highlighted that given the good relations the King has with the government of Singapore and since Johor is a convenient hinterland for Singapore’s investments, one can expect greater use to Johor to support Singapore’s investments.
This may take the form of housing and land development, but it will also extend to the location of investments in Johor.
Wong might also see value in being a partner in Johor’s development as a hub for service providers, he said.
Singapore Institute of International Affairs senior fellow Dr Oh Ei Sun said the bilateral trade and investment relations had remain very stable over many leaders on both sides.
So, he noted that it would continue into the future under Wong’s administration.
“Singapore has an established and tested set of domestic and foreign policies. But it is also famous for being pragmatic and innovative. The persistent global economic slowdown affects not only Singapore but all trading nations in Southeast Asia.
“So, all of us would have to figure out how to transform our economies into more resilient ones and Singapore is usually the leading example in this,” he added.
The total trade between Malaysia and Singapore for the first half of 2023 amounted to US$301.2 billion (about RM1.29 trillion), reflecting a 4.6 per cent decrease compared to the same period in 2022.
Singapore and Malaysia were each other’s second-largest trading partners in 2022, with bilateral trade reaching U$83.53 billion.
Singapore also ranked as one of Malaysia’s top sources of foreign direct investment, contributing 8.3 per cent to Malaysia’s total investments in 2022.
Early this year, Malaysia and Singapore signed an agreement to work together on the creation of the Johor-Singapore Special Economic Zone to be located in the state of Johor.
Additionally, both countries are also working on the proposed high-speed rail project that would connect Malaysia to Singapore. The project is currently being revived after being cancelled in 2021.
Meanwhile, Nusantara Academy for Strategic Research senior fellow Dr Azmi Hassan said there would not be much difference in trade and investment relations with Singapore under Wong.
He noted that however, Wong represents the fourth generation, which is a departure from Lee’s generation and therefore, his administration style will likely be significantly different.
“More importantly, Wong needs to demonstrate his capacity to serve as PM, and he doesn’t have much time, perhaps less than a year before the general election in Singapore, possibly by the end of this year or early 2025.
“To prove his capability, he will likely adopt a stricter approach and prioritise policies that benefit Singapore over its neighbors. This marks a notable difference, particularly in the context of relations with Malaysia and Singapore,” he added.
With Wong assuming office on May 15, Azmi said the era of Lee Kuan Yew’s family legacy in the political arena comes to an end.
However, he noted that we must pay attention because Wong needs to demonstrate his ability to lead Singapore toward a better future.
While Wong has displayed leadership as the deputy prime minister, these instances occurred under Lee’s administration.
“When a leader needs to establish their capabilities, they may implement policies that prioritise Singapore’s interests over those of its neighbours. It’s worth noting that Wong wasn’t the first choice to succeed Lee Hsien Loong, adding more pressure on him,” he said.
Source: NST
