Economy of a Malaysian state
The state of Johor is strategically located in southern Malaysia, bordering one of the regional economic powerhouses Singapore. Johor is the third-largest economy in Malaysia after Selangor and Kuala Lumpur, accounting for 9.6% of the nation's gross domestic product, valued at RM 148.2 billion in 2023. The economy is primarily driven by manufacturing and service sectors, covering almost 80% of the state GDP.
Econonmic history.
Johor's economic history can be traced back to the early 16th century when it was part of the Malacca Sultanate. Following the fall of Malacca to the Portuguese in 1511, the Sultanate of Johor was established by Sultan Alauddin Riayat Shah II in 1528. During this period, Johor became a significant trading hub due to its strategic location along the Straits of Malacca, facilitating trade between the East and the West.
In 1914, Johor became a de facto British protectorate. Thereafter, large-scale agricultural activities were gradually introduced, particularly the cultivation of pepper and gambier, which were highly sought after commodities. Refugee labour from China played a crucial role in developing these plantations. The extension of the railway from the tin and rubber belt of the Malay Peninsula to Singapore in 1919 further integrated Johor into the regional economy. This greatly facilitated the export of agricultural products, particularly rubber, which became a major economic driver in the early 20th century. Following Malaysia's independence in 1957, Johor continued to diversify its economy. The state capital, Johor Bahru, emerged as a regional industrial and commercial center.
Sectors.
Agriculture.
Johor is the largest agriculture output contributor at 17.5% in Malaysia. The main agricultural sectors in the state are palm oil plantations, rubber plantations, and produce. Its palm oil plantations cover almost three-quarters of the agricultural land in the state. Johor Plantation Group (JPG) is the leading corporation in the palm oil industry, which owns 55,904 hectares of land and made itss debut on the Malaysian stock market in 2024.
Johor is also the biggest fruit producer in Malaysia, with a total fruit plantation area of and total harvesting area of . There are around 25,000 registered fruit farmers in Johor and the top five most grown fruits are pineapple, durian, white guava, papaya and banana. In 2021, the total production is 736,136 tonnes, including 569,004 tonnes of fruits and 167,174 tonnes of vegetables.
Tourism.
Johor has a relatively vibrant tourism industry, receiving more than 16 million foreign visitors in 2023, with the bulk of them being Singaporeans. Six segments have been identified by the government to be crucial in attracting new tourists, namely ecotourism, sports tourism, medical tourism, education tourism, historical tourism and culinary tourism.
Special Economic Zone.
Johor-Singapore Special Economic Zone.
On 11 January 2024, Malaysia's Economy Minister Rafizi Ramli and Singapore's Trade and Industry Minister Gan Kim Yong signed a Memorandum of Understanding (MoU) to work on a Johor-Singapore Special Economic Zone (JS-SEZ). One goal of this cooperation is to build one-stop business investment centre, in terms of less administrative procedures for movement of goods and labour and more favourable business incentives. The ongoing construction of the Johor Bahru–Singapore Rapid Transit System would also greatly benefit further interaction of the two countries.
On 7 Jan 2025, Singapore Prime Minister Lawrence Wong visited Malaysia and signed an agreement with his Malaysian counterpart Anwar Ibrahim on creating the special economic zone. The agreement expects 50 projects in the first five years of the establishment of the special economic zone, which would create an estimated 20,000 jobs and benefit more than 11 industries. However, there are concerns about the lack of skilled labour and causeway congestion.
Forest City Special Financial Zone.
Forest city in Johor has been desingated by the government as a Special Financial Zone, thanks to its geographical proximity to the regional economic powerhouse Singapore. The government gives business-friendly incensives such as tax breaks to promote development of the local financial industry.
References.
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