On a vast artificial island off Malaysia’s Johor state, scale models of gleaming high-rise towers still dominate a showroom the size of a football field, even as much of the surrounding land remains empty. Forest City, once pitched as “Malaysia’s Shenzhen,” is now being recast as a potential beneficiary of renewed cross-border momentum under the Johor-Singapore Special Economic Zone (SEZ), according to reporting by Nikkei Asia.
Launched in 2015 as a joint venture between China’s Country Garden and a Johor state-backed company, Forest City was designed to house up to 700,000 residents. A decade later, only about 2,000 residential units are on the market and the population is estimated at around 20,000. The project stalled after Country Garden plunged into a deep debt crisis, leaving large parts of the 30-square-kilometer development undeveloped.
The outlook has brightened somewhat since Forest City was designated part of the Johor-Singapore SEZ, launched last January to revive the long-dormant twin-city vision across the narrow strait from Singapore. Johor’s broader development strategy aims to nearly double the state’s economic output to 260 billion ringgit ($64.2 billion) by 2030, targeting annual growth of 7% to 8%, with the SEZ expected to play a central role.
According to Nikkei Asia, Singapore-based companies had invested more than 5.5 billion Singapore dollars ($4.3 billion) in Johor as of October, following the signing of an SEZ memorandum of understanding in 2024. Investments span sectors from healthcare and retail to agritech, while data centers are rapidly expanding to take advantage of Johor’s cheaper land and utilities. Singapore’s major banks have also stepped in, with United Overseas Bank opening dedicated SEZ desks in both Johor and Singapore.
Political backing from both governments has added momentum. Malaysian Prime Minister Anwar Ibrahim and Singaporean Prime Minister Lawrence Wong highlighted connectivity and infrastructure upgrades during their annual meeting last month, underscoring joint efforts to ease cross-border movement. A centerpiece of that push is the Rapid Transit System (RTS) Link, scheduled to open next January, which will connect Johor Bahru and Singapore and carry up to 10,000 passengers per hour.
Around the RTS corridor, construction activity is accelerating. Developers have announced large-scale retail, residential and medical projects, while property prices in Johor Bahru have climbed steadily, with average apartment transaction prices up 44% from a decade earlier, according to Malaysian government data cited by Nikkei Asia.
Johor’s appeal rests heavily on cost advantages. Median monthly wages in Malaysia are roughly one-seventh of those in Singapore, and overall living costs are about half, making the state attractive for labor-intensive industries. These factors have drawn manufacturers, food-processing firms and agri-tech companies, as well as healthcare providers targeting Singaporean patients seeking more affordable services.
Data centers have emerged as a particularly strong growth area, helping offset Singapore’s constraints on land, power and water. Industry estimates cited by Nikkei Asia suggest Johor’s data center capacity could reach 2.3 gigawatts within a few years, surpassing Singapore’s total after the city-state imposed a moratorium on new facilities between 2019 and 2022.
Still, challenges remain. Some Johor businesses reported a drop in Singaporean customers late last year, partly due to the ringgit’s appreciation against the Singapore dollar, which erodes Johor’s price advantage. Analysts caution that if currency and wage gaps narrow further, only select sectors will continue to benefit.
Investors are now watching whether the SEZ can move beyond cost-driven growth and attract higher-value industries such as advanced manufacturing, finance and technology startups. As Nikkei Asia notes, achieving that shift would be critical if Johor is to realize its ambition of becoming a true regional hub rather than a lower-cost extension of Singapore.
