The neighbours first agreed in principle to jointly develop the economic zone a year ago. Tuesday’s agreement was announced during a visit to Malaysia by Singapore Prime Minister Lawrence Wong and senior cabinet members.

“It’s an important project… we can both be more competitive, enhance our value proposition, and jointly attract more investments to our shores,” Wong told a joint press conference with counterpart Anwar Ibrahim.

“When negotiating the agreement, both sides have actively engaged stakeholders to ensure that the SEZ has the conditions to help our businesses grow together for the longer term.”

Anwar said the SEZ was a unique initiative as it was rare for two countries to team up on a single project.

The two countries are aiming to attract high-value investments in sectors ranging from manufacturing and logistics to tourism and energy transition, economy minister Rafizi Ramli told reporters.

They are targeting 50 projects within the economic zone in the first five years of its inception, and the creation of 20,000 skilled jobs.

Malaysia will set up and manage an infrastructure fund to support companies looking to set up there, while Singapore will create its own fund to facilitate investments and support Singaporean companies operating in Johor, Rafizi said.