Singapore's Integration with the Region
Adjournment Motion, 7th July 2026
1. The window: get richer before we grow old — and before the gradient closes
Speaker,
Southeast Asia is about 680 million people and a US$4 trillion economy. And it is young where we are old: median age of Malaysia and Indonesia around 31, Vietnam 34, the Philippines 27, against our own citizens’ median of nearly 44.
But youth is a window, not a promise. A demographic window buys a country growth — more workers — not wealth. Since 1990, fewer than one in three of the world’s middle-income economies has made it to high income; the rest are stuck. The region has perhaps fifteen to twenty years to get rich before it grows old.
Singapore did climb that ladder by hosting — taking in large amounts of foreign investment to make goods and services for foreign markets. But it is now hitting a limit.
The markets everyone leaned on are being weaponised. ASEAN still trades with itself only about a fifth as much as it trades with the world — 21 per cent, against the European Union’s 60 — and about three-quarters of our exports depend on external demand, just as the great powers begin wielding access to their markets as instruments of coercion. A region that produces mainly for markets it does not control can be squeezed at will.
And the ground under our own strategy is shifting too. Our hub model carries an assumption: that the gradient between Singapore and its neighbours — in competence, in institutions, in trust — is permanent. It is not. Penang firms today do nano-level vision inspection that the world’s chipmakers buy. A Penang chip designer, SkyeChip, listed this year ninety-five times oversubscribed — the largest Malaysian IPO in sixteen years. Vietnam is climbing the ladder. For the region, this is great news. For a Singapore whose business model is to be the main place in the region where things work, it is a deadline.
Because a hub, unlike an owner, can be bypassed. Indonesia or Vietnam, at even half their potential, has the demographic weight to become the heart of Southeast Asia. And we have to outrun potential resurgent nationalisms that could close doors around us. A Singapore that is merely a well-run waypoint — hosting, brokering, never owning anything together with its neighbours — will find that the region learns, in time, to route around it.
So we should help build a Southeast Asian market of genuine middle-class consumers — we do not have one at scale today — because a market we help build is far less likely to be closed to us.
And we need Singaporeans and Singaporean firms to own a real piece of the value chains that serve it. To be essential to the region, and to share in what the region earns.
We must build a deeper, more structural integration with Southeast Asia.
2. The conviction that stops us
Part of what stops us is a posture.
In my maiden speech I asked why Singapore and Malaysia could not build an Airbus together — one enterprise, owned on both sides, the way France and Germany anchored theirs.
I know the truer hesitations. It is not necessarily that our neighbours cannot execute — Penang’s equipment firms and Selangor’s chip designers have put that to rest. The real reasons are older: memories of past issues, from water to the railway lands; a reflex to keep control of anything that matters; and a fear of bets stranded across a border if politics turns.
But if one is sceptical that the gradient between Singapore and our neighbours will last — I am — then joint industrial policy is exactly what a country builds while the gradient still favours it.
3. Why Malaysia, why now
I believe the strongest path to owning things together runs through our closest neighbour, Malaysia.
Malaysia’s industrial strategy now deliberately targets the design end of semiconductors, setting up the region’s first IC-design park in Selangor.
The integration is happening anyway — by drift. Two hundred and forty-five million checkpoint crossings last year, three-quarters of them by land.
New instruments in front of us: the Johor-Singapore Special Economic Zone, and the RTS Link.
If we get them right, we can prove a model of structural bilateral integration that we can extend.
I will discuss three points.
4. First — make the Zone real
First, on the JS-SEZ.
This economic zone lets two governments run, inside a bounded space, an experiment.
The Zone has been a blank slate many have piled their hopes onto: some ideas put to me were high-tech food-growing zones, an ASEAN Friendship Hospital in Johor, an integrated medical hub on the Shenzhen–Hong Kong model.
But hopes need us to bring the Zone into greater focus.
First: where, exactly, is the Zone? Nine flagship areas have been announced, described at the level of districts; I have not seen a consolidated boundary map. If one exists, we should publish it.
Second: what does a Singapore company receive inside the JS-SEZ, over and above the new federal baseline? Malaysia’s New Incentive Framework took effect for manufacturing on 1 March. If the federal incentives are as good as the Zone’s, there is nothing special about the Zone.
Third, I believe we should soon sort out, with our Malaysian counterparts, one SOP to enter the Zone and one rulebook.
Right now there are multiple agencies and points of contact. On the Malaysian side, there is the Iskandar Regional Development Authority, Invest Johor, MIDA, and the Invest Malaysia Facilitation Centre Johor (IMFC-J). On the Singapore side, we have the EDB one-stop centre. We need policy clarity and joint rules of the road over how companies enter the Zone, whether from Malaysia or Singapore, so that the private sector can plan for it.
With a joint rulebook, we should measure joint success. In my view that means EDB or MTI should be responsible for total KPIs over the JS-SEZ, not just the Singapore-originated investments alone.
Of course, a large degree of self-interested thinking is inevitable and even desirable. The instinct in parts of our Government may be to keep the high-value activity here and let the rest go. This is not wrong. But if we want the unfolding of a richer, more complex, more diverse value chain within a 60km radius than would currently be possible in 10 or 20 years, we will need to take a more collaborative approach.
What gets measured gets managed. I believe we should grade ourselves and the Ministry on the SEZ’s success.
5. Second — semiconductors: co-own the upstream stack
Next, we face a strategic question.
If the Zone is meant to be more than just a new method of foreign direct investment, but to foster a vibrant set of Singaporean and Malaysian businesses, in pursuit of broadening the middle class, does it build on the current set of bilateral strengths?
The foremost candidate for such an industrial deepening is semiconductors.
But here, using the instrument of the Zone may be an impedance mismatch, as in my view Penang’s semiconductor cluster is unlikely to relocate beyond the Klang Valley. So we will need a broader set of instruments.
What can we hope for from semiconductors as joint industrial policy?
In Singapore, we host. Our IC-design strength is mostly the design centres of foreign firms on our soil. We have not grown a chip-design champion of our own — and we had an indigenous foundry once, Chartered Semiconductor, and sold it.
Meanwhile Malaysia is building some of what we lack. Its National Semiconductor Strategy puts indigenous IC design — about half of a chip’s value-added — at the centre, with RM25 billion behind it and a 60,000-engineer training goal. Selangor’s IC-design park, the largest in Southeast Asia, turns out hundreds of designers a year; the Penang design house whose listing I described came out of this push; and Singapore’s own state-linked capital is already backing Malaysian design start-ups.
We have more reason to complement each other than to compete. Singapore hosts what the region’s designers require: wafer fabs to prototype on, advanced packaging, capital, and customers. They hold what we require: design talent, by the hundreds, at a fraction of our cost. Neither side has a complete, owned upstream stack alone.
First, I believe MTI should foster a design-to-fab-to-packaging chain that runs through Singapore — access and equity as one instrument: structured prototyping on our fabs and packaging lines, tied to a stake for our investors, public and private.
Since we sold Chartered, we have no fabs of our own. So first, we should allow RIE funds to lease or rent Singapore-based fab lines, so we can put real silicon in front of the region’s designers.
While those fabs are still under construction, we should use supplemental investments to expand directable fab capacity — prioritising Singaporean businesses, but open to Malaysian ones as well.
This, I think, is the best way to validate the viability of a chip-design ecosystem while giving it the best chance of success — iterative prototyping feedback inside the same regional corridor — especially if one is understandably hesitant about a full-scale US$15-20 billion 2nm fab rebuild.
Second, the talent pipeline: our universities, NTU and NUS, should seek to set up an embedded institute in the Selangor cluster carrying a joint credential, with firms operating on both sides of the Zone sponsoring net-new training places whose employment options are exercisable in Johor, Selangor or Singapore. Producing new engineers for the region.
Third, I believe we should recognise in law a Malaysia-Singapore business entity, defined by a minimum stake on each side — 30-30, 40-40, 50-50 — and give it closer-to-local treatment in both countries’ grants, financing and procurement. When people from both countries own part of the same success, each has reason to grow its own capability rather than poach it. We should seek to create rails that work for a recognised category of bilateral joint-firms across the two countries, and crowd in the private sector.
Fourth, in service of crowding in, we should reactivate the Malaysia-Singapore Business Development Fund. It was set up in 2004 for exactly this, enhanced in 2023, relaunched in 2024. As far as I know, it has not been used. Give it a fresh purpose: competitive seed awards into the first recognised Malaysia-Singapore ventures — many small bets, fast answers.
6. Third — the RTS
Next, and third, on the RTS.
Integration will arrive as a train, in 2027, up to ten thousand passengers an hour each way.
Walk our heartland shops today and you can feel the dread coming. The provision shop, the TCM shop, the noodle stall, the barber, the tailor. They read the same reports we do. There is gallows humour in those shops now about the RTS and what it will do to Singapore retail — and a question: when the RTS opens, what happens to us?
DBS puts the leakage at S$1.5 to 2.1 billion a year — three to four per cent of retail sales, everyday food and personal services hit hardest. Eleven million Singaporean trips into Johor in the first seven months of last year alone.
The Government’s answer so far is to make retail more attractive at home — visual-merchandising programmes, placemaking grants, neighbourhood-centre upgrades, vouchers to spend at home. I support these initiatives. But we should be honest with ourselves: for a generation of retailers, it will make little difference.
I believe we can offer a different deal. Johor is planning the e-ART as a dispersal network out of Bukit Chagar, and I speculate that transit-oriented development will be done in the vicinity of their 32 stations. If so, I propose we invest in that plan: as part of the JS-SEZ bargain, Singapore takes an equity stake in the transit-oriented developments the line creates — Bukit Chagar and the thirty-two e-ART stations — and negotiates, in the same deal, reserved positions for our small retailers inside those developments — in the podium of these malls.
This has happened before. When Singapore and Malaysia resolved, in 2010, the twenty-year impasse over the 1990 Points of Agreement on the railway lands, it was not settled in cash but in co-ownership: Khazanah and Temasek formed a joint company, sixty-forty, and built Marina One and DUO in the city centre. I am proposing a similar instrument.
The footfall those developments capture is largely from Singapore, so the deal has logic on both sides: Johor gains a committed capital partner for a network it is building anyway; we gain a share of where our own spending lands — and a place in it for the retailers that spending leaves behind.
Thus, we can give every exposed small retailer who rents rather than owns their premises — on the order of forty thousand provision shops, eateries and personal-care operators — a tradeable entitlement: a priority claim on a reserved position in those developments, to take up or assign to another small operator; or, for those who would rather not move, a cash floor drawn now or set against rent — enough to fund a real relocation or a year of rent. It goes to the tenant, not the owner of the unit: the renter carries the lost footfall with nothing to fall back on.
Retail is a more protected part of Malaysia’s economy, so MFA and MTI would need to negotiate this within the same bargain. Malaysia has already carved foreign firms into Forest City, so it is not unprecedented.
We speak about the stakeholder economy. We can seek this compact, if it is possible, for our small retailers. This is a better deal than the fait accompli they currently await.
7. What we must decide
Speaker, in closing.
I don’t pretend any of this is inevitable or easy.
Foreign economic relations are always challenging, with reduced control and increased unpredictability.
But we are in a unique moment, with the threat and leverage of market closure from the biggest powers foremost on our minds.
And we are also reaching the limits of our growth on 750 square kilometres.
It would be a shame if the JS-SEZ and the tenor of our future cooperation with Malaysia were predominantly FDI-led, instead of being in service of tackling the true strategic challenges of the decade.
The creation of a true middle class in Southeast Asia.
An integration of our country, to be indispensable to the future economic geometries of our neighbours.
An imperative to increase the complexity and diversity of our value chains.
And the fostering of a stakeholder economy, and the search for a better bargain for our pioneering generations.
This is the model of integration I believe we should seek with the region — one that best maximises the fifteen to twenty years Southeast Asia has before it ages out of its demographic dividend.
Thank you, Sir.