The Malaysian state of Johor is debuting a sprawling new innovation sandbox, bolstering its plans to build a “regional champion” alongside the border with Singapore.
The 7,300-acre development—named Ibrahim Technopolis (IBTEC)—is located within the Johor-Singapore Special Economic Zone, a new strategic partnership between Singapore and Malaysia meant to create over 20,000 jobs for people on both sides of the causeway. Designed to be Asia’s largest innovation sandbox, it will concentrate high-value industries like medtech, logistics, data centers and agritech.
IBTEC, formally launched on Dec. 2, will make “production smarter, supply chains more resilient and operations more efficient,” said developer JLand Group, the real estate arm of Johor Corporation, in a press statement.
The innovation park is part of a broader plan to tap Johor’s proximity to Singapore to attract investments from high-tech industry and other advanced manufacturing.
Malaysia and Singapore formally launched the special economic zone earlier this year. Part of the agreement involves measures to make it easier to travel back and forth between Singapore and Johor, already one of the busiest land border crossings in the world.
Officials have high hopes for the SEZ. The goal is to make it a “regional champion,” and not just “an industrial park with a nicer brochure,” YB Lee Ting Han, chair of the Johor State Investment, Trade, Consumer Affairs and Human Resources Committee, said at the Fortune Innovation Forum on Nov. 17.
Johor, and Malaysia in general, offers lower costs and greater access to resources like land for foreign companies, even as these firms continue to base higher-value activities in more expensive Singapore.
“While Johor offers land and scale, Singapore offers capital and speed. So this is the opportunity that I feel we need to capitalize [on], where we can complement each other,” Datuk Syed Mohamed Syed Ibrahim, Johor Corporation’s president and CEO, told the audience at the Fortune Innovation Forum on Nov. 17.
Tapping the data center boom
Demand for data centers has skyrocketed in response to the AI boom. Southeast Asian countries are hoping to attract new data center investments from operators looking for cheap power and proximity to booming markets in the region.
New economic complexes like IBTEC have sprouted in response, designed to house and manage critical IT infrastructure providing computational power to train AI models on vast datasets.
Singapore’s small land mass and costly industrial power tariffs have pushed investors to look north; Johor’s power tariffs stand at 13.5 cents per kilowatt-hour, almost half of the 23.9 cents charged by its neighboring city-state.
StepEast, a data center hub within IBTEC, has already secured more than 30 billion Malaysian ringgit ($7.28 billion) in investments from 11 international operators, reported the Business Times, a Singaporean newspaper. This includes big tech conglomerates like Microsoft.
“We are building the infrastructure, systems and execution capacity so that investors can come in faster and grow with more certainty,” Datuk Sr. Akmal Ahmad, the group managing director of JLG and JCorp’s director of real estate and infrastructure division, said in the Dec. 2 statement.
Data center operators are paying attention. “Johor is adding data center capacity at a speed and scale I’ve not seen ever anywhere else,” Rangu Salgame, CEO of Singapore-based data center operator Princeton Digital Group, told Fortune in April.
Benefits for local businesses and SMEs
Despite being a project of massive scale, IBTEC will focus on the needs of SMEs and local Malaysian businesses, JLG added. The development will offer them shared facilities and plug-in spaces, where they can collaborate with larger industry players.
“We will measure IBTEC’s success not only by the investments it attracts, but by how it helps Malaysians and Johoreans move up the value chain—as workers, entrepreneurs and communities,” said Akmal Ahmad. “That is how we intend to prove the real impact of this ecosystem.”
“We really need to be able to connect our SMEs to global supply chains and to create brands owned within the zone,” Lee, from the Johor state government, said at the Fortune Innovation Forum.
IBTEC will also enable Malaysian start-ups to better partake in regional supply chains, open new doors for local entrepreneurs, and further the Southeast Asian nation’s goal of achieving sustainable, innovation-led development.
“IBTEC is an investment for the next generation, and a signal that Johor is ready to compete on a different frontier,” Syed Ibrahim added in JLG’s press statement.
Malaysia as a whole has attracted 285 billion Malaysian ringgit ($69 billion) in approved investment (or proposed investment projects that have received all the necessary licenses) in the first three quarters of the year, up 13% year-on-year, according to a Dec. 3 report from Nomura. The state of Johor alone is responsible for almost a third of that total, with investments into the state totaling 91 billion ringgit ($22 billion) in the first nine months of 2025.
Nomura now expects Malaysia’s economy to grow by 5.2% next year, up from an earlier forecast for 4.0%. “We expect strong investment-led growth to persist into 2026, sustained by the implementation of more reforms and infrastructure projects, and progress in the Johor-Singapore Special Economic Zone (JS-SEZ),” Nomura’s analysts wrote in their Dec. 3 report.
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