The economy of Johor Bahru is a fast-growing, diversified powerhouse driven by its strategic location adjacent to Singapore and significant government-backed development initiatives. The state is a major contributor to Malaysia's national GDP, with its economy anchored by strong manufacturing and service sectors. 

Key economic drivers

• Singapore's proximity: Johor Bahru's closeness to Singapore is one of its most important economic advantages. Businesses can leverage Singapore's high-tech and financial industries while benefiting from Johor's lower costs and larger land area to scale production.
• Manufacturing hub: Johor is home to key industrial zones, including the Pasir Gudang and Tanjung Langsat Industrial Parks. These areas support high-value manufacturing in electronics, food processing, chemicals, and logistics.
• Logistics and trade: The state's key port, the Port of Tanjung Pelepas (PTP), is among the busiest in the world. As a major transshipment hub, it solidifies Johor's role as a gateway for regional trade and industry.
• Digital economy and data centers: Johor is rapidly emerging as a regional data center hub, fueled by investments in cloud services. This growth is partly due to spillover effects from Singapore, where high costs and land scarcity have prompted firms to seek alternatives.
• Tourism and services: As the main commercial center for Johor, Johor Bahru has a bustling services sector supported by a significant influx of tourists from the region. The city has developed as a center for hospitality, urban tourism, and retail.
• Agricultural sector: While manufacturing and services dominate, agriculture remains a key sector for the state, playing a significant role in the national food supply. 

Major development projects
The government has launched several high-impact projects that are poised to accelerate Johor Bahru's economic growth:

• Johor-Singapore Special Economic Zone (JS-SEZ): This joint initiative with Singapore aims to boost bilateral trade and investment by creating a more integrated, cost-efficient ecosystem. Incentives include special tax rates and smoother cross-border clearance, especially for companies establishing "twin" facilities in both locations.
• Forest City Special Financial Zone (SFZ): Designated in 2023, this zone offers incentives like flat income tax rates for skilled foreign workers and multiple-entry visas to attract foreign investment. It is intended to catalyze economic activity within the Iskandar Malaysia region.
• Iskandar Malaysia: Established in 2006, this is Malaysia's largest special economic zone by investment value. Anchored by Johor Bahru, it has been a major success in attracting investments in various sectors and continues to be a focal point for development.
• Rapid Transit System (RTS) Link: This project, connecting Johor Bahru and Singapore, is expected to enhance connectivity and provide more predictable cross-border transit times. 

Economic outlook and challenges
Johor Bahru's economic trajectory is strong, with projections pointing toward continued high growth. The JS-SEZ alone is expected to provide a significant boost to the economy by 2030. However, growth brings challenges, such as the need to balance investment with local welfare and address issues like infrastructure and housing affordability. Addressing these issues will be key to ensuring inclusive and sustainable development for the state.