A number of companies are shifting their operations from Singapore to Malaysia, driven by the pursuit of lower costs, tax incentives, and larger market access. H & M's decision to move its Southeast Asian headquarters to Kuala Lumpur and Heineken's relocation of production to regional breweries in Malaysia and Vietnam are notable examples.
Alwyn Lim, an associate professor at Singapore Management University, noted that this trend has accelerated since early 2026, influenced by cost pressures and policy changes. Companies like Gardenia and Yeo's are also reducing their workforce in Singapore while consolidating operations in Malaysia, indicating a strategic shift rather than a complete exit from Singapore.
David Blasco from Randstad Singapore emphasized that Singapore remains attractive for high-value functions, while Malaysia offers lower operational costs and tax incentives. The Johor-Singapore Special Economic Zone (JS-SEZ) is expected to facilitate further investments and cooperation between the two countries, potentially enhancing the trend of companies balancing operations across both markets.
This could lead to a dual approach where firms retain strategic functions in Singapore while moving manufacturing to Malaysia, as suggested by Lim. The JS-SEZ, with its low tax rates for eligible sectors, may further encourage this shift, impacting the competitive landscape in the region