Strategy & Practice Management
Multinational Corporations Re-evaluate Singapore as Southeast Asian Hub
Singapore is becoming less attractive as the primary Southeast Asian base for multinational companies, which are now exploring alternatives for their regional headquarters to cut costs and explore new growth avenues.
While Singapore continues to be a preferred location for Japanese firms establishing their Southeast Asian headquarters, Sakata Inx, a Japanese printing ink manufacturer, chose Malaysia for its new regional office this February. This office is set to manage operations across South Asia and Southeast Asia, including countries like India, Thailand, Vietnam, and Indonesia, with an expected operational start between late 2024 and early 2025. Sakata Inx highlighted that this move would facilitate better service to customers across Asia and was influenced by significant tax benefits offered by Malaysia, contributing to an anticipated increase in operating profits, according to a report by Nikkei Asia.
Malaysia and Thailand are emerging as attractive options due to their favorable tax incentives aimed at attracting regional headquarters. Malaysia's latest budget proposes substantial tax reductions for businesses establishing regional hubs in the country, while Thailand, with its strategic plans for expanding production and sales, has successfully attracted companies like Nissin Foods Holdings, which relocated its headquarters from Singapore to Thailand in 2020.
A survey by the Japan External Trade Organization (JETRO) revealed a growing trend among Japanese companies to relocate specific functions, such as sales or corporate planning, out of Singapore to countries like Thailand and Malaysia, driven by the region's concentration of production sites and the appeal of reallocating functions amidst rising costs in Singapore.
This trend isn't confined to Japanese enterprises; a survey by the European Chamber of Commerce in Singapore showed a significant number of European companies are also considering relocating personnel due to increasing operational costs. Despite these shifts, Singapore's strategic advantages in location, language proficiency, and financial services maintain its status as a key regional headquarters hub, with only certain functions like sales being relocated for now. The move from Hong Kong to Singapore by various companies since the 2019 protests underscores Singapore’s continued relevance as a regional headquarters despite the emerging trend of functional relocation.
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