RISING COSTS GIVE ADDED PUSH
While Singapore firms shifting manufacturing to Malaysia is not new, analysts say the trend is accelerating as global pressures mount.
Rising costs linked to the Middle East crisis, coupled with generous tax incentives under the JS-SEZ, are pushing more companies to rethink where they produce goods.
The blueprint and masterplan for the JS-SEZ have not been launched but some Singapore companies are already moving operations across the Causeway and enjoying incentives that have been announced.
The trend of Singapore firms moving to Malaysia is part of “Singapore companies right-sizing their geography”, said Lennon Tan, president of the Singapore Manufacturing Federation (SMF).
It was “not a vote of no-confidence in Singapore” but, rather, how F&B players are restructuring their business, he said.
“F&B players like Gardenia, Yeo’s and APBS are restructuring footprints — they are keeping HQ, brand, innovation, distribution and supply chain orchestration in Singapore,” said Tan.
In March, Yeo’s announced it would lay off 25 employees at its Senoko facility and shift manufacturing to Malaysia to “optimise capacity utilisation and strengthen overall manufacturing efficiency across its network”.
The company said Singapore would continue to serve as its headquarters, cross-border logistics hub and smaller-scale manufacturing centre.
Separately, APBS, which brews Tiger Beer, said it would cut about 130 roles as it shifts production to other regional markets such as Malaysia and Vietnam.
Its Tuas facility is expected to be redeveloped over time to focus on logistics and innovation functions.
Meanwhile, Gardenia said that Singapore will remain the company’s central hub for key functions such as brand management, product development, quality and regulatory oversight, daily distribution and supply chain operations.
Olive Tree’s Tan said Johor has become increasingly attractive because the JS-SEZ offers what he called the “most credible cross-border proposition Singapore manufacturers have ever had”.
Key incentives include a special corporate tax rate of 5 per cent for up to 15 years, sharply lower than Malaysia’s standard 24 per cent, alongside investment tax allowances of up to 100 per cent on qualifying capital expenditure for five years.