A general view of bumper-to-bumper traffic at the border between Malaysia’s southern state of Johor Bahru and Singapore in Singapore on March 17, 2020, as vehicles are seen entering Singapore, a day before Malaysia closed its borders.
Suhaimi Abdullah getty images
A raft of companies have been relocating operations from Singapore to Malaysia in recent months, reflecting a broader trend of global mobility in which companies are seeking jurisdictions with lower costs, tax incentives and access to larger markets.
apparel giant H&M It was announced in May that it would be relocating its Southeast Asian headquarters Singapore to Kuala Lumpur78 posts affected. during this time Heineken said In March it said it would transfer the bulk of production for its Asia Pacific breweries Singapore to regional breweries in Malaysia and Vietnam.
“These moves are significant and signal a clear upward trend,” said Alvin Lim, associate professor of sociology at Singapore Management University. “From early 2026 onwards we have seen a clear wave of companies that are operating in Malaysia… This is more pronounced than in 2025 due to the alignment of policy signals and cost pressures,” Lim told CNBC by email.
Lim said the companies were “working on substantial cost arbitrage on rent, salaries and operations.”
Lim said companies moving some operations from Singapore to Malaysia are part of a larger global trend of companies realigning their manufacturing and supply chain networks.
“This is primarily a response to crisis events such as the COVID-19 pandemic as well as recent trade and geopolitical tensions,” he said. “Corporations are splitting things up for lower costs, security and speed.”
bread maker Gardenia cuts 141 jobs As of 20 May, Singapore said it would move its bakery production to Malaysia. media release. “This move is part of Gardenia’s ongoing efforts to enhance operational efficiency and maintain competitiveness amid an increasingly challenging global environment,” it said.
Yeo’s, a local beverage company, said in march It will lay off 25 employees in Singapore, citing efforts to strengthen cans manufacturing in Malaysia. It added that Singapore would continue to serve as its headquarters. statement.
efforts like Johor-Singapore Special Economic Zoneor JS-SEZ, aims to strengthen trade between the city-state and Malaysia. This could further accelerate this trend as it is expected to become easier to go back and forth – transit between the two countries currently may take hours During rush hour.
David Blasko, country director of Randstad Singapore, said companies are relocating some of their operations rather than leaving Singapore entirely, as many companies continue to maintain regional headquarters, innovation centers and high-value functions in the city-state. It remains “highly attractive” for research and development, strategic decision-making and senior talent, he said in an email to CNBC.
“In contrast, Malaysia offers significantly lower overheads, attractive tax incentives and the land space companies need to scale up,” Blasko said.
‘regional diversification’
Linda Teo, country manager of ManpowerGroup Singapore, described the move as “regional diversification rather than mass relocation”.
“Most companies are not choosing between Singapore and Malaysia, but are using both markets in complementary ways as part of a more flexible and sustainable operating model,” Teo told CNBC via email.
H&M and Heineken reiterated that Singapore remains important. A spokesperson told CNBC that H&M’s office will remain in the city-state. “We will continue to maintain our retail presence, reflecting our long-term commitment,” he said by email.
Heineken said An online statement said its move would “maintain and deepen Singapore’s role as a base for regional commercial operations, logistics, innovation and GenAI-enabled capabilities.”
Meanwhile, the upcoming JS-SEZ will focus on how companies allocate their resources between Singapore and Malaysia.
Spread across 3,500 square kilometres, the zone is expected to facilitate investment in 11 sectors, including business services, digital economy and education, according to Enterprise Singapore. “As global competition for trade, investment and talent intensifies, the JS-SEZ is an important milestone in bilateral economic cooperation,” it said on its website.
In January 2025, Malaysian Investment Development Authority Detailed incentives such as lower 5% tax rates for eligible areas as part of JS-SEZs.
According to Lim, although the JS-SEZ means Singapore companies can “take advantage” of Malaysia’s growth, it could also mean more companies moving out of Singapore to enter Malaysia’s larger domestic market.
“It is interesting to see whether there will be complete exits (companies relocating entirely) or ‘twinning’ (where companies retain high-end operations in Singapore and move manufacturing and more basic operations to Malaysia),” Lim said.
