SINGAPORE: Companies moving parts of their operations out of Singapore, especially within the region, is part of a longer-running trend and not a sign that firms are abandoning the country altogether, said experts.
This shift – driven by cost pressures, labour availability and regional integration – reflects how businesses are reorganising in response to rising costs in Singapore and opportunities elsewhere in Southeast Asia, they told CNA’s Deep Dive podcast.
Over the past month, two prominent homegrown brands have announced plans to move some operations abroad.
Asia Pacific Breweries Singapore, which produces Tiger Beer and is owned by Heineken, said it will wind down brewing operations in the country over the next few years, with about 130 jobs expected to be cut by 2027.
Meanwhile, Yeo Hiap Seng (Yeo’s) said it will lay off 25 workers due to a “consolidation of can manufacturing to Malaysia”.
These moves are mainly down to cost savings and a growing push for regional integration within the Association of Southeast Asian Nations (ASEAN), said Professor Sumit Agarwal of NUS Business School.
“Just look at the strength of the Singapore dollar versus the Malaysian ringgit. That causes lots of things to be much cheaper (across the border)”, noted Prof Agarwal, a Low Tuck Kwong Distinguished Professor of Finance who teaches economics and real estate.
He added that countries such as Malaysia and Vietnam are attractive because they offer cheaper labour, educated workers and English-speaking talent.
“That is allowing companies to think broadly. But they are not moving wholesale,” he said.
“They’re realising: ‘What should we move? Low-cost things, things that are labour-intensive and space-intensive.’”
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Prof Agarwal said that means activities such as brewing, large-scale manufacturing or back-office operations are more likely to move out first. Brewing beer, in particular, requires a lot of space, which is expensive in Singapore, he noted.
Both Prof Agarwal and Ms Karen Teo, country manager for recruitment firm Quess Singapore, stressed that Yeo’s and Heineken are not fully exiting the country.
Yeo’s said its Senoko facility will continue to serve as its headquarters, cross-border logistics hub and smaller-scale manufacturing centre. Heineken’s Tuas site will be redeveloped to support regional logistics and innovation, including a pilot brewery.
Ms Teo said the pattern of moving some functions out of Singapore has already been taking shape for years – particularly in banking and financial services, where shared service centres in Malaysia now handle many support functions.
“Offshoring is not today's business. It has been there for a decade,” she noted.
“The support functions, the know-your-client roles, customer care roles, HR operations, finance operations, marketing operations roles, typically will be moved to Malaysia. But we do see a trend that the higher value jobs (will) still (be retained) in Singapore.”
These include leadership roles, project management positions and specialist jobs, Ms Teo said.
This is because Singapore still offers value many companies want, including reliability, efficiency, strong regulation and governance, she added.
Prof Agarwal concurred, saying Singapore offers credibility to clients, as well as rule of law and an environment that is hard to replicate elsewhere.
For those reasons, some functions are much less likely to move out of Singapore, especially in the areas of research and development, high-end pharmaceuticals and chip manufacturing, he said.
Even with higher wages and living costs, Singapore still has the talent pool and ecosystem needed to support those sectors, he added.
As for middle management roles, Ms Teo said companies in Singapore are still hiring for them, but a trend has emerged where they are “a little bit more cost-sensitive”.
She pointed to the large number of Malaysians who commute daily to Singapore for work, saying this labour pool can support companies looking to spread functions across the border.
The rise of artificial intelligence is adding another layer of pressure.
Prof Agarwal warned that while workers may lose some jobs to neighbouring nations in the near term, many routine roles may eventually be displaced by AI anyway.
“When we lose these jobs … we can then see how we can create higher value jobs in Singapore,” he added.
Ms Teo described this as “job evolution”, noting that in the past, roles such as typists and data-entry operators were common, but many of them have disappeared as technology advanced and business needs changed.
“The more important question is: How can people working in Singapore be able to upgrade (themselves) to match up to this?” she added.
That challenge becomes harder when workers are not aiming for management or specialist roles, but simply want stable employment.
Prof Agarwal said the answer lies partly in recognising that Singapore cannot move certain kinds of work overseas, especially jobs tied to domestic consumption and services. At the same time, he noted, the economy needs to keep moving up the value chain.
Still, the shift across the border could make practical sense as the “cost and friction” that once discouraged such moves are easing, he added.
The high cost of buying or renting a home in Singapore is one factor pushing people and companies to consider alternatives, Prof Agarwal noted.
Transport connectivity between Singapore and Johor Bahru has improved and is likely to get easier with future rail links, including the Johor Bahru-Singapore Rapid Transit System that is set to launch in January next year.
Ms Teo said that with the upcoming Johor-Singapore Special Economic Zone, businesses now have a clearer path to expand into the region.
“Malaysia is a very good springboard through the ASEAN region now,” she noted.
“It actually makes more sense for companies to move out. That also means these companies are going to expand to the region and potentially make more money, and that’s good profitability for them.
“I don’t see that as a negative. I would rather see that as a more positive way of growing businesses,” she added.
But Ms Teo also stressed Singapore must continue to protect its strengths by focusing on high-value roles and helping workers stay relevant through more emphasis on reskilling and upskilling, both for younger employees and seasoned workers.
Employers are also increasingly looking at skills-based hiring, rather than focusing only on experience or seniority, she added.
A worker in administrative or data-entry roles, for example, may be able to move into other functions if they have strong communication skills or enjoy dealing with people, she said.
Both Prof Agarwal and Ms Teo highlighted soft skills – including communication, leadership, relationship-building and cross-border collaboration – as increasingly important.
In a region where Singapore is deepening ties with neighbouring economies, the ability to work across cultures is becoming more valuable, they said.
The Johor-Singapore Causeway. (File photo: CNA/Hanidah Amin)
Prof Agarwal gave the example of understanding local customs and language when dealing with counterparts in Indonesia, such as wearing batik clothing when meeting officials on Fridays.
“You really need to know your stuff, get reskilled … Getting these soft skills will help give you that edge,” he added.
The broader message is that the movement of some jobs and operations out of Singapore should not be viewed as a permanent loss, said the experts.
Instead, it may be part of a regional restructuring that allows Singapore to concentrate on the sectors where it has the strongest advantage.
“This is not a new phenomenon. We have all seen over the decades (that) things evolve, and both labour and capital are mobile,” Prof Agarwal said.
“Right now, we are seeing that this is a strategic partnership between Singapore and Johor Bahru where we are creating labour and capital mobility from both sides.”
Ms Teo said Singaporeans may increasingly work across the region as well, just as foreign workers and companies move in and out of the country.
The future may be less about whether jobs are physically in Singapore or across the border, and more about how Singaporeans and businesses adapt to a more connected regional economy, she added.
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This shift – driven by cost pressures, labour availability and regional integration – reflects how businesses are reorganising in response to rising costs in Singapore and opportunities elsewhere in Southeast Asia, they told CNA’s Deep Dive podcast.
Over the past month, two prominent homegrown brands have announced plans to move some operations abroad.
Asia Pacific Breweries Singapore, which produces Tiger Beer and is owned by Heineken, said it will wind down brewing operations in the country over the next few years, with about 130 jobs expected to be cut by 2027.
Meanwhile, Yeo Hiap Seng (Yeo’s) said it will lay off 25 workers due to a “consolidation of can manufacturing to Malaysia”.
NOT FULL EXITS
These moves are mainly down to cost savings and a growing push for regional integration within the Association of Southeast Asian Nations (ASEAN), said Professor Sumit Agarwal of NUS Business School.
“Just look at the strength of the Singapore dollar versus the Malaysian ringgit. That causes lots of things to be much cheaper (across the border)”, noted Prof Agarwal, a Low Tuck Kwong Distinguished Professor of Finance who teaches economics and real estate.
He added that countries such as Malaysia and Vietnam are attractive because they offer cheaper labour, educated workers and English-speaking talent.
“That is allowing companies to think broadly. But they are not moving wholesale,” he said.
“They’re realising: ‘What should we move? Low-cost things, things that are labour-intensive and space-intensive.’”
CNA Games
Show More Show Less
Prof Agarwal said that means activities such as brewing, large-scale manufacturing or back-office operations are more likely to move out first. Brewing beer, in particular, requires a lot of space, which is expensive in Singapore, he noted.
Both Prof Agarwal and Ms Karen Teo, country manager for recruitment firm Quess Singapore, stressed that Yeo’s and Heineken are not fully exiting the country.
Yeo’s said its Senoko facility will continue to serve as its headquarters, cross-border logistics hub and smaller-scale manufacturing centre. Heineken’s Tuas site will be redeveloped to support regional logistics and innovation, including a pilot brewery.
Related:
SINGAPORE OFFERS CREDIBILITY, EFFICIENCY
Ms Teo said the pattern of moving some functions out of Singapore has already been taking shape for years – particularly in banking and financial services, where shared service centres in Malaysia now handle many support functions.
“Offshoring is not today's business. It has been there for a decade,” she noted.
“The support functions, the know-your-client roles, customer care roles, HR operations, finance operations, marketing operations roles, typically will be moved to Malaysia. But we do see a trend that the higher value jobs (will) still (be retained) in Singapore.”
These include leadership roles, project management positions and specialist jobs, Ms Teo said.
This is because Singapore still offers value many companies want, including reliability, efficiency, strong regulation and governance, she added.
Prof Agarwal concurred, saying Singapore offers credibility to clients, as well as rule of law and an environment that is hard to replicate elsewhere.
For those reasons, some functions are much less likely to move out of Singapore, especially in the areas of research and development, high-end pharmaceuticals and chip manufacturing, he said.
Even with higher wages and living costs, Singapore still has the talent pool and ecosystem needed to support those sectors, he added.
As for middle management roles, Ms Teo said companies in Singapore are still hiring for them, but a trend has emerged where they are “a little bit more cost-sensitive”.
She pointed to the large number of Malaysians who commute daily to Singapore for work, saying this labour pool can support companies looking to spread functions across the border.
JOB EVOLUTION
The rise of artificial intelligence is adding another layer of pressure.
Prof Agarwal warned that while workers may lose some jobs to neighbouring nations in the near term, many routine roles may eventually be displaced by AI anyway.
“When we lose these jobs … we can then see how we can create higher value jobs in Singapore,” he added.
Ms Teo described this as “job evolution”, noting that in the past, roles such as typists and data-entry operators were common, but many of them have disappeared as technology advanced and business needs changed.
“The more important question is: How can people working in Singapore be able to upgrade (themselves) to match up to this?” she added.
That challenge becomes harder when workers are not aiming for management or specialist roles, but simply want stable employment.
Related:
Prof Agarwal said the answer lies partly in recognising that Singapore cannot move certain kinds of work overseas, especially jobs tied to domestic consumption and services. At the same time, he noted, the economy needs to keep moving up the value chain.
Still, the shift across the border could make practical sense as the “cost and friction” that once discouraged such moves are easing, he added.
The high cost of buying or renting a home in Singapore is one factor pushing people and companies to consider alternatives, Prof Agarwal noted.
Transport connectivity between Singapore and Johor Bahru has improved and is likely to get easier with future rail links, including the Johor Bahru-Singapore Rapid Transit System that is set to launch in January next year.
Ms Teo said that with the upcoming Johor-Singapore Special Economic Zone, businesses now have a clearer path to expand into the region.
“Malaysia is a very good springboard through the ASEAN region now,” she noted.
“It actually makes more sense for companies to move out. That also means these companies are going to expand to the region and potentially make more money, and that’s good profitability for them.
“I don’t see that as a negative. I would rather see that as a more positive way of growing businesses,” she added.
Related:
SKILLS-BASED HIRING
But Ms Teo also stressed Singapore must continue to protect its strengths by focusing on high-value roles and helping workers stay relevant through more emphasis on reskilling and upskilling, both for younger employees and seasoned workers.
Employers are also increasingly looking at skills-based hiring, rather than focusing only on experience or seniority, she added.
A worker in administrative or data-entry roles, for example, may be able to move into other functions if they have strong communication skills or enjoy dealing with people, she said.
Both Prof Agarwal and Ms Teo highlighted soft skills – including communication, leadership, relationship-building and cross-border collaboration – as increasingly important.
In a region where Singapore is deepening ties with neighbouring economies, the ability to work across cultures is becoming more valuable, they said.
The Johor-Singapore Causeway. (File photo: CNA/Hanidah Amin)
Prof Agarwal gave the example of understanding local customs and language when dealing with counterparts in Indonesia, such as wearing batik clothing when meeting officials on Fridays.
“You really need to know your stuff, get reskilled … Getting these soft skills will help give you that edge,” he added.
REGIONAL RESTRUCTURING
The broader message is that the movement of some jobs and operations out of Singapore should not be viewed as a permanent loss, said the experts.
Instead, it may be part of a regional restructuring that allows Singapore to concentrate on the sectors where it has the strongest advantage.
“This is not a new phenomenon. We have all seen over the decades (that) things evolve, and both labour and capital are mobile,” Prof Agarwal said.
“Right now, we are seeing that this is a strategic partnership between Singapore and Johor Bahru where we are creating labour and capital mobility from both sides.”
Ms Teo said Singaporeans may increasingly work across the region as well, just as foreign workers and companies move in and out of the country.
The future may be less about whether jobs are physically in Singapore or across the border, and more about how Singaporeans and businesses adapt to a more connected regional economy, she added.
Continue reading...