Singapore (Commonwealth) _ According to international media, multinational companies are moving part of their Southeast Asian regional headquarters operations outside of Singapore in order to save money and take advantage of new prospects.
This February, the Japanese printing ink manufacturer Sakata Inx opened a regional headquarters in Malaysia. With activities starting in late 2024 or early 2025, the regional headquarters will manage business across South and Southeast Asia, including Vietnam, Thailand, India, and Indonesia. Despite not having established a regional office in Southeast Asia, Sakata Inx was already well-established in the area. According to a corporate spokesperson cited by Nikkei Asia, the new head office will facilitate customer service across Asian nations.
According to the company’s medium-term business strategy until 2026, the new headquarters will increase operational profit by an additional 1 billion to 2 billion JPY (6.6–13.1 million USD). A spokesman stated that tax benefits were the primary consideration in selecting Malaysia. One of the top contenders to designate a regional headquarters is Thailand. The nation is frequently chosen in tandem with strategies to increase output and sales.2020 saw the relocation of Nissin Foods Holdings’ Southeast Asian headquarters from Singapore to Thailand.
The Thai government is also attempting to entice international corporations with tax breaks. According to a survey conducted in March by the Japan External Trade Organization, of the Japanese firms having their regional headquarters in Singapore, 31% had partially transferred their responsibilities to another country or were considering doing so.
Compared to the 7.4% in the fiscal 2019 poll, the proportion has increased considerably. Relocating certain services, such sales or corporate planning, has been the preferred option for many Japanese corporations, as opposed to moving entire headquarters functions out of Singapore. With 19 enterprises, Thailand emerged as the most favoured location among respondents who had relocated or were contemplating relocating their functions abroad. With five, Malaysia was in second place.
Experts asserted that Singapore still has the upper hand in terms of location, linguistic ability, and financial services. The city-state doesn’t seem to be losing its position as the ideal location for regional headquarters. Previously, starting in 2019, a number of businesses run by financial firms have relocated from Hong Kong, China, to Singapore.
Investments are still coming in to Singapore, a reputable center for foreign businesses operating in ASEAN. More foreign businesses than any other in the area currently operate in Singapore, with nearly half (46%) of those questioned having done so. When it comes to expansion priorities, Singapore is also well ahead of its ASEAN counterparts: Over the next two years, 36% of companies having a presence in the City-State want to give their expansion in Singapore top priority.
The poll also included the main elements that attract foreign companies to Singapore. According to the report, Singapore is a desirable place for development because of its highly trained labor force (30%), advanced infrastructure (29%), and expanding digital economy (29%).
The nation of Singapore continues to attract international firms due in large part to its reputation for providing a stable operating and business-friendly regulatory environment. It is especially crucial for mainland Chinese businesses, as 36% of them stated that Singapore’s stability motivates them to increase their investment levels. In a similar vein, Singapore’s business-friendly regulatory framework attracts 42% of Indian enterprises.
For many enterprises, Singapore’s leadership in sustainability-related concerns is advantageous. According to one in four respondents (24%) Singapore is very appealing for company development because of its ESG, sustainability, and net-zero goals. There is also significant investment in environmental initiatives: During the next 12 months, 77% of businesses having a presence in Singapore plan to invest at least 5% of their operational earnings in becoming more sustainable, and nearly two thirds (28%) of them spend more than 10%.
Attractions in ASEAN
The survey indicates that, despite Southeast Asia’s GDP per capita increasing from USD1,250 in 2000 to USD5,800 in 2023, according to the International Monetary Fund, foreign businesses still view the region mainly in terms of supply chain connectivity rather than as a consumer market.
The top three draws in the area are the highly skilled labor force (27%) followed by the expanding digital industry (26%) and competitive pay (25%); the expanding middle class comes in ninth place. But companies see talent as an attraction as well as a challenge: the highest problems are the expense of training (36%) and the shortage of qualified staff to lead implementation (also 36%). Main obstacles for companies looking to digitize their operations in ASEAN are to drive implementation (also 36%). The biggest obstacle to the region being more sustainable is also finding individuals with the appropriate degree of experience.
When asked which technologies ASEAN is leading the way in, the majority of respondents said digital payments (28%) and e-commerce (31%) since these technologies are widely used in many countries in the region.
