A general view of the congestion of vehicles entering Singapore on the causeway that borders Malaysia’s southern state of Johor Bahru and Singapore before Malaysia closes its borders, in Singapore, March 17, 2020.
Suhaimi Abdullah | Getty Images
In recent months, many companies have relocated their operations from Singapore to Malaysia, illustrating a broader trend of global liquidity as companies seek jurisdictions with lower costs, tax benefits and greater market access.
Major apparel company H&M announced in May that it would move its Southeast Asia headquarters from Singapore to Kuala Lumpur, impacting 78 positions. Meanwhile, Heineken announced in March that it would transfer large-scale production from its Asia-Pacific Brewery Singapore to regional breweries in Malaysia and Vietnam.
“These moves are significant and represent a clear acceleration,” said Alwyn Lim, associate professor of sociology at the Singapore Management University. “Since early 2026, we have seen a visible wave of these companies relocating their operations to Malaysia…This is more pronounced than in 2025 due to the alignment of policy signals and cost pressures,” Lim told CNBC via email.
Mr Lim said the companies were “acting on the basis of significant cost arbitrage in terms of rent, wages and operations”.
Mr Lim noted that companies relocating some operations from Singapore to Malaysia is part of a larger global trend where companies are rethinking the direction of their manufacturing and supply chain networks.
“This is primarily a response to crisis events such as the COVID-19 pandemic and recent trade and geopolitical tensions,” he said. “Companies are dividing their operations in search of cost savings, safety, and speed.”
Bread maker Gardenia announced it would move its bakery production to Malaysia and cut 141 jobs in Singapore, according to a May 20 media release. “This move is part of Gardenia’s continued efforts to increase operational efficiency and remain competitive in an increasingly challenging global environment,” the company said.
Local beverage company Yoh’s announced in March that it would lay off 25 employees in Singapore due to efforts to consolidate can production in Malaysia. Singapore will continue to serve as its headquarters, the company said in a statement.
Initiatives such as the Johor-Singapore Special Economic Zone (JS-SEZ) aim to enhance business between the city-state and Malaysia. This trend is likely to accelerate as travel is expected to become easier. Currently, connections between the two countries can take hours during busy times.
Randstad Singapore country director David Blasko said many companies are relocating parts of their operations rather than leaving Singapore completely as they continue to maintain regional headquarters, innovation centers and high-value functions in Singapore. He added in an email to CNBC that it remains “very attractive” for research and development, strategic decision-making and senior talent.
“In contrast, Malaysia has much lower overhead costs and attractive tax incentives, giving industrial land space companies the need to scale up,” Blasko said.
“Regional diversification”
ManpowerGroup Singapore country manager Linda Teo described the move as “regional diversification rather than mass relocation.”
“While most companies are not choosing between Singapore and Malaysia, they are increasingly using both markets in a complementary manner as part of a more resilient and sustainable operating model,” Teo told CNBC via email.
H&M and Heineken reiterated Singapore’s continued importance. A spokesperson told CNBC that H&M will continue to maintain an office in the city. “We will continue to maintain our retail presence, reflecting our long-term commitment,” she said in an email.
Heineken said in an online statement that the move “maintains and deepens Singapore’s role as a hub for regional commercial activity, logistics, innovation and GenAI-enabled capabilities.”
Meanwhile, the upcoming JS-SEZ will focus on how companies allocate resources between Singapore and Malaysia.
According to Enterprise Singapore, the zone will cover an area of more than 3,500 square kilometers and is expected to foster investment across 11 sectors including business services, digital economy and education. “JS-SEZ marks an important milestone in bilateral economic cooperation as global competition for trade, investment and talent intensifies,” it said on its website.
In January 2025, the Malaysian Investment Development Board detailed incentives such as a minimum tax rate of 5% for targeted sectors as part of the JS-SEZ.
Mr Lim said the JS-SEZ could mean Singapore companies “benefiting” from Malaysia’s growth, but it could also mean more companies exiting Singapore and entering Malaysia’s much larger domestic market.
“What will be interesting to watch is whether there will be a complete exit (where a company relocates completely) or ‘partnership’ (where a company will retain high-level functions in Singapore and move manufacturing or more basic operations to Malaysia),” Mr Lim said.
