Singapore losing attractiveness as Southeast Asia base for multinationals: media

Multinational corporations are increasingly locating some Southeast Asian regional headquarters functions outside Singapore to save money and pursue expanded opportunities.

Sakata Inx, a Japanese maker of printing ink, established a regional head office in Malaysia this February. The regional headquarters will oversee business in South Asia and Southeast Asia, including India, Thailand, Vietnam, and Indonesia, with operations to begin in late 2024 or early 2025.

Sakata Inx already had a market presence in Southeast Asia but had not set up a regional headquarters there so far. The new head office will make it easier to serve customers in Asian countries, a company representative was quoted by Nikkei Asia as saying.

The new headquarters will add an extra 1 billion to 2 billion JPY ($6.6-13.1 million) to operating profit under the company's medium-term business plan through 2026. Tax advantages were the deciding factor in choosing Malaysia, a spokesperson said.

Thailand is one of the leading candidates for drawing regional headquarters. The country is often picked in conjunction with plans to expand production and sales.

Nissin Foods Holdings moved its Southeast Asian headquarters from Singapore to Thailand in 2020. The Thai government is also working to lure multinationals via tax incentives.

Among the Japanese companies with regional headquarters in Singapore, 31% had partly relocated their functions to another country or were considering doing so in a poll released this March by the Japan External Trade Organisation. The share was up significantly from 7.4% in the fiscal 2019 survey.

Instead of shifting all headquarters functions out of Singapore, many Japanese companies have favoured relocating specific functions, such as sales or corporate planning.

Thailand was the most popular destination among respondents that had moved or were considering moving functions to another country, with 19 companies. Malaysia came in second, with five.

However, experts held that Singapore still has the advantage in location, language proficiency, and financial services. It does not appear that the city-state will be dethroned as the prime spot for regional headquarters.

Earlier, a string of companies led by financial groups have moved from Hong Kong to Singapore since 2019