10-4-2024 (SINGAPORE) Multinational corporations are increasingly diversifying their Southeast Asian regional headquarters functions beyond Singapore, driven by cost-saving strategies and expanded business opportunities.
While Singapore remains a prominent hub for Southeast Asian headquarters, some companies are opting for alternative locations. Sakata Inx, a printing ink manufacturer, recently established a regional head office in Malaysia in February, signaling a shift in the corporate landscape.
The new Malaysian headquarters will oversee operations in South Asia and Southeast Asia, including key markets such as India, Thailand, Vietnam, and Indonesia. Scheduled to commence operations in late 2024 or early 2025, the move aims to enhance customer service and streamline business operations across Asian countries.
The decision to set up the regional headquarters in Malaysia was influenced by tax advantages offered by the country’s fiscal policies. Malaysia’s proposed fiscal 2024 budget introduced tax incentives, including preferential income tax rates ranging from 5% to 10% for up to ten years, enticing multinational corporations to establish regional headquarters there.
Thailand is also emerging as a top choice for multinational corporations relocating regional headquarters, often in conjunction with plans to expand production and sales activities. Nissin Foods Holdings, for instance, relocated its Southeast Asian headquarters from Singapore to Thailand in 2020, attracted by the country’s favorable tax incentives and strategic business environment.
A recent survey by the Japan External Trade Organization (JETRO) revealed that 31% of Japanese companies with regional headquarters in Singapore had either partly relocated their functions or were considering doing so. The trend reflects a strategic shift towards decentralizing headquarters functions to optimize operational costs.
While Singapore maintains its edge in location advantages, language proficiency, and financial services, rising operational costs have prompted concerns among multinational corporations. A survey by the European Chamber of Commerce in Singapore highlighted that 69% of respondents expressed willingness to relocate personnel due to increasing operational expenses.
Despite these challenges, Singapore’s status as a prime location for regional headquarters remains unchallenged. The city-state continues to attract a significant influx of companies, particularly from Hong Kong, seeking stability and business-friendly environments. However, the evolving corporate landscape suggests a gradual diversification of headquarters functions, with partial relocations to neighboring countries like Malaysia and Thailand expected to accelerate in the foreseeable future.
