Recent moves by companies such as Gardenia and H&M to shift some operations from Singapore across the Causeway have put the spotlight on Malaysia’s growing appeal as a more affordable base for businesses facing high costs and a tight labour market in the city state.But while the trend may look like an easy win for its neighbour – bringing investment, jobs and spillover opportunities – analysts say the gains could come with trade-offs, as an influx of firms drives up competition for skilled workers and risks leaving lower-skilled staff further behind.The shift also points to a wider regional recalibration, with other Southeast Asian economies such as Vietnam and Thailand positioning themselves as alternatives for companies moving lower-cost or labour-intensive functions out of Singapore.On May 20, food manufacturing company Gardenia announced it was shifting its bakery production from Singapore to Johor Bahru, resulting in 141 employees being laid off.The company said the move was part of an ongoing effort to improve operational efficiency and remain competitive amid an increasingly challenging global environment.Earlier this month, Malaysian media reported that fast fashion retailer H&M would relocate its Southeast Asian headquarters from Singapore to Kuala Lumpur, affecting close to 80 roles in the city state’s office.
Rising costs in Singapore spur business migration as regional alternatives rise
Analysts say the economic gains could come with trade-offs, such as increasing income inequality between skilled and unskilled workers.
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