SINGAPORE: Thailand and Malaysia may be giving Singapore a run for its money when it comes to multinational companies’ Southeast Asia bases, based on an April 10 (Wednesday) report in Nikkei Asia.

Due to lower operational costs and more tax incentives, other nearby countries are becoming more attractive.

Singapore has ranked high on lists of countries for ease of doing business, and due to its status as a financial hub, it remains highly attractive to global firms.

Financial Times ranking earlier this month listed Singapore as having the most high-growth firms in the Asia-Pacific region, 93, in comparison to rival cities Tokyo and Seoul, even though on a countrywide basis, Japan and South Korea have more such firms.

While the Nikkei Asia piece acknowledges that Singapore is still the go-to for Japanese companies, some Japanese firms are looking to other Southeast Asian venues to set up their regional headquarters or at least move some of their functions.

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Malaysia’s “tax advantages” were cited in the article as one particular reason that made it more attractive for the Japanese country to choose it over Singapore.

For the same reason, Thailand has also caught the eye of other global companies. Four years ago, Nissin Foods Holdings moved its Southeast Asian headquarters from Singapore to Thailand.

Nikkei Asia pointed out that in a survey published last month by the Japan External Trade Organization of Japanese firms with headquarters in Singapore, almost a third, or 31 per cent, “had partly relocated their functions to another country or were considering doing so.” In 2019, in comparison, there was only 7.4 per cent.

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

When asked for their choice of countries, 19 chose Thailand, and five chose Malaysia.

The piece added that firms from Japan are not the only ones looking to other countries in Southeast Asia for their regional offices.

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Last year, a European Chamber of Commerce in Singapore survey showed that over two-thirds, or 69 per cent, said that because of increasing operational costs, “they would be willing to move some personnel out.”

The piece, however, ends by saying that for now, it “does not appear that (Singapore) will be dethroned as the prime spot for regional headquarters” and that “the exodus will likely be limited to sales and similar functions for the time being.” /TISG

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