‘Moving operations to Johor makes strong commercial sense’: Analysts say Singapore manufacturers shifting to Malaysia is not new but accelerating

SINGAPORE: Some Singaporeans online have raised concerns over a growing trend of homegrown food and beverage manufacturers shifting production across the Causeway, after companies such as Yeo’s, Tiger Beer, and most recently Gardenia announced job cuts alongside moves to relocate production there to cut costs and streamline operations.

Analysts, however, said that such moves by Singapore firms are not new, but the trend is accelerating amid global pressures.

Rising costs triggered by the Middle East conflict, as well as generous tax incentives tied to the Johor-Singapore Special Economic Zone (JS-SEZ), are influencing company decisions on where they want to produce goods.

According to Singapore Manufacturing Federation (SMF) president Lennon Tan, the trend of Singapore firms shifting manufacturing to Malaysia is part of “Singapore companies right-sizing their geography” and is “not a vote of no-confidence in Singapore.”

Olive Tree Property Consultants CEO and founder Samuel Tan also told Channel News Asia (CNA) that “Moving operations to Johor makes strong commercial sense given the changing economics of manufacturing in Southeast Asia”, as companies no longer need to produce goods in the same place where they sell them.

Citing Gardenia’s perishable bread as an example, he said that having the production side in Johor allows the company to produce at a lower cost while still delivering fresh products into Singapore every day.

Experts, however, warned that the influx of companies across the Causeway could intensify competition for labour, industrial land, and other limited resources there.

At the same time, shifting too much production there would risk “weakening” the “Made in Singapore” identity over time, People’s Action Party’s Government Parliamentary Committee for Finance, and Trade and Industry Saktiandi Supaat told CNA. /TISG

Read also: ‘No Singaporeans buying local’ netizen says after Yeo’s cuts 25 jobs, moves can production to Malaysia