A general view of heavy traffic as vehicles are seen crossing into Singapore a day before Malaysia closes its borders on the border road between Malaysia’s southern state of Johor Bahru and Singapore on March 17, 2020 in Singapore.
Suhaimi Abdullah | Getty Images
Many companies have been shifting operations to Malaysia from Singapore in recent months, reflecting a broader trend of global mobility with companies seeking low-cost locations, tax incentives and access to large markets.
The clothing giant H&M announced in May that it would move its Southeast Asia headquarters from Singapore to Kuala Lumpur, affecting 78 positions. Meanwhile, Heineken said in March it will move production of Asia Pacific Breweries Singapore to regional breweries in Malaysia and Vietnam.
“These measures are significant and show a clear acceleration,” said Alwyn Lim, associate professor of sociology at Singapore Management University. “From the beginning of 2026 we have seen a visible wave of such companies moving jobs to Malaysia … This is more likely than 2025 due to the alignment of policy signals and cost pressures,” Lim told CNBC in an email.
Lim said the firms are “operating with huge tax, wage and labor costs.”
Companies moving some jobs from Singapore to Malaysia are part of a global trend of companies restructuring their manufacturing and supply networks, Lim noted.
“This is primarily in response to critical events such as the COVID-19 pandemic and recent trade tensions and political tensions,” he said. “Companies differentiate between low cost, security, and speed.”
Bread maker Gardenia has cut 141 jobs in Singapore as it says it will transfer its bakery production to Malaysia, according to a May 20 statement. press release. “This move is part of Gardenia’s ongoing efforts to improve efficiency and maintain competitiveness amid an increasingly challenging global environment,” he said.
Yeo’s, a local beverage company, said March will lay off 25 workers in Singapore, citing efforts to consolidate canning in Malaysia. Singapore will continue to serve as its headquarters, the statement said.
Initiatives such as the Johor-Singapore Special Economic Zone, or JS-SEZ, aim to boost business between the city-state and Malaysia. That could speed up the process because going back and forth is expected to be easier – currently traveling between the two countries can take hours at peak times.
Firms are moving some of their operations rather than leaving Singapore entirely, as many continue to keep regional headquarters, innovation centers and high-value jobs in the city region, said David Blasco, country director of Randstad Singapore. It remains “highly attractive” to research and development, strategic decision-making and senior talent, he added in an email to CNBC.
“On the contrary, Malaysia offers very low prices, attractive tax incentives, and an industrial location companies need to scale,” said Blasco.
‘Regional diversity’
Linda Teo, country manager of ManpowerGroup Singapore described the moves as “regional diversification rather than mass migration.”
“Many companies are not choosing between Singapore and Malaysia, but are increasingly using both markets in complementary ways as part of strong and sustainable business models,” Teo told CNBC via email.
H&M and Heineken reiterated that Singapore is still important. H&M will continue to have an office in the city, a CNBC spokeswoman said. “We will continue to maintain our retail presence that reflects our long-term commitment,” he said in an email.
Heineken said its move will “maintain and deepen Singapore’s role as a hub for regional commercial activity, logistics, innovation and capabilities enabled by GenAI,” in an online statement.
Meanwhile, the upcoming JS-SEZ will focus on how companies share their resources between Singapore and Malaysia.
The zone, covering 3,500 square kilometers, is expected to facilitate investment in 11 sectors including business services, digital economy and education, according to Enterprise Singapore. “As global competition for trade, investment and talent increases, the JS-SEZ marks a milestone in bilateral economic cooperation,” it said on its website.
In January 2025, the Malaysian Investment Development Authority detailed incentives such as lower tax rates of up to 5% in eligible sectors, as part of the JS-SEZ.
While the JS-SEZ does not mean that Singaporean companies are “taking the lead” in Malaysia’s growth, it may mean that more companies are moving out of Singapore to enter Malaysia’s much larger domestic market, according to Lim.
“What’s interesting to note is whether there will be a complete exit (companies will completely relocate) or ‘twins’ (where companies keep high-end jobs in Singapore and move manufacturing and core operations to Malaysia),” said Lim.
