Image: Skyline of Johor Bahru, Malaysia, and causeway connecting to Singapore/Canva
Commenting on companies shifting their operations from Singapore to Malaysia, SMU Associate Professor of Sociology Alwyn Lim said these moves are significant and mark a clear acceleration due to the alignment of policy signals and cost pressures. Assoc Prof Lim said the firms were "acting on substantial cost arbitrage on rents, wages, and operations." He noted that companies moving some operations from Singapore to Malaysia are part of a larger global trend of firms reorienting their manufacturing and supply chain networks. Assoc Prof Lim mentioned that this is primarily a response to crisis events such as the COVID-19 pandemic as well as the recent trade and geopolitical tensions, adding that corporations are splitting things up for lower costs, safely, and speed.
While the Johor-Singapore Special Economic Zone (JS-SEZ) could mean companies in Singapore "capture upsides" from Malaysia's growth, Assoc Prof Lim said it mean more companies exit from Singapore to tap into Malaysia's significantly larger domestic market. He added that what is interesting to observe is whether there'll be complete exits (companies relocating completely) or 'twinning' (where companies retain higher-level functions in Singapore and relocate manufacturing and more basic operations to Malaysia).
Read all about it here.