Is Singapore Losing Its Appeal?

[raptor_from_vietnam]

Hi everyone,

Recently, there are more and more cases of MNCs retrenching their staff in Singapore and move those functions to lower cost countries in the region. I noticed this trend from both the media and from my conversations with people in different industries. I understand that as Singapore has become more expensive, and other countries catching up in terms of their workforce's quality, this happens. Do you think this may spell the end for Singapore's appeal to foreign MNCs?

[NYY1]

No place or person is immune from competition or change. That being said, there is probably a difference between moving some pieces around to lower costs (this has been going on forever) and where the regional HQs will be located (in the near to intermediate term).

Harsh reality, one is either incredibly valuable to a company or he/she is a cost...

[jalanjalan]

Which sector do you mean, and which target markets? Some will move, some won't, some new ones will come. Depends what drew them to SG in the first place and what their growth plans are. Cheap labour model has long since vanished, so those MNCs here must be drawn by other factors. Maybe business friendly environment, favourable taxes, legal and regulatory factors, banking, infrastructure and connectivity, maybe all of the above, or other things?

[malcontent]

Multinational companies (my present employer included) include Singapore as part of their global tax strategy. To do this, they must keep a certain number of employees, including key decision makers, in Singapore - - otherwise tax authorities may determine that your company presence is insubstantial and disqualify the revenue recognized here (with major tax implications).

[Lisafuller]

Hi everyone,

Recently, there are more and more cases of MNCs retrenching their staff in Singapore and move those functions to lower cost countries in the region. I noticed this trend from both the media and from my conversations with people in different industries. I understand that as Singapore has become more expensive, and other countries catching up in terms of their workforce's quality, this happens. Do you think this may spell the end for Singapore's appeal to foreign MNCs?

Too early to tell, really. We're only just coming out of a pandemic, changes are inevitable as things restabilize.

[Lisafuller]

No place or person is immune from competition or change. That being said, there is probably a difference between moving some pieces around to lower costs (this has been going on forever) and where the regional HQs will be located (in the near to intermediate term).

Harsh reality, one is either incredibly valuable to a company or he/she is a cost...

One thing I have noticed is many companies downsizing drastically to cut costs. Many MNCs letting whole teams go.

[Lisafuller]

Which sector do you mean, and which target markets? Some will move, some won't, some new ones will come. Depends what drew them to SG in the first place and what their growth plans are. Cheap labour model has long since vanished, so those MNCs here must be drawn by other factors. Maybe business friendly environment, favourable taxes, legal and regulatory factors, banking, infrastructure and connectivity, maybe all of the above, or other things?

I believe tax and the "glitz" of SG are the strongest pulls. Sure, the workforce is strong and highly skilled, but if companies want to hire from all over, they have to have offices in places where their employees want to be. SG is one of those places.

[Lisafuller]

Multinational companies (my present employer included) include Singapore as part of their global tax strategy. To do this, they must keep a certain number of employees, including key decision makers, in Singapore - - otherwise tax authorities may determine that your company presence is insubstantial and disqualify the revenue recognized here (with major tax implications).

With that in mind it seems like most have to take an all or nothing approach. Either stay or don't.

[malcontent]

Multinational companies (my present employer included) include Singapore as part of their global tax strategy. To do this, they must keep a certain number of employees, including key decision makers, in Singapore - - otherwise tax authorities may determine that your company presence is insubstantial and disqualify the revenue recognized here (with major tax implications).

With that in mind it seems like most have to take an all or nothing approach. Either stay or don't.

We moved a lot of our clerical accounting and IT functions to India about 15 years ago. However, that hasn’t resulted in fewer employees here, just the job function being performed here has evolved to become more value added now — and since we are growing, we have only seen our headcount increase.

[Strong Eagle]

So long as the thugocracy that is China continues to clamp down on Hong Kong, you'll continue to see a migration of the executive level of companies into Singapore. No company wants to see their executive level databases hacked by the government or simply cutoff from all access whenever the thugs in charge deem it necessary. Back office functions will continue to move out to KL, Manila, and India because it's cheaper. Cloud computing power will continue to be concentrated in Singapore as multiple companies build out giant data centers and tons of fiber is available in and out of Singapore.

[raptor_from_vietnam]

Talking about China, I believe one big reason why Singapore has been so important to the world economy so far is because it is somewhat of a gateway to Asia, and to China in particular. But for the past 1-2 years, Xi has totally messed up the China economy. It is basically in the toilet now. I've heard of companies downsizing their China presence significantly...With China losing out, would you imagine MNCs would need less of a "gateway to China" that is Singapore?

[jalanjalan]

China is still the world's second largest economy. Barring anything catastrophic happening, I don't think that's going to change in the near future.

[naresh.negi.kr]

Corporate tax rates haven't changed, and companies will continue to use Singapore as a HQ for revenue recognition. Yes, Singapore has become more expensive. However, that is true for other countries as well. In other countries, the city tends to expand, and people start moving into the suburbs. Singapore does not have that luxury owing to its size. MNCs have been retrenching employees over the last couple of years globally. Again, it isn't a Singapore-only event.

A few of the tech companies had been sold a bad bill of goods by their consultants and led to believe that there weren't any restrictions on hiring foreigners. Post-COVID, MoM has been a bit stringent in issuing work passes. The situation got a lot of hype on social media. However, very few companies have actually shut down their operations in Singapore.

[Lisafuller]

China is still the world's second largest economy. Barring anything catastrophic happening, I don't think that's going to change in the near future.

Agree. Would take something truly epic to disrupt this order.

[Lisafuller]

Talking about China, I believe one big reason why Singapore has been so important to the world economy so far is because it is somewhat of a gateway to Asia, and to China in particular. But for the past 1-2 years, Xi has totally messed up the China economy. It is basically in the toilet now. I've heard of companies downsizing their China presence significantly...With China losing out, would you imagine MNCs would need less of a "gateway to China" that is Singapore?

I believe US China relations have been more influential. Most companies (and countries) pick the states over China.