Can Singapore hold its edge as ASEAN’s HQ hub as costs climb?

For years, Singapore has been the natural Southeast Asia headquarters for global companies. That perception still largely holds, but the way companies use Singapore is changing.

Recent examples such as Tiger Beer, H&M, Gardenia Foods and Yeo’s moving or placing more headquarters or operational functions elsewhere in the region point to a broader shift: companies are no longer assuming every regional function needs to sit in Singapore. More are distributing operations across Malaysia, Vietnam, Thailand and other ASEAN markets, particularly for manufacturing, shared services, technology support and scalable execution-heavy roles.

This is not a story of companies abandoning Singapore, but of becoming more deliberate about how they use it. As Raymond Ng, CEO, SG and SEA at Revolut Singapore, put it: 

What has evolved is not Singapore's relevance, but how businesses organise themselves across the region.

While Singapore remains a hub for leadership and regional decision-making, neighbouring markets are increasingly taking on operational and cost-sensitive functions.

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A more distributed ASEAN model

The traditional regional headquarters model concentrated most functions in Singapore. That is becoming less common. Companies are increasingly building regional structures where Singapore remains the leadership and coordination hub, while operational teams are spread across lower-cost or faster-scaling markets.

Ng said many businesses are adopting “more distributed operating models across ASEAN to access specialised talent, serve local markets more effectively and optimise costs.” Yet he added that strategic leadership, innovation, governance and regional decision-making often remain concentrated in Singapore because of its connectivity, regulatory stability and depth of expertise.

Greg Cazalis, principal consultant for commerce contract at Robert Walters Singapore, made a similar point. Companies are still placing regional leadership and strategic roles in Singapore, while moving operational, shared services, technology support and manufacturing functions to markets where costs are lower and talent pools can scale more quickly.

The drivers are largely practical. Rising labour costs, rental costs and broader operating expenses have pushed companies to reassess whether every role needs to be based in Singapore, with businesses seeking greater cost efficiency, talent scalability and operational flexibility elsewhere in the region.

Malaysia has become especially attractive because of its proximity to Singapore, bilingual talent pool, lower costs and growing capabilities in shared services, finance operations and technology support. Meanwhile, Vietnam continues to attract manufacturing and technology investment, supported by a young workforce. Thailand remains strong in manufacturing and supply chain ecosystems, particularly in sectors such as healthcare and FMCG, explained Cazalis.

The shift has also been made easier by improved digital connectivity and communication tools following the pandemic, said Brian Lee, economist at Maybank Securities. Companies can now split functions across markets more easily while keeping teams integrated.

Lee noted that this offshoring dynamic is not new. Labour- and land-intensive production activities have long moved out of Singapore, while knowledge- and capital-intensive operations remained. Back-office functions such as payroll, IT helpdesk and basic accounting processing have also been offshored to more cost-competitive hubs. What is different now is the sophistication of the model. Companies are not only moving basic support work, but are designing more regionalised structures, with different ASEAN markets playing different roles.

This is why the shift should not be read simply as Singapore losing ground. Rather, the headquarters function itself is being redefined. As Cazalis described it, companies are increasingly adopting “role segmentation”, keeping higher-value, business-critical and leadership functions in Singapore while distributing execution-heavy and scalable operational work across the region.

Singapore's premium still rests on trust

Singapore’s challenge is not simply that it is expensive. It is whether companies continue to see enough value to justify that expense.

For some functions, the answer is increasingly no. Shared services, operational support, marketing execution and some technology support roles can often be located in lower-cost markets without major loss of effectiveness. However, for functions that require senior stakeholder management, regulatory engagement, regional strategy, specialised expertise or proximity to leadership, Singapore still offers strong value.

That value rests first on trust. “For global businesses, particularly those operating in highly regulated industries such as financial services and technology, a stable and predictable environment is critical. Singapore's regulatory framework, strong institutions and reputation for transparency continue to be significant differentiators," said Ng. 

Lee made a similar point, citing Singapore’s predictability, rule of law, intellectual property protections and technocratic macroeconomic management as qualities that remain highly prized by companies making long-term investment decisions.

Singapore’s advantages also extend beyond regulation. Its supply chain connectivity, efficient seaport and airport infrastructure, and relative immunity from major natural disasters continue to reduce business risk. Just as importantly, its dense concentration of multinational corporations, investors, financial institutions, technology companies and global talent creates a self-reinforcing ecosystem: companies attract talent and partners, which in turn attract more companies. Lee added: 

This strong set of strengths have yet (and are not easy) to be replicated elsewhere in neighbouring countries.

This is why Singapore remains difficult to replace for complex, high-value regional functions. As Cazalis noted, its edge is not being the cheapest location but being the most trusted and efficient one, particularly for sectors such as financial services, healthcare, pharmaceuticals, commodities and regional corporate leadership.

"Brand Singapore" must move up the value chain

The question, then, is how Singapore applies those strengths in a more decentralised ASEAN model. One answer may be closer integration with neighbouring markets rather than direct competition with them. Lee pointed to the Johor-Singapore Special Economic Zone as one way Singapore can continue to capture value from offshored activities, by supporting “twinning” investments where economic activities are split between Singapore and Johor.

Such models could become increasingly common: regional leadership, legal, finance, product strategy or investor-facing functions remain in Singapore, while manufacturing, shared services, support or logistics functions sit in Malaysia. In that sense, Malaysia’s rise is not only a competitive threat, but also a potential extension of Singapore’s regional value proposition.

The broader lesson is that "Brand Singapore" can no longer rely solely on infrastructure, tax incentives, connectivity and ease of doing business. Those fundamentals remain important, but they are no longer sufficient. To stay competitive, Singapore must increasingly stand for higher-value attributes such as trust, innovation, specialised talent and strategic relevance.

Ng said "Brand Singapore" should increasingly be defined by innovation, talent and global relevance. "Infrastructure and connectivity remain important, but they are no longer sufficient differentiators on their own. Companies are looking for ecosystems where they can build new products, attract world-class talent and collaborate across industries to drive innovation," he explained. 

"To remain competitive, Singapore must continue investing in future-focused capabilities, including technology, AI, digital skills and entrepreneurship. Equally important is maintaining an environment that attracts ambitious people from around the world who want to build, innovate and create long-term value," added Ng. 

Meanwhile, Cazalis argued that Singapore cannot compete purely on cost and must instead compete on quality, trust, and strategic relevance.

Lee’s point adds an economic lens to this. Singapore has managed similar transitions before by moving up the value chain. Offshoring has not derailed Singapore’s growth because the country has continued to attract higher-value industries such as advanced manufacturing, technology, fintech and finance. Its electronics sector and strength in memory chip fabrication have also positioned it to benefit from rising AI-driven demand.

As such, Singapore’s future competitiveness depends on remaining the place where companies put their most strategic, complex and future-facing work, even if more of the execution happens elsewhere in ASEAN. Singapore is not being replaced as Southeast Asia’s business hub; rather, the hub model itself is evolving into a more distributed structure, with leadership and decision-making anchored in Singapore and operational functions spread across the region.

As Ng put it:

The future is not Singapore versus ASEAN. The future is Singapore as the strategic command centre of a more interconnected ASEAN.

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