Is Singapore still Southeast Asia's headquarters capital? H&M left for Kuala Lumpur, Gardenia and Heineken moved production, yet HQ investment hit 62.5%

Is Singapore losing its status as Southeast Asia's headquarters capital? Not according to the numbers. Despite several high profile corporate exits this year, headquarters and professional services activities made up 62.5 percent of total business expenditure commitments in Singapore in 2025, up from 27.2 percent in 2021, according to Economic Development Board data, The Business Times reported. Over the same period, general manufacturing's share shrank to 0.1 percent from 2.1 percent.

What is changing is the shape of Singapore's role. Lower value activities such as manufacturing, back office work and some support functions are moving to cheaper neighbours, especially Malaysia, while Singapore keeps the decision making, treasury, research and leadership roles. Bankers describe a hub and spoke model for Southeast Asia, with Singapore as the hub.

Who has moved out, and why

Several moves this year drew attention. Fast fashion retailer H&M moved its regional headquarters from Singapore to Kuala Lumpur in May. Beverage group Yeo Hiap Seng kept its headquarters, logistics and smaller production in Singapore but laid off 25 plant workers in March to consolidate manufacturing in Johor and Selangor. Gardenia Singapore, the bread maker owned by QAF, moved its bakery operations to Malaysia in mid 2026, and Heineken shifted large scale production from Asia Pacific Breweries in Singapore to breweries in Malaysia and Vietnam.

Cost is the common thread. "Businesses continually review and optimise their operations in response to changing market conditions," Tan See Leng, then minister for trade and industry, told Parliament in August, adding that companies may relocate or restructure because of costs, technology or shifting supply chains.

The American Chamber of Commerce in Singapore's chief executive, Lei Hsien Hsien, said some multinationals have removed their regional layer entirely as global conditions pushed them to restructure. "It's not just Asia or Singapore that would be experiencing a decrease," she said. Companies may also move support roles, such as those filled by S Pass holders subject to quotas, to Kuala Lumpur or India.

Why the headquarters numbers keep rising

The exits are real, but so is the inflow. Singapore housed about 1,030 multinational headquarters in 2024, according to the most recent government figures. New arrivals are increasingly diverse in industry, origin and size, from Taiwanese chip testing firm King Yuan Electronics, which opened its first overseas testing facility in Singapore in May as part of a S$100 million investment, to US AI start ups opening regional offices.

DBS analysts expect Taiwanese foreign direct investment into Singapore to approach 6 billion US dollars in 2026, after Taiwan became Singapore's top trading partner in 2025. Chinese companies are also prominent. Standard Chartered's Maisie Chong said Chinese firms, "from household names to mid market emerging Chinese firms, are becoming increasingly prominent among new regional headquarters entrants".

Chinese beverage chain Chagee is one example. Its Asia Pacific chief marketing officer, Eugene Lee, said key functions such as finance, supply chain and marketing are based in Singapore, which it plans to use to run markets from Asia Pacific to the Middle East, Europe and Latin America. "Singapore will remain a pivotal part of our business," he said.

Singapore is not losing headquarters. It is losing the jobs that used to sit around them, and that is a choice, not a defeat.

The rise of Kuala Lumpur

Malaysia is the main beneficiary of functions leaving Singapore. Kuala Lumpur offers targeted tax incentives, lower costs and a strong English speaking business environment for shared services, back office and mid tier functions, Chong said. The Malaysian Investment Development Authority reported 31.1 billion dollars of approved foreign investment in the first half of 2026, up 22.3 percent, with more than two thirds in services.

Malaysia is also making itself more attractive to foreign professionals, including by letting spouses of expatriates work from 2027, as we covered in our report on Malaysia's expat spouse work rules. And Johor's special economic zone is designed to link Singapore's headquarters with Malaysian operations across the border.

Other capitals are courting companies too. AmCham's Lei said Bangkok has been recruiting regional headquarters aggressively, "but nobody has told me they've made the move, because it's a big one". In AmCham's September survey, 55 percent of respondents named Singapore as an important revenue market, while the share naming the rest of ASEAN jumped from 46 to 68 percent.

What keeps companies in Singapore

Executives and economists cite a consistent list of strengths. DBS economists Chua Han Teng and Radhika Rao pointed to Singapore's business ecosystems, access to capital, institutional capabilities, regulatory predictability, connectivity and regional management talent. "High value added functionalities, treasury related roles and senior decision making departments are expected to continue preferring Singapore," they said.

Data rules matter for technology firms. Kearney's Varun Arora said Singapore's data protection framework and regulatory credibility strengthen its appeal, and Yealink said it chose Singapore for a cloud data centre because of its strict data protection regime. Cost is less of a barrier for specialised operators: Universal Vapor Jet's chief executive said that for deep technology, "what counts is the total cost and time to bring a product to market".

Tax also remains part of the story, even under the new global minimum tax. Apple paid 3.25 billion dollars in Singapore income tax last year, as we reported in our analysis of Apple's Singapore tax bill, showing how much profit large multinationals still book in the city state.

What it means for Singapore workers and the region

For Singapore, the shift toward headquarters work means higher value jobs but fewer roles in manufacturing and back office functions. Workers in those areas face more competition from Malaysia and other neighbours, while demand grows for finance, management, technology and research skills. The key implications are:

• headquarters and research roles keep concentrating in Singapore
• production, shared services and back office roles move to Malaysia, Vietnam and India
• Singapore's costs push companies to keep only the highest value work there
• neighbours gain jobs and investment from the overflow

Bank of America's Martin Siah described a "dual hub approach" in which ASEAN economies capture different parts of the investment value chain. DBS's economists see the neighbours as playing "a complementary role, rather than posing material risk to Singapore's status".

For the region, that is a positive story. Malaysia, Vietnam and Thailand gain jobs and capital, while Singapore remains the coordinator. The risk for Singapore is complacency: if costs rise too far or talent becomes scarce, even the high value functions could start to look elsewhere.

Singapore's headquarters model is evolving rather than eroding. Companies are moving factories and back offices to cheaper neighbours, but the decisions, the money and the research are concentrating in the city state. For Southeast Asia, that division of labour spreads jobs across the region, and for Singapore it raises the stakes on keeping talent and costs in balance.