Is local manufacturing under threat from cheap Iskandar?

Manufacturers are relocating to this hub.

On the surface, Singapore’s status as an industrial hub appears to be under threat from the relative cheapness of neighboring Iskandar. As more firms choose to relocate to Malaysia’s southern growth corridor, Singapore will have to fight harder to retain its competitiveness.

A report by Maybank Kim Eng highlighted that cost advantage is the biggest threat that Iskandar poses to local manufacturing. Singapore is under threat not only from high manufacturing costs but also from land and labour scarcity.

Iskandar’s cost advantages render it attractive to relocate lower-value-add manufacturing there. Singapore faces constraints as an industrial hub for the global economy. Land and labour are scarce and expensive. Energy-wise, it is a price taker. Costs invariably become a deterrent,” stated Maybank Kim Eng.

In spite of all these threats, JTC believes that Iskandar could complement rather than threaten local manufacturing.

“JTC believes companies could base their HQ, R&D, product development, marketing and logistics operations in Singapore while shifting their lower-end manufacturing to Iskandar. Besides freeing up valuable land in Singapore, companies could also boost their cost competitiveness. JTC shared that Singapore’s probusiness and transparent policies, educated and well-trained workforce, and good infrastructure had played critical roles in attracting MNCs to the country,” Maybank Kim Eng noted.