[Special Report] Global Competition Meets Flexible Labour — Singapore’s Double-Edged Sword for Lower Entry Costs and Sharper Performance
- SEONWOO LEE
- Aug 15
- 14 min read
Singapore: From Southeast Asia to a Global Business Hub
*This article was originally published as a contribution to the Dong-A Business Review (DBR) in April 2023.
Article at a Glance
Singapore’s rise as a global business hub is no coincidence. Long-term government efforts to attract top-tier companies—backed by political neutrality, a wide network of free trade agreements, and a stable regulatory environment—have created ideal conditions for international expansion. With a strong focus on advanced technology, talent development, and open innovation, Singapore is also emerging as a preferred base for global family offices, thanks to bold tax incentives. Current policies signal strong growth opportunities for companies in manufacturing, food security, and green tech.
For Korean companies, uncertainty is mounting. As US-China rivalry intensifies, economic security has become a key global priority. The United States continues to tighten restrictions on China’s access to advanced industries such as semiconductors, electric vehicles, and batteries. At the same time, China—South Korea’s largest trading partner—is experiencing a delayed recovery in economic momentum, posing increasing downside risks to Korean exporters. China’s push for self-sufficiency has also taken a toll on Korean brands. Local subsidies and domestic product promotion policies have eroded the market share of Korean goods that once dominated sectors like smartphones, TVs, and automobiles. Samsung’s smartphone market share in China fell from 19.7% in 2013 (ranked 1st) to just 0.6% in 2021 (barely holding on to 10th place). During the same period, Samsung’s TV share dropped from 7.1% (6th) to 4.1% (9th), while LG’s OLED TV share fell from a dominant 94.2% (1st) to 6.1% (4th). Hyundai-Kia, once ranked 3rd in automotive sales, has fallen out of the top 10 entirely.
In this climate of geopolitical uncertainty and economic volatility, Korean companies are recognising the need to realign their global supply chains. The COVID-19 pandemic and the war in Ukraine exposed the fragility of global logistics, prompting many firms to adopt dual or multi-sourcing strategies. Southeast Asia is emerging as a key alternative. Manufacturing operations that were once concentrated in China are shifting to countries like Vietnam and Indonesia. As a consumer market, Southeast Asia is also gaining strategic importance, with a growing middle class expected to drive demand over the next decade.
This shift is not limited to Korean firms. Global players such as P&G, Dyson, and Tencent are also relocating or expanding their regional headquarters in Southeast Asia—especially in Singapore. The Singaporean government has spent years building a business-friendly ecosystem designed to attract and scale competitive enterprises. With strong infrastructure, political stability, and access to regional markets, Singapore has become the preferred launchpad for companies expanding across the region.
This article explores how Singapore has become the destination of choice for multinationals and how Korean companies can leverage this momentum to redefine their presence in Asia and beyond.
Singapore’s Rise as a Global Business Hub
1. Neutral Foreign Policy and Strategic Diplomacy
Since gaining independence from the Malaysian Federation, Singapore has consistently pursued a non-aligned, neutral foreign policy. Rather than taking sides in the intensifying US-China rivalry, Singapore aims to maintain balance through strategic trust. This approach reflects a belief that regional stability and balanced great-power relations are more beneficial for the country's growth and Southeast Asia’s long-term development.
2. Stable and Effective Governance
Singapore is widely regarded as one of Southeast Asia’s most politically stable countries. Its government operates under a single-party dominant system, with the People’s Action Party (PAP)—a conservative party—holding the vast majority of parliamentary seats. While opposition parties such as the Workers’ Party, the Singapore Democratic Party, and the Singapore Democratic Alliance do exist, their influence remains limited due to the PAP’s longstanding dominance and consolidated control. This has contributed to political predictability and administrative efficiency.
The country’s political stability has played a critical role in attracting foreign investment and supporting sustained economic growth. Singapore consistently ranks high in global indices for economic freedom and growth performance. It has long served as a regional headquarters for global corporations and frequently hosts high-level diplomatic events and international conferences, reinforcing its reputation as a trusted and neutral venue in the global arena.
3. Business Environment and Talent Development
Singapore offers one of the most attractive business environments in the world, underpinned by a globally competitive tax regime. The corporate tax rate stands at 17%, approximately 8 percentage points lower than South Korea’s. In addition, the government provides financial support for a range of business-related costs—including local hiring, facilities and equipment, professional services such as accounting and legal fees, and intellectual property management—when establishing a corporate entity in Singapore.
To attract high-income professionals, Singapore also offers economic incentives such as favourable personal tax rates. The country ensures economic stability and a high standard of living, making it appealing not only for companies but also for high-net-worth individuals. Notably, Singapore levies no capital gains tax, gift tax, inheritance tax, dividend tax, or wealth tax—further strengthening its appeal as a global base for business and private capital.
Singapore is also highly competitive when it comes to talent development and education. The country is home to six national universities and over 30 private institutions, including Yale-NUS College, a joint initiative between Yale University and the National University of Singapore (NUS). Among them, NUS and Nanyang Technological University (NTU) consistently rank first and second in Asia in global university rankings, with graduate employment rates near 90%—a testament to the strength and market relevance of the education system.
4. A Hub for Economic Cooperation and Free Trade Agreements
Singapore has significantly strengthened its competitiveness in trade and economic cooperation by signing a wide range of Free Trade Agreements (FTAs) with countries around the world. These include bilateral agreements such as the Singapore-China FTA, Singapore-Japan FTA, and Singapore-India FTA. The country also actively participates in multilateral trade frameworks, including the Trans-Pacific Partnership (TPP)1 and the Regional Comprehensive Economic Partnership (RCEP).2
Such agreements have positioned Singapore as a strategic base for companies seeking secure and advantageous access to global markets—especially in the post-Brexit era. While the UK continues to renegotiate trade terms with individual countries and regions, Singapore already benefits from an FTA with the European Union, giving it a structural edge.
This has encouraged a growing number of UK-based companies to relocate their headquarters to Singapore. One notable example is Dyson, the British home appliance manufacturer, which announced in January 2019 its decision to move its corporate headquarters to Singapore. Dyson already operated manufacturing facilities in Singapore, Malaysia, and the Philippines, and as of early 2019 employed around 1,100 people in Singapore. The company also confirmed plans to further expand its research and operations footprint in the country.
1 A regional cooperation framework aimed at eliminating tariffs and promoting economic integration across the Asia-Pacific region.
2 A mega-FTA integrating the Asia-Pacific into a unified free trade area, involving 15 countries including the 10 ASEAN members, South Korea, China, Japan, Australia, and New Zealand.
5. Promoting Advanced Manufacturing
According to Singapore’s Ministry of Trade and Industry (MTI), manufacturing accounted for 21.4% of the country's GDP in 2018.3 As one of the core pillars of Singapore’s high-value economy, the manufacturing sector has consistently focused on advanced, premium products. The government has actively pursued bold regulatory reforms to strengthen this sector, leveraging world-class infrastructure and forward-looking policies such as the Industry Transformation Maps (ITMs)4, which are aligned with Fourth Industrial Revolution (4IR) priorities. Kiren Kumar, Deputy Chief Executive of the Singapore Economic Development Board (EDB), noted that “the widespread adoption of advanced technologies such as robotics and automation in Singapore’s manufacturing sector likely played a significant role in Dyson’s decision to relocate its global headquarters.” Unlike traditional manufacturing hubs that rely on low-cost, abundant labour, Singapore’s strength lies in its accessibility to cutting-edge technologies—such as artificial intelligence and automation—supported by strong government backing. This has made the country an attractive destination for global manufacturers producing high-end, value-added products.
3 Economic Survey of Singapore (2018)
4 Singapore’s national framework for long-term economic growth, outlining seven strategic priorities across 23 key industries—including productivity enhancement, job creation, workforce upskilling, and innovation in advanced technologies.
6. Singapore’s Pro-Business Bureaucracy: Acting Like Entrepreneurs
Singapore’s government takes a highly proactive, business-oriented approach to attracting investment. In one notable case, officials conducted a strategic analysis of Procter & Gamble (P&G), one of the world’s largest consumer goods companies, and sent a proposal suggesting that combining P&G’s global brand with Singapore’s local innovation ecosystem could unlock new products and markets. In 2022, P&G responded by relocating its global headquarters for skin, cosmetics, and personal care from Cincinnati, USA, to Singapore.
According to a 2022 report by the Korea Institute for International Economic Policy (KIEP), both Hong Kong and Singapore have been aggressively using cash incentives to attract foreign direct investment. Singapore’s financial support is especially well known for its scale and confidentiality. Professor Hakno Lee of Dongguk University recalled asking an executive why their company had chosen Singapore over Korea: “The answer I received was simple: ‘We were offered substantial behind-the-scenes support.’”5
Global Companies Are Turning to Singapore
Singapore’s pro-business environment—shaped by strategic government support—continues to attract a growing number of multinational corporations beyond Dyson. In recent years, global pharmaceutical companies have accelerated investment into Singapore.
French pharmaceutical giant Sanofi announced plans to invest €400 million in a vaccine production facility in Tuas Park, aiming to expand supply across Asia. The facility will feature a modular, digitised platform capable of producing up to four different vaccines simultaneously. Until recently, GSK was the only vaccine manufacturer operating in Singapore, but in April last year, Sanofi confirmed its entry, followed by BioNTech in May, which announced plans to build a fully automated mRNA vaccine facility in the city-state. Japanese pharma leader Takeda is also expanding its operations by adding laboratory and office space adjacent to its existing biologics site in Singapore, with an investment of US$14 million.
According to the Singapore Economic Development Board (EDB), companies such as Pfizer, Novartis, AbbVie, and Amgen already operate production facilities in the country. Over the past 30 years, these sites have consistently passed regulatory inspections by agencies such as the U.S. Food and Drug Administration (FDA) without significant issues. It’s not just pharmaceutical multinationals—Singapore is also becoming a safe haven for Chinese tech firms. Facing increasing scrutiny and regulatory challenges in the United States, Europe, and India, Chinese technology companies are shifting operations to Singapore, where regulations are lighter and digital infrastructure is strong. Tencent, the parent company of messaging app WeChat, has established its Southeast Asia hub in Singapore and relocated key gaming operations to the city. ByteDance, the operator of TikTok, has also positioned its Singapore entity as a launchpad for both Southeast Asian and global expansion. The company has relocated core engineers to Singapore and hired over 200 employees to support its payments and e-commerce businesses.
Venture Capital Growth and Financial Innovation
Singapore is not only attracting multinational corporations—it is also fast becoming a hub for startups. As more capital flows into the country, a virtuous cycle has formed: easier fundraising leads to better investment opportunities, which in turn fuels more capital inflow and upgrades in financial services infrastructure. In 2022, venture capital activity in Singapore reached 651 deals, totaling over ₩12 trillion (approximately USD 9 billion) in investments. Remarkably, this accounted for 56% of all VC transactions across Southeast Asia, underscoring Singapore’s dominant position in the region’s startup ecosystem.
Singapore’s financial innovation is advancing at a game-changing pace. A prime example is the Variable Capital Companies (VCC)6 regime, introduced in 2020. The VCC structure reduces the cost and complexity of establishing and managing fund entities, while offering generous tax incentives. The policy has been hailed as a strategic move that brings the advantages traditionally offered by jurisdictions like Luxembourg, Ireland, and the Cayman Islands into Asia’s financial capital. Within just one year of implementation, over 160 VCCs were registered—reflecting strong demand from global asset managers and signaling a shift in the global fund management landscape.
6 A corporate structure in Singapore optimized for investment funds and collective investment schemes (CIS). Legally, a VCC may be set up as a standalone fund or as an umbrella fund with two or more sub-funds, each holding different assets.
Wealth from around the world is increasingly flowing into Singapore. The Singaporean government is actively encouraging the establishment of family offices—not only from Asian high-net-worth individuals but also from global billionaires. To manage, preserve, and transfer their wealth efficiently, ultra-high-net-worth families often set up family offices, which are categorized into single family offices (SFOs) and multi-family offices (MFOs). An SFO is dedicated to serving the needs of a single wealthy family, offering tailored services such as asset management, investment planning, succession strategy, trust administration, and risk management. In contrast, an MFO manages the wealth of multiple families. These offices focus on pooling resources, sharing market insights, and optimizing investment performance across clients.
Singapore has successfully attracted the family offices of some of the world’s most prominent billionaires—including Sergey Brin (co-founder of Google), Paul Allen (co-founder of Microsoft), James Dyson (founder of Dyson), and Ray Dalio, the legendary hedge fund investor.
These ultra-wealthy individuals are drawn to Singapore’s business-friendly ecosystem, which includes low taxes, exceptional public safety, and generous government incentives for family office setups. The surge in family office establishments has also been fueled by the global pandemic, prolonged low-interest rates, and slower growth in traditional markets. Amid a highly liquid environment and increasing concerns over intergenerational wealth transfer, many asset owners are seeking more efficient and secure ways to manage their wealth—turning to Singapore as their preferred destination.
In contrast, Hong Kong, once seen as a major rival to Singapore as a financial hub, has seen declining interest from global wealth holders. The imposition of China’s National Security Law and the aftermath of the 2019 pro-democracy protests have raised concerns over political autonomy and transparency. These factors have led some asset managers to shift their funds and operations to Singapore.
As of 2022, Singapore’s guidelines for family offices require a minimum AUM of approximately USD 15 million (KRW 20 billion) and mandate that at least 10% of managed assets be invested in companies listed on the Singapore Exchange (SGX) or other local firms. These requirements are expected to channel even more capital into Singapore’s listed and private markets.
Korean Companies Expanding into Singapore
The Hyundai Motor Group Innovation Center in Singapore (HMGICS) officially opened in April 2023. Positioned as an open innovation lab for building a future mobility ecosystem, the center focuses on core technologies that cover the entire customer journey—from vehicle ordering and production to delivery, test drives, and post-sale services. Located in the western Jurong Innovation District, HMGICS represents a bold investment of over KRW 300 billion (approx. USD 230 million). The facility spans 44,000 square meters of land and 90,000 square meters of total floor space across seven stories. Starting with the IONIQ 5, the center aims to produce up to 30,000 electric vehicles annually. The rooftop features a 620-meter “Sky Track” for customer test drives, a takeoff and landing pad for Urban Air Mobility (UAM), and solar panels for sustainable energy generation. With its unique exterior design and integrated functionalities, the HMGICS building is set to become a landmark of innovation in Singapore’s urban landscape.
Hyundai Motor Group’s decision to establish the Hyundai Motor Group Innovation Center in Singapore (HMGICS) was driven by the city-state’s strategic position as Southeast Asia’s hub for logistics, finance, and business, as well as its optimal environment for open innovation. Singapore is widely recognized as the region’s best testbed for cutting-edge technologies, thanks to its government-level interest in emerging services and trends, a culture of openness to new ideas, and high societal acceptance of IT advancements. Through HMGICS, Hyundai plans to collaborate closely with local universities, startups, and research institutions, including joint research initiatives with top-tier institutions like Nanyang Technological University (NTU)—ranked among the world’s leading universities—and pursue industry-academia projects in next-generation sectors.
According to South Korea’s Ministry of Trade, Industry and Energy, the ASEAN automotive market is currently dominated by Japanese automakers, whose internal combustion engine (ICE) and hybrid models account for over 78% of the market, supported by well-established local production systems. However, Singapore is rapidly shifting toward electrification, with a national goal of phasing out internal combustion vehicles entirely by 2040. The government is offering generous EV subsidies of up to KRW 20 million (approx. USD 15,000) and plans to expand its EV charging infrastructure from 160 to over 20,800 stations by 2030. In this evolving landscape, HMGICS is positioned as a strategic outpost for Hyundai to lead the EV transition in Southeast Asia. Beyond the EV sector, Singapore's political and policy stability, pro-business environment, access to top talent, and open trade policies make it an ideal launchpad for Hyundai's broader innovation efforts. By understanding and aligning with Singapore’s national priorities, Hyundai and other Korean companies can identify new opportunities for regional and global expansion.
Manufacturing Sector in Singapore
Currently, the manufacturing sector accounts for approximately 20% of Singapore’s GDP. The Ministry of Trade and Industry (MTI) has laid out a long-term plan to grow the sector by 50% by 2030. As part of this initiative, the government is actively attracting leading global companies, enhancing scale and capabilities in advanced manufacturing, and promoting industry-academia collaboration. These developments present valuable opportunities for Korean companies looking to expand or pivot into high-value manufacturing in the region..
Agriculture and Agri-Food Opportunities in Singapore
The Singapore Food Agency (SFA) is spearheading the development of an agri-food cluster that leverages advanced technology to enhance productivity and resource efficiency. As part of the country’s national food security strategy, Singapore aims to produce 30% of its nutritional needs locally by 2030. This has created urgent demand for innovation in local food production capabilities. Key high-potential areas include the production and commercialization of alternative food sources such as plant-based products, dairy alternatives, ready-to-eat meals, cultivated meat, and alternative proteins. These sectors are particularly well-positioned to receive government support. Given that over 90% of Singapore’s food supply is imported, reducing external dependence has become a critical priority. However, with less than 1% of land available for food production, the country is seeing surging demand for high-efficiency indoor vertical farms and smart farming solutions.
Green Technology: A Strategic Growth Sector in Singapore
The Singapore government is actively advancing its green transition agenda, resulting in increased investment across multiple sustainability-driven sectors. Key areas of focus include the expansion of renewable energy, energy efficiency in buildings, and the development of low-carbon smart cities. Carbon emissions reduction, green mobility and clean transportation, green finance, food security, coastal protection technologies in response to rising sea levels, waste reduction and advanced waste management solutions are also identified as high-potential objectives.
A major policy milestone is Singapore’s plan to phase out all internal combustion engine (ICE) vehicles by 2040. Given the country’s 10-year vehicle Certificate of Entitlement (COE) system, this policy means that starting in 2030, all new cars must run on clean energy. Furthermore, diesel vehicle and taxi sales will cease in 2025, positioning Singapore’s green mobility sector for rapid expansion. These policies are creating significant market opportunities in sectors such as sustainable construction, fueled by the government’s push for green buildings. Public transport development, in line with the Land Transport Master Plan 2040, which envisions a greener, more efficient, and commuter-centric transportation system. Companies with proven technology and capabilities in these fields will find Singapore’s supportive regulatory environment and government procurement pipelines conducive to growth and market entry.
IT Companies
Global IT giants—including Microsoft, Meta, Twitter, Apple, Netflix, Alibaba, Tencent, and ByteDance—are increasingly investing in Singapore as a strategic hub for expanding into the Southeast Asian market. The nationwide Smart Nation initiative is accelerating the country's digitalization by leveraging new technologies such as 5G networks, digital twins, artificial intelligence, big data, and the Internet of Things to manage the city-state. This initiative aims to develop solutions in areas like healthcare, housing, transportation, and energy, enabling citizens to see tangible improvements in their daily lives.
As the digital economy expands, concerns about cybercrime are also growing, likely increasing demand for cybersecurity companies.
Family Offices
As Korea’s baby boomer generation began retiring at an accelerated pace in 2021, interest in sustaining and finding new growth drivers for family offices has grown significantly.
Companies considering the long-term sustainability and global expansion of their family offices are encouraged to view Singapore as a strategic base.
The Singaporean government offers incentives to family offices established within the country, exempting taxes on most investment gains generated through their managed domestic and international funds and investment vehicles.
Beyond simple asset management, family offices can evolve into platforms for succession planning, social contribution, and cultural and artistic engagement—helping preserve family legacies while also serving as a springboard for becoming globally recognized enterprises rooted in Southeast Asia.
While the Singapore market presents numerous opportunities, there are also important challenges to keep in mind. These include a relatively small domestic market size, high cost of living, expensive rent and labor, and intense competition from global players. With rising costs and fierce competition driven by the influx of multinational corporations and international capital, it is crucial to minimize initial entry costs and maximize return on investment.
Singapore’s labor market is also highly flexible, resulting in high employee turnover and making it difficult to recruit and retain key talent. While the flexibility in hiring and firing can be advantageous for businesses, companies must make efforts to secure and retain skilled local talent while strictly complying with regulatory and labor law requirements.
When I first began working as an analyst in Singapore in 2011, the local office was significantly smaller compared to those in Hong Kong or Tokyo, and there was a relative lack of experienced senior professionals. In terms of financial markets and transaction volume, Singapore also lagged behind other Asian countries at the time, while neighboring China was experiencing a boom.
Fast forward to 2023, and now in my fifth year operating an asset management firm in Singapore, the transformation over the past decade has been a sea change. Long-term government policies aimed at development met with global events such as the Hong Kong protests, China's lockdowns, and the U.S.-China tensions, allowing Singapore’s potential to fully emerge. For now, there appears to be no viable alternative to Singapore in the global market, and its growth trajectory is expected to continue for some time. I hope Korean companies will seize the opportunities currently available in Singapore without hesitation.
Hyuk-Tae Kwon
Founder and CEO
