Foreign firms streaming out of Singapore prefer China

Asian Economic News, June 24, 2002

SINGAPORE, June 17 Kyodo

China is the hot destination for Japanese and other foreign companies that have moved out of Singapore to countries with lower business costs in recent years.

''China has become the favorite destination for relocation, followed by Indonesia, Malaysia and Thailand,'' the National Trades Union Congress (NTUC), Singapore's umbrella trade union, said in its latest weekly newsletter.

The report was based on the results of a study of unionized companies conducted by NTUC's industrial relations department.

It found that 42,000 workers lost their jobs between January 1997 and May this year due to decisions by the companies to streamline their Singapore operations.

''These jobs will not come back,'' the report said.

The majority of the companies cited factors such as ''business restructuring, high operating and labor costs and the economic downturn'' for cutting jobs.

Among the companies that cut down on workers were Japanese cathode ray tube maker Hitachi Electronic Devices (S) Pte. Ltd. and electronics firm Hitachi Consumer Products (S) Pte. Ltd. They moved to China in September and October, respectively, last year after shutting down their Singapore plants due to business restructuring and high operating costs.

About 2,100 workers were laid off from the two companies in Singapore.

In addition, Matsushita Electric Motor (S) Pte. Ltd., which makes mini-motors for cassette players, laid off 529 workers and relocated its operations to Indonesia's Batam island, near Singapore.

Sony Precision Engineering Center (Singapore), which has laid off 523 workers over the last five years, moved its optical device operation and production of electronics components for its CD players to Batam.

''Malaysia's cheaper labor costs have also lured a number of electronic and electrical firms to set up shop there,'' the report said. ''Besides Malaysia, an increasing number of companies have chosen Thailand.''

Sanyo Electronic Components (S) Pte. Ltd. has let go of 665 workers and moved its production to China and Malaysia. It has retained its research and development and support functions in Singapore, employing about 23 workers.

Audio-maker Aiwa Singapore Pte. Ltd. has laid off 774 workers in Singapore so far, and moved all its production and logistics operations out of Singapore. It has retained only its regional headquarters functions, sales and research and development departments in Singapore.

Singapore faces fierce competition from China and other Southeast Asian countries offering cheaper production costs.

The government has been trying to promote the life sciences industry and services industry, such as information technology and educational services, to reduce dependence on the electronics industry.