SG monthly business operation cost 76% higher than other SEA countries: TMX

Its high costs make the country a top choice for companies with higher-valued-added manufacturing.

Business transformation consultancy company TMX released the report, The Great Supply Chain Migration – Breaking down the Cost of Doing Business in Asia. It delves into the average costs of doing business in Asia and the corresponding country competitiveness across nine popular potential manufacturing locations: Cambodia, India, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

The report revealed that labour costs are the major component of total costs, forming up to 55% of average monthly operating costs. This was followed by leasing, logistics, utilities, and telecommunications costs.

Based on these findings, the countries, except Singapore, were then classified into three stages of the manufacturing value chain. The three stages are basic assembly lines, developing supply chains, and early automation.

Singapore was excluded from the categorisation given its high costs, 64% to 76% higher than the second most costly country, and overall competitiveness. The country was the obvious choice for companies with higher-value-added manufacturing involving complex processes and automation requirements.

"Beyond direct operating costs, it is also imperative that businesses look at qualitative factors like business environment to have a clearer perspective of the market they are looking to set up or expand in. Our findings show that while the markets in Asia are mostly on equal footing in the qualitative aspects, there remain significant differences between the markets," said supply chain consultant Rebecca An.