JOHOR BAHRU, May 29 — In Senai’s sprawling industrial belt, Gardenia Malaysia’s massive bakery sits alongside warehouses operated by tech giant Seagate and e-commerce heavyweight Shopee.

The facility, located 45km from the Tuas Second Link, is run by Singapore-listed QAF Group, owner of the Gardenia brand.

Last week, the bread maker announced it would shift production from its Pandan Loop facility in Singapore to Johor Bahru, a move resulting in 141 retrenchments in the republic. 

Gardenia said the relocation aims to improve efficiency and maintain competitiveness in a challenging global market.

While the company has not disclosed the exact site for the transferred production, its Senai plant is currently its only major Johor facility, capable of churning out 8,000 loaves and 20,000 tortilla wraps every hour, CNA reported

A ‘structural shift’

Analysts say Gardenia’s move reflects a growing trend of Singapore companies relocating manufacturing across the Causeway.

Similar shifts by major players like Asia Pacific Breweries Singapore (APBS) and Yeo Hiap Seng (Yeo’s) point to a broader “structural shift,” according to Johor-based property consultant Samuel Tan.

“Moving operations to Johor makes strong commercial sense,” said Tan, CEO of Olive Tree Property Consultants.

“Companies no longer need to produce goods where they sell them. Johor allows Gardenia to manufacture at a lower cost while still trucking fresh products into Singapore daily.”

This realignment is turbocharged by the Johor-Singapore Special Economic Zone (JS-SEZ).

While the full masterplan is pending, firms are already moving to capitalise on incentives, including a special 5 per cent corporate tax rate for 15 years, sharply lower than Malaysia’s standard 24 per cent.

Lennon Tan, president of the Singapore Manufacturing Federation (SMF), describes this as “rightsizing geography.” He also insists it is not a vote of no-confidence in Singapore, but a strategic restructuring.

“F&B players are keeping HQ, brand innovation, and supply chain orchestration in Singapore, while moving the heavy lifting to Johor,” he said.

Industry precedents

In March, Yeo’s announced it would lay off 25 employees in Singapore and shift manufacturing to Malaysia to “optimise capacity.”

Similarly, APBS, which brews Tiger Beer, is cutting 130 roles as it shifts production to Malaysia and Vietnam. Its Singapore facility will eventually pivot to logistics and innovation.

The investment wave has been record-breaking. In March, Johor announced RM110 billion in investments for 2025, the highest ever for a Malaysian state. Menteri Besar Datuk Onn Hafiz Ghazi noted these projects are expected to create 25,000 jobs.

Economist Sedek Jantan of IPP Financial Advisers compares the relationship to Hong Kong and Shenzhen in the 1990s.

“Hong Kong retained high-value finance functions while Shenzhen became the manufacturing powerhouse. We are seeing a similar Asean supply chain realignment,” he said.

However, Johor’s boom comes with growing pains.

Teh Kee Sin of the SME Association of South Johor warned that an influx of foreign firms intensifies competition for skilled workers and industrial land.

“There will be stronger competition for workers, pushing wages higher, while industrial rents are also likely to rise,” he said.

Resource strain is another concern. Johor’s fast-growing data centre industry has already pressured water and electricity supplies.

Prime Minister Datuk Seri Anwar Ibrahim recently acknowledged the issue, noting that Putrajaya has begun rejecting data centre applications unrelated to AI to protect local resources.

The human cost

The trend also raises concerns for Malaysians employed in Singapore. While jobs are moving to Johor, the salary gap remains vast.

Outside Yeo’s factory in Pasir Gudang, one employee noted that manufacturing roles in Johor pay RM3,000 to RM5,000, compared to over S$2,000 (RM6,200) in Singapore.

“The gap is still very big,” the employee said. “But we also know these jobs in Singapore are becoming fewer.”

Looking ahead, SMF’s Tan expects more F&B and light manufacturing firms to move, while high-value sectors like semiconductors and aerospace remain anchored in Singapore.

“The question is no longer ‘Singapore or Malaysia’,” he concluded. “It’s how companies can best use both.”