Asia Bulletins

Asian Logistics Hubs: The cost-reliability trade-off January 20, 2026 In this issue of our Asia Bulletin, we hear from Asia’s leading CFOs about their concerns around logistics and inventory management, and the sharp trade-offs they are making. The Asia Bulletin reflects insights from IMA’s peer forums for CEOs and senior leaders. It highlights anonymised perspectives that surface the issues executives are grappling with firsthand. Reach out to us if you’re interested in the full report. What’s new: CFOs in Singapore are taking a closer look at the newly launched Johor–Singapore Special Economic Zone (JS-SEZ) to see whether it can improve inventory management and reduce logistics costs — without sacrificing reliability. This afternoon I’m headed to Malaysia to visit the new Johor–Singapore Economic Zone. A supplier moved their plant from Singapore to Johor, and the savings are phenomenal. They are looking at cutting labour costs by 25% to 30%, although they will need slightly more people. Rental savings are also around 25%. In Singapore, the REITs keep pushing up rents, while in Malaysia, getting things done efficiently is a nightmare. Why it matters: Warehousing and logistics across Southeast Asia force companies into sharp trade-offs — either reliable but expensive, or cheap but unpredictable. CFOs are watching the JS-SEZ to see whether it can narrow that gap. There must be balance. We consider our total cost of movement. Manufacturing may be cheap, but you only earn money when you sell something. In our case, we target the aftermarket and need to deliver goods in two to three days — or we lose the deal. What CFOs are saying about their options in Asia Vietnam — overcrowded and congested With China Plus One, a lot of products moved from China to Vietnam, but the infrastructure wasn’t ready. Everything was bursting at the seams. There were delays at the ports, in transshipment, and the bureaucracy can be very challenging. Hanoi is moving quickly now to build new ports and airports, mainly with Chinese firms. Warehouses in every market — opaque and costly We have warehouses in Jakarta, KL, Vietnam, and Bangkok. What issues do we run into? We overstock in some countries and don’t realise it until we have to write it off. That’s the trade-off — total logistics cost. Once you have warehouses in multiple countries, inventory becomes a real problem. Multiple distributors — duplication creates inefficiency We have distributors in almost every country, so you could say we effectively have warehouses with them. But that’s costly — additionally, distributors compete and don’t support each other. Fast-moving products — control matters more than location We need a reliable setup. Jakarta works for Indonesia, but not for customers in Singapore or elsewhere in Southeast Asia. No matter what happens in the supply chain, we are responsible. We work on fast-moving goods — 15 days, no more. If an Indonesian customer cancels, the product goes to Malaysia, Thailand, or Myanmar. It has to move. We don’t stock things up. Why Singapore wins — despite the cost Simplicity over price Over a decade ago, we put our Southeast Asia regional distribution centre in Singapore — two tall warehouses close to the port. Easy in and out. We don’t directly ship some products; we hold stock for 10 to 15 days. Vietnam was too complicated; product was always getting stuck. Indonesia is too far away. So Singapore is the best for us. Singapore is three times more expensive for two things: labour and rentals. The exchange rate difference between Singapore and Malaysia also matters — roughly three ringgit to one Singapore dollar. Connectivity still matters most Most product from Johor still moves through Singapore unless you truck it to KL, because connectivity isn’t strong. Trucking to KL or Penang takes time. Compare that with how easy it is to move goods into Singapore. Connectivity really matters. Ideal for transhipment Singapore works as a transshipment hub. If your product is just moving through — minimal labour, minimal handling, quick turnaround — Singapore is far more efficient. The government actively promotes transshipment. We work a lot with Economic Development Board — getting advice and sometimes funding — to build Singapore as a transshipment centre. Transshipment includes light assembly. You might bring components from China and India, fit them together in Singapore, and move them on. If you assemble without adding value, it’s duty-free. If you add value, then you pay duty. If we just touch Singapore — don’t store product there for long — and avoid holding inventory in an expensive location, that changes the size of the warehouse. We can have a smaller footprint. The Bottom Line: The Johor–Singapore SEZ is not replacing existing Asian warehousing altogether. Instead, it is emerging as a regional buffer for firms exhausted by execution risk and high costs elsewhere. For MNCs, that makes it strategically significant — not because it is cheap, but because it may restore predictability. Why it might work: the incentives and capabilities between the partner countries are aligned. Singapore is space-constrained and cost-heavy. By pushing labour- and land-intensive logistics into Johor — rather than losing them to Vietnam or Indonesia — it can protect its role as Asia’s premium transhipment and coordination hub, while extending capacity without diluting standards. Singapore is lending its management discipline, regulatory frameworks, and digital systems to ensure operations run smoothly and predictably across the border. Malaysia wants to prove it can deliver Singapore-adjacent execution at Malaysian cost… …by converting proximity into jobs and capex in Johor, and challenging the perception that Asian locations are cheaper but operationally unreliable. Malaysia is dedicating infrastructure and large-scale industrial land — 3,500–3,600 sq km (350,000–360,000 ha), nearly four to five times the size of Singapore. What CFOs are watching next: Early leasing and pilot deployments in Johor — a ‘wait-and-see’ hedge rather than a full relocation Border and connectivity performance metrics, not policy announcements — especially if they demonstrate consistency and speed Progress on the Johor–Singapore Rapid Transit System Link, scheduled for completion in late 2026,