Japanese businesses in S’pore most keen on expanding to India: JETRO survey
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India has emerged as a production hub for Japanese carmakers like Suzuki.
PHOTO: REUTERS
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- JETRO's survey reveals 43% of Japanese firms in Singapore plan overseas expansion, an increase from 2024, with India being the top destination.
- Despite global uncertainty, around 67% of Japanese companies expect operating profits in 2025.
- Increased labour costs was named as the biggest investment barrier for firms.
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SINGAPORE - Japanese companies operating in Singapore are interested to expand to more overseas destinations and regard India as their top choice, a survey released on Dec 12 found.
Some 43 per cent of businesses were looking to enter new markets, according to the Japan External Trade Organization (JETRO) Singapore, which polled 1,184 Japanese companies in the city-state in August and September. This was 6.9 percentage points higher than in 2024.
JETRO is a Japanese government-related organisation that works to promote mutual trade and investment between Japan and the rest of the world.
Originally established in 1958 to promote Japanese exports abroad, its focus has shifted to encouraging foreign direct investment in Japan, and helping small and medium-sized Japanese firms to export globally.
India was the most desirable destination for companies, ahead of Malaysia, Indonesia and Vietnam, the survey found.
It did not indicate why businesses were keen to expand to India. The country has emerged as a hub for Japanese carmakers, with Honda, Toyota and Suzuki spending billions of dollars on factories there in an effort to reduce dependence on China.
Toyota is the world’s largest carmaker, while Suzuki is a leader in the Indian market, where it holds an almost 40 per cent share.
The survey also found that Japanese companies in Singapore have a strong appetite for business expansion, despite global uncertainty and US tariffs. It noted that close to 67 per cent of businesses expected to post an operating profit in 2025, indicating that their performances have been steady.
However, US tariffs continued to weigh on the outlook of businesses, according to the survey. Around a fifth of the companies exported their products to the US directly and indirectly.
Many of them expressed concern about a decline in demand for their products in the US, because of an economic slowdown and unstable tariff rates.
A smaller group said they expected to be unaffected by tariffs. Instead, they projected opportunities to capture business in the US, as Chinese firms accelerate their expansion in South-east Asia.
Meanwhile, 91.3 per cent of the Japanese companies cited increased labour costs as their biggest barrier to investment.
This was followed by a shortage of land and office facilities, and the rising cost of obtaining space. Many firms also cited obtaining visas or work permits as a barrier.
JETRO Singapore also asked firms about the impact of the Complementarity Assessment Framework (COMPASS)
Close to half of the businesses that have since reviewed their workforce said they reduced their number of foreign workers.
Early results from COMPASS suggest it has made employers more selective in hiring foreign talent
The share of firms with higher dependence on foreigners has generally decreased by 15 per cent, Dr Tan said during a debate on the Ministry of Manpower’s budget in March 2025.
