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Singapore is losing its gleam for many MNCs, as labour constraints and rising cost continue to be a concern.

While Singapore remains attractive to investors, companies are beginning to question whether it is still an ideal regional management hub, Justin Wood, director of The Economist Corporate Network (ECN), told The Business Times.

ECN’s 2013 Asia Business Outlook Survey found factors affecting Singapore’s allure as a regional headquarters hub include cost of living and inflation (52%), soaring property prices (38%) and labour shortages (34%).

“Anecdotally, some firms are moving parts of their operations that don’t need to be in their regional hubs into less expensive cities in other countries. Other firms are exploring more distributed management models, spreading their senior team across several markets rather than putting them all in one place,” the survey reported.

But the labour crunch is helping increase local employment, as companies turn to Singaporeans and permanent residents to fill jobs.

A 2012 report by the Ministry of Manpower found the employment rate of locals inched up 0.8% to 78.8% in 2012.

Another silver lining is business confidence seems to be on the rise in Asia. Nearly half of the survey’s respondents felt their business expectations for this year have improved, and companies are anticipating faster growth for 2013 in every Asia Pacific market except Japan.

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