(1) The reason why Paypal implements a restriction on withdrawals to a credit card, includes, but is not limited to, the possibility of fraudsters using it to skim off the funds quickly. The method is quite simple - there are a few variations - e.g. set up a fake card, use that to register Paypal, perform the fraud, skim the funds to the card, use the funds to buy items, then fence items, etc.

(2) Hence, the preference for Paypal to implement a system where withdrawals are to bank accounts. And only bank accounts in particular countries, in which the opening of bank accounts follows a particularly strict and accepted process. Sadly, Malaysia doesn't qualify haha... anyway, so Singapore is the closest. For my various Paypal accounts, I used bank accounts in Singapore, UK and US. There are a lot of other countries you can choose from.
So, with regards to your comment -> Your only option is US-based bank account / Singapore-based bank account -> Nope, there are other choices.

(3) US-based accounts. If you pass their resident status requirements, easy to open. You cannot easily open offshore bank accounts, these kind of controls are in place to prevent people from laundering assets.

(4) Singapore-based accounts. Assuming you can open it, nope Paypal's fraud detection systems is not based on that. I can tell you how their fraud detection systems work but it'd be extremely boring... it's perfectly fine for you to access your account from anywhere in the world. For example, I sometimes access my US-based Paypal account from Malaysia and my Singapore-based Paypal account from the UK. No problems whatsoever.

(5) If all else fails, just make sure you set up your business to receive other payment options. Paypal is a very limited option to receive funds. The no. 1 thing you want to do is make sure you have a good credit card payment processor.

(6) Bonus note -> Be wary of chargebacks when setting up your Paypal payment system.

Good luck!