Asia is home to over 4.5 billion people, making it the most populous continent on Earth with approximately 2/3 of the world’s population living there.
In the last decades, it has experienced a tremendous technological boom, and the economies there are relatively stable. GDP growth in many of the region’s economies outstrips the ones from Western countries, and recent forecasts predict Asian economies will be larger than the rest of the world combined in 2020.
The accelerated economic growth and stability are one of the many reasons why you should consider Asia as your next opportunity to expand abroad.
Spectacular economic growth
In the last 60 years, Asia has experienced spectacular economic growth and has become a breeding ground for fast-moving, innovative, and competitive businesses. Since 1960, Asia has become richer faster than any other region of the world.
Of course, this growth has not occurred at the same pace all over the continent. The eastern half of the continent and more specifically China, Hong Kong, Indonesia, South Korea, Malaysia, Singapore, Taiwan, Thailand, and Vietnam have been champions in economic growth. Countries such as Cambodia, Myanmar and Laos are now emerging as exciting growth opportunities in the near term.
Recent forecasts predict that in 2020 those economies’ GDP will overtake the GDP of the rest of the world combined, and by 2030 is expected to add approximately 60% to global growth. This will essentially make the global economy depend on Asian markets, which are taking the lead.
The majority of the growth will come from China, India and the ASEAN (Association of South East Asian Nations) countries, and it will give rise to shifting world order with Asian economies taking the lead as global leaders and advertising their governance model across the world.
Large consumer market
A vast population in Asia also delivers a huge consumer market to companies. Many international businesses seek to expand in Asia simply because it is more profitable to offer a product or services to 263 million customers in Indonesia than the 1.32 million in Estonia.
Although Asian countries tend to be very proud of their products and services, Asian customers love to spend and have a curious fascination with foreign products and culture, mainly Western.
Asia has a very business-friendly environment, especially for foreign investors.
Singapore, for instance, offers low taxes for companies, and it has an easy setup for new businesses. Singapore has consistently been recognised among the world’s best places to do business and remains among the top choices for business investors.
Compared to other countries considered as business hubs, Singapore offers one of the easiest and quickest processes of business registration, which attracts investors to start a business in Singapore. You can register a company within one day with a capital of just SGD 1 to start your expansion into the Asian markets.
Hong Kong is similar to Singapore in terms of business advantages and ease of setting up and doing business. Foreign investors in Hong Kong have access to low taxation, and international corporations can expand their operations into other Asian economies by opening a branch in Hong Kong. Hong Kong has the added advantage of proximity to the vast Chinese market and preferential trade terms with China compared to other countries.
High-technology, manufacturing, biotechnology and health services are among the business sectors favoured by the Malaysian government. They are encouraged by tax incentives for certain types of investments into the country. For instance, in 2019 the Malaysian Investment Development Authority (MIDA) announced that companies eligible for the government’s Principal Hub (PH) incentive would be able to enjoy a 10% tax rate for their operations instead of 24%.
In this way, Malaysia is starting to attract numerous investors to use the country as a base for conducting their regional or global business. In southern Malaysia, the state of Johor Bahru is positioning itself through tax and investment incentives, as a low-cost middle and back-office location for banks and other financial services firms in Singapore.
Thailand supports foreign investors and businesses through its special investment policies that focus on free trade. The country gives special support to companies and activities that promote innovation and technology. In December 2019, Thailand’s Board of Investment (BOI) also issued new incentives to attract investments in the country’s Eastern Economic Corridor (EEC).
The EEC is a special development zone that includes three provinces: Chonburi, Rayong and Chachoengsao. This latest incentive package includes tax reductions and holidays, as well as an expansion on the type of activities that will be eligible for these incentives.
The above are only a few examplesม, but overall Asia prides itself with:
- Low corporate tax rates
- Comprehensive double tax treaty network with countries in ASEAN and around the world
- Sensible employment law regime allowing for appropriately qualified foreigners to work in Asia
- Good intellectual property protection
- Asia is also home to one of the largest arbitration centres in the world, namely the Singapore International Arbitration Center (SIAC)
- Access to a comprehensive and highly sophisticated banking network
- 100% foreign business ownership is largely permitted
- Share transfers are freely allowed, as is the issuance of new shares by a company
Hub for startups
In the last few years, money has been pouring into Asia’s tech startup scene, and international startup investors continue on betting big on the region’s rapid growth, large consumer markets, and youthful customers.
Cities like Singapore and Ho Chi Minh City are competing to become the next Silicon Valley with their governments outperforming each other in offering incentives for investments.
For example, the Singapore government rolled out *Startup SG* which is a **one-stop source for entrepreneurs to gain access to loans, grants, funding, and capability enhancement. The seven pillars of Startup SG include:
- Startup SG Founder provides mentorship and a startup capital grant of S$30,000 to first-time entrepreneurs with innovative business ideas.
- Startup SG Tech provides early-stage funding for the commercialisation of proprietary technology.
- Startup SG Accelerator provides funding and non-financial support to incubators and accelerators in strategic growth sectors.
- Startup SG Equity aims to catalyse more investments into Singapore-based deep-tech startups, whereby the government co-invests with a third-party investor.
- Startup SG Loan provides government-backed loans to startups to catalyse their growth opportunities.
- Startup SG Talent offers various schemes including EntrePass, T-Up, Global Ready Talent Programme and Tech@SG Programm, to help startups to attract talent to Singapore.
- Startup SG Infrastructure provides startups with the spaces that they need to grow, experiment and flourish.
Vietnam, in turn, is a very young country. The median age in Vietnam is 31, with almost 70% of the population under 40 years old. Since 2016, the government has been actively promoting the local tech industry through legislative measures.
The Law on Technology Transfer makes it easier for local startups to access tech from abroad, and the Decree 38-ND-CP provides additional legal protections to startups and allows increased access to state funding. This resulted in Vietnam becoming home to as many as 3,000 startups, making it one of the largest startup ecosystems in Asia. In 2017, 92 firms secured deals worth a record US$292 million, a 42% increase from 2016’s US$205 million, according to Topica Founder Institute.
Some of the programs are as follows:
- SpeedUP is a VND 11.75 billion (US$ 520,520) fund, which has been started by Ho Chi Minh City’s Department of Science and Technology. The fund invests in 14 startups, with investments ranging from VND 350 million (US$ 15,500) to VND 1,282 billion (US$ 56,792).
- Startupcity.vn is an online platform launched by Hanoi’s People Committee that has details about startups and investors and aims to connect investors with entrepreneurs.
- Vietnam – Finnland Innovation Partnership Programme is a program financed jointly by both governments. The fund’s investments focus on innovative companies that are aiming for international growth.
- Saigon Silicon City Center is a 52-hectare complex, which is being built to support tech-focused startups and international firms. It is expected to attract investments worth US$ 1.5 billion by 2020.
- Mekong Business Initiative is a partnership program between the Asian Development Bank and the Government of Australia that focuses on alternative financing, including venture capital, angel investments, and fintech in Cambodia, Laos, Myanmar, and Vietnam.
- Mobile Applications Laboratory (mLab) East Asia was launched by Ho Chi Minh City and has an incubation program that focuses on mentoring, training, access to equipment, and financing.
- National Technology Innovation Fund (NATIF) is a government agency and financial institution under Vietnam’s Ministry of Science and Technology that provides grants and preferential loans for R&D, innovation, and technology transfer.
- National Agency for Technology, Entrepreneurship, and Commercialization Development (NATECD) is a national platform under Vietnam’s Ministry of Science and Technology that provides training, mentorship, and financial aid to startups.
Rising tourism industry
Another reason to consider Asia as your next opportunity to expand abroad is the booming Asian tourism industry which has tripled in size over the last ten years. The well-developed infrastructure and the numerous tourist attraction in Asian countries have made the tourism industry a sector worthy of your investment.
Asia’s reputation as being the destination of choice for holiday goers, boasting must-see attractions, and idyllic natural landscapes, have attracted domestic as well as international tourists and contributed enormously to the countries’ GDP. Although the Covid-19 pandemic has hit the tourism industry hard, it promises to bounce back in 2021 and beyond.
The above is by no means an exhaustive list of reasons why you should consider Asia as your next opportunity to expand abroad. There are so many additional nuances worth exploring depending on the jurisdiction you may be looking at.
We at Acclime advise investors in Cambodia, China, Hong Kong, Indonesia, Singapore, Malaysia, Thailand and Vietnam, with offices in all of those countries. If you are considering one of these countries as your next business expansion, contact us today and speak with one of our experts who can help you identify all of the advantages of investing in the current economic climate.