Continuous development in Asia is leading to the emergence of new global business hubs. Attractive government incentives, expanding talent pools, and swift digitalization are attracting foreign companies to the Asia-Pacific region and its vast consumer markets.
Although traditional financial centers like New York and London still dominate most metrics, the swift rise of emerging economies in the Asia-Pacific region indicates new centers of influence. This guide examines five such locations: Hong Kong, Malaysia, Singapore, Taiwan, and Thailand, highlighting why these are prime locations for starting or expanding a business in 2024.
Hong Kong ðŸ‡ðŸ‡°
Hong Kong is widely acknowledged as one of the world’s leading financial centers, known for its economic stability and growth, which create an attractive environment for businesses and investors. This success is partly due to its proximity to China, the world’s second-largest economy. However, its strategic location, robust economic fundamentals, and strong regulatory framework are also significant factors. Let’s delve into each of these aspects.
Strategic Location: Hong Kong’s central position in Asia offers a gateway not only to China but also to the broader region. Major business hubs like Beijing, Shanghai, and Kuala Lumpur share the same time zone, while cities such as Bangkok, Jakarta, and Tokyo are just one hour ahead or behind. This makes Hong Kong an ideal base for multinational corporations and institutions to conduct business. Additionally, Hong Kong boasts a deep-water port and well-developed air and rail infrastructure, which facilitate efficient trade and logistics.
Sound Economic Fundamentals: Hong Kong maintains a free-market economy with low taxes, a stable currency, and a highly skilled workforce. Foreigners can fully own businesses, and there are no capital gains taxes or goods and services taxes. Investment gains and capital transactions, such as trading company stocks, are also tax-exempt. Corporate tax rates follow a two-tiered system: 8.25% on the first HKD 2 million of assessable profits and 16.5% on amounts above that. For unincorporated businesses, the rates are 7.5% and 15%. The workforce in Hong Kong is capable and well-educated, fluent in English, Cantonese, and Mandarin, attracting professionals globally and fostering a multicultural work environment.
Strong Regulatory Framework: Hong Kong’s robust regulatory framework ensures the integrity and efficiency of its financial markets, adhering to international best practices and overseen by the Hong Kong Monetary Authority (HKMA). The city’s strong anti-corruption measures help maintain its reputation as a transparent financial center. Notably, the HKMA handles over 70% of China’s renminbi (RMB) cross-border payments, making Hong Kong the largest global offshore hub for RMB financial services, including asset and risk management, financing, and settlement.
Lastly, the rise of Singapore as a global investment hub has prompted Hong Kong to enhance its appeal to foreign investors through the InvestHK 2023 Policy Address, aiming to reinforce its position in the Asia-Pacific region. (Singapore is discussed in more detail below.)
Malaysia 🇲🇾
Malaysia is an emerging financial center in Asia with a steadily growing economy that is increasingly attracting foreign investors. Kuala Lumpur is a popular investment destination within Malaysia. The standard corporate tax rate in Malaysia is 24%. For SMEs, the first MYR 600,000 is taxed at 17%, and any amount above that is taxed at 24%. SMEs are defined as companies incorporated in Malaysia with paid-up capital of MYR 2.5 million or less, not part of a larger company group, and with a gross income not exceeding MYR 50 million for the assessment year. Companies in the wholesale, retail, and distributive business sectors need approval from the Ministry of Consumerism and Trade to have 100% foreign ownership. Those in education, banking and finance, agriculture, or tourism face stricter regulations and may require local Malay co-ownership.
Malaysia boasts a well-educated and skilled workforce, with many multilingual individuals fluent in English, Malay, and Chinese. This linguistic diversity enhances communication and operational efficiency for foreign businesses in the country.
Investors in technology and innovation can find significant advantages in Malaysia. The government offers investment and tax incentives to high-tech and innovative sectors. With a liberal and transparent investment policy, developed infrastructure, high cost-competitiveness, ASEAN membership, and attractive government incentives, Malaysia is a compelling location for foreign companies and entrepreneurs to establish their businesses.
Singapore 🇸🇬
Singapore stands out as a top business hub in Asia, renowned for its business-friendly environment and robust economic infrastructure. Company registration in Singapore is a preferred destination for international banks, multinational organizations, and businesses looking to establish operations in Asia.
Singapore offers an appealing tax system, with a corporate tax rate of 17% on taxable income and concessional rates on the first SGD 200,000 of a company’s income. There are no taxes on capital gains and dividend income, and foreign-sourced income is tax-exempt if it has already been taxed in a country with a headline tax rate of at least 15%. Additionally, foreigners can fully own the companies they establish in Singapore.
Foreign investors benefit from a multilingual talent pool, with English, Mandarin, Malay, and Tamil as the official languages. The widespread use of English allows foreign companies to integrate smoothly into the local business environment. Singapore boasts highly skilled personnel thanks to its robust education system, and its favorable immigration policies facilitate the relocation of skilled professionals from other countries. As a member of ASEAN, Singapore enjoys low or no tariff trade among member countries, further enhancing its appeal.
As a key business center in Asia, Singapore offers numerous advantages for companies looking to expand. Its low tax policies, excellent talent development programs, and status as a leading business hub have attracted multinational corporations such as Google, Facebook, and Pfizer to set up their regional headquarters in Singapore.