By Globalization Partners
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Are you in the early stages of planning your company’s international expansion strategy? No matter where you’re headquartered, consider Southeast Asia as your next landing spot.
With strong and growing economies, it’s one of the most dynamic regions in the world for business growth. It’s an ideal location for companies that are expanding internationally in order to expand their total addressable market as well as access top-tier talent.
Overview of the Region
Southeast Asia is the third largest market in the world, with a total population of over 635 million people, and the sixth largest economy in the world, with a total combined GDP valued at U.S. $3.0 trillion in 2018.
To promote economic growth and stability in the region, the Association of Southeast Asian Nations (ASEAN) was founded in 1967. To date, there are 10 member states that belong to ASEAN. Many identify six ASEAN countries as the “tigers” of the region: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
What makes these countries so appealing to growing companies? Let’s take a quick look at six of the top countries for international expansion in Southeast Asia.
Singapore: Location, Location, Location
Singapore, a republic with a multi-racial population of over five million, is positioned in the heart of Southeast Asia – an ideal location for traveling or transporting goods throughout the region and a top target for international expansion for many high-growth companies. It has a record of political stability and the government actively encourages investment from international business interests. All these factors combine to make the country extremely attractive to multinational companies.
And even if Singapore is home to only 5.7 million people, it is the third most densely populated country in the world at 20,000 people per square mile, and one of the most developed economies, with a GDP per capita of over U.S. $50,000.
Singapore is one of the world’s busiest transportation hubs with container ports linking 123 countries, and an international airport that caters to over 5,000 weekly flights. Singapore also has an extensive network of free trade agreements with Asia and other major economies.
You will find that Singapore is a melting pot of cultures that includes Chinese, Malay, Indian, and Eurasian communities. Singaporean Chinese form most of the population, but the cultural norms could change depending on who you’re talking to. Click here for a deep dive into recruiting and hiring in Singapore.
Indonesia: Growing Talent Pool
Indonesia has a population of 267 million, making it the world’s fourth most populous nation, and the 10th largest economy in terms of purchasing power parity. Indonesia has cut poverty rates by half since 1999, emerging as a lower-middle-income country.
Indonesia is the world’s largest archipelago, composed of approximately 17,000 islands. These include several large islands like Java, Sumatera, Kalimantan, Sulawesi and Papua, as well as various islands that are popular tourist destinations, such as Bali, Lombok and Komodo. Java is the main and most developed island where almost 60 percent of the Indonesian population live and most of the business and governmental activities are conducted.
A rapidly growing population is putting strain on the Indonesian employment market, with an estimated 2 million new entrants seeking jobs each year. Agriculture and services are the two biggest sectors, employing respectively 43 percent and 44 percent of the workforce.
For the last 10 years, the government of Indonesia has been actively introducing measures directed at encouraging investing in Indonesia and improving the country’s regulatory and economic environment. However, there are still nine procedures to establish a corporate entity in Indonesia which take an average of 47 days to complete.
Indonesian labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners provides Employer of Record services for companies planning an international expansion into Indonesia, and want to hire employees and run payroll without first establishing a branch office or subsidiary in Indonesia.
Philippines: Powerful Consumer Base
Supported by a population of 107 million that increases by 2 million every year, the Philippines is one of the largest growing consumer markets in Southeast Asia. The depth and quality of its talent ranks make the Philippines an attractive place for people doing business.
The Filipino worker is known for their diligence, hard work, creativity, professionalism, technical skills, and English proficiency. In the recent survey of Global English Corporation, a cloud-based advance English literacy software provider, the Philippines ranked best in the world for Business English Proficiency.
Want to know all the details on hiring, negotiating and doing business in the Philippines? Don’t miss our Globalpedia overview of this country.
Thailand: International Investors Welcome
The current population of Thailand is 69 million. It has been widely cited as a development success story, moving from a low-income to an upper-income country in less than a generation.
For decades, Thailand has been a stronghold for automobile manufacturing. The government offers land ownership rights for international investors and smooth visa and permit processes. And tourism accounted for 18 percent of Thailand’s gross domestic product in 2019.
Establishing a branch office or subsidiary in Thailand to engage a small team is time-consuming, expensive, and complex. Thai labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners makes it painless and easy to expand into Thailand.
Vietnam: Investments Are Paying Off
Vietnam is experiencing rapid demographic and social change. From being one of the poorest nations in the world, it is now a lower middle-income country with expanding gross domestic product, improving infrastructure, and a steady increase in foreign direct investment. Its population reached 97 million in 2018, and 70 percent of the population is under 35 years of age.
Despite being a one-party communist state, Vietnam has signed several free trade agreements to help accelerate the country’s integration into the global economy, has diplomatic relations with 185 countries, and is one of the few countries in the region that allows 100 percent foreign ownership for most sectors.
Vietnam is investing heavily in infrastructure, such as highways and seaports, providing an efficient business environment for investors. Additionally, the Vietnamese government offers international companies one of the most competitive tax regimes in the region. Read more about expanding into Vietnam here.
Malaysia: Political Stability Powering Growth
Malaysia boasts one of southeast Asia’s most vibrant economies, the fruit of decades of industrial growth and political stability. Malaysia has seen a steady improvement in its business climate for domestic small and medium-sized enterprises, moving up three places to a global rank of 12th out of 190 economies in the latest ease of doing business ranking by the World Bank.
With a population of 33 million, Malaysia has built a well-educated and highly diverse workforce. It has a reliable digital infrastructure and has emerged as an attractive hub for financial, information and communications technology, and logistic sectors. The country is benefiting from a growth in manufacturing and is a major tourist destination.
International expansion in Malaysia requires a comprehensive understanding of the country’s culture and norms, so make sure you check our recommendations on Globalpedia.
We Support Your International Expansion Strategy for Southeast Asia
Globalization Partners enables companies like yours to quickly and easily expand into more than 187 countries, including locations in southeast Asia, without the hassle of setting up local branch offices or subsidiaries. You identify the talent, and we employ your team member via our in-country payroll, lifting the burden of figuring out HR, tax, and legal matters from your shoulders to ours.
Go after the opportunities for your business in places like southeast Asia – tap into new markets and add the best talent to your team. Globalization Partners helps you succeed faster.