A shift in incentives
Recent years have seen a shift in the nature and application of the incentives for companies relocating their headquarters to Singapore, Thailand and Malaysia as their governments look to attract key value-adding functions, as well as the executive ‘top brass’. What kind of incentives are on offer in each country, how do they compare and how can your business benefit?
As growth in output and demand in Southeast Asia continue to accelerate, where to base your business and locate key functions (eg marketing or R&D) within the region is high on the corporate agenda. The major commercial centres within Southeast Asia, including Singapore, Bangkok and Kuala Lumpur are also an increasingly popular base for wider international and global operations. Looking at the East Asia region as a whole, the broad and well-contested choice includes Hong Kong and China's major commercial centres.
This article looks at the key considerations including, access to talent, language, employment costs, infrastructure development, regulatory environment and proximity to markets targeted for growth. While, in addition to this, favourable tax arrangements may also be an attraction if all these other criteria are satisfied. The business benefits will always be an important part of the location choice.
So how are governments seeking to encourage businesses to locate to their shores? The packages have evolved and we are now even seeing different levels of packages, reflecting competition in this arena.
So which is the best bet? Clearly business factors are paramount. Areas such as stability, size of the country and relative development are all going to come into play.
- Singapore is more established and through its great port is better connected.
- Thailand is at the apex of the fast growing Greater Mekong, a highly interconnected sub-region with a population greater than the United States.
- Malaysia’s size and improving infrastructure would make it attractive to a broad range of manufacturing as well as high-tech enterprises.
Government incentives are really just the icing on this business cake, as valuable as they can be and as keenly contested as they are. What is clear is that the biggest benefits will go to those corporations who are prepared to invest the most in their new locations.
How can relocation add value?
Business relocation and associated restructuring can deliver significant commercial, operational and tax management benefits. And it isn’t just large multinationals who are on the move, many smaller and privately-owned companies are now realising the potential gains. Grant Thornton has significant experience in advising clients on how a business can benefit. Talk to your local firm about how Grant Thornton can help your organisation reach its growth potential.