Asia is emerging as a dominant global financial hub, attracting foreign companies due to favorable government regulations, appealing tax rates, and a growing talent pool. According to the World Bank’s Doing Business 2020 report, Singapore, Hong Kong, Malaysia, Taiwan, and Thailand stand out as the top five Asian countries for foreign businesses.
This article delves into the aspects that make each market unique. For more information, please consult the accompanying article on Challenges and Opportunities of Doing Business in Asia.
#1. Singapore
Singapore, a leading hub in Asia, is favored by international banks and multinational organizations. Boasting an attractive tax regime, with a 17% corporate tax rate on taxable income and concessional rates for the first S$200,000, Singapore offers a tax haven for foreign investors. The absence of taxes on capital gains and dividend income, coupled with exemptions for foreign-sourced income, further enhances its appeal. The multilingual talent pool, sound education policies, and business-friendly immigration guidelines contribute to Singapore’s status as a preferred destination for companies like Google, Facebook, and Pfizer.
#2. Hong Kong
Situated at the heart of Asia, Hong Kong is renowned as a premier financial center. With a 16.5% standard corporate tax rate and exemptions for the first HKD 2 million of assessable profits, Hong Kong provides an enticing environment for multinational companies such as AXA, J.P. Morgan, and Goldman Sachs. Its strategic location as a gateway to other Asian countries, particularly China, adds to its attractiveness. Hong Kong’s language advantage, being predominantly fluent in English, and the ability for foreigners to own 100% of their companies further contribute to its appeal.
#3. Malaysia
As an evolving financial center in Asia, Malaysia, particularly Kuala Lumpur, is gaining popularity among foreign investors. With a 24% standard corporate tax rate, Malaysia offers tax incentives for SMEs. The country’s multilingual population (English, Malay, Chinese) and its broadly liberal and transparent investment policy make it an attractive destination. Malaysia’s focus on technology and innovation sectors, backed by government incentives, positions it favorably for businesses in these domains.
#4. Taiwan
Taiwan stands out for its favorable fiscal climate and world-class financial services industry. Featuring a 20% standard corporate tax rate and exemptions for companies with taxable income below NTD 120,000, Taiwan attracts foreign investors, particularly in the technology sector. The government’s support through initiatives like the Asian Silicon Valley Development Plan has led companies such as Google, Microsoft, and Corning to expand their presence in Taiwan.
#5. Thailand
With a population of 69 million and a growing economy, Thailand is a high-potential destination for foreign investors. Despite a 20% standard corporate tax rate, tax incentives for small businesses make it attractive. The language barrier can be a challenge, but Thailand’s appeal lies in its industry and manufacturing sectors. Companies like Ford, Toyota, Tesco, Body Shop, and Marks and Spencer have found success in Thailand, benefiting from good infrastructure, low start-up costs, ASEAN membership, and proximity to Asian markets.
A pilot view of the top five countries for doing business in Asia according to the World Bank
| Country | Ranking | Tax Rates | Official Languages | Foreign Ownership | Unique Information | Typical Use |
|---|---|---|---|---|---|---|
| Singapore | 86.2 | Corporate tax rate on taxable income is 17%, with concessional rates on the first $200,000. Capital gains and dividend income taxed at 0%. All foreign-sourced income is tax-exempt under certain conditions. | English is widely spoken, facilitating seamless integration for foreign companies. | Foreigners can own 100% of the company in Singapore. | Singapore aims to attract foreign companies for regional headquarters, especially in the tech sector, leveraging a skilled workforce and government-provided tax incentives. Member of ASEAN. | Regional Headquarters |
| Hong Kong | 85.3 | Corporate tax rate is 16.5%. The first HKD 2 million profits subject to half rate (8.25%). | Fluent in English; official languages include Cantonese, English, and Mandarin. | Foreigners can own 100% of the company in Hong Kong. | Popular destination for multinational companies like AXA, J.P. Morgan, Goldman Sachs, and Prudential to establish regional headquarters. Member of ASEAN. | Regional Headquarters |
| Malaysia | 81.5 | Corporate tax rate is 24%. For SMEs, the first MYR 600,000 at 17%, remaining balance at 24%. | Malaysians are multilingual (English, Malay, Chinese). | Foreigners can own 100% in specific industries. | Malaysia offers a favorable environment for tech and innovation businesses, with government support, investment incentives, and transparent policies. Member of ASEAN. | Entrepreneurs & those seeking government support |
| Taiwan | 80.2 | Corporate tax rate is 20%. Companies with taxable income under NTI$120,000 are tax-exempt. | Official language is Mandarin; business community fluent in English. | Foreigners can own 100% in most sectors. | Ideal for technology-focused foreign companies due to government support and the availability of affordable, highly educated IT talent. | High-tech companies or organizations seeking tech manufacturing exposure |
| Thailand | 80.1 | Corporate tax is 20%. | Language barrier may exist, with fluent English mainly in management. | General foreign ownership limited to 49%. | Attractive for industry and manufacturing sectors with good infrastructure, low startup costs, and proximity to Asian markets. Member of ASEAN. | Industry & Manufacturing Organizations |
In addition to those mentioned by the World Bank, some additional markets, in Capital Cities’ opinion also make the list when considering a business expansion to Asia Pacific, due to either their readiness or opportunity they present:
Australia
Australia, with its stable economy and business-friendly environment, is an appealing destination for foreign investors. The corporate tax rate is 30%, but there are various incentives and deductions available. English is the primary language, and foreigners can own 100% of their companies. Industries like technology, finance, and natural resources find significant opportunities in Australia.
New Zealand
Known for its transparent regulatory framework and ease of doing business, New Zealand attracts foreign companies seeking stability and innovation. The corporate tax rate is 28%, and the country encourages entrepreneurship. With English as the predominant language, New Zealand offers a smooth integration for businesses. Foreign ownership is generally unrestricted.
Japan
As one of the world’s largest economies, Japan is a crucial player in the Asia Pacific region. The corporate tax rate is relatively high at 30.62%, but Japan offers a highly skilled workforce, advanced technology, and a vast consumer market. Tokyo, the capital, serves as a major financial hub, making it an attractive location for multinational corporations.
South Korea
South Korea’s robust economy and technological advancements make it an appealing destination for foreign businesses. The corporate tax rate is 25%. English is widely used in business, especially in multinational corporations. South Korea’s strategic location and well-developed infrastructure contribute to its attractiveness for industries like electronics, automotive, and technology.
Vietnam
Vietnam, with its rapidly growing economy, is becoming a hotspot for foreign investment. The corporate tax rate is 20%, and various incentives are available. English proficiency is increasing, especially in urban areas. Vietnam’s strategic location in Southeast Asia and its membership in ASEAN make it an ideal base for businesses looking to tap into the region’s potential.
In conclusion, the Asia Pacific region offers a diverse range of opportunities for foreign companies. These ten countries provide a snapshot of the favorable business environments, strategic advantages, and unique characteristics that make them attractive for business expansion.
Questions? Capital Cities can help.
Whether you are aiming to establish a new company, broaden your existing operations, or explore investment opportunities, Capital Cities can furnish you with tailored solutions and valuable insights to ensure a seamless and successful entry into the Asian market. Reach out today to schedule a call.