Introduction
Businesses of all sizes and forms constantly look for opportunities to grow and develop. Companies operating out of Singapore have enjoyed the benefits of being centrally located in Asia. The country offers numerous platforms to expand internationally regardless of business sectors.
The Singapore government’s business grants can be taken by companies, especially small and medium enterprises, for venturing to foreign markets. Three of the most lucrative markets in Asia- Thailand, Vietnam and China are discussed in brief here. Know the markets better, understand the benefits of doing business over there and get going.
Thailand- The Developing Friendly Neighbor
The growth of Thailand has been a great development success story. Smart economic policies have moved this Asian nation from being a low income to upper-middle income economy. The country is making progress towards achieving goals of sustainable development. Thailand has made remarkable achievements in its social and economic scenes over the last four decades.
However, economic growth slowed to 2.4 percent in 2019 as compared to the 4.2 percent recorded in 2018. The growth contracted further by 6.1 percent in the year 2020 due to low external demand. This affected Thailand’s trade and tourism, weakened domestic consumption and disrupted supply chains.
The Thai government has initiated the ‘Thailand 4.0’ economic model to direct economic development over the next 20 years. The model proposed to build the nation with a strong foundation in science, technology, innovation and creativity. Considering the geographic advantages that Singapore has in Asia, it is a great time for business expansion to Thailand.
The Thailand Board of Investment (BOI), welcomes foreign direct investments that are deemed beneficial for the country. BOI has discretionary powers in granting certain trade, employment, taxation, financial and other benefits. Businesses promoting research and development, and valuing creation and innovation in the agricultural and services sectors are given privileges. Southern Thailand invites businesses that can enhance their regional development agenda. Non-tax incentives under BOI for foreign businesses include a majority of foreign ownership, land ownership, expedited work permits and visas for foreign talents. Tax incentives include reduced or exempted import duties on machinery, material and components. Up to 8 years of corporate income tax exemptions, and the exclusion of income tax on promoted projects’ dividends are few other benefits.
Vietnam- The Dynamic and Emerging East Asian Nation
Vietnam has transformed from one of the poorest economies to a lower-middle income country. In the East Asia region, Vietnam is a dynamic emerging nation. Vietnam’s population is expected to reach 97.3 million by the end of 2021.
Vietnam is deeply integrated into the global economy. Covid-19 pandemic has struck them badly. The country has shown amazing resilience. In 2020, GDP grew by 2.9 percent. However, household income in 2021 plummeted as compared with 2020. Despite this, the economy is expected to grow 6.6 percent in 2021 amidst an ongoing pandemic situation. The government has achieved robust recovery with Vietnam’s domestic demand. The country’s export-oriented manufacturing sector is being boosted for growth.
Vietnam is witnessing a fast-paced commercial environment with half of its population under 30 years of age. Economic growth is exponential and reforms are ongoing.
Equipment sales, managerial or consulting services and technologies can be targeted for business expansion. Infrastructure development projects are also attracting foreign direct investments in Vietnam. Companies from the West have shown great interest in expanding to Vietnam over these years. Reports from the Asian Development Bank are notable here, pinning Vietnam as the highest in the region for public and private infrastructure investment. This accounts for more than 5.7 percent of Vietnam’s GDP. The Vietnamese government is looking at attaining a per capita GDP of USD 18,000 by 2035.
China- The Powerhouse in Asia
China began economic reforms in the last quarter of the 19th century resulting in a 10 percent increase in GDP annually. Since then, over 800 million citizens have been elevated from poverty. The country surpassed 1.4 billion population in 2021.
Significant improvements are visible in the access to healthcare, education and relevant services during the last four decades. These base effects drive China’s economy to foster growth. China’s GDP is expected to grow by 8.5 percent in 2021. USD 14 trillion was China’s GDP in 2019, prior to the outbreak of Covid-19.
Real estate, leasing and business services, information transmission, computer services, software, and scientific studies all attract foreign direct investments in China. China is by large a self-sufficient and self-sustaining economy. Businesses eyeing expansion to China can benefit from tax reliefs and industrial promotion schemes offered by federal and state governments.
Business expansion from Singapore to foreign lands can be tedious and time-consuming. They can burn through a lot of your assets. Funding at the right time is the most important thing, catalyzing your overseas business expansion.
Singapore Government Business Grants
The Singapore government’s grants can be of great help in venturing out to China, Vietnam and Thailand. The Market Readiness Assistance (MRA) is one such grant that can give you a boost for international presence. Small and Medium Enterprises (SMEs) can benefit from MRA grants to cover up to 70 percent of eligible costs pertaining to overseas expansion. The grant can be used for venturing into these Asian countries starting with market setup, promotion and business development. Remember to have a strong foundation, strategies, vision, technological support, innovation and a drive to grow to be eligible for MRA provisions.
The Enterprise Development Grant (EDG) is yet another grant for Singaporean companies to expand to international markets. EDG mainly supports business upgrading, innovation and expansion overseas. The grant is provided for companies with strong core capabilities, innovation, productivity and foreign market access.
There are other schemes under Singapore government’s international co-innovation programmes targeting businesses looking for cross-border collaboration on technology products. Companies can choose to work with international counterparts to co-innovate and exchange ideas, test them and then scale up into other international markets.
Conclusion
Asia is growing at a tremendous pace. Countries in the region are opening up plenty of room for SMEs and MNCs to coexist in their markets and cultivating symbiotic relations. Liberal trade agreements, development vision, accelerated economic growth and globalization have shed light on the need for business expansion within Asia. Thailand, Vietnam and China are three strong international markets with distinctive sectors of interest among business people. Get country-specific personalized assistance from a certified management consultant if expansion plans are on your cards.
