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1、A Collaboration between Cambridge Advisers and NUS Business School on a Field Service Project,under the guidance of Professor Mark GohNAVIGATINGINTOSOUTHEASTASIAAPRACTICALROADMAPTOSUCCESSFULREGIONALEXPANSIONA Collaboration between Cambridge Advisers and NUS Business School on a Field Service Project

2、,under the guidance of Professor Mark Goh Cambridge AdvisersWebsiteCEOs WhatsAppNicole ChenCambridge Advisers and National University of Singapore(NUS)Business School do not provide any warranties or make representations as to the accuracy,completeness,suitability or fitness for purpose of the Mater

3、ials and accept no responsibility for any acts or omissions made in reliance of the Materials.These Materials have been produced for reference purposes only and are not intended,in part or full,to constitute legal or professional advice.To the extent permitted by the applicable laws in your jurisdic

4、tion,the authors(including its employees,agents,consultants,affiliates)exclude all liability for any loss,damage,claim,proceeding and or expense including but not limited to legal costs,indirect special or consequential loss or damage,arising from acts or omission made in reliance of the Materials.W

5、here any law prohibits the exclusion of such liability,the co-authors and editors limit their respective liability to the resupply of the information.DISCLAIMERTABLE OF CONTENTSPREFACEAcknowledgementIntroductionThe ASEAN Expansion NavigatorPreamble:The Strategic Challenge for BusinessesMethodology:R

6、esearch Flow and Roadmap Development010409111111121414151720211420OverviewOpportunities in 5 ASEAN COIsMegaTrendsCOIs Emerging Index/Strengths in DiversityEconomic CompetitivenessPolitical Factors and Impact on Foreign InvestorsPolitical FriendlinessOpenness to Foreign InvestorsKey Political Factors

7、 for EvaluationWorkforce and Talent Development StrategiesWorkforce CompositionSkill LevelsTraining InitiativesLabour ProductivityInfrastructure Readiness and Strategic InvestmentsQuality of Existing InfrastructureFuture Development Investments0102036567232324262627272829303132324040424333Sustainabl

8、e Growth:Environmental ConsiderationsAbundance of Natural ResourcesEnvironmental,Social and Governance(ESG)RegulationsEnvironmental Impact Assessment(EIA)GuidelinesTax Policy Impact on Business CompetitivenessStandard Corporate Income TaxTax Credits and Incentives Avoidance of Double Taxation Agreem

9、ent(DTA)/Treaty(DTT)Operational Costs in the Business EnvironmentLabour CostCost of Land and RentLogistics Cost(Freight)Utilities CostNavigating Cultural Dynamics in Business OperationsFrameworkRoadmap to Regional ExpansionStage 1:Examine Strategic GoalsAssessing Strategic GoalsTypes of Overseas Exp

10、ansionSG+1 StrategyStage 2:Explore Overarching Landscape of COI Stage 3:Ensure Operational ReadinessStage 4:Establish Risk Management Practises Stage 5:Evidence of Immediate Goals AchievedStage 6:Empirical Long-Term Indicators4549566061ConclusionAppendix AAbout Cambridge AdvisersAbout National Unive

11、rsity of Singapore(NUS)Business School0403Cambridge AdvisersDirector,Singapore Cambridge Advisers Senior Adviser Cambridge AdvisersProfessor,Business Analytics&OperationsDirector(Industry Research)at The Logistics Institute-Asia Pacific(TLI-AP)December 2024PREFACEIn todays evolving business landscap

12、e,Southeast Asia presents unprecedented growth opportunities for companies seeking to expand their operations internationally.However,navigating the complexities of a region as diverse as Southeast Asia requires a nuanced understanding of varied economic,political,and cultural environments.From emer

13、ging regulatory challenges to shifting geopolitical dynamics,businesses face a range of considerations when evaluating expansion strategies.Against this backdrop,Cambridge Advisers is honoured to have collaborated with NUS Business School as a Field Service Project supervised by Professor Mark Goh t

14、o present this white paper,Navigating SEA:Regional Expansion Roadmap.This guide is designed to support foreign enterprises in their decision-making journey,providing an in-depth analysis of regional opportunities and practical steps for successful market entry into Singapore and selected countries i

15、n Southeast Asia.This paper combines macro-environmental insights,case studies,and a structured roadmap to assist businesses in their regional expansion journey.SuperviserProfessor Mark GohNicole ChenRaymond Moh照片照片04We would like to thank Professor Mark Goh and his field service project students fr

16、om the NUS Business School(Georgia Liu,Kacy Ong,Mithrajit Sivasangaran,Chua Xin Yi,Tan Xin Wei)who work closely with Cambridge Advisers team to develop this guide.We would also like to thank the following individuals for coordinating the interviews,collating and translating the contents:Ms Shi Jiayi

17、n and Ms Chua Li En,graduates from Shanghai Fudan University,and Ms Annie Ning and Ms Ruoyu from Xian Jiaotong-Liverpool University.We would also like to express our gratitude to the following individuals and organizations whose case studies and interviews made this publication possible.Jiangsu Kung

18、e Smart Technology Co.,LtdMerit Metals Sdn.Bhd.Professor Xu Xiang,Xian Jiaotong-Liverpool University International Business SchoolSuna Optoelectronics(Thailand)Co.,LtdSGET GROUPTuah&Suparto Law FirmW(Malaysia)*,a Malaysian subsidiary of Jiangsu electronics manufacturing company X(Singapore)*,a Singa

19、pore subsidiary of a Jiangsu state-owned enterprise specialised in supply chain solution XNode,a Singapore-China Cross Border Accelerator and Enterprise Singapores Global Innovation Alliance(GIA)partnerACKNOWLEDGEMENT*Company requested anonymity during the interviewWhere key trade routes meet in the

20、 heart of Asia,Southeast Asia(SEA)is a microcosm of the worlds most dynamic economies.With strong maritime and land links to key Asia-Pacific economiesAustralia,China,India,JapanSEA saw its share of global foreign direct investments rise from 11.9 per cent in 2019 to 13.7 per cent in 20201,underscor

21、ing its growing appeal on the global stage.With its rapid urbanisation,diverse attributes across countries,and improving manufacturing capacity,SEA is increasingly becoming a region of strategic importance for manufacturing companies that are considering international expansion2,offering various opp

22、ortunities to tap into3.However,SEAs attractiveness,which lies in its diversity of opportunities,also serves as the greatest challenge for international business expansion.The varying economic,cultural,and regulatory landscapes across SEA countries create a complex environment for expansion.A lack o

23、f openly comparable and accessible information across the region can make it difficult for business leaders to navigate the various steps during the process of expansion,often leaving them unaware of crucial considerations for choosing the different countries.This guide,the ASEAN Expansion Navigator

24、,aims to bridge these information gaps,offering a structured approach to help businesses evaluate and capitalise on the opportunities within Southeast Asias dynamic economies.THE ASEAN EXPANSION NAVIGATORINTRODUCTION11.9%13.7%20192020SEA saw its share of global foreign direct investments rise01The A

25、SEAN Economic Community(AEC)has fostered stronger economic integration within the region,making ASEAN an attractive expansion destination,especially considering ongoing geopolitical tensions,trade wars,and the strategic implications of the Belt and Road Initiative(BRI).As global supply chain network

26、s realign and trade between Southeast Asia and major global markets continues to grow,companies are looking to diversify to acquire strategic resources like talent with relevant expertise,innovative technologies and develop a resilient ecosystem for them to advance their long-term business expansion

27、 goals12.As such,ASEAN is an ideal complement to their existing operations.However,the diversity that makes ASEAN appealing also presents unique challenges.Companies seeking to expand often face a gap between expectations and the realities of operating in these markets.Misaligned expectations can ar

28、ise from underestimating regulatory variations,administrative delays,or the time needed to navigate local business processes,all of which can introduce unexpected complexities in the expansion process.The StrategicChallenge forBusinesses The Association of Southeast Asian Nations(ASEAN)consists of 1

29、0 member states namely Singapore,Malaysia,Indonesia,Vietnam,Thailand,Philippines,Laos,Cambodia,Myanmar,and Brunei,acts as a strategically important region for economic growth and innovation4.Timor-Leste was granted observer status in 2022 and is in the process of becoming ASEANs 11th full member.ASE

30、AN is home to a population of 671.1 million5 and a combined GDP of US$3.6 trillion as of US$3.6 trillion as of 20226.With an annual growth rate of 4.2%as of 2022,ASEAN stands as the worlds fifth-largest economy7,characterised by its strategic location,robust economic frameworks,dynamic workforce,and

31、 an increasingly stable political environment8.Additionally,it is projected that ASEAN would develop to become the worlds 4th largest economy by 20309.If viewed as a country,ASEAN would be the worlds 3rd most populous state after India and China.Unlike other developed nations in the region,ASEAN is

32、young and growing,with a median age of 30 across the region compared with 39 in China,49 in Japan,38 in the US and 42 in Europe10.Figure 1.1.(1)Summary of Projected GDP Growth for ASEAN as compared to World Powers11Preamble02Figure 1.1.(2)Consumption Market Value&Summary of ASEAN13Economic Condition

33、sKevIndustries2023 GDP per capita:4,942.36 USD1Large population of 277.4 million1Relatively stable inflation rate12023 GDP per capita:4,942.36 USDLarge population of 277.4 millionRelatively stable inflation rateBase MetalsMiningTransport2023 GDP per capita:12,570 USDLarge population of 34.1 millionR

34、elatively stable inflation rateTech&Electronics ManufacturingServiceOil and Gas2023 GDP per capita:84,734 USDLarge population of 5.9 millionRelatively stable inflation rateBiomedical SciencesPharmaceuticalsEnergyChemicals2023 GDP per capita:7,337 USDLarge population of 70 millionRelatively stable in

35、flation rateValue-Added ManufacturingAutomotivesElectronic&Electrical2023 GDP per capita:4,324.05 USDLarge population of 100.3 millionRelatively stable inflation rateElectronics ManufacturingGarment and Fashion ManufacturingAgricultural ProductsTo address these challenges,this guide focuses on five

36、key countries of interest(COIs)within ASEAN:Singapore,Malaysia,Thailand,Vietnam,and Indonesia.These countries were selected based on their significant production capacities,established manufacturing industries,and competitive advantages in labour availability and consumer markets,as highlighted by t

37、he ASEAN Statistical Yearbook 202014.This guide equips foreign companies with the tools to make informed decisions,optimizing their expansion journey across SEAs varied markets.This ASEAN expansion navigator aims to provide foreign businesses with a framework that would support managements decision-

38、making process as they seek to expand into the region.What you can expect from this guideComprehensive OverviewComprehensive OverviewStrategic Insights and Case StudiesRoadmap for New InvestorsReal-world insights,challenges,and strategies drawn from research and interviews with industry leaders who

39、have navigated SEAs business environment.A framework highlighting key steps,considerations,and common pitfalls to streamline expansion.A deep dive into the five COIs,covering economic trends,industry sectors,workforce availability,Environmental,Social,Governance(ESG)standards,and tax systems(non-exh

40、austive).IndonesiaMalaysiaSingaporeThailandVietnam03Research Flowand Roadmap Development The ASEAN Expansion Navigator was developed through a research process that bridges information gaps for businesses exploring expansion into Southeast Asia(SEA),addressing gaps in existing guides which often mis

41、s crucial regional insights.MethodologyResearch Question:What strategic considerations and framework can support foreign companies in successfully expanding into key ASEAN countries?METHODOLOGYSources of DataPrimary SourcesIndustry ExpertsCompaniesCambridge AdvisersSecondary SourcesGovernment Websit

42、esSupranational Organisational SourcesNews ArticlesInfluencingFactorsEconomicPoliticalWorkforce&Talent DevelopmentInfrastructureESGTax PolicyOperationalCulturalFramework&ApplicationStagesCase Studies+Guiding QuestionsStage 1:Examine Strategic GoalsStage 2:Explore Overarching Landscape of COIStage 3:

43、Ensure Operational ReadinessStage 4:Establish Risk Management PracticesStage 5:Evidence of Immediate Goals AchievedStage 6:Empirical Long-Term MetricsFigure 1.2.(1)Summary Infographic of MethodologyMethodology OutlineComprehensive Analysis1We offer a broad macro-environmental comparison across key f

44、actors for the COIs,based on over 30 sub-factors.Case Study Insights2Key insights from business leaders are distilled into actionable checklist questions.Integrated Expansion Roadmap3The roadmap synthesizes macro factors,case insights,and checklist questions into a practical framework that guides bu

45、sinesses through each expansion phase.Research Flow and Data Collection04Through this methodology,the ASEAN Expansion Navigator aims to empower manufacturing companies with a comprehensive,adaptable framework that supports each phase of their expansion journey,enabling them to make informed,strategi

46、c decisions for expansion in SEAs complex and dynamic environment.The methodology behind the ASEAN Expansion Navigator involved the following stagesData SourcesIdentification of Influencing FactorsFramework and Checklist Development Toolkit IntegrationExpert Interviews:Consultations with industry ex

47、perts,advisors,and companies operating in SEA highlighted strategic considerations,specific regulatory,cultural,and operational nuances.Case Studies:We reviewed real-world case studies of expansions into SEA to identify critical lessons,opportunities,and challenges.Secondary Sources:We drew insights

48、 from official government websites,the OECD,World Bank,consulting research,and news articles to form a foundational analysis of each country of interest(COI).PESLE Analysis:A comprehensive framework covering political,economic,social,legal,and environmental factors,with over 30 sub-factors,enabled d

49、etailed COI comparisons.Operational Cost Analysis:We evaluated key operational expenses,including labour,logistics,and informal costs,to give investors a clear picture of both direct and indirect expansion costs.Roadmap Creation:A step-by-step roadmap guides each stage of the expansion journey,from

50、initial market assessment to scaling,addressing compliance,cultural fit,and operational readiness.The roadmap integrates strategic and operational insights to support effective decision-making.Stage-by-Stage Approach:The roadmap is organised into distinct stages,each addressing key considerations li

51、ke regulatory compliance,cultural adaptation,and operational scalability.By following this staged approach,companies can mitigate risks and make informed decisions at every step.Checklist of Questions:Insights from interviews and case studies were distilled into a checklist of key questions and help

52、ing companies systematically assess each COI.Investor Toolkit:The final section integrates the roadmap,influencing factors,and checklist questions into a cohesive toolkit for investors.This practical toolkit not only supports strategic decision-making but also helps businesses anticipate challenges,

53、plan for effective market entry,and leverage the Singapore+1 strategy.Scalability and Flexibility:Designed to be adaptable,the roadmap allows companies to initiate pilot projects and scale operations based on real-time insights and evolving market conditions,guiding companies from initial SEA operat

54、ions to potential expansions beyond.05Southeast Asia(SEA),comprising over 655 million people,is one of the worlds most economically and culturally diverse regions.SEA has a combined GDP of 3.6 trillion USD,with the manufacturing industry playing a key role,contributing 21.2%to the regions economic o

55、utput15.This industrys strategic growth is supported by SEAs unique position as a hub for global trade,with established connections to major markets like China,the United States,and the European Union.It is projected that ASEAN would develop to become the worlds 4th largest economy by 203016.The reg

56、ion also benefits from a vibrant labour and consumer market,supported by a young demographic profile and a large workforce.SEA is the third-largest labour pool after China and India,with 61%of the population under 35 years old17.The ASEAN-China Free Trade Area(ACFTA)is a free-trade agreement between

57、 ASEAN and China,aimed at enhancing economic integration by reducing tariffs and boosting trade and investment.Established in 2010,it forms one of the worlds largest free-trade zones.In November 2022,leaders agreed to launch ACFTA 3.0 negotiations,which concluded in October 202418.The upgrade introd

58、uces new commitments in areas like the digital economy,green economy,and supply chain connectivity,while strengthening existing areas like customs and trade facilitation.It also supports micro,small and medium enterprises(MSMEs),promoting an inclusive and resilient regional economy.Overall,ACFTA 3.0

59、 aims to foster long-term growth,improve supply chain resilience,and accelerate digital transformation19.OPPORTUNITIES IN 5 ASEAN COISOVERVIEWSingapore,Malaysia,Thailand,Vietnam,and Indonesia.These countries were selected based on their significant production capacities,established manufacturing ind

60、ustries,and competitive advantages in labour availability and consumer markets,as highlighted by the ASEAN Statistical Yearbook 202020.This guide focuses on five key countries of interest(COIs)within ASEAN06Indonesia is one of the worlds emerging market economies,with a GDP of 1.37 trillion USD in 2

61、023,making it the largest economy in SEA.With a large population of 277.4 million,Indonesia has substantial market potential and a large labour force.The country has been attracting significant foreign direct investment(FDI)over the past few years,more than doubling from 2021 to 2023,reaching 47.34

62、billion USD21.Inflation rates in Indonesia have remained relatively stable over the past eight years,staying below 4%.In 2023,the inflation rate was 3.71%,with a forecast of 2.56%for 2024.FDI in Indonesia has been steadily increasing,particularly in the base metals,mining,and transport industries22.

63、These are its three largest industries.With the country holding the largest nickel reserves in the world and the governments decision to ban the export of nickel ore,the nickel processing industry has experienced significant growth23.China and Indonesia have been deepening their collaboration in the

64、 nickel sector,driven by the global demand for electric vehicles(EVs)and battery materials.The two nations recently signed agreements worth$10 billion,encompassing industries such as EV manufacturing,lithium batteries,and other new energy technologies24.The abundance of nickel reserves has increasin

65、gly attracted players in the growing electric vehicles(EV)market,including manufacturers of battery materials as well as companies operating both upstream and downstream.Malaysia with a GDP of 415.57 billion USD in 2023,is one of the smaller economies in SEA,yet ranks as the second wealthiest with a

66、 GDP per capita of 12,570 USD despite a modest population of 34.1 million.Inflation rates in Malaysia have remained stable over the past decade,consistently staying below 4%.In 2023,the inflation rate was 2.49%,and it is projected to rise slightly to 2.79%in 202425.Malaysias economy has successfully

67、 diversified from being commodity-and agriculture-based to one that now features strong manufacturing and service sectors.This shift has made the country a key exporter of electrical appliances and components,which account for over one-third of its gross exports26.Oil and gas also continue to be a s

68、ignificant contributor to Malaysias exports27.In 2023,Penang attracted a record-breaking 12.8 billion USD in foreign direct investment(FDI),surpassing the total FDI inflows of the previous seven years combined,with a particular focus on the semiconductor industry,affirming Malaysias position as a gr

69、owing tech and electronics manufacturing hub in SEA28.Singapore,an advanced economy with a GDP of 501.43 billion USD in 2023 and the highest GDP per capita of 84,734 USD,is SEA s premier global financial centre29.Despite its relatively small population of 5.9 million,Singapores open economy is heavi

70、ly trade-reliant,with trade as a percentage of GDP at 311%30.Known for its efficient institutions and high-quality infrastructure,Singapore hosts the second-largest port in the world,reinforcing its role as a global trade hub.Singapores inflation rate spiked in the past two years,reaching 4.8%in 202

71、3,though it has historically been stable and is forecasted to drop to 2.98%in 2024.Singapores key industries include biomedical sciences,pharmaceuticals,energy,and chemicals31.FDI inflows reached 150.7 billion USD in 2023,the highest in SEA,due to its conducive business environment,attractive regula

72、tory framework,and strategic location for regional headquarters.COIBrief Country ProfileIndonesiaMalaysiaSingapore07SEA presents a compelling mix of strategic advantages for businesses,driven by its specialised manufacturing hubs,vital trade connectivity,and expansive labour and consumer markets.Wit

73、h each country offering distinct manufacturing strengthssuch as electronics in Malaysia and Vietnam or automotive in Thailandbusinesses can strategically align their operations to leverage these specialties.Positioned along major global trade routes and supported by extensive free-trade agreements,t

74、he region facilitates seamless international trade.Additionally,SEAs young workforce and growing middle class create an attractive environment for both production and consumer market expansion,reinforcing its role as a prime location for business growth.Thailand,SEAs second-largest economy,reported

75、a GDP of 514.95 billion USD in 2023.Its GDP per capita of 7,337 USD ranks as the third largest in the region.With a population of 70 million,Thailand has maintained low and stable inflation,staying under 2%for most of the last decade.An anomaly in 2022 saw inflation spike to 6%,attributed to the aft

76、er-effects of COVID-19,but it returned to 1.23%in 2023 and is forecasted to drop to 0.7%in 202432.Thailand has seen a steady rise in foreign direct investment(FDI),amounting to 23.79 billion USD in 202333,primarily in value-added manufacturing,the automotive sector,and the electrical and electronics

77、 industries.It already boasts the largest automotive industry in SEA,with well-established supply chains.The Thai government now aims to position the country as a hub for electric vehicle(EV)production,offering generous investment incentives to develop EV infrastructure34.Vietnams emerging economy,w

78、ith a GDP of 433.7 billion USD in 2023,is one of the fastest-growing economies in SEA,with a GDP growth rate of 8.1%in 2022 and 5.04%in 2023.Vietnams population stands at 100.3 million,providing a large and relatively young workforce that contributes to its economic dynamism35.Inflation has remained

79、 stable over the past decade,staying under 4%,with a rate of 3.25%in 2023 and a forecast of 3.74%for 2024.Vietnams foreign direct investment(FDI)inflows were the third largest in SEA at 36.6 billion USD in 202336,Directed towards its main industries,including garment and fashion manufacturing,agricu

80、ltural products,and electronics manufacturing37.Vietnams competitive labour costs and proximity to global trade routes have strengthened its role in global supply chains,making it a favourable destination for manufacturing investments.COIBrief Country ProfileThailandVietnamTable 2.(1):Brief Country

81、Profile of COIs08COIS EMERGING INDEX/STRENGTHS IN DIVERSITYEvaluating a countrys potential as a manufacturing hub requires understanding its economic landscape.We compare Indonesia,Malaysia,Singapore,Thailand,and Vietnam across fifteen economic factors.GDP measures overall economic output,while GDP

82、per capita reflects living standards and income distribution.Economic growth rates,particularly in emerging economies,reflect future potential and the countrys growth trajectory,while household disposable income provides insight into consumers spending power.Interest rates influence borrowing costs

83、and impact investment decisions.Foreign Direct Investment(FDI)inflows reveal investor confidence,market stability,and the influx of capital and technology.Currency volatility is assessed using weighted averages of exchange rate fluctuations with the USD,EUR,and RMB and helps determine the stability

84、of a currency,assessing how exposed a country is to international financial risks.The exact methodology is explained in the Appendix A3.1.Import and export trends in manufacturing demonstrate integration into global supply chains,while Free Trade Agreements(FTAs)with major economies enhance market a

85、ccess and competitiveness.For a complete list of all FTAs,please refer to the Appendix A3.1.The growth of the manufacturing sector,particularly its share of GDP,as well as the popular industries reflects the level of development and importance of industries within each economy,making these factors c

86、rucial for assessing the economic competitiveness of each COI.In this section,we compare five countries of interest(COIs)in ASEAN Malaysia,Thailand,Indonesia,Vietnam,and Singaporeacross seven aspects.Weve used a colour-coded relative ranking system(Darkest Shade:Most Ideal for this COI,Lightest Shad

87、e:Least Ideal for this COI)to represent the relative performance of each COI.Data and detailed graphs are available in the appendix for further reference.Economic Competitiveness MEGATRENDS09EconomicCompetitivenessSize of Economy38GDP(USD Billions)Economic Standing39GDP Per Capita(USD)Economic Growt

88、h40Forecasted GDP Growth Rate(%)Population41(Millions)Forecasted Household Disposable Income per Capita42(USD)Interest Rate436 Month T-Bill Rate(%)FDI Inflows44(USD Billions)Inflation Rate45(%)Free Trade Agreements49China|US|EU|Total Export Trend48Manufacturing/Total Exports(%)Import Trend47Manufact

89、uring/Total Imports(%)Currency Volatility46Weighted Average Monthly FX Volatility Manufacturing Industry Average Growth Rate502022-2023(%)Popular Industries52Manufacturing Industry/GDP51(%)Table 3.1.(1):Economic Competitiveness Metrics across COIsThe economic competitiveness of the five ASEAN countr

90、iesIndonesia,Malaysia,Singapore,Thailand,and Vietnamreveals diverse strengths and strategic opportunities for investors.Singapore stands out with the highest GDP per capita and minimal currency volatility,making it an attractive hub for high-value industries and foreign direct investment(FDI),which

91、reached USD 177.05 billion.However,its high inflation rate as well as slowdown in manufacturing industry growth may not suit labour-intensive manufacturing.Vietnam and Indonesia demonstrate strong economic growth rates(5.8%and 4.9%,respectively)and substantial manufacturing contributions to GDP,unde

92、rscoring their appeal as cost-effective manufacturing bases.Vietnam comes in second after Singapore in FTA ranking,with an extensive Free Trade Agreement(FTA)network,including the Regional Comprehensive Economic Partnership(RCEP),Comprehensive and Progressive Agreement for Trans-Pacific Partnership(

93、CPTPP),and bilateral agreements such as the EU-Vietnam FTA(EVFTA)and Vietnam-Israel FTA.This network boosts Vietnams access to global markets,providing tariff advantages and integrating it deeply into international supply chains,especially in electronics.Malaysia and Thailand also hold competitive p

94、ositions;Malaysia leverages its developed infrastructure and moderate GDP per capita,while Thailands strengths in automotive manufacturing,coupled with low inflation and interest rates,foster economic stability.This diversity within ASEAN allows investors to strategically align their goals,whether f

95、ocused on cost-efficiency,regional market access,or stability,by leveraging each countrys unique economic profile and trade relationships.IndonesiaMalaysiaSingaporeThailandVietnamBase Metals Mining TransportManufacturing Service Oil&GasBioMedPharmaceuticalEnergyManufacturingAutomotiveElectronicsGarm

96、entAgricultureElectronicsACFTA|Negotiating|Negotiating|18ACFTA|Negotiating|Negotiating|18ACFTA|USSFTA|EUSFTA|31ACFTA|Negotiating|Negotiating|15ACFTA|-|EVFTA|151,371.174,942.364.9277.43,6906.0047.343.7131.19865.8644.554.7718.67415.5712,570.464.433.16,7803.158.582.4891.21468.6668.714.4023.05501.4384,7

97、34.282.15.945,8203.06177.054.8210.81568.9974.86-0.8117.65514.957,337.192.770.24,7102.2723.791.2281.45368.3773.96-1.2824.91433.704,324.055.8100.33,3105.1536.603.2531.06978.3983.965.9123.8810Political relations between Southeast Asian countries and the country from where the foreign firm originate are

98、 shaped by a combination of diplomatic engagement,economic ties,and national interests.For instance in Asia,countries like Thailand,Malaysia,and Indonesia maintain favourable relations with China due to significant investments and non-interference policies.Chinas diplomatic outreach in 2024 further

99、strengthened these relationships,with new bilateral agreements focusing on sectors like the digital economy,clean energy,and infrastructure development53,underscoring ASEANs strategic importance to Chinas regional influence54.Political Friendliness A countrys regulatory framework and business struct

100、ure influence its attractiveness to foreign investors.Key elements include ease of establishing a business,levels of foreign ownership allowed,and overall transparency of regulations.Countries that offer more flexibility and ownership rights to foreign firms rank higher.Singapore is a standout with

101、its open investment environment,while Indonesia and Vietnam are relatively more restrictive.A countrys tax policies also play a significant role in its openness to foreign investors.Political leadership often shapes these policies to either attract or limit foreign investment.Countries that view for

102、eign investment as critical to economic growth,such as Singapore and Malaysia,tend to offer more favourable tax incentives.On the other hand,nations with more restrictive political attitudes may impose higher tax burdens on foreign enterprises,as seen in Vietnam.To assess the openness of countries t

103、o foreign investment,we can refer to the Foreign Direct Investment(FDI)Confidence Index.This index reflects both the regulatory environment and the economic conditions within each country.Openness to Foreign InvestorsPolitical Factors and Impact on Foreign InvestorsThe political landscape of a count

104、ry plays a pivotal role in shaping the expansion strategies of foreign firms.Critical factors include the governments attitude toward the country from where the foreign firm originate,stability of political leadership,and how involved a country is with initiatives such as the Belt and Road Initiativ

105、e(BRI)in the case of China.These factors not only influence bilateral relations but also impact trade policies,tax regimes,and institutional frameworks that directly affect foreign investments.In this section,we evaluate each COI through key lenses such as political friendliness,openness to foreign

106、investors,and institutional efficiency.11Corporate tax rate(24%)with multiple tax incentives for manufacturing,green tech,and digital industries579th(Emerging Markets Index)Emerging MarketEmerging MarketDeveloped MarketEmerging MarketEmerging MarketHigher corporate tax rate(22%),but offers tax holid

107、ays and incentives for investment in priority sectors(infrastructure,energy)56Corporate tax rate of 17%,various tax exemptions and sector-specific tax incentives for foreign investors58Competitive corporate tax rate(20%)and tax incentives for strategic sectors,but political instability affects long-

108、term tax planning59Corporate tax rate(20%),though compliance is complex.Incentives available for high-tech and export sectors60Singapore stands out among the COIs for its inclusion in the Main FDI Confidence Index,ranking 12th in 2024.This distinction is critical because Singapore,as a developed mar

109、ket,operates under different parameters and expectations compared to the emerging markets of Indonesia,Malaysia,Thailand,and Vietnam,all of which are ranked on the Emerging Markets Index.The latter group faces distinct challenges like political instability,tax compliance complexity,and reliance on i

110、ncentives for strategic sectors.Singapores higher ranking on the more prestigious Main Index highlights its global appeal to investors due to its business-friendly environment and stability.Though its corporate tax rate is lower at 17%,compared to others,the strategic tax incentives and exemptions i

111、t offers make it an even more attractive destination for FDI.This competitive edge in taxation will be discussed further in later sections,where Singapores superior tax environment will be explored in greater detail.Government Continuity:We will assess the historical and current state of government

112、leadership in each COI,focusing on the continuity of governance and its implications for political stability.Government effectiveness score61 is also used to reflect the quality of public services,the competence of civil servants,and the governments ability to implement sound policies effectively.Hi

113、gher scores indicate a capable,efficient administration that fosters stability and growth,while lower scores suggest challenges in policy execution and public service delivery.Impact of Chinas Belt and Road Initiative(BRI):This analysis will explore how Chinas BRI projects have influenced the politi

114、cal landscape of each COI.Institutional Efficiency:We will evaluate each COI using the Institutional Efficiency Index62 to examine the effects on Institutional Efficiency and Public Sector Transparency,as well as the political landscape63 in the COI.In assessing the viability of foreign firms expand

115、ing into Southeast Asian countries,three key political factors warrant careful consideration:Key Political Factors for EvaluationTable 3.2.2.(1):FDI Confidence Index,Market Type and Tax Environment across COIsCOI2024 FDI Confidence Index55Market TypeTax Environment IndonesiaMalaysiaSingaporeThailand

116、Vietnam12th(Emerging Markets Index)10th(Emerging Markets Index)12th(Main Index)18th(Emerging Markets Index)12Table 3.2.3.(1):Government Continuity,BRI Impact&Institutional Efficiency across COIsThe political landscapes of Indonesia,Malaysia,Singapore,Thailand,and Vietnam vary in stability and openne

117、ss to foreign investors.Singapores developed market,high FDI confidence,and efficient institutions make it ideal for long-term,high-stakes investments despite higher costs.Indonesia and Malaysia offer cost-effective entry with strong BRI involvement and tax incentives.Thailand and Vietnam also prese

118、nt opportunities,though challenges like Thailands political instability and Vietnams cautious BRI stance require strategic consideration.Together,these factors guide foreign investors in aligning their expansion strategies with each COIs unique political and regulatory conditions for informed decisi

119、on-making in SEA.Stable leadership transition with Prabowo Subiantos presidency ensures policy continuity64Frequent leadership changes;the current government under Anwar Ibrahim maintains overall stability67The ruling party has maintained uninterrupted governance and political stability since indepe

120、ndence,with Mr Lawrence Wong recently take over the reins as the fourth Prime Minister70Political instability marked by fragile coalitions and leadership challenges73Leadership transitions and anti-corruption efforts create uncertainty76Largest BRI recipient in SEA with major infrastructure projects

121、,though political challenges like cost overruns remain65Significant BRI projects,focusing on green and digital sectors under the current government68Key regional BRI hub,facilitating one-third of Chinas total BRI investments.Many ASEAN BRI infrastructure projects originate from Singapore,leveraging

122、its financial institutions for project financing,creating opportunities for local businesses to engage in BRI projects71Key participant in BRI in regional infrastructure development,but controversies like the Sino-Thai rail project highlight concerns over sovereignty74Cautious participation in BRI d

123、ue to sovereignty concerns,but increasing engagement in recent years,especially in rail connectivity77115th66 Challenges in transparency.The new administrations priorities could bring opportunities for infrastructure and economic growth,though policy unpredictability may pose challenges for both loc

124、al and foreign investors.57th69 Gradual improvement in governance.Political and economic management faces challenges due to coalition dynamics,yet individual states like Johor and Penang are pursuing growth through their own strategic pathways.5th72 Highly transparent,efficient governance.Singapore

125、is known for its highly transparent and effective governance.Despite demographic pressures and regional dynamics,Singapore plays a complementary role in the region,working synergistically with neighbouring countries like Malaysia to enhance ASEANs collective economic strength.108th75Governance chall

126、enges persist.The post-election government is working to stabilise and address economic inequalities,yet frequent political transitions contribute to a conservative and cautious approach among policymakers.80th78 Ongoing governance reforms.Actively balancing economic liberalisation with party contro

127、l,it is driving institutional reforms to improve transparency,though slowed growth from over-investment in real estate presents hurdles.COIGovernment ContinuityBRI ImpactInstitutional EfficiencyIndonesiaMalaysiaSingaporeThailandVietnam13Workforce composition refers to both the size and age demograph

128、ics within the COIs labour pool.A younger workforce indicates adaptability and potential for skill development.On the contrary,a mature and experienced workforce might provide immediate expertise but require succession planning.Ultimately,subfactors like age and size of the labour force inform HRM p

129、ractices like workforce planning based on business needs,enabling companies to effectively leverage human capital81.In the table below,a larger and younger workforce is shaded with darker shade,as this is favourable for adaptable talent.Please refer to Appendix A3.3 for detailed justification of the

130、 rankings.Table 3.3.1.(1):Workforce Composition Factors across COIsWorkforce CompositionSkills levels highlight the competencies within the workforce,such as the percentage of those with advanced education or highly skilled professionals92.Higher skilled labour aligns with industries that require te

131、chnical expertise,which affects HRM strategies.The table below summarises the skill levels across five COIs.Darker shade indicates higher education levels and skill proficiency,which is desirable for specialised roles.Skill Levels Workforce CompositionSize of WorkforceAge of WorkforceIndonesiaMalays

132、iaSingaporeThailandVietnamOver 17 million workers83Over 3 million workers84Over 40 million workers85Over 56 million workers86Over 140 million workers8215.27%of population aged 25-298811.88%of population aged 30-3489Majority of population less than 35 years old90Majority of population less than 35 ye

133、ars old9117.9%of population aged 25-2987Table 3.3.2.(1):Skill levels across COIsSkill Levels Workforce with advanced education(%)Workforce with highly skilled professionals(%)IndonesiaMalaysiaSingaporeThailandVietnam77.9294(As of 2022)85.5595(As of 2022)81.3596(As of 2023)87.2697(As of 2023)81.4293(

134、As of 2023)27.2991410111102No Data;Approximately 20%of the workforce is categorized as under-skilled98No Data;Tops the world for having the most highly skilled workers100Workforce and Talent Development Strategies As a customer-centric approach gains prominence,effective Human Resource Management(HR

135、M)in manufacturing to enhance customer satisfaction and productivity79.HRM encompasses a strategic set of policies underpinned by organisational design strategies aimed at attracting,developing and retaining talent80.By strategically attracting,developing and retaining talent,firms can leverage on t

136、heir workforce to meet long-term goals.This section evaluates the HRM landscape of each COI,using four key metrics:workforce composition,skill levels,training programs and labour productivity.Each factor is summarised in a table format,that facilitates quick comparison across COIs.14The manufacturin

137、g landscape can be characterised by evolving megatrends and external forces,which require skilled labour.This can be described by advancements in technology that require constant training programs to develop new skills as the complexities of job tasks increase.Access to training initiatives allows c

138、ountries to upskill their workforce in line with evolving industry demands103.The table below summarises the COIs with their respective training initiatives and training initiatives on a state level if applicable.Training Initiatives Launched in 2020,this nationwide Indonesian program aims to cultiv

139、ate workforce competencies,productivity,and competitiveness through skill development(skilling,reskilling and upskilling).Available to all Indonesian citizens aged 18 years and above who are not enrolled in any formal education.Training programs are administered via a private-public partnership sche

140、me by partnering with 6 digital platforms and 183 training institutions,leading to the provision of 1085 courses.Training courses are implemented via a Learning Management System(LMS),webinar or a combination of both modes.Expected Impact Supports productive employment,decent work and SDG related ta

141、rgets like quality education and lifelong learning.According to a Statistics Indonesia survey,out of 14.3 million Kartu Prakerja beneficiaries,87%agreed that work competency levels have improved.Additionally,according to test results,beneficiaries could increase skill levels by 95%post-training.Digi

142、talisation has helped to mitigate geographical challenges and course take up rates of training courses across different states beyond Java105.Training InitiativesIndonesia Established in 1988 through a cooperation with Japan to address Malaysias skilled workforce needs.It offers certificates of diff

143、erent levels:Diploma,and Advanced Diploma programs in fields like electronic,computer,mechatronic,and manufacturing engineering,alongside short courses.Expected Impact JMTi seeks to increase Malaysias highly skilled workforce to 35%by 2030,by aligning training with industry demands and equipping ind

144、ividuals with high-tech skills.These programs enhance employability and support further education opportunities for graduates,contributing to Malaysias economic growth.Training InitiativesMalaysiaKartu Prakerja1041APAN Malayan Technical Institute(JMTi)106115MalaysiaTraining Initiatives(State Level)S

145、killsFuture is a national movement in Singapore,founded in 2016 which is aimed at empowering individuals with lifelong learning opportunities,which equip Singaporeans with the relevant skills to advance in an evolving economy.It emphasises skill mastery,continuous education,and career development,re

146、gardless of ones background,age,or qualifications.Training InitiativesSkillsfuture Movement1081 FMM Institute,a subsidiary of the Federation of Malaysian Manufacturers,was founded in 1999,to provide industry-focused skills training for Malaysias manufacturing and services sectors.These institutes of

147、fer training programs and are equipped with training facilities across nine branches nationwide,its Selangor&Kuala Lumpur branch operates in Hicom Glenmarie Industrial Park,Shah Alam.Expected Impact On average,around 1,000 programs and training 18,000 participants annually are conducted annually It

148、aims to enhance personnel skills across all levels of industry,as the Institute provides a broad range of corporate training programs tailored to meet sector-specific needs.This includes options for cost-effective,in-house programs that allow the attainment of high-quality and learning outcomes.Emph

149、asising lifelong learning,the Institute offers various Certificate and Professional Development programs,enabling working professionals to gain qualifications for career advancement.Expected Impact The Blueprint will address Malaysias talent gap,attract investments,and support Penangs ambition to be

150、come a regional high-tech hub.By training and upskilling 60,000 engineers,it strengthens Malaysias value proposition for global investors and boosts the workforce capability of Penangs semiconductor and industrial sectors.Expected Impact With the transition to an increasingly knowledge based and tec

151、hnology driven economy,SkillsFuture will enhance Singapores competitiveness by fostering a highly-skilled workforce capable of adapting to technological advancements and global demands.Through this,it also creates the potential for better job opportunities,higher incomes,and a stronger culture of li

152、felong learning and skill recognition.FMM Institutes 1 In light of plans to build a sustainable STEM talent pipeline,The Penang STEM Talent Blueprint was launched.This aligns with Malaysias New Industrial Master Plan 2030 and the National Semiconductor Strategy.Key industry players like Penang STEM

153、Working Group with partners like Intel and Motorola collaborate to develop this blueprint which aims to double STEM enrolment,output from TVET,female participation in STEM,and high-value jobs through a comprehensive education and workforce development model(IGNITE,EMBED,IMMERSE,EMBRACE,ENABLE)and in

154、centivising STEM careers.Penang STEM Talent Blueprint in Support of National Semiconductor Strategy1072Singapore16 The refreshed Continuing Education and Training(CET)Masterplan in Singapore,is part of the SkillsFuture movement,which seeks to build a resilient and skilled workforce through offering

155、an integrated,adaptable system of education and lifelong learning opportunities.Training InitiativesRefreshed CET Masterplan 2Expected Impact The CET Masterplan will strengthen Singapores workforce by encouraging employers to value and invest in skill development,enabling individuals to make informe

156、d career choices,and creating a dynamic ecosystem of high-quality learning options.This initiative is expected to allow individuals to map out the journey of career development,enhance career resilience,deepen expertise,and align workforce skills with industry needs.The Singapore Workforce Skills Qu

157、alifications(WSQ)is a national credentialing system that provides competency-based training,development,assessment,and certification of skills aligned with the Skills Framework.It outlines the qualifications that are focused on role-specific and transferable skills to enhance workforce adaptability

158、and mobility.WSQ Skills Qualifications1093Expected Impact WSQ promotes lifelong learning and career progression by offering flexible,accessible training without academic prerequisites,recognising prior learning,and providing structured pathways.This initiative aims to develop a skilled,adaptable wor

159、kforce with certifications that meet industry standards.Thus,reflecting industry needs as individuals,employers,and training providers collaborate to support employability via in-house training.The Advanced Manufacturing Training Academy(AMTA)was launched in 2020 and is operated by the Singapore Man

160、ufacturing Federation.The training academy supports the local manufacturing sectors industrys needs by identifying future job and skill needs,coordinating training,and developing programs to fill skill gaps.It leverages on valuable insights and partnerships from government agencies,educational insti

161、tutions,and industry leaders.Advanced Manufacturing Training Academy(AMTA)1104Expected Impact AMTA aims to strengthen Singapores manufacturing workforce by addressing skill shortages,ensuring alignment with industry demands,and preparing workers for emerging roles.Thus,enhancing industry competitive

162、ness and resilience.Singapore17 Thailand aims to address labour skill shortages hindering its Thailand 4.0 goal by implementing a two-year project,in partnership with Mercer.This initiative aims to analyse future labour demands and develop relevant curricula to align education and training with mark

163、et needs.Expected Impact The initiative seeks to enhance Thailands economic and social resilience by creating a skilled workforce aligned with future market needs.Thus,supporting the countrys transition to support an advanced,innovation-driven economy.Training InitiativesLift Skill Thai Labour Force

164、1111 Launched by Thailands NECTEC-NSTDA to support transitioning to Industry 4.0.This includes assessment,consultation,solution provision and training.To target the specific needs of clients and common challenges for SMEs,SMC offers both customised and platform solutions.It encourages Industry 4.0 r

165、eadiness through a training and collaborative platform membership program at EECi.Expected Impact SMC aims to drive productivity and efficiency within Thailands manufacturing sector,enabling the adoption of advanced technologies in over 140000 factories.By providing workforce training and fostering

166、an Industry 4.0 ecosystem,SMC supports sustainable industrial growth and positions Thailand as a competitive player in the digital manufacturing era.Sustainable Manufacturing Center(SMC)1122Thailand Vietnams Technical and Vocational Education and Training(TVET)program seeks to address skill shortage

167、s,enhance inclusivity,and align vocational training with economic,environmental,and digital needs.This program fosters all-rounded collaboration between training institutes,businesses,and civil society,and supports 30 institutes in developing green and digital competencies,especially for the energy,

168、forestry,and environmental sectors.Expected Impact The initiative seeks to make TVET more accessible and relevant,improve job prospects for trainees,and support Vietnams socially just,digital,and green transformation.Through equipping workers with future-ready skills,Vietnam can increase its talent

169、attractiveness in the long run.Training InitiativesTechnical and Vocational Education Training System1131Vietnam18 Table 3.3.3.(1):Nationwide and Manufacturing Specific Training Initiatives across COIsFigure 3.3.4.(1):Labour Productivity per worker per hour in USD across COIs116 Vietnam-Korea Univer

170、sity(VKU)in Da Nang has launched a human resources training program in the semiconductor industry,aiming to produce 600 to 1,000 skilled engineers by 2028.The initiative is largely facilitated by key stakeholder partnerships with companies like Synopsys and Samsung,and is designed to train engineers

171、 in semiconductor technology.Plans to implement upskilling courses for lecturers and students are already underway.Meanwhile,Da Nang is also establishing the Da Nang Semiconductor Research,Design Training&AI Centre to support research,training,and design in the semiconductor field.Expected Impact Th

172、rough this,it is expected to develop a strong,skilled workforce,to support Vietnams growing semiconductor industry that can attract long-term investment from global players like Intel,Qualcomm,and Samsung.The initiative will contribute to making Da Nang a hub for semiconductor research and manufactu

173、ring,supporting high-tech industry development and fostering partnerships in AI,automation,and IT with companies and universities worldwide.Training InitiativesTraining Program in the Semiconductors Industry held by Vietnam-Korea University(VNU)2VietnamLabour Productivity is defined as output(GDP)or

174、 value-added per worker,reflecting both efficiency and the level of industrialisation in each COI114.Productivity impacts cost structures,with higher productivity leading to better output for investment.In particular for Chinese businesses looking to expand into SEA,we gathered that businesses need

175、to account for differences in labour productivity in comparison to the Chinese workforce.This can result in higher labour costs that Chinese businesses need to factor in and devise long term strategies to mitigate.As shared by our interviewees and corroborated by the New Zealand Ministry of Foreign

176、Affairs and Trade,a potential way to offset relatively higher labour costs is to invest in technologies that can ensure greater automation of processes115.Consequently,this investment into technology can ensure greater consistency in production efficiency and bridge the mismatch between expectations

177、 for the local labour force productivity.The graph below summarises the output(GDP)per worker in USD and its respective trends across the five COIs from 2004-2024.From this,we observe an overall increasing trend in labour productivity over time across all five COIs,with Singapore emerging as the lea

178、d to be particularly attractive for high-value industries.Labour ProductivitySum of Output per worker(GDP constant 2017 international$at PPP)-ILO modelled estimates,Nov.20232000001800001600001400001200001000008000060000400002000002004200520062007200820092010201120122016201720182019202020212022201320

179、14201520232024IndonesiaMalaysiaSingaporeThailandViet NamCOI19In the table below,the ASEAN countries have been ranked across the factors,which collectively determine the quality of a countrys infrastructure and its ability to support business activities.Existing physical structures,transport networks

180、 and sources of power supply support daily operations of businesses by connecting them with the resources they require to function119.High quality of existing infrastructure is often associated with higher levels of safety and efficiency120.Accessibility on top of convenience ensures that employees

181、time is used efficiently,increasing the economys overall productivity.In turn,higher levels of productivity attract investors,contributing to the growth of businesses.Quality of Existing Infrastructure To assess the quality of existing infrastructure within the COIs,the following factors are analyse

182、d in greater detail.The ASEAN region offers various workforce strengths across its respective member countries.Each country possesses unique advantages that influence strategic human resource management(HRM)decisions for businesses.By examining these workforce characteristics,businesses can make inf

183、ormed HRM decisions tailored to their business goals and expansion strategies.For roles requiring high productivity and workers with advanced skill sets,Singapore emerges as a prime choice.Next,Malaysia and Thailand offer appealing options for companies seeking out a balanced workforce with skill an

184、d size considerations.Meanwhile,Indonesia and Vietnam serve as advantageous locations for businesses aiming to leverage cost-effective,youthful labour for scalable operations.Thus,an in-depth analysis as such enables businesses to strategically align their HRM decisions with the specific strengths o

185、f each country in the ASEAN region,which ultimately impact business outcomes.Summary of Workforce and Talent Development StrategiesLogistics Performance Index124Measures efficiency,utilisation rate,public transit density and extent to which the COIs public transport can adapt to counter competition

186、from emerging mobility services.Measures operational efficiency through analysing vessel turnaround,port capacity and resource utilisation,loading and unloading efficiency,and extent of integration of port into the global supply chain.Indicates the availability of business-ready spaces to facilitate

187、 smooth operations and easy access to necessary resources.Measures the quality of the countrys digital infrastructure in terms of internet quality,electronic infrastructure and security(Surfshark,2023),all of which supports business efficiency.Measures the efficiency of the COIs logistics systems,hi

188、ghlighting the ease and efficiency of the movement of goods through the COI.FactorsDescriptionPublic Transit Index121Container Port Performance Index122Quantity of Industrial EstatesDigital Quality of Life(DQL)Index123Table 3.4.1.(1):Factors assessed and description chosen factors determining Qualit

189、y of Existing InfrastructureInfrastructure Readiness and Strategic InvestmentsInfrastructure,comprising physical,digital,and organisational systems,is essential for enabling efficient trade,productivity,and business operations117.High quality infrastructure supports the seamless flow of goods,inform

190、ation,and people,enabling productivity alongside lower costs,leading to higher output118 and thus,promoting economic growth and attracting investment.In this section,we focus on the quality of existing infrastructure within the country and its future development plans to further improve infrastructu

191、re.20Future infrastructure investments are crucial indicators of a countrys long-term growth potential.We assess the financial commitment of each COI to infrastructure development,including transport,industrial zones,and technological advancements.Higher investments signal a commitment to improving

192、infrastructure,increasing connectivity,and contributing to enhanced business productivity.Future Development InvestmentsTable 3.4.1.(2):Quality of Existing Infrastructure across COIsQuality of Existing Infrastructure IndonesiaMalaysiaSingaporeThailandVietnamLogistics Performance IndexPublic Transit

193、Index Ranking6037th23rd(Tanjung Priok)10312567th323rd28th(Klang)50012637th3.63th17rd(Singapore)1112710th4.342th45rd(Laem Chabang)6412851th3.526th132rd(Saigon)56312956th3.3Container Port Performance Index61Quantity of Industrial Estates/ParksDigital Quality of Life(DQL)Index2023 and 2024 figures for

194、development investment from multiple sources are used to measure the countrys financial commitment to future infrastructural developments.Higher average development investment is an indicator of the countrys ability and willingness to commit to enhancing the standards of its infrastructure.Such impr

195、ovements would better serve the needs of businesses in terms of accessibility,connectivity and productivity.Singapore and Malaysia boast the highest quality infrastructure in the region,driven by robust public transport networks,high operational efficiency of its ports,and advanced digital infrastru

196、cture.However,Singapore faces limitations in the number of Industrial Estates and Parks,primarily due to its constrained land area.In contrast,Vietnam excels in the quantity of Industrial Estates and Parks,coupled with above-average public transport quality and strong port activity.Meanwhile,Thailan

197、d has relatively good digital infrastructure,but its public transport,port activity,and availability of Industrial Estates and Parks are less developed.Indonesia lags the most for port throughput and digital infrastructure.Please refer to Appendix A3.4.1 for a closer look into details of existing in

198、frastructure present in the COIs and the rationale behind choosing the above factors.Figure 3.4.2.(1):Development Expenditure across ASEAN countries in 2023 and 202421Table 3.4.2.(1):Development Expenditure across COIs in 2023 and 2024Development ExpenditureIndonesiaMalaysiaSingaporeThailandVietnam2

199、0232024Average25.24132(Projected)27.2313526.2622.9113320.8313621.8720.7213423.4213722.0716.0617.8316.9527.5226.8027.16Of the 5 COIs,the average of investment on the development of infrastructure between 2023 and 2024 was the highest for Vietnam,at US$27.16 billion,as shown above(Figure 3.4.2).This i

200、s followed by Indonesia(US$26.24 billion),Thailand(US$22.07 billion),Malaysia(US$21.87 billion)and Singapore($16.06 billion)in last place.In preparation for the development of its economy,each COI has engaged in several major infrastructure enhancement projects.Overall,Vietnam and Indonesia show str

201、ong potential due to their high development investments,which indicate a commitment to long-term infrastructure improvement.Singapore and Malaysia lead in quality of existing infrastructure,offering immediate operational benefits,though Singapores growth may be limited by its land constraints.These

202、factors collectively enable investors to align their infrastructure needs with each COIs unique strengths.Giga Industrial Park in Southeast Sulawesi,Kolaka Resource Industrial Estate,Stargate Industrial Estate,and Toapaya Industrial Estate in Bintan138 Nusantara Airport139 Road constructions140 East

203、 Coast Rail Link141 Sabah-Sarawak Link Road142 Jurong Region Line143 Cross Island Line144 5th Changi Airport Terminal145 Tuas Port Fully automated146,designed to support Singapores growing status as a global logistics and trade hubCOIMajor Development ProjectsIndonesiaMalaysiaSingaporeThailandVietna

204、m Dual-track railroad project connecting Kohn Kaen and Nong Khai147 Orange Line Project between Bang Khun Non and Min Buri148 Extension of Highway 4027149 Extension of road networks150 Long Thanh International Airport151Table 3.4.2.(2):Major Development Projects in COIs22Natural resources are a key

205、driver of economic growth,particularly for the manufacturing industry which is reliant on raw materials such as oil,coal,and natural gas and metals that have contributed significantly to the growth of economies globally152.The abundance of resources reduces costs for businesses and enhances a countr

206、ys attractiveness for investment.Abundance of Natural ResourcesTo gauge resource availability,we used natural resource rent as a percentage of the countrys GDP as a proxy.This indicator takes into consideration the sum of natural gas,coal,oil,forest and mineral rents158 and reflects the revenue gene

207、rated from resource extraction relative to the cost159,signalling each COIs dependence on and access to natural resources.As of 2021,Malaysia shows the highest percentage,indicating a strong resource base,followed by Indonesia,Vietnam,Thailand and Singapore.These rankings suggest that Malaysia and I

208、ndonesia may offer cost advantages for resource-dependent industries,while Singapore,with the lowest natural resource rents,is less resource-reliant but has a highly developed economy and infrastructure.You may refer to Appendix A3.5,Table 3.5.1(1)for more details on the natural resources of each CO

209、I.Figure 3.5.1.(1):Natural Resources Rent as a percentage of GDP(2024)160Sustainable Growth:Environmental ConsiderationsWhen evaluating potential markets for expansion,environmental conditions and regulatory frameworks are key considerations.Factors such as natural resources availability and Environ

210、mental,Social and Governance(ESG)regulations directly influence operational costs,efficiencies and long-term viability of investments in each COI.An abundance of natural resources within the chosen COI would translate to lower costs of importing and transporting the required components.Below are exa

211、mples of key manufacturing industries and the core natural resources they require:Automotive IndustryGenerally,the automotive industry requires high levels of aluminium,copper and lithium to produce car bodies and motors of the drive system153.Particularly in the Electric Vehicles(EV)market,each car

212、 requires approximately 8 kilograms(kg)of lithium,prompting the International Energy Agency(IEA)to predict that the world could very soon face a shortage of lithium154.Aerospace IndustryAircraft manufacturing requires a large amount of metals,such as aluminium,nickel,titanium and steel alloys.The A3

213、20155 and Boeing 777156,some of the most common aircrafts used by airlines,are made up of over 70%aluminium and aluminium-lithium alloys157.23With a global shift toward sustainable practices,assessing a COIs commitment to ESG standards is increasingly crucial for long-term operational success.Strong

214、 ESG regulations can boost investor confidence,enhance reputational value,and reduce long-term operational costs through sustainable practices.Conversely,meeting these standards can involve initial compliance costs for firms,arising from data collection,monitoring,and hiring ESG experts161.The table

215、 below summarises each COIs ESG regulatory requirements,water pollution penalties,carbon taxes,budgets allocated to environmental efforts,future plans focused on sustainability,and key environmental policies and laws that firms should keep a lookout for.In an ESG Report,more factors have to be taken

216、 into consideration when evaluating a countrys ESG performance.Please refer to Appendix A3.5,Table 3.5.2(4)for the comprehensive list of factors,as well as the rationale for the chosen factors.Singapore stands out with the most rigorous ESG requirements,being one of the 2 countries to implement carb

217、on taxes,while also dedicating a high amount of budget to environmental efforts.Malaysia and Thailand also show commitment to ESG while Indonesia shows relatively low engagement in this aspect.Environmental,Social and Governance(ESG)RegulationsEnvironmentIs ESG Reporting Necessary?Water Pollution Pe

218、naltiesIndonesiaMalaysiaSingaporeThailandVietnamNecessary for Public listed companies,financial institutions,non-public companies using natural resources162Necessary for companies listed on Bursa Malaysia163From 2025,necessary for all listed companiesFrom 2027,also applied to large non-listed compan

219、ies164Necessary for listed companies to produce the 56-1 One Report165Necessary for listed companies166Fines up to 3 billion Rupiah(USD 191,142)Daily fines may be imposed for unresolved violations167Fines ranging from RM 50,000-RM 10 million(USD 11,520-USD 2,270,784)and mandatory imprisonment of up

220、to 5 year168Fine up to SGD 15,000(USD 11,344)and/or maximum 3 months jail for discharge of hazardous substancesFine up to SGD 50,000(USD 37,816)and/or maximum 12 months jail if safety and health of others are compromised169Up to 200,000 Baht(USD 1,485)170Warning may be issuedFine ranging from VND 1

221、million-VND 1 billion(USD 39.42-USD 39,417)may be issuedPossible suspension of operations for at least 3-6 months Environmental licence may be revoked171No active carbon taxNo active carbon taxNo active carbon tax2024-2025:SGD 25/tonne(USD 18.91)2026-2027:SGD 45/tonne(USD 34.03)172Starting 2025:200

222、Baht/tonne(USD 5.94)173No dataRM 7.1 billion(USD 1,635,945,080)174No dataSGD 3,401,292,300(USD 2,572,449,174)175131,020.5 million Baht(USD 3,892,469,691)76Golden Indonesia 2045176Establishing a Green EconomyEmphasising a low carbon,circular and blue economy,along with energy transitionNational Polic

223、y on the Environment(DASN)1778 principles which align economic development with environmental mindfulness and sustainabilityVietnams National Green Growth Strategy180Reduce greenhouse gas emissionsReduce energy production and consumptionAchieve sustainable urban developmentThe Singapore Green Plan 2

224、030178Long-term net zero emissions by 2050Strengthening commitment to the UNs 2030 Sustainable Development Agenda and Paris AgreementFocus on 5 pillarsClimate Change Master Plan 2015-2050179Promote sustainable developmentEncourage low carbon growth and climate change resilience Focus on 3 key strate

225、giesCarbon Tax2024 Budget allocated to Environmental EffortsFuture EnvironmentalPlans24EnvironmentIndonesiaMalaysiaSingaporeThailandVietnamKey Environmental Policies/LawsLaw No.32 of 2009,on Environmental Protection and Management181Highlights:Pollution and Environmental Damage Control Environmental

226、 Licensing and Permits Accountability and Liability of Environmental DamagesEnvironmental Quality182(Sewage)Regulations (Prescribed Premises)(Scheduled Waste Treatment and Disposal Facilities)Regulations (Clean Air)Regulations (Licensing)Regulations (Pollution Control from Solid Waste Transfer Stati

227、ons and Landfills)Regulations (Industrial Effluents)RegulationsPolicies184 Law on Environmental Protection Air Pollution Water Resource Management Waste Problems Greenhouse Gas Reduction Law on Water Resources Law on Water Supply and Sewerage Law Policies116 Carbon Pricing Act Environmental Protecti

228、on and Management Act Sewerage and Drainage Act Energy Conservation Act Public Utilities Act Resource Sustainability Act Environmental Public Health Act Hazardous Waste(Control of export,import and transit)Act Radiation Protection ActPolicies183 Enhancement and Conservation of National Environment Q

229、uality Act Factory Act Hazardous Substance Act Public Health Act Occupational Safety,Health and Environment Act Energy Conservation Promotion Act Industrial Estate Authority of Thailand ActTable 3.5.2.(1):Environmental Factors across COIs Table 3.5.2.(2):Social Factors across COIsSocialIndonesiaMala

230、ysiaSingaporeThailandVietnamLife Expectancy at Birth,2021(Years)18567.60.363.516.174.90.413.620.582.80.371873.613.178.70.350.911.973.60.361.514.8Gini Coefficient,2023186Unemployment Rate,2022(%)188Education Spending as a share of Total Government Expenditure,2021(%)189 Table 3.5.2.(3):Governance Fac

231、tors across COIsGovernaceIndonesiaMalaysiaSingaporeThailandVietnamGovernment Effectiveness,20221900.440.390.210.390.990.320.640.692.150.322.210.960.130.190.170.350.140.14-0.430.34Liberal Democracy,2022Regulatory Quality191Rule of Law19225While each country adopts separate systems with regards to EIA

232、 Guidelines,its intention to prevent excessive environmental damages caused by development projects remains the same.Particularly for manufacturing firms whose operations may result in land,water and air pollution,it is crucial to ensure legal compliance and prevent any unnecessary fines or delays i

233、n projects.Additionally,identifying potential issues beforehand enables firms to address risks of non-compliance early on,ensuring smooth operations and reducing future liability.Details of each COIs EIA guidelines are further explained Appendix A3.5.Considering a COIs ESG standards is essential for

234、 evaluating potential operational efficiencies,compliance costs,and alignment with global sustainability practices.While compliance may increase initial upfront expenses,these investments often yield long-term financial,reputational,and operational gains.Sustainable practices can drive efficiency an

235、d help reduce costs over time.Investors prioritising COIs with strong ESG performance,such as Singapore,may benefit from greater stability and growth.Meanwhile,countries like Indonesia and Malaysia offer rich natural resources,albeit with some environmental trade-offs.Environmental Impact Assessment

236、(EIA)GuidelinesTax Policy Impact on Business Competitiveness Taxes have a direct impact on the net profits of a firm.Favourable tax policies can lower tax burden and increase net profits,allowing for greater reinvestment into the firms operations and growth,while high tax rates and the lack of suffi

237、cient and effective incentives could result in the loss of profits in the short run,threatening the firms long-term survival193.This section evaluates the tax environment of each COI by examining three key areas:Standard Corporate Income Taxes,available Tax Credits and Incentives as well as the pres

238、ence of Double Tax Agreements/Treaties(DTAs/DTTs),using data from October 2024.These factors provide insight into the overall tax burden and financial support available to businesses.Table 3.6.(1):Tax Policy Attractiveness of COIsTax FactorsIndonesiaMalaysiaSingaporeThailandVietnamStandard CIT Rates

239、(%)221271243178172310220106120680Number of Tax Credits and IncentivesNumber of DTAs/DTTsSingapore dominates with the lowest CIT rate,as well as DTAs/DTTs with all markets in Europe and the United States except for 4 countries.This is followed by Malaysia,which offers the highest number of tax incent

240、ives.Vietnam and Thailand have moderate CIT rates but fewer incentives,while Indonesia ranks lower due to fewer DTAs.26Based on data compiled by PricewaterhouseCoopers194,the Standard Corporate Taxes of the 5 COIs are listed below.They are typically the highest statutory Corporate Income Tax(CIT)rat

241、e,and include surtaxes,but not local taxes.Standard Corporate Income Tax Tax Credits and IncentivesTable 3.6.1.(1):Corporate Income Tax across COIsTax FactorsIndonesiaMalaysiaSingaporeThailandVietnam2224172020Figure 3.6.1.(1):Corporate Income Tax across ASEAN countriesIn this case,Singapore has the

242、lowest Standard CIT of just 17%,putting it in first place.This is followed by Thailand and Vietnam in second,then Indonesia,and Malaysia in last place.Tax credits and incentives play a crucial role in providing financial benefits and support to businesses,enhancing their operations,stimulating growt

243、h,and encouraging desirable behaviours.They help reduce tax liabilities,increase cash flow,foster competitive advantages,support innovation,and create jobs.These benefits contribute to sustainable economic growth by lowering costs,increasing cash flow,and driving innovation.The table below summarize

244、s the total number of tax credits and incentives,along with those specific to the manufacturing sector:Standard CorporateTax(%)COITotal Number of Tax Credits and Incentives(inclusive of those not specific to Manufacturing Sector)Indonesia195Malaysia196Tax Credits and Incentives(Specific to Manufactu

245、ring Sector non exhaustive)12311.Bonded Stockpiling Area Incentives1.Pioneer Status(PS)and Investment Tax Allowance(ITA)2.Investment Tax Allowance(ITA)3.Special Incentive Schemes4.Special Economic Regions5.Green Incentives6.Aerospace Industry Incentives7.Automation Capital Allowancea.Reinvestment Al

246、lowanceb.Incentives for relocating to Malaysiac.Export Incentives a.Northern Corridor Economic Regionb.Sabah Development Corridora.Manufacture of electric vehicle(EV)charging equipment27 Avoidance of Double Taxation Agreement(DTA)/Treaty(DTT)To prevent businesses from being taxed twice on the same i

247、ncome,countries enter into Avoidance of Double Taxation Agreements/Treaties.This decreases the overall tax burden on businesses operating overseas,encouraging expansion.The table below showcases the DTAs and DTTs each COI has with Europe and the United States.Some countries such as Singapore and Mal

248、aysia have Limited DTAs with the United States,which limits tax relief to income generated from air transport and shipping only.At the same time,Vietnam also has a DTA that has yet to be put into effect with the United States.Total Number of Tax Credits and Incentives(inclusive of those not specific

249、 to Manufacturing Sector)Tax Credits and Incentives(Specific to Manufacturing Sector non exhaustive)A larger number of tax agreements and treaties suggests more markets in which firms can choose to enter without having to be concerned about double taxation.There is greater ease and less tax burden o

250、n such firms,allowing for better financial planning and smoother cross-border operations.COISingapore197Thailand199Vietnam200Table 3.6.2.(1):Tax Credits&Incentives across COIs(Specific to Manufacturing Sector)231061.Pioneer Tax Incentive2.Development and Expansion Incentive(DEI):a.Recently updated t

251、o expand eligibility,now including SMEs as beneficiaries198b.Aligns with BEPS 2.0 standards,introducing a higher,globally competitive tax rate.1.Board of Investment(BOI)Tax Incentives2.Research&Development(R&D)Incentives1.Inbound Investment Incentives2.Employment Incentives Table 3.6.3.(1):Double Ta

252、x Agreements/Treaties across COIsDouble Tax AgreementsIndonesia201Malaysia202Singapore203Thailand204Vietnam205Total Number of DTAs/DTTs71YesYes78YesDTA with China?DTA with the United States?DTA with Europe?Yes(except Ireland,Greece,Estonia,Cyprus,Iceland,Bosnia&Herzegovina,Andorra)Yes(except Bulgari

253、a,Greece,Estonia,Cyprus,Portugal,Andorra)Yes(Limited)78YesYes(except Croatia,Iceland,Bosnia&Herzegovina,Andorra)Yes(Limited)78YesYes(except Greece,Croatia,Iceland,Bosnia&Herzegovina,Portugal,Andorra)Yes78YesYes(except Greece,Cyprus,Iceland,Andorra,Bosnia&Herzegovina)Yes(Not in Effect)28Operational C

254、osts in the Business EnvironmentOperational costs are a crucial consideration for businesses assessing new markets,as they directly impact profitability and efficiency by minimising overhead costs206.Operating costs vary widely across countries due to factors like local labour costs,infrastructure q

255、uality,and economic stability207.In this section,we assess the operational environment of each COI.Figure 3.7.(1):BCG Global Manufacturing Cost Competitiveness Index Graph(2022)208 The BCG Global Manufacturing Cost Competitiveness Index benchmarks manufacturing costs,including the cost of producing

256、a product and shipping it to the US market.This analysis considers factors such as productivity-adjusted labour costs,energy prices,logistics,tariffs,machinery depreciation,and transportation.Even with a relatively competitive score of 96 without tariffs,Chinas cost competitiveness declines sharply

257、with the imposition of US trade-war tariffs,raising its score to 121.This provides an opportunity for the other COIs to position themselves as attractive alternatives for export-driven manufacturing to the US.In particular,Vietnam,Malaysia,Thailand,and Indonesia,offer competitive operational costs f

258、or manufacturing aimed at US exports.While Singapore has a higher landed cost due to higher labour and operational costs,its efficiency in logistics and trade facilitation makes it a strategic hub for high-value production.These variations in cost structures highlight the importance of industry-spec

259、ific analysis when considering the best location for operational efficiency and cost optimization.As precise cost structures vary by industry,by region,and often by locality within a country,companies must conduct on-the-ground analysis.To realise labour productivity advantages in certain regions,ma

260、nufacturers may also need to design new processes and train workers in new locations.Still,the index offers a useful macroeconomic view of cost competitiveness.Sources:World Bank;Us Census Bureau;World Trade Organization;Us Bureau of Labor Statistics,EnerData;Economist inteligence Unit;International

261、 Labor Organization;nternational Federation of Robots;Drewry;,National Bureau of Statistics of China;BcG analysis.1 Refers to Us Code$301 tariffs on Chinese imports;graph displays maximum value of 25%.2 Includes WTo,most favored nation,and preferential tarifs.Excludes ant-dumping,counterailing dutie

262、s,and all safeguard tarifs except Us trade war tarifs on China.3 Includes materials,capital expenditures on facilities,taxes,and other operating expenses.Landed Cost Competitiveness for Goods Shipped to the US29Labour CostLabour is often one of the largest operational expenses for manufacturers.Acco

263、rding to the OECD,unit labour costs are a broad measure of international price competitiveness209.Within the context of manufacturing companies,we assess the average monthly manufacturing wages in each COI,which serves as a measure of labour cost competitiveness.The wages were extracted from sources

264、 including Statista,Trading Economics,and Indeed,with more details in Appendix 3.7.1.Each of these components varies across the COIs and influences the cost-effectiveness and ease of setting up and maintaining operations.For clarity,we colour-code these values in shades,with darker shades indicating

265、 more favourable conditions due to lower nominal costs,which can enhance profitability.The cost of employing workers,often measured by average wages in the manufacturing sector.Table 3.7.1.(1):Average monthly manufacturing wages across COIsLabour CostIndonesia210Malaysia211Singapore212Thailand213Vie

266、tnam2141968031,389425226Average monthly manufacturing wages(USD)Countries like Indonesia and Vietnam stand out with relatively low wages,making them attractive for labour-intensive operations.In contrast,Singapore,while offering a skilled workforce,has significantly higher labour costs,aligning bett

267、er with industries focused on high-value or specialised manufacturing.For this analysis,we selected the main cost components that represent a significant share of operational expenses in a manufacturing environment:The expense associated with purchasing or renting industrial land,factories,and offic

268、e spaces.The cost of domestic and international transportation,which is essential for export-oriented companies reliant on efficient supply chains.Primarily electricity,a major operational expense,particularly in energy-intensive industries.Labour CostUtilities Cost Land&Rental Cost Logistics(Freigh

269、t)Cost30A significant part of setting up a business overseas includes securing industrial land,ready-built factory space and office rentals.As such,this subfactor includes the cost to lease or purchase industrial land,rent factory space,and secure prime office locations.The comparisons in the table

270、below mainly account for lease comparisons.As construction costs are also a significant component of comparison,we include some figures in the Appendix 3.7.2 but exclude them here to avoid generalising comparisons.Cost of Land and RentTable 3.7.2.(1):Cost of Land and Rent across COIsCost of Land and

271、 RentIndonesia215Malaysia216Singapore218Thailand219Vietnam220Industrial Land Rate(USD):Lease(unless otherwise specified)Ready-Built Factory RentalOffice RentMalaysia offers more affordable industrial land options,while Singapores high costs can be offset by its advanced infrastructure.Countries that

272、 offer lower land rates,such as Vietnam(USD 2.20-USD 2.64 per sqm per annum),are ideal for firms focused on minimising initial setup costs.While publicly available data is not readily available for Indonesia,more information can be found in Appendix A3.7.2.Leaseholds up to 30 years;prices vary by lo

273、cation,subject to Indonesian Investment Board(BKPM)approvalsPurchase:Greater Jakarta area:$177/sqm,Jakarta city:$400/sqm,Tangerang:$181/sqm,Bekasi:$173/sqm,Bogor:$139/sqmVaries by location and facility specifications;consult local listings for current ratesJakarta office rental prices are increasing

274、;consult local real estate listings for current data$0.0581-0.5165 per sqm per annum$3.44-7 per sqm per month$10.44-16.68 per sqm per month$22.79-$53.17 per sqm per annum$15.19-30.38 per sqm per month$91.90 per sqm per month$2.67-8.33 per sqm per annum$4-6per sqm per month$14-29 per sqm per month$2.

275、20-2.64 per sqm per annumNo Data$27.1-47.5 per sqm per month31Logistics costs significantly influence the cost-efficiency of exporting goods and connecting to supply chains.This component is measured by the cost of shipping a 20-foot container(TEU)from major hubs,such as Port of Shanghai,to each COI

276、,as well as from the COI to major global ports likeRotterdam in Europe and Los Angeles in the U.S.Low quality infrastructure and run-down ports generally cause prices of transporting exports internationally to increase221.This ultimately affects the cost of production,a key consideration for firms i

277、n their expansion decision making process.In this section,we analyse how much it costs to ship a 20-foot standardised shipping container(1 TEU)from Shanghai,the biggest port in China,to the COI.Following this,costs of exporting from the COI to the Port of Los Angeles and Rotterdam,Netherlands,the la

278、rgest ports in the United States and Europe respectively,are also calculated to determine the final comparison.Countries with lower shipping costs and faster transit times rank more favourably.Singapore and Thailand rank highly due to competitive freight rates and efficient shipping times,while Viet

279、nams higher costs place it lower in the rankings.Logistics Cost(Freight)Utilities,especially electricity,are a key component of operational expenses,particularly for the energy-intensive manufacturing industry.In our analysis,electricity rates(in cents per kWh)are used as a measure of utility costs

280、in each COI.Utilities Cost Table 3.7.3.(1):International Freight Cost across COIsIndonesiaMalaysiaSingaporeThailandVietnamInternational Freight Cost14(based on shipping cost range and time taken:lower cost,shorter time,and smaller range=better)Amounts in USDPort of Shanghai COICOI Port of RotterdamC

281、OI Port of Los Angeles$1,10010-15 days$6,749.50 24-34 days$6,43935-46 days$1,1949-14 days$6,42420-40 days$5,798.5032-53 days$1,1549-20 days$6,26220-32 days$5,798.5032-53 days$931.508-12 days$6,404.5020-42 days$5,837.5032-56 days$2,195.506-11 days$6,61420-30 days$6,06231-57 daysLower freight costs an

282、d faster transit times,seen in Singapore and Thailand,are favourable for businesses relying on export markets.Vietnam,with relatively higher logistics costs,may face disadvantages in attracting export-oriented businesses.Investors should assess the relative importance of shipping from China to COI a

283、nd exporting manufactured goods out of the COI based on business needs.Table 3.7.4.(1):Utilities Cost across COIsUtilities CostIndonesia223Malaysia224Singapore225Thailand226Vietnam227109241310Electricity Tariffs(USD cents)In general,Singapore has the highest rates due to its dependence on imported e

284、nergy,while countries like Malaysia and Indonesia offer lower rates,making them more attractive for energy-dependent manufacturing processes.The stated rates are the average rates in USD,with detailed ranges in Appendix 3.7.4.32Navigating Cultural Dynamics in Business Operations Given the diverse cu

285、ltural landscape and demographics within the five COIs,businesses need to account for cultural complexities and how it would impact their operations within each COI228.Understanding different cultural factors like religion,language,demographics and customs within each COI,helps businesses to tailor

286、their communication,business practices,staff training and expectations in a way that resonates with local stakeholders.The table below summarises these three factors and their similarity to home culture(using Chinese culture as an illustration),business culture,labour practices and workplace culture

287、.In this section,we will analyse the cultural factors of the five COIs by expounding on the following key factors:Diverse Cultural LandscapeFactors like language,religion,and demographics shape how business interactions are conducted in each COI.We will assess the significance of language,religion,d

288、emographics and customs on business operations in each COI.Business Culture and Relationship BuildingEach COI has distinct norms around business relationships.This analysis will explore how the business culture is like within the COI and the ways to build business relationships.Labour Practices and

289、Workplace CultureWorkforce attitudes toward work-life balance,hierarchy,and workplace enjoyment vary widely across COIs.We will delve into potential implications on labour practices and workplace culture from the differences in a diverse culture landscape of each COI.Bahasa Melayu is the official la

290、nguage in Malaysia.While many in Malaysia can speak English,their command of the language can be limited with a preference to use their preferred mother tongue232.As of 2024,22.4%of Malaysias population are ethnic Chinese233,which suggests a relative ease for Chinese businesses to communicate in Chi

291、nese within business dealings.In Malaysia,religion plays an important role in workplace culture and practices.For instance,businesses should avoid scheduling meetings on Fridays as this is a day of worship for Muslims234.Working and meeting agendas can get interrupted as the Muslim workers need to p

292、ray multiple times a day.Thus,businesses need to design working hours and breaks accordingly to account for these religious practices235.As such,businesses also need to be prepared for non-negotiable breaks in productivity in staffs ability to meet production targets.Bahasa Indonesia is the official

293、 language in Indonesia.While English is used during business dealings,learning basic phrases in Bahasa Indonesia signals a respect which can help to build trust229.As one of the largest Muslim populations in the world,religion forms a big part of the lives of Indonesians.Businesses need to cater to

294、the perceptions towards having the autonomy to express their religion within their workplace.For instance,having family work-life balance and work arrangements that allow them to pray and practise their religion freely230.Despite comprising 3-4%of the Indonesian population,Chinese Indonesians domina

295、te the ownership of private capital and non-state businesses231.For Chinese businesses,this implies a relative ease to communicate in Chinese when conducting business dealings.COIDiverse Cultural LandscapeIndonesiaMalaysia33Singapores workplace environment places a strong emphasis on pragmatism,tran

296、sparency,and compliance,with high regard for seniority and authority.This culture encourages businesses to recognize and respect the leadership of senior management,who are often entrusted with making significant strategic decisions246.Furthermore,collaboration and consensus within a team is essenti

297、al hence enough respect must be given,and trust must be built from developing a professional relationship with each stakeholder247.Initial business meetings in Malaysia usually seek to set expectations and build personal relationships.Hence,businesses should try to be patient and do not expect key d

298、ecisions to be made during the initial meeting stages245.The pace of decision making also tends to be slower due to consultative decision-making approaches in Malaysia,which can lead to lengthy negotiations213.A potential to overcome these challenges is to engage a local intermediary,particularly be

299、fore initiating business negotiations in Malaysia.This helps to smoothen potential gaps in cultural and communication that promotes more productive business dealings213.Thailand has a deeply ingrained culture of“Khap Chun”which emphasises on respect towards workplace hierarchy and greater significan

300、ce surrounding those in senior positions248.As a result,businesses should strive to have more conversations in a respectful manner with those in senior positions who have greater decision-making authority.The pace of business negotiations can be rather slow in Thailand,with the expectations for both

301、 parties to make concessions and meet halfway249.Hence,businesses need to consider room for adjustments and be open to adjusting their expectations accordingly213.In Indonesia,preserving mutual respect and harmony and achieving consensus are highly valued in business dealings244.Displays of dissatis

302、faction or overt confrontation are generally discouraged,as they can complicate interactions and prolong negotiations206.A culturally sensitive approach is essential for businesses to foster positive relationships and avoid misunderstandings.COIBusiness Culture and Relationship BuildingIndonesiaMala

303、ysiaApproximately 11-14%of Thais are ethnic Chinese238,which suggests relative ease in communicating in Chinese during business dealings.However,primary and secondary research findings show that Chinese firms do indeed face challenges in communicating with locals.These language barrier issues are pa

304、rticularly faced when firms want to communicate to workers about the production processes but face difficulty in finding a common language to express business terms239.As shared by our interviewees,a possible way to manage this issue is to hire bilingual employees that were well-versed in Chinese an

305、d Thai to resolve communication problems that could cause delays in production processes240.Many still prefer to use the official language-Vietnamese to converse and have limited capability to converse fluently in English241.This preference goes beyond conversations into official business documentat

306、ions and paperwork relating to business operations that have to be in Vietnamese242.Less than 1%of Vietnams population are ethnic Chinese243,which further reinforces the difficulty in conversing in Chinese during business dealings.The primary business language used is English with many being bilingu

307、al in their mother tongues236.With 75%of Singapores population being ethnic Chinese,Singapore is cited as one of the easiest foreign countries for the Chinese to live in and communicate with237.COIDiverse Cultural LandscapeSingaporeThailandSingaporeThailandVietnamTable 3.8.(1):Diverse Cultural Lands

308、cape across COIs34Malaysians are quite flexible towards deadlines and time,where they are less often than not strictly adhered to256.Thus,firms need to better manage their expectations towards adherence to deadlines and allocate additional buffer time in the production planning timelines.Additionall

309、y,Chinese firms face challenges in recruiting and training local labour.Due to the mismatch in expectations and output regarding labour productivity,businesses anticipate difficulties in replicating the efficiency of its Chinese workforce by hiring local workers in Malaysia.Singapores workforce can

310、be described as disciplined,efficient and hardworking.A lot of this can be attributed to the strict adherence to workplace rules and norms aimed at creating a productive and harmonious work environment257.Additionally,Singaporean workers often possess a strong work ethic where they are prepared to w

311、ork long hours to deliver work outcomes258.The workforce culture in Singapore can be characterised by a blend of Asian and Western influences focused on the following values259:Professionalism and Efficiency-prioritising efficiency,results and punctuality Hierarchy-strong respect for senior leadersh

312、ip and authority Collaborative Team Approach-focus on collective results and decision making Work is not a priority and is perceived as a means to support personal and family goals253.The work culture in Indonesia emphasizes a balance between professional duties and personal or family priorities.For

313、 many Indonesian employees,work is a means to support family and personal goals,which can lead to requests for greater flexibility and work-life balance.One notable challenge highlighted in our findings is the adjustment to Indonesias more moderate work pace,especially for companies accustomed to a

314、faster,high-intensity business environment.Unlike Chinas typically rapid work tempo,Indonesias approach is generally lower paced.Companies should be prepared to manage expectations and avoid imposing high-pressure environments,which may not align with local workplace norms.Organisational loyalty is

315、also a significant aspect of Indonesias workforce culture.Employees with long tenures are often viewed as committed and reliable,with a strong sense of loyalty towards their organisation 254.This is often commonly seen in organisations where employees feel a sense of belonging and trust255.Hence,com

316、panies are encouraged to cultivate this loyalty by creating an inclusive environment and building long-term relationships with employees.COILabour Practices and Workforce CultureIndonesiaMalaysiaSingaporeIn Vietnam,trust and personal relationships form the basis for successful business partnerships2

317、50.Such personal connections have great business implications as business dealings are often made through referrals and recommendations and the price offered can be dictated by the method of introduction251.Navigating Vietnams business culture goes beyond merely overcoming language barriers.Companie

318、s need to understand workforce interactions,including how to negotiate,follow proper etiquette,be culturally sensitive,and meet other underlying expectations252.Business meeting outcomes are rarely achieved from the get-go with frequent possibilities for last minute changes and lots of convincing to

319、 do216.Businesses should be more open and flexible in adapting to last-minute decisions instead of strictly adhering to earlier agreements,especially when dealing with Vietnamese government agencies and local partners 216.To address such issues,foreign businesses in Vietnam usually hire locals to he

320、lp them.Having the right local intermediary also entails the quality of being adept at addressing the challenges of dealing with the local business culture216.COIVietnamTable 3.8.(2):Business Culture and Relationship Building across COIsBusiness Culture and Relationship Building35Vietnamese workers

321、generally value quality of life and are less willing to work in poor conditions,which contrasts with the more intense work culture in China.The mismatch in expectations towards workplace conditions can cause challenges in attracting and retaining workers for businesses should they fail to provide a

322、good physical working environment for them.For instance,solely designing a fully air-conditioned factory working space for attracting and retaining workers can also add to additional business costs227.Within the workplace,Vietnamese working culture emphasises harmony,teamwork,and a common collective

323、 spirit261.The concept of Gia nh promotes collaboration,shared responsibility and team synergy where personal relationships thrive228.There is also a huge focus on adhering to a hierarchical structure where respect and decision making is usually given to seniors262.Thus,promoting discipline,order,an

324、d efficient communication within workforces229.The relatively young and disciplined labour force in Vietnam has a strong work ethic which makes them increasingly productive229.Furthermore,Vietnamese workers are relatively adept towards embracing change,learning new skills,and quickly adapting to evo

325、lving technologies and industry demands229.Companies expanding into Thailand should be prepared to adapt to a slower pace of business operations.Cultural sensitivity and flexibility in pacing of work-related processes are essential to overcoming initial challenges and ensuring long-term success226.T

326、he Thais tend to emphasise on the importance of work-life balance where sufficient time should be allocated outside of work to account for social and family interactions260.The concept of Sanuk is widely entrenched in Thai work culture,where workers seek to make their working experience enjoyable209

327、.Moreover,Thai workplace culture is characterised by a need for consensus-based decision making facilitated by fostering personal relationships227.For businesses,this implies that embracing such workplace beliefs and customs into team design can encourage improved work outcomes.COILabour Practices a

328、nd Workforce CultureThailandVietnamTable 3.8.(3):Labour Practices and Workforce Culture across COIs36This section serves as a practical framework for foreign investors considering expansion into SEA.Drawing from the experiences of companies we interviewed,subject matter experts,and prominent case st

329、udies from sources such as the Singapore Economic Development Board(EDB),we developed a“Roadmap to Regional Expansion”framework and corresponding guiding questions to provide foreign investors a structured approach to evaluating potential investment destinations and navigating operating decisions in

330、 the region.The compiled list of guiding questions can be retrieved in Appendix A.ROADMAP TO REGIONAL EXPANSIONFRAMEWORK37The Roadmap to Regional Expansion includes six stages that firms can use to guide their thinking and approaches before expanding into the respective COIs.Understanding and clarif

331、ying the strategic goals of the business is an essential first step for investors looking to expand into a new COI.By examining how well different COIs align with their key motivations,investors will be better equipped to develop an appropriate overseas expansion strategy.Stage 1Examine Strategic Go

332、alsThis stage encourages investors to begin their analysis of the COI by taking a broader view,analysing the overarching landscape through the lens of broader macro-environmental factors(economic,political,and tax conditions)within the country,in order to determine if the COI offers a favourable env

333、ironment for business growth and investment.Stage 2Explore Overarching Landscape of COIAfter analysing high-level opportunities and gaps that the business can potentially fill,this stage prompts firms to assess how well the COIs operational environment can support the business(in terms of workforce management,infrastructure and logistical considerations,cultural affinity,and the regulatory environ