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Singapore shines as the Regional Hub for Global Businesses

According to HSBC, sales in the region are set to grow by 23.2% over the next 12 months.

According to a new report from HSBC, they expect sales in the region to grow by 23.2% over the next 12 months – versus 20.1% from last year’s survey, and 4-5 times the rate of GDP growth expected in Southeast Asia. This highlights growing confidence in the region on the part of international companies.

Singapore, a well-established hub for international companies with operations in ASEAN, continues to attract investments. Nearly half (46%) of international companies surveyed already have operations in Singapore, more than any other markets in the region. Singapore is also well ahead of its ASEAN peers as a priority for expansion: 36% of firms with a presence in the City-State are planning to prioritise their growth in Singapore over the next two years.

The survey also delved into key factors that make Singapore appealing to global businesses. Essentially, those surveyed cited Singapore’s skilled labour force (30%), developed infrastructure (29%), and growing digital economy (29%) making it an attractive location for expansion.

Singapore’s reputation offering a stable operating and business-friendly regulatory environment remains a key factor that draws global businesses to the country. It is especially important to mainland China-based companies where 36% of them cited Singapore’s stability as a key factor which encourages them to make further investments. Similarly, 42% of India-based companies are drawn to the business-friendly regulatory environment that Singapore offers.

Singapore’s leadership on sustainability issues is a positive for many businesses. One in four (24%) say Singapore’s ESG, sustainability and net-zero ambitions make it particularly attractive for business expansion. Investment in sustainability initiatives is also strong: 77% of companies with a presence in Singapore will spend at least 5% of their operating profit on becoming more sustainable over the next 12 months, and almost three in 10 (28%) are spending more than 10%.

ASEAN attractions

The survey suggests that international businesses continue to see ASEAN primarily in terms of its supply chain connectivity rather than as a consumer market, even though Gross Domestic Product (GDP) per capita for Southeast Asia has grown from USD1,250 in 2000 to USD5,800 in 2023, according to the International Monetary Fund.

The region’s skilled workforce (27%), growing digital economy (26%) and competitive wages (25%) are the top three attractions, while the growing middle class ranks ninth in terms of importance. However, businesses identify talent as a challenge as well as a draw: the cost of training (36%) and lack of skilled personnel to drive implementation (also 36%) are identified as top challenges for businesses seeking to digitise their operations in ASEAN. Also, the ability to hire talent with the right level of expertise is the top challenge to becoming more sustainable in the region.

When asked which technologies ASEAN is leading the way in, the highest number of respondents identified e-commerce (31%) and digital payments (28%), reflecting the widespread adoption of digital platforms and mobile wallets across many countries in the region.

Regina Lee, Head of Commercial Banking, HSBC Singapore said: “The survey findings are consistent with the increased funding, trade financing and payment activities that we have seen especially amongst our global clients in Singapore. ASEAN’s growing demographic, increasing number of inter-regional economic frameworks, and sprouting innovation scene makes it one of the most compelling regions to do business in. We have been scaling up our coverage team as well as banking and digital capabilities to support global businesses pursue growth opportunities that the region offers.”