3 Key Notes Before Entering a New Market [Video & Transcript]

3 Key Notes Before Entering a New Market [Video & Transcript]

The above is a video taken during one of 2iB Partners master class where our advisor Mr. Richard Eu answers a question on “3 Key Notes Before Entering a New Market” by a business owner, Mr. Peh Zheng Yang.

 [Begin Transcript]

Mr. Peh: You mentioned something like for more traditional businesses, like my retail business with a product and when you’re looking to expand regionally, you talked about either buying or organic growth. So, well you mentioned that there are very key differences to look out for. So, I’d like to know, what are 3 important things to look out for – perhaps like processes to look out for or potholes we need to avoid.


Mr. Richard Eu (2iB Partners):

The People Problem


Actually, the main thing is the people problem. You get the right person, anything can work. In most cases it is very hard to find the right person, that’s one.


Aligning existing operations


And the other thing is that, if you start out in a new country, you have got to give a lot of effort, backing and support from your existing operations. So are your existing operations prepared to do this and spend time doing stuff, not beneficial for them, you know and to help out this new territory. So I come, you know, in my case, we have situations where the people from one country wouldn’t support the other one because they are looking at their own bottom line. So you have got find a way of aligning everybody else in the organization to ensure the success of that operation. So it is some compensation scheme you have to think of, right?


Navigating regulatory issues


And then the third one I would say is probably, in our case particularly – regulatory, getting over regulatory issues. But generally speaking, every time I go to a new territory, requirements will be different and you’re going to need somebody who can navigate the stuff locally. I won’t say paying bribes, but you’ve got to know who are the right people to deal with. Especially in the emerging countries, it’s a lot more difficult to do that.


[End Transcript]


2iB Partners goes to Silk Road Summit 2018 in Zhang Jia Jie, China

2iB Partners goes to Silk Road Summit 2018 in Zhang Jia Jie, China

15th Oct, 2018 – 2iB Partners attended the Silk Road Summit Conference in Zhang Jia Jie, China along with some other Singapore delegates.

From left to right: Mr. Dylan Tan, Director of 2iB Partners. Mr. Yang Yen Thaw, Managing Director of 2iB Partners, Dr. Lai Leng Tham, Executive Director of Meinhardt Infrastructure Pte Ltd, Mr George Abraham, Chairman of The GA Group Pte Ltd, Mr. David Chew and Mr. Shawn Toh

The conference was attended by Delegates from more than 80 countries attended the Summit, including former politicians, government leaders, about 40 diplomats, business associations from more than 50 countries, and representatives of international organizations such as UNESCO, UN World Tourism Organization, UN Industrial Development Organization, International Standardization Organization, Black Sea Economic Cooperation, etc.

The event had also attracted great attention from Chinese and foreign media. China Business News of CCTV reported the grand summit; Xinhua News Agency and China News Agency published news release; Phoenix Satellite TV also carried a series of featured reports on the summit. Media including China Global Television Network (CGTN), Philippine News Agency, Asia Pacific Daily, Manila Bulletin and Manila Standard Today (MST) carried out frequent and extensive coverage to the global audience.

The conference was an informative one and gave delegates a better sensing on chinese sentiments towards the One Belt One Road (OBOR) initiative.

Deputy Governor of the Hunan Provincial Government He Baoxiang addressed and announced the opening of the summit. Vice Chairman of China Chamber of International Commerce and former Vice Chairman of China Council for the Promotion of International Trade Zhang Wei, Deputy Director of CPPCC Sub-committee of Social and Legal Affairs and President of China Association for Friendship Chen Zhimin, former Assistant to Minister of the International Department of Central Committee of CPC and Vice President of China NGO Network for International Exchanges Dou Enyong, Deputy to the National People’s Congress of China and Chairman of Silk Road Chamber of International Commerce (SRCIC) Lu Jianzhong, former President of Croatia and SRCIC senior consultant Stjepan Mesić, delivered welcoming speeches at the opening session chaired by Secretary of Zhangjiajie Municipal Party Committee Guo Zhenggui.

Minister of Environmental Agriculture of Georgia Levan Davitashvili, Executive Dean of Chongyang Institute for Financial Studies, Renmin University of China Wang Wen, Chairman of the Board of the Union of Arab Banks Sheikh Mohamed El -Jarrah El- Sabbah, Vice President of China NGO Network for International Exchanges and Chairman of Chinese Culture Promotion  Society Wang Shi, and Commissioner of Korea World Travel Fair Shin Joong Mok delivered keynote speeches.

2iB Partners endeavors to bridge businesses between Singapore and Belt Road countries by fostering good relationships and networks within these countries. To a certain extent, the recent European Union And Singapore Free Trade Agreement (EUSFTA) and European Union And Singapore Investment Protection Agreement (EUSIPA) will help to facilitate many of these relations.


Is having a Corporate Social Responsibility (CSR) program just a cost to your company?

Is having a Corporate Social Responsibility (CSR) program just a cost to your company?

Developing great companies that give back is more about devising a clear Corporate Social Responsibility (“CSR”) program aligned with the company’s goals and values rather than forcefully integrating CSR with their business strategies and goals. Instead of passing it off as a short term marketing gimmick, CSR should be seen as a long term investment strategy.

read more

Is it the right time to expand your business?

Is it the right time to expand your business?

Today’s conquerors

Expansion, empire building, conquest are hard in-grained into the champions of each era. In the times before, there was Qin Shi Huang, there was Genghis Khan and Alexander the Great. Today, there are entrepreneurs.

Expansion into foreign markets is by itself a strategic task and should not be made without considerable thought and investigation. More often than not, the move fails to meet expectations and adhere to the company’s long term strategic goals. The planning and implementation should be the task of a company’s management and not a mere reaction to a certain event. If anything, it should be a carefully thought out process with a clear motive of the strategic intent behind the action.

Here are some things to consider, amongst many others:

War chest

One obvious consideration when contemplating expansion is cost. Expansion often requires a significant commitment of corporate resources- both financial and human. In a smaller company, the owner’s personal finances may also be involved. Chances are, only the business owner’s skin is in the game. In some cases, you must be able to sustain the bleed before it becomes profitable.

A good move can bring a company to greater heights but a bad one can bring pain and ruin immediately. Having an investor would help to diversify risks and also bring about more financial muscle. An investor’s interest is also heavily aligned with that of the business and is likely to help if he/she has any connections in that market to help.

Hired Directors

Hired directors and advisors bring fresh, new ideas to a company and can provide valuable insight about strategic matters. They might also bring with them experience and network in the particular market. The last thing you want is to break into a new market with absolutely no connections

Many smaller companies aggressively pursue expansion when, in fact, they are not prepared to do so. Entrepreneurs are brilliant, daring and change agents which is why they have what it takes to build a business from scratch. In that first stage of growth, entrepreneurs are like heroes that defy common expectations and bring about unprecedented peace. After that however, comes another stage of growth, one where the entrepreneur may be lacking the skills to deal with.

Corporatization, or to take the previous analogy, peace-time. In times of peace, there are no need for heroes. It is a stage of creating a sustainable business. It is a stage of corporatization where specialist talents are brought in. Often, an entrepreneur becomes “stuck” in the hero mode, a company’s first stage of growth, when it is time to move on to the corporatization mode. This mode involves the creation of robust systems, processes and the right people. Strategy also means something much deeper than during the first phase.

An easy example would be the listing of a company. You will require a full board of directors governing investor relations, corporate secretary, compliance, governance amongst many others. Suddenly, everything becomes paper warfare.

Know your weakness

From time to time, it is important to go through a period of self-reflection. In corporate jargon, this is known as a strategic audit. This assessment can reconfirm or even inform management of the strengths within the company that management may have taken for granted. Assessment also brings out the weaknesses within the organization that management must act upon.

Whether it is a simple SWOT (Strength, weakness, opportunity, threat) analysis or a porter’s 5 forces exercise, it will reveal immediate action points or contingency plans that need to be made in case a fateful event were to happen.

Knowledge and information

Anyone blessed with common sense would know that charging in blind would be a fatal mistake. One should have armed himself with as much knowledge as possible. -From differences in accounting treatments, tax, legal to who are the people that you need to meet. Requiring 100% of knowledge to make a decision is pure insanity but jumping into the water without knowing if there are rocks below is not a very smart thing to do. There needs to be a fine balance and your strategy should address that.

Digital, a borderless solution?

Buzzwords are ricocheting around and one of them is the 4th industrial revolution. Sky-high valuations are based on the belief on incredible scalability through the www. The believers are religious that tech will disrupt traditional businesses and the secular ones are adamant it will not affect businesses.

It will but not in the way that you think. Tech will have an effect on the way business is done. For instance, the digitization of marketing services. Social selling, SEOs and digital marketing in general is an example of digitization. However, this does not mean that traditional marketing has been wiped off the earth. Traditional media buy-sell-placement still exists, banners and large television ads still play a big role. It simply means a change in the way business is carried out.

As entrepreneurs, you have to be ahead of the times and be able to look 3 or more years into the future. The business that survives and owns the revolution will be the ones that embraced technology and digitization. However, that being said, building a tech team is an incredibly risky play that most businesses are not able to afford.

Do you think it is the right time for you to expand?

  1. Have you built a strong international management team?
  2. Have you developed a strategic plan, and does the proposed expansion fit in with your overall strategic goals?
  3. Do you have the necessary resources – financial and human – to handle an expansion?
  4. Have you reflected on the impact that digital capabilities can bring you?
  5. Do you have a digitization plan?
  6. Do you have the necessary knowledge and connections in your target market?


CoAggregation® is a business model evolved by 2iB Partners that helps you overcome these problems through collaboration. We help you reduce costs, scale up, internationalize and future proof disruption. If you want to be a co-owner in a global company and become a disruptor instead of the disrupted, drop us an email at info@2ibpartners.com to have a confidential preliminary discussion.

Your partners, in the truest sense



Dylan Tan – Director, 2iB Partners

For partnerships, speaker and general business enquiries with 2iB Partners:

Contact Person Dylan Tan
Designation COO
Email Dylan@2ibpartners.com


Is having a Corporate Social Responsibility (CSR) program just a cost to your company?

Is having a Corporate Social Responsibility (CSR) program just a cost to your company?

Developing great companies that give back is more about devising a clear Corporate Social Responsibility (“CSR”) program aligned with the company’s goals and values rather than forcefully integrating CSR with their business strategies and goals. Instead of passing it off as a short term marketing gimmick, CSR should be seen as a long term investment strategy.

read more

Transcending the conglomerate discount and turning it into a premium

Transcending the conglomerate discount and turning it into a premium

The Conglomerate Discount

In a conglomerate model, one entity buys out many disparate entities resulting in one top management/board that all companies report upwards to.

In 1981, conglomerates had already gone out of fashion. Analysts were keen to distinguish between the failures of the conglomerate model and the leveraged buy-outs (LBOs) and mergers of the 1980s. Investment managers were skeptical on grounds that conglomerates were not transparent and disallowed investors the ability to allocate within sectors. It appeared that investors preferred a “pure play” compared to conglomerates. Instead of putting together chunks of unrelated sectors which complicated management and investment, investors preferred focused companies true to their core competencies. They wanted simple and easily understandable investment propositions.

General Electric, an S&P 500 listed company, is one of the notable conglomerates that is involved in a great variety of businesses. What was observed in the 1980’s, however, was that the PE of GE was trading equal to or less than the S&P 500. Hence there was an inherent pressure for divestments, spin-offs and carve-outs that resulted in much more efficient, customizable and nimble units.

The conglomerate discount concept refers to the stock market’s tendency to undervalue the stocks of a conglomerate businesses. It is calculated by adding an estimation of theintrinsic value of each of the subsidiary companies in a conglomerate and subtracting the conglomerate’s market capitalization from that value. The conglomerate discount arises from the sum-of-parts valuation, and it is the reason why many conglomerates spin-off or divest subsidiary holdings. -Investopedia

Investors tend to undervalue large, diversified conglomerates due to the natural limits of one board governing such a large business and those that do not have a core focus. The quality and smoothness of corporate strategy execution, to a large extent, is heavily dependent on the company’s internal corporate governance mechanisms. It is thus an indispensable task of that one board to ensure that the company’s organizational structures (e.g., the group functions), the style with which group-level management interacts with the business units, as well as the management systems (e.g., corporate planning and controlling systems, incentive systems, IT systems) are well aligned with the corporate strategy.

The board faces further difficulty since the business groups within a conglomerate sometimes lack strategic coherence and overall transparency. This can foster inefficiencies in internal and external resource allocation. Such management inefficiency is also due to the many layers of approval leading to slower decision making. A centralized conglomerate is thus less nimble and customizable in their offerings and often stifles the creativity and efficiency of each of the moving parts. Furthermore, finding cost efficiencies and reducing bureaucratic inefficiencies becomes more difficult as a company moves into more diversified and dispersed lines of business. On some occasions, these inefficiencies lead to the company receiving a conglomerate discount. Large companies, such as Apple, Exxon and JPMorgan Chase & Co., may not be subject to the discount because despite being very large, they still operate focused businesses true to their core competencies. Some examples of U.S. conglomerates that may have been treated with this discount include Proctor & Gamble and Honeywell International Inc.

Merging to form conglomerates is attractive on the surface, especially from an accounting perspective: when faced with 4 balance sheets and P&Ls, it makes perfect sense to centralize everything and squeeze out every dollar. It is widely known, that most M&As and roll-ups fail due to egos and cultural incompatibility. They also create more bureaucracy laden entities, which defeats the promise of efficiency.

Emotion also plays a role in M&A, especially with small businesses. In small business M&A, it is often a more emotional thing rather than just a pure transaction. The business owners and staff are more emotionally tied into their company. Generally, people dislike change and this includes staff and customers alike.

Merging Through a holdco structure

This is a structure involving a number of complementary companies under a holding group which may or may not be listed. However, the key premise is that all of these companies are ring-fenced and kept independent of each other with the autonomy to run their business as is. Integration wise, these companies maintain their identities and brand equity. On the holdco level, the services are integrated on a project by project basis like a jigsaw with many permutations.The philosophy is that great things happen when great minds come together.

Small to medium companies do not have the resource and the capacity to conduct an IPO and more so the rigor of running a publicly listed company. Together, with a pool of resources, they now can hire first rate talent and build the systems and processes needed to maintain the public holdco structure.

Transcending the Conglomerate Discount

Business process activities in particular can benefit from centralization: there are great benefits in shared services and out-sourcing of day to day routine operations such as payroll, finance, accounting, HR and anything administrative –even having one central secretarial pool. If a business is freed from the dead weights of such administrative tasks, it can focus entirely on profitability and growth.

By creating a company comprised of high performing, complementary, autonomic small businesses, the market is offered something unique: an industry specific conglomerate that does not suffer from the traditional downsides of a centralized conglomerate. Since each business is high performing and maintains its effective leadership, the conglomerate discount becomes a premium: the company is worth more than the sum of its parts, since it enhances the value of each of the small businesses in the group.

Instead of forcing a consummation, synergies happen by themselves in an environment where creativity and innovation are encouraged rather than stifled. Decisions are made much faster and each moving part works autonomously which makes delivering much more efficient. Each of the business owner remains in full control of their business which makes efficiency more possible. At heart, entrepreneurs are free spirits and out of the box thinkers.

Many books on management and leadership always talk about giving control and a sense of ownership. It is something really simple but very few people do it! As an entrepreneur that has built a good, solid, multi-million dollar business, they probably know their industry better than you.

Leverage on a Global platform

Standard procurement practice dictates that you would not be able to qualify for a tender if you are not of a certain scale or capacity. However, by coming together, companies now have a much larger global footprint and financials to leverage on. By leveling the playing field, a smaller business can now have a chance at the larger contracts.

By having sister concerns in different markets, this effectively gives you market access into those markets. They know their market well enough and have the contacts needed to help you get off to a good start. This is in stark contrast to going in completely blind with a million and one counter-party risk.


Dylan Tan Director – 2iB Partners

-John Nikolaou contributed to this article

For partnerships, speaker and general business enquiries with 2iB Partners:

Contact Person Dylan Tan
Designation COO
Email Dylan@2ibpartners.com


Is having a Corporate Social Responsibility (CSR) program just a cost to your company?

Is having a Corporate Social Responsibility (CSR) program just a cost to your company?

Developing great companies that give back is more about devising a clear Corporate Social Responsibility (“CSR”) program aligned with the company’s goals and values rather than forcefully integrating CSR with their business strategies and goals. Instead of passing it off as a short term marketing gimmick, CSR should be seen as a long term investment strategy.

read more

When Mergers & Acquisitions don’t work

When Mergers & Acquisitions don’t work

Mergers and Acquisitions (M&A) aim for financial stability of a business and wealth maximization of shareholders. It provides a potentially bigger and diversified market share. In these days, it is the most commonly use methods for the growth of companies. M&A are a dominant means of globalization and is key to scaling up and internationalization.

The potential problems of M&As are aplenty. Ego issues, inflated books, race against time, misrepresentations, etc. As long as the business looks profitable, the merged / acquisition parties are happy but when profits go south, then the finger pointing begins.

M&As should be familial not financial. If M&As are driven purely by finance, it is going to be a disaster for the business. Finance in business rarely takes a long-term view. It is the maximization of profits in the shortest time. Finance people laugh all the way to the bank. Maybe it is solely driven by time value of money. But great businesses are the greatest collateral damage if such a view is adopted.

M&A Reasons

Collaborations and synergies, often touted as reasons for M&As, are highly advantageous to M&A parties. This brings in, among other things, cost savings + efficiencies (CSE), value, returns and profitability. CSE brings in sharing of resources, centralization of corporate functions and systems, elimination of duplicate overheads, optimization of over-capability, shared networks, business op­timization, managing financial risk, elimination of double incidence of taxation, shared technology and human resource reallocation. These can bring about high profitability by itself.

M&A Headaches


Though the term “merger” implies a creation of a single entity from two or more equals this does not work in practice. There is no i-contact – both in terms of seeing eye to eye and discarding egos; both of speaking on the same eye level and equal egos. In most merger discussions, getting the two to see eye to eye itself is a daunting task. There will always be a bigger equal in terms of higher revenues or profits, or in terms of potential growth or their war-chest. And when the captains of the business come to an understanding, the professionals will come in with their own set of needs and wants to potentially scuttle the deal. This is worse in an acquisition. There will always be a difference of opinion in every aspect of valuation depending upon the buy or the sell side. Warren Buffet’s “price is what you pay, value is what you get” would probably be the anti-thesis of such business deals.

Non-prima inter pares

The big problem and headaches for M&A reasons are many a times the perception of primus inter pares. There is always the issue of one being bigger than the other. Whether it be in terms of revenues or profits or growth or talent or arrogance of cash. Substantial amount of time is spent in sorting out the babel from benefits. Hence when 2 or more parties get into a room, it is very difficult for them to have a balanced discussion or negotiation and this leads to high protraction of deal completion.

Human Capital

Human capital (HC) deals with all three tenses – past, present and future. It is strategic and takes into consideration issues beyond logic as well. HC is probably the first collateral damage in an M&A. While M&As are supposed to bring in CSE of scale, paradoxically, most of the valuable existing experience in a company is lost in redundancies, lay-offs, retrenchment, human resource conflicts. This capital which has high return on investment, must be captured and reallocated in an M&A.

Professionals assisting in M&As are also part of HC. If the professionals’ vision is not aligned with M&A parties, the M&A is headed towards dangerous times. Such professionals, even with good intentions, will take the M&A one step forward, but 3 steps back.

On a different note, an interesting development in HC companies getting into an M&A would be the development of big data and analytics and its application on the experience of individuals. With most interested individuals expressing / uploading their thoughts in some form of the other on the web, one day sufficient processing speed and bandwidth can give us the benefit of this experience.


Time is money, time is the enemy. But it is a long-term investment. In the haste to close a deal, most M&As gloss over critical issues. Time is also the culprit in closing deals over weekends resulting in missing out potential added costs, disputes, rushing go-to-market, pushing to agreements without careful consideration and relationship building (cf. guanxi below). Time is not speed and speed is not time. What is important, is speed based on calculated timing. An M&A built on relationships takes time, but it calculates the long-term benefits of working well together resulting in a high average speed.


The importance is always understated and misunderstood, especially in international M&As.

Merged & Acquired – Solution

  • M&As are delicate subjects. In these cases, I say that the shortest distance between two points is never a straight line. Diplomatic skills, EQ, empathy, motivational theory applications, change management and cultural integrations are pre-requisites for a successful M&A. This actually saves time in the long run and are the multiple points that in fact bring the main 2 points together.
  • Capture and reallocation of HC in merged or acquired companies. This capital which has high return on investment in an M&A.
  • Guanxi – Like most Chinese expressions, guanxi is complex. Simply put, it means “relationships” (but without hierarchy). Build understanding and acceptance before M&A. It forms what I call Human Due Diligence.
  •  Find professionals that give you the paradoxical and elusive “Collaborative M&A with Organic Growth” that consider contribution by all parties to an M&A to help each other increase output, increase customer base, improve and develop new products and successfully deploy HC.


Yang Yen Thaw Managing Director – 2iB Partners


For partnerships, speaker and general business enquiries with 2iB Partners:

Contact Person Dylan Tan
Designation COO
Email Dylan@2ibpartners.com


Is having a Corporate Social Responsibility (CSR) program just a cost to your company?

Is having a Corporate Social Responsibility (CSR) program just a cost to your company?

Developing great companies that give back is more about devising a clear Corporate Social Responsibility (“CSR”) program aligned with the company’s goals and values rather than forcefully integrating CSR with their business strategies and goals. Instead of passing it off as a short term marketing gimmick, CSR should be seen as a long term investment strategy.

read more

ASEAN Outlook 2016

ASEAN Outlook 2016



ASEAN is the Association of South East Asian Nations comprising the State/Government of Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People’s Democratic Republic, Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand and the Socialist Republic of Viet Nam. ASEAN is the 6th largest economy and GDP growth from 2016 has been approximately 5.3% annually. It also has the 3rd largest population of 600 million with a relatively young population about half of which are under 30 years of age. This makes it a prime destination for relocation of labour intensive industries. ASEAN governments’ commitment to investing in infrastructure also suggests long term investment opportunities which attracts and encourages Foreign Direct Investment (FDIs)

From a macroeconomic perspective, the ASEAN story is generally positive and is one of the fastest growing regions with projected 4.9% GDP growth this year compared to projected global growth of 3.5%. Fast growing Myanmar is also projected for a growth of 7.5% next year, though for this country, regulations may slow the advancement of certain sectors. The ASEAN growth is projected to outperform that of global growth rate for the foreseeable future with relative political stability and increased connectivity in terms of both investment and trade.

Global trade has also re-emerged and as a result, Asia, that is the most export dependent has benefited substantially. Indicators suggest that domestic demand is also improving post slow down but it would take a while before this reaches a steady state. This could suggest investment opportunities in the medium to long term.

Inflation is behaving and the region as a whole is not sitting on any large imbalances. Therefore, with regards to concerns on fed hikes, as long as they are well introduced and earnings growth is faster than the rise in cost of capital, we should sift through the shifts in global monetary conditions.

According to data, 10% of FDI into ASEAN in 2016 is from China and this is poised to increase due to One Belt One Road (OBOR) activities which will greatly enhance connectivity. Japan is also a great contributor of FDIs into ASEAN and is actively pushing outbound capital and M&A deals. 19% of M&A deals in ASEAN is inbound from China with the US coming in 2nd. The number one sector is undoubtedly manufacturing with services slowly gaining popularity.

The ASEAN Economic Community (AEC) blueprint which aims for tax collaboration by 2025 and reduction in trade transaction cost by 2020 also point to significant improvements in opportunities.

The AEC was formed to transform ASEAN into a stable, prosperous, and highly competitive region with equitable economic development, and reduced poverty and socio-economic disparities. The AEC is to be established in 2015 and is one of the pre-cursors to the ASEAN Community in 2020. The AEC aims to establish ASEAN as a single market and production base which comprise the following:

  • Free flow of goods
  • Free flow of services
  • Free flow of investment
  • Freer flow of capital; and
  • Free flow of skilled labor.

In the course of consulting and advising investors internationally, there has always been reference to the two biggest economies in Asia – China and India; and a tendency to compare the same. This leads to critical mistakes. To those who have done business in India, doing business in ASEAN should indeed be familiar. China, in spite of its size and provinces (states), are commonly linked by Mandarin and communist governance. India, on the other hand, does not really have a common language in Hindi and is democratic with a quasi-federal system of governance. ASEAN is a far better example for comparison to India and vice versa.

All jurisdictions provide for business entry as sole proprietor, partnership, private limited company, public limited company and branch/liaison office. Some jurisdictions like Indonesia may permit only foreign investment limited liability companies and representative office and have been mentioned separately. Nearly all ASEAN countries project themselves to be at the heart of South East Asia.

Understanding of culture and customs cannot be stressed enough while doing business in South East Asia.




It is the best destination to operate business in Asia from. Several common and oft repeated factors that contribute to this are:

  • Business friendliness
  • Integrity
  • Regulatory transparency
  • Corruption free environment
  • Political, legal and financial stability
  • Infrastructure
  • Business integrity
  • Cosmopolitanism

However, this is not all. The thrust in the past was on accounting and finance. Singapore has already established its reputation as a financial hub and being a nation that favours automation and technology. She has now trained its focus not only on technology and finance but towards fintech as well. Three articles have been published on business in through and around Singapore under LinkedIn Posts under the headings: “Doing Business in India from Singapore”; “Gateway to Asia: Singapore | Hong Kong” and “China India Investments: Sino-Indian ties or see no Indian ties” (contains a para on benefits of investing through Singapore).

Singapore is the 3rd richest nation in the world according to Global Finance and is the first in many areas and remains relevant by constantly reinventing itself. The political system is a parliamentary representative democratic republic. The legal system follows common law. Singapore recognizes 4 languages – English, Mandarin, Malay and Tamil. English is probably most spoken and used widely.

Macroeconomic View

As of the time of this article (November 2017), although exports point to good numbers, it is a very long hike for Singapore. Singapore is still sitting on period of very weak labour haul. Wage growth is very low and job creation has been negative for 5 quarters.

The opinion is that the economy still needs to go through a transition where wages come down, household reduce exposure to property market, etc.  This is seen as an extremely long drawn process with no quick fix. Where historically there has been emergences of new sectors, the economy now is far too mature and rich for a new sector to emerge.

The economy needs to consolidate but in a more balanced fashion.


As is the case with highly developed economies and countries, the investment climate in Singapore is open and highly favourable with a regulatory environment only in the sectors of finance, professional services, telecom, real property, energy and media. There are no restrictions on reinvestment or repatriation of proceeds. Primary reasons for investment into Singapore are taxation, sophisticated workforce, infrastructure and connectivity to ASEAN, double taxation avoidance and free trade agreements with most countries in the world.


The challenges of doing business in Singapore is that it is highly regulated and failure to comply leads to swift implementation of legal justice. Depending upon the industry or sector, there are licenses that need to be obtained. Therefore for businesses seeking to acquire a local company, it is not so much the due diligence of the target company but the post-integration and post-acquisition compliance that matter more for success.

Many Singapore companies, as well as foreign owned ones, have foreign operations. Where local participation is required, shareholders agreement should be carefully drafted.


Tax benefits, safety, ease of doing business. Singapore has DTAAs signed with over 75 countries and many others pending ratification. See end of this article for other benefits as well.




Malaysia ranks fifty fifth amongst the richest nations. The dominant religion is Islam. The political system in the country is a constitutional monarchy under the Westminster parliamentary system and is categorized as a representative democracy. The law of Malaysia is mainly based on the common law legal system. The constitution of Malaysia also provides for state laws, secular laws (criminal and civil) and Sharia laws. The national and official language is Bahasa Malaysia or Malay. Local language in court proceedings is a requirement for Courts, at least lower courts, though they may waive it. Contracts may be in English though government contracts may contain both languages.

Macroeconomic view

GDP growth has come down to 5-5.5%. However, the negatives mainly come from government policies being completely focused onto supporting household sector and maintaining consumption growth. The repercussions of this is that savings rate is down, current account surplus moved from 14% of GDP to 1.6% in 5 years.

That being said, for the first time, metrics have improved slightly, external debt coverage stabilizing, liquidity conditions have improved, non-oil exports have increased. 

As a whole, Malaysia is in a better place than 5 years ago, this is largely attributable to change in balance of payments and growth of non-oil and non-gas trade surplus.


Economic growth of Malaysia is driven by agriculture, mineral resource, electrical and electronics, forestry, oil and gas. Malaysia ranks highly in ease of doing business and its strengths lie in getting credit and protecting investors. Infrastructure is well developed and Malaysia even exports related services. 100% foreign equity participation in permitted in certain healthcare and educational services, department and specialty stores, telecommunications Application Service Providers (ASP), accounting and taxation services, courier services.

Many companies take full advantage of setting up company in Singapore and working in Malaysia where they gain from cheaper labour, land and costs. This is mutually beneficial as smarter companies can continue benefit from projecting its Asia-Pac HQ in Singapore as it main base. While engaging in contracts in Malaysia, it may be useful to note that dealing with decision-makers or senior management result in efficacious and expeditious business.

Malaysia has extensive and progressive legislation in the field of intellectual property rights protection. There are monetary threshold restrictions on real property ownership and approval would be required. There are exceptions as well.


Incorporation as well as approval process and permits can take time. Local equity participation apply for various permits and licences. On internal front, its airline industry has not received the best of attention or feedback. The recent issues of proprietary and political imbroglio has also not helped in the presenting the best side of Malaysia.


Malaysia provides tax incentives for private limited companies and public limited companies. Malaysia has DTAAs with over 70 countries. Capital gains are taxed on real property gains and on exercise of employee stock options.




Vietnam ranks 132 amongst the richest nations. It is the only other communist state in SEA. The law in Vietnam is based on communist legal theory and French civil law. Vietnamese is the official language and official documentation are in Vietnamese. English is not commonly used as a language for business communication. Lawyers play an important role.


Vietnam is an important manufacturing hub for many international companies. Agriculture and seafood produce form major part of the economy along with mineral wealth and oil and gas reserves, making it attractive for global investors. 100% FDI is permitted along with investment through joint stock company or a business cooperation contract with a local partner. However, FDI requires an investment certificate that sets out the scope that the firm is allowed to cover. Time taken for registering a business in Vietnam can vary substantially from two to eight months depending on the complexity of the industry and the number of licenses required. Investors can apply directly to the authorities or through a lawyer.

Though Vietnam has comprehensive legislation relating to protection of IP, enforcement is an issue. On real property, foreign-owned entities are not allowed to own land, but can enter into leases.


Local experts are a must while doing business in Vietnam. Documentation is in Vietnamese and multiple authorities/agencies may be involved for various licenses. Registering local entity procedures and obtaining of approvals are cumbersome. Due diligence reports may return many documents unfound or unfounded. Foreign ownership are capped at 30% (banking), 49% (public company), may not exceed 51% for some restricted industries, or is even prohibited altogether for some sectors.


Vietnam has DTAAs with about 38 countries. Capital gains tax is levied.




Indonesia ranks 122 amongst the richest nations. The dominant religion is Islam. The political system in the country is a republic with a presidential system. Law of Indonesia is based on a civil law system, intermixed with customary law (known as adat law) and the Roman Dutch law. These three systems co-exist along with new laws. The main language is Bahasa Indonesia, a variant of Malay which also functions as an official language for transactions and commercial documents. Local language in contract is a requirement for Courts.

Macroeconomic View

One thing to note is that the resource boom has faded. 2010-2012 saw growth at 6.5-7% and now this is at 5%. It is difficult to see how this is going to change in the short run. However, this generally points to macroeconomic stability in the Medium run, whether this is balance of payments, current account, inflation or reforms.

More importantly, the Jokowi administration has focused on structural reforms on improving the ease of doing business. World Bank released report and Indonesia jumped up 19 spots in ease of doing business. There is a focus on long term development from a structural perspective rather than short term gains and thereby currency runs as proven historically.- This can be seen as a positive development.

Major look out will be the elections which are due in 2019 which hopefully will not go into an era where populist measures start to dominated.

Economy is not in a great spot but there is no immense currency pressure in the market. Inflation is structurally low and households feel that prices are not going to go up. Balance of payment also is well-behaved which suggests that currency risk is not as high compared to last time.

From an M&A perspective, the indicators suggest to focus on micro-opportunities which lie in deep pockets which can still produce significant alpha.

The Indonesia story is that the next hike in Indonesia’s productivity and growth will come from broader macro productivity improvement rather than resources.


Economic growth of Indonesia is driven by performances in agriculture, mineral resources, coal, oil and gas. Nearly every sector has restrictions on foreign investment and participation. High priority economic sectors may be entitled to income tax benefits or tax holidays. There are Forex controls on repatriation of amounts. Infrastructure is a major target sector for investment. Foreign investment can own up to 100% of their business only in certain and very limited sectors.

Though Indonesia provides for intellectual property protection, the process of enforcement and defense is slow. Foreigners cannot own land in Indonesia. Many use convertible lease agreements or try to obtain strata title. These are however not established means.


There are limits and investment caps across a variety of industries which range from 0% to 100%. Limited infrastructure increases the cost of doing business. However, Indonesia may have separate agreements with different countries, such as China on Chinese products, on taxation of products imported. Indonesia ranks 128th out of 185 countries in the World Bank’s Doing Business rankings. Contract enforcement and legislative transparency are major issues along with poor access to credit and high taxation. Incorporation process is protracted requiring at least 2 shareholders for companies. Transparency is an issue. Extensive due diligence is recommended.


Indonesia has DTAAs with over 50 countries. Capital gains are taxable as ordinary income and capital losses, deductible. Process of paying tax is rather onerous.




Thailand formerly known as Siam ranks 85 amongst the richest nations. The religion followed by Thais is Buddhism. As of 2015, the Kingdom of Thailand continues to be under military rule. The law of Thailand is civil law with some sources of common law. General contracts can be in English and government contracts in Thai.

Macroeconomic View

Thailand is in a state of stagnation. GDP is largely driven by external sector (tourism) and government spending. – there has been a big gain in Chinese tourists.

Problem: Private investment is weak, confidence is weak. Outbound investment by Thai companies particularly in Mekong region has been greater than investment within the country. This shows longer term dynamics.

Economy is at 3-4 % growth with not much inflation, large current account surplus, lots of money and overvalued currency. Insights suggest that the economy is slowing and reaching a state of maturity before it becomes rich.


Thailand is the second largest economy in SEA and considered an emerging economy. It is ranked the 5th easiest place to do business in Asia. Tourism industry is substantial. Thai government incentives for FDI focuses on research and development, innovation and value creation investment. List of promoted sectors are – agriculture and agricultural products, mining, ceramics and basic metals, light industry, metal products, machinery and transport equipment, electronic industry and electric appliances, chemicals, paper and plastics, services and public utilities.

Thailand has progressive legislation in the field of intellectual property rights protection though enforcement used to be an issue. On real property, foreign-owned entities are not allowed to own land unless special conditions are met. Foreign nationals may buy condominiums units in Thai condos (shares in condominium corporations) subject to a cap of 40% of the units acquired by foreigners.


Political stability and world markets affect Thailand investment outlook. Thailand is also subject to many a political unrest, strikes and bombings. Corruption remains an issue.


Income in Thailand from capital gains is taxed the same as regular income. If an individual earns capital gain from security in the Stock Exchange of Thailand, it is exempted from personal income tax.



The Philippines

The Philippines ranks 127 amongst the richest nations and is the only Christian nation in Asia. The Philippines is a unitary presidential constitutional republic, with the President of the Philippines acting as both the head of state and the head of government. The Philippine legal system is a blend of customary usage, civil law and common law systems. Constitutional law, procedure, corporation law, negotiable instruments, taxation, insurance, labour relations, banking and currency follow common law. English and Filipino are the official languages.

Macroeconomic View

The Phillipines have had long history of obstacles and continuously subject to crisis. They have faced periods of very weak growth and highly volatile currency markets. However, as a positive surprise, came, 2008-2009, where Business process outsourcing (BPO) industry took off. Similar to India in 2003, it came as positive surprise with regards to internal GDP growth.

This is an industry that grows at 20% year on year, which for a small economy, has a tremendous impact in growth.

What this also means is that the government now has finances to invest in infrastructure. In addition, private investment is also growing.

The Phillipines has had a tendency of very strong business cycle fluctuations. Credit is also growing very rapidly which is cause for concern. Furthermore, much of this credit is going to real estate sector. As a result, real estate prices are looking like a bubble.

This suggests a degree of misallocation of credit wherein inflation has risen. Therefore, it is prudent to tread with a degree of caution.

Things to look out for:

Tax reforms – a higher VAT and increase in charges of motor vehicles will go a long way. This would give the administration the finances to invest in infrastructure.

The Phillipines story: The long term looks positive but would suggest caution in the short term.


Agriculture constitutes the largest part of the economy. The Philippines is known for its workforce export. Investment by public-private participation in aviation, infrastructure, transport, water, healthcare and education is highly encouraged. Investment in to the Philippines is controlled with no FDI in certain sectors such as mass media, practice of professions, retail trade, and with local participation in others such as recruitment, construction, advertising, natural resources, gambling, finance. 100% FDI is permitted subject to stringent conditions.

The Philippines has made substantial progress in protection of IP and taken steps to bolster IPR by passing laws to improve and streamline enforcement.

Foreign-owned entities are not allowed to own land, but can enter into leases. Foreign nationals may buy condominiums units in Philippine condos (shares in condominium corporations) subject to a cap of 40% of the units acquired by foreigners.


Local experts are a must while doing business in the Philippines. Registering local entity procedures and obtaining of approvals are cumbersome. There are many limitations to investing in the Philippines. Contract enforcement is slow. Business is conducted in a hierarchical structure and on consensual basis. Due diligence reports may return many documents unfound or unfounded.


The Philippines has DTAAs with about 36 countries. Capital gains tax is levied and there are various withholding tax rates.




Myanmar, erstwhile Burma, ranks 162 amongst the richest nations, but this means little and is considered by many as the last bastion of FDI. There is no official religion but Buddhism is followed by majority of the population. Though the country is making overtures towards democracy, the political system is currently in the hands of the military. The opposition does not appear to have a succession or continuing plan. The legal system is based on English common law, with many systems outdated and in the process of overhaul. The official language is Burmese. Business documentation may be in Burmese.


The economy is one of the least developed in the world. The major investors have been China, South Korea and India. Tourism is an area for foreign investment. Myanmar is rich in semi-precious stones, natural resources, oil and gas. The key FDI sectors are infrastructure (roads, power, telecommunications and logistics), oil and gas, manufacturing, mining, real estate, hotel and tourism. Business proceedings could be protracted and impeded by bureaucracy. Due diligence and definition of risk should be indigenised. Up to 100% foreign investment can be received in private limited companies. Some of the prohibited sectors relate to teak, forest plantations, petroleum and natural gas pearls, jade and precious stones, postal and telecommunications services, air and railway transport services, banking and insurance services, broadcasting and television services, metals, security and defense.

Intellectual property laws do not exist. Alternate protection may be sought in other laws. Foreign-owned entities are not allowed to own land, condos, apartments or any type of property in Myanmar under the current law, but can enter into leases.


As is the case with many underdeveloped and developing countries, cost of stay in luxury hotels are comparable to developed countries. Cost of experienced and skilled professionals are also at a premium. Infrastructure and skilled workforce is an issue. Justice meted may be ambiguous and not necessarily independent of the Government.


Myanmar has DTAAs with about 10 countries and 8 of them have been notified. Capital gains tax is levied and there are various withholding tax rates.



Brunei Darussalam

Brunei is the fifth richest nation owing to its petroleum and natural gas fields. The official religion is Islam. The political system in the country is governed by the constitution and the national tradition of the Malay Islamic Monarchy. It has a mixed legal system based on English common law and Islamic Shariah law; the latter supersedes the former some cases, for instance, the sharia-based penal codes applies to Muslims and non-Muslims and exists in parallel to the existing common law-based code. Malay is the standard language, but English is widely used as a business and official language.


The investment climate in Brunei is open and highly favourable with limitations in the sectors of certain fields. The Government has been making an effort to diversify the economy and turn Brunei into a banking centre as well as an international offshore financial centre. National food security and those based on local resources require local participation. Industries for the local market not related to national food security and industries for total export can be totally foreign owned. Intellectual property protection is consistent with international norms. Areas of investment promoted by Brunei are: agri-food; downstream oil and gas and energy intensive industries; information and communication technology; life sciences (pharmaceutical, cosmetics, and functional health food and health supplements); light manufacturing; services, such as financial services and tourism; and other activities that may be technology driven.

Though there are IP laws, enforcement is an issue. Local partners are required for land purchase.


The challenges of doing business in Brunei are relatively high cost of doing business; shortage of skilled and unskilled workers and lack of competitiveness of local products. Increase in institutional capacity of the government, including service delivery, and finance sector development need to be more effective. Other areas that need addressing are investor protection, ease of obtaining credit, and ease of doing business.


Brunei has DTAAs with about 20 countries. There is no capital gains tax. However, where the Collector of Income Tax can establish that the gains form part of the normal trading activities, they become taxable as revenue gains. The Government of Brunei Darussalam has also signed the Tax Information Exchange Agreement (TIEA). Unlike DTAAs, the objective of TIEA is to promote cooperation in tax matters through exchange of information between the signatory countries especially cooperation in countering abuses of the financial system.




Cambodia ranks 142 amongst the richest nations though the UN has classified Cambodia as a least developed country. It is arguably the fastest growing economy in Asia. The official religion is Buddhism and the political system in the country is constitutional monarchy where the governing powers of the monarch are contained by the Constitution. The legal system is primarily based on civil law system (influenced by the UN Transitional Authority in Cambodia), customary law, Communist legal theory, and common law. Khmer or Cambodian is the standard language as well as the official language.


Economic growth of Cambodia is driven by performances in garment manufacture, tourism, paddy and milled rice, and construction. Infrastructure is a major target sector for investment. Foreign investment can own up to 100% of their business or enter into joint ventures except in except in the sectors of cigarette manufacturing, movie production, rice milling, gemstone mining and processing, publishing and printing, radio and television, wood and stone carving production, and silk weaving. Investors invest in Cambodia for its low wages, liberal government policy on business, access to larger markets, and a country that offers extensive opportunities for tourism.

Intellectual property protection is consistent with international norms and Cambodia is a member of the World Intellectual Property Organization and the Paris Convention for the Protection of Industrial Property, and is a party to the ASEAN Framework Agreement on Intellectual Property Cooperation.

Land in Cambodia must be registered under a local person and locals are needed to oversee the development.


Cambodians working in export sectors are typically recruited from among the rural poor. Trade, employment and poverty reduction are tightly linked in Cambodia. As a small and open economy that is highly dollarized, Cambodian economy is immediately affected by any changes in oil prices. Though the political environment appears stable, corruption and controversies are major factors. The administrative process for acquisitions can be highly complex and time consuming. Health care, limited infrastructure, low government salaries are some of the challenges of doing business in Cambodia.


Dividends, royalties (including rent and other payments connected with the use of property) and interest paid to a non-resident are subject to withholding tax. Other non-resident payments include withholding tax on compensation for management or technical services. Cambodia is not a party to any double tax agreements. Accordingly, no tax treaty relief from withholding tax is available.




Laos or the Lao People’s Democratic Republic is one of the poorest countries in SEA and featured as a developing nation. It is a communist state with a civil law system. The religion is Buddhism. Economy is mainly agrarian and natural resource exports. The legal system is based rule of the only party in Laos, the Lao People’s Revolutionary Party. The official and dominant language of Laos is Lao and laws are in Lao language. French is also used for communication.


Economic growth of Laos is driven by agriculture which accounts for 85% and tourism. Infrastructure is a major target sector for investment. The scope of investment lies in natural resources, tourism and agri-business from fertile agricultural land. It is a substantial supplier of hydroelectricity to China, Vietnam and Thailand. Legal entities take the form of partnerships, private and public limited companies.

Comprehensive IP law is much needed. There is a Prime Minister Decree on trademarks and patents for protection, but no copyright protection in Laos. IPR is still under development. On real property, land in Laos cannot be owned by non-residents but can be leased.


There are many challenges to doing business in Laos. Human rights and corruption are major issues. The infrastructure in Laos is underdeveloped and more so in the rural areas. Legal recourse and enforcement could be arbitrary. Work force is unskilled, though low cost.


Laos has DTAAs with 8 countries: 5 ASEAN countries, N & S Korea and China and is in negotiations with Singapore and India.




Advantages of accessing ASEAN from Singapore

Some of the main benefits for foreign entities and individuals doing business in through and around Singapore are:

  • Strategic location.
  • Long term business success due to stability of DTAA implementation and limitation of benefits giving high credibility.
  • Investing in Singapore for accessing international Stock Exchanges as well as reinvestment into ASEAN (as holding company).
  • Access Singapore and international funds with representative in the Singapore company to invest in ASEAN.
  • Investor comfort, confidence and safety towards ASEAN-incorporated, Singapore-promoted companies doing business in ASEAN.
  • Easier to raise global funds.
  • Governance premium by Singapore based entities.
  • High quality and sophisticated work force and service.
  • Intellectual property assets maintained in Singapore for worldwide deployment and centralized portfolio management.
  • First point of protection of investor value into ASEAN.
  • A second listing in SGX, a more conservative markets, after US, Europe and/or Australian markets provides excellent hedging and safer market. SGX is also an advantage to investors and promoters who wish to keep their investments voluntarily locked in for longer periods.
  • Home for family offices (private wealth).
  • Tax:
    • For profits up to $S300,000 Singapore corporate tax rate is below 9% and capped at 17%
    • 5 year tax holiday subject to qualifiers
    • India corporate tax rate is 30% for residents and 40% for non-residents (goes up beyond 60%)
    • Annual turnover of less than S$5 million are exempt from audit requirements
    • Dividends distributed by the Indian Subsidiary to the Singapore Holding is not subjected to withholding tax in India, subject to conditions.

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