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Article in partnership with Expat.com
At a time when the spread of COVID-19 is still not controlled globally, it is legitimate to question the opportunities for relocation and business creation in Asia.
The dragons
The Asian dragons - South Korea, Taiwan, Hong Kong and Singapore - are the Asian countries that experienced strong growth during the second half of the 20th century. While China and Japan remain the traditional destinations for expatriates on the Asian continent, certain countries (in particular those two Asian dragons, Hong Kong and Singapore) have, in the course of their economic development, chosen to open their markets to foreign investors and workers. Nevertheless, due to the current economic situation, these two countries are no longer in a position to maintain their economic strategies, forcing potential investors and expatriates to review their alternatives.
Attention might instinctively turn to the two remaining Asian dragons: South Korea and Taiwan.
Taïwan
Taïwan has many attractions for foreign investors and workers, notably its dynamism, its numerous professional opportunities and its well-developed healthcare system. In 2020 and 2019, the city of Taipei came first among South East Asian cities in a survey conducted by the United Nations on happiness[1]. Each year, the survey focuses on the quality of life of the inhabitants, and their positive and negative experiences of daily life. The capital, in particular, is already attracting talent of various nationalities.
However, it would appear that the political instability that has affected Hong Kong may soon spread to Taiwan, as spokespersons for the Chinese government have confirmed that they consider Taiwan to be a non-independent Chinese territory. The physical and diplomatic conflicts that could result from Chinese claims make settling in the region precarious as long as the issue is not resolved on the international stage.
South Korea
In contrast, South Korea presents a certain political stability and economic attractiveness, despite the spectre of its northern neighbour, but the quality of life of expatriates and their integration into society seems less attractive. In fact, despite its modernity and cultural richness, Korea presents difficulties (language, pollution, integration, high cost of living, etc.) for both expatriates and companies wishing to relocate there in the long term, notably because of protectionist policies in its labour market and industries.
Moreover, the pandemic has prompted Korea, like its neighbour Japan, to further tighten the conditions of entry into its territory for an as-yet-undetermined period. However, the country has much to offer and its dynamism alone is enough to make it an interesting expatriate destination.
If the most obvious destinations in Asia seem less accessible, there remains another group of states which, for years in the shadow of the dragons, have been boosting their economies and improving their quality of life. This new generation of industrialised Asian countries, these Asian tigers, are Vietnam, Indonesia, Thailand, Malaysia and the Philippines. Much more than paradise holiday destinations, some of these countries now offer a serious alternative for expatriates in Asia.
The tigers
Vietnam
For years now, Vietnam has been engaged in a strategy to lure foreign economic players, following in the wake of Singapore and Hong Kong. According to the ranking published by JLL[2], a global real estate specialist, of the 20 most dynamic cities in the world in 2020, Hanoi and Ho Chi Min City ranked in the top ten.
In its latest annual expatriate satisfaction survey, HSBC also ranked[3] the country as the second most popular destination in East Asia after Singapore. In addition, in 2019 the Vietnamese government granted a significantly higher number of business start-up licences than in previous years, reaching a record for the country and thus allowing the development of foreign ventures on its territory. The establishment of foreign companies in a territory encourages the subsequent arrival of expatriates following migratory movement.
Consequently, three main factors seem to unite to promote Vietnam as a new flagship destination for relocation and business establishment: the government is making considerable efforts to attract foreign investors, notably by simplifying set-up; the country's industrial production index remains very high; and finally, the country is a signatory to numerous free trade agreements which facilitate international trade.
Thailand
A paradise destination par excellence, Thailand offers expatriates a cheap way of life and a cultural richness that will appeal to many. From a professional point of view, its dynamism offers significant opportunities for development and an attractive taxation system. It is important to stress that the country is also plagued by political instability that could undermine the quality of life and economic opportunities there in the coming years. In addition, current laws, particularly those favouring locals in terms of access to the labour market and home ownership, restrict foreign companies and hinder long-term establishment[4].
Indonesia
With a large, low-cost labour force, Indonesia can be a first-rate host country, especially when taking into account the tax advantages granted by the state to companies setting up in its territory. In addition, the country is undergoing rapid development and offers a constantly improving quality of life for both locals and expatriates[5]. While the administrative burden of setting up a business in Indonesia remains high, it is not impossible to get started and the government is tending to simplify the process over time.
Malaysia
According to HSBC's ranking of the best expatriate destinations, Malaysia ranks fourth among East Asian countries. The country, especially its capital, offers a privileged living environment combining modernity and tradition. Cultural diversity is pre-eminent, if only because of its history, and expatriates who settle there can flourish in their careers as well as in their social and cultural life. On the other hand, to protect local jobs, the government is now restricting the creation of foreign enterprises by banning foreign investors from certain sectors while encouraging them to move into other industrial and service sectors.
The Philippines
while the cultural richness (combined with a good command of English) and tropical climate will attract expatriate candidates to the Philippines, the high crime rate (as well as the threat of terrorism) and a real estate market that is expensive for Southeast Asia do not yet make this country an idyllic business destination.
Manila, in particular, is experiencing strong growth while at the same time fighting deep social inequalities, which generates logistical problems that affect the quality of life: pollution, environmental noise, inadequate transport infrastructure, etc. Nevertheless, JLL ranks Manila among the ten most dynamic cities in the world. It is therefore highly likely that the Philippines will be one of the destinations to watch in the coming years.
As the situation of each Asian country is unique, it is difficult to draw up a ranking because expatriates or companies will have different needs. However, it is possible to generalise by stating that the most economically attractive countries with an already established presence of French or international companies, such as South Korea or Vietnam, can be more selective in terms of access to the labour market. Like Singapore, these countries now tend to favour their nationals over foreigners in employment contracts. Obtaining a work visa is not impossible, however, and the best way to do so is to be able to demonstrate specific skills that are not shared by a majority of locals, which is not so straightforward in countries where the level of education is increasing every year.
As 2020 draws to a close, the global situation is being strongly shaped by the health crisis, which is turning into an economic crisis. What was true in 2019 may not be true in 2021, and it will be important to monitor the evolution of each country on the Asian continent.
1https://worldhappiness.report/ed/2019/#read
2https://www.jll.ca/en/trends-and-insights/research/city-momentum-index-2020
3https://www.expatexplorer.hsbc.com/survey/
4https://www.expat.com/fr/guide/asie/thailande/8532-creer-une-entreprise-en-thailande.html
5https://www.mckinsey.com/featured-insights/asia-pacific/understanding-the-diversity-of-indonesias-consumers
by Julie Leprohon
