Expanding Your Business into South East Asia? – A Quick Comparison

Is Southeast Asia a Region Worth Investing in?

Southeast Asia is home to over 9% of the world’s population and with around 670 million inhabitants, the region has a dynamic environment that is quickly developing! Perfect for any business looking to explore new opportunities to increase their revenue and drive long-term business growth.

Flows of Inward Foreign Direct Investment (FDI) in million US$

Source: asean.org

Foreign direct investment into ASEAN countries has been steady despite being hit by COVID-19 and the recovery from the pandemic is expected to be strong. Many businesses are taking advantage of the regions reforming the business environment, low labour costs, growing consumer market, and strategic location.

Will COVID-19 Hinder the Regions Development?

Countries in Southeast Asia are seeing different levels of success at controlling the pandemic and this has been reflected in their economic performance.

Source: brookings.edu

Vietnam has been one of the most successful countries in the world at containing the virus and saw positive growth in 2020 as other countries continued to struggle. Vietnam imposed swift strict lockdowns and in turn, was able to reopen its economy quickly.

Singapore has also been touted by HSBC as potentially the standout performer in the region due to the high vaccination rates, relatively low infection numbers, and strong economic data. However, Indonesia was more reluctant to impose social distancing restrictions and saw a resurgence of delta variant cases leading to a weaker economic recovery.

Although the pandemic is creating uncertainties and the recovery has been uneven, it is unlikely to hinder the long-term positive economic trajectory of the region.

The Asian Development Bank is expecting strong growth for developing Asia in 2021 and 2022
Source: adb.org

When is the Best Time to Prepare Your Business Expansion?

As the world slowly recovers from COVID-19, businesses should be preparing their next steps to grow the business and take advantage of the economic reopening. Selecting the right place to expand is tough as there are many areas to consider. Labour laws are one of the most important factors and leaders need to be aware of the differences across the region.

How Do Labour Law Standards Vary Across the Region?

Minimum Wage

Countries in Southeast Asia are at different development levels but the minimum does not necessarily reflect this. Despite being the most developed country in the region Singapore does not have a minimum wage:

  • Lowest Minimum Wage: Singapore (No Minimum Wage)
  • Highest Minimum Wage: Thailand (313 – 336 Baht per day)

Legal Notice Period

Notice period in the region is very similar in most locations, with the most common being 30 days.

  • Lowest Legal Notice Period: Singapore (1 day to 4 weeks, depending on the length of service)
  • Highest Legal Notice Period: Vietnam (45 days for indefinite term contracts)

Statutory Maternity Leave

The International Labour Organization recommends 14 weeks of maternity leave and most Southeast Asian countries are close to meeting the recommendation but one country significantly exceeds it.

  • Lowest Statutory Maternity Leave: Cambodia (90 days with 50% pay when the employee has worked for 12 months)
  • Highest Statutory Maternity Leave: Vietnam (6 months with full pay for one child. In case of twins or more, from the second child onwards, for each child, the mother is entitled to 1 more month of leave)

*Please note that labour laws can vary depending on the region in large countries

Labour laws vary throughout the region, with some locations being more employee orientated while others are more business-friendly. Singapore is a good example of a business-friendly country, as it lacks a minimum wage and the notice period can be as little as one day. Vietnam’s labour laws on the other hand are more employee orientated, with long notice periods and maternity leave lasting 6 months!

Business leaders need to be careful when expanding their footprint in Asia as they could easily be caught out by non-compliance. More businesses are choosing to expand with the help of experts by using PEO/EoR services. Expanding with secondment services means that there will be a team of professionals to ensure you are compliant with local protocols and up to date with the latest changes.

To learn more about the fastest, most flexible, and cost-efficient way to expand your business, contact our team now!

See How Southeast Asia Labour Laws Compare with the Rest of Asia

Interested in finding out how Southeast Asia labour laws compare with other countries in Asia? Our 2021 Mid-Year APAC Labour Law Comparison Chart explores the difference between 16 locations in the APAC region, covering:

  • Minimum Wages
  • Working Hours
  • Probation & Notice Period
  • Maternity Leave
  • Compulsory Employment Insurance
  • Statutory Leave
  • And more!

Our APAC labour law chart is free to download, so get your copy now!

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Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcingvisa applicationPEO/EOR Secondmentoutplacementrecruitment and more! Contact us for more information on how we can help leverage your HR function.

Labour law comparison chart