Perspectives on Regional Growth

Thailand is one of the most compelling expansion markets for Singapore-based businesses — and the regulatory landscape is shifting rapidly in foreign investors' favour. Foreign direct investment surged 45% year-on-year between January and November 2025, reaching THB 311 billion, with Singapore the single largest source of capital. The Thai Cabinet approved in principle in April 2025 the delisting of ten business activities from the Foreign Business Act's restricted annexes — including software development, treasury centre operations, and financial advisory services. Once enacted, foreign companies can operate in these sectors without a Foreign Business License or Thai majority shareholder. For companies that qualify for BOI promotion, the incentives are significant: up to 100% foreign ownership, corporate income tax holidays of up to 15 years, import duty exemptions, and a reduced personal income tax rate of 17% for qualifying expatriate staff. The Eastern Economic Corridor alone attracted 33% of all foreign capital in 2025. Entry structure — whether a BOI-promoted subsidiary, a representative office, or a distribution partnership — is the critical first decision, and the wrong choice creates compliance and operational drag that is costly to unwind.

Singapore is consolidating its three flagship SME grant programmes — the Enterprise Development Grant (EDG), Productivity Solutions Grant (PSG), and Market Readiness Assistance (MRA) — into a single unified scheme called EDGE, launching in the second half of 2026. Announced by Deputy Prime Minister Gan Kim Yong, the new framework will support up to S$100,000 per year per eligible company. The consolidation brings two critical changes. First, the MRA's international expansion support has already increased from 50% to 70% co-funding for SMEs from 1 April 2026. Second, the current restriction requiring a "new" overseas market is being removed under EDGE — meaning companies can use grant funding to deepen presence in markets they already operate in. For SMEs currently considering overseas expansion, the window between now and the EDGE launch is strategic: current EDG, PSG and MRA applications can still be optimised individually to maximise specific department caps, before the unified framework takes effect.

Banks across Southeast Asia are pulling back on SME lending — tightening credit to businesses without clear cash flow visibility or hard collateral. Non-performing SME loans in some ASEAN markets stood at 7.2% in 2024, and domestic banks are refocusing on investment-grade corporates. This retreat has opened significant space for private credit. Direct lending, invoice financing, trade finance, and asset-backed structures are increasingly filling the gap — offering SMEs access to growth capital on terms that traditional lenders won't provide. For companies expanding regionally, this matters directly: local entity setup, working capital for new markets, and inventory financing for cross-border trade are all areas where private credit is increasingly the practical funding route. Singapore retains a structural advantage as the regional hub for structuring these facilities, given its established legal framework, regulated capital markets infrastructure, and access to a sophisticated investor base. Companies entering Southeast Asia should factor alternative financing into their expansion planning from the start — not as a fallback, but as a core capital strategy.