Corporate Wellbeing Asia 2023
Skilled workforce and competitive wage prices rank as top reasons for business expansion into Southeast Asia

Skilled workforce and competitive wage prices rank as top reasons for business expansion into Southeast Asia


25% of international firms said competitive wages were an attraction for expansion in ASEAN in 2023, it was further highlighted.

According to a recent survey, commissioned by HSBC Commercial Banking, international companies operating in Southeast Asia consistently cite the region’s skilled workforce and competitive wage prices as making it attractive for business expansion. In fact, ASEAN’s skilled workforce was the region’s most attractive market feature in 2023, up from second place in 2022.

At the same time, 25% of international firms said competitive wages were an attraction for expansion in ASEAN in 2023, down slightly from 27% in 2022.

While ASEAN’s able and affordable workforce was attractive to global manufacturers, the research also highlights the challenges facing overseas employers: personnel issues ranked among the top three challenges in both 2022 and 2023. This year, 28% of respondents stated that they were challenged in deploying talent; 28% also admitted they were challenged by the cultural difference they encountered.

In line with ASEAN’s increasing importance, the Global Connections survey was expanded to explore how firms in nine major markets are approaching the region.

Overall, the survey identified a total of seven key themes, including the appeal of human capital, connecting Southeast Asia and the world. This year’s survey covers more than 3,500 companies with a commercial interest in at least one ASEAN market, with an equal number of respondents based in: mainland China, India, the UK, France, Germany, the US, Australia, Hong Kong, and Gulf Cooperation Council (GCC) countries.

Growth ambitions

International companies operating in Southeast Asia are increasingly confident about their prospects for continued growth in the region — on average, companies surveyed are expecting to see 23.2% annual organic growth in ASEAN markets in 2023, a growth from 20.1% in last year’s survey.

Breaking it down, Asia Pacific firms have a more developed track record of growth in ASEAN and higher growth expectations in the region than those from Europe. Over three in five firms in Hong Kong (68%), Australia (67%), mainland China (67%), India (61%), and GCC (51%) have achieved organic growth to date. In comparison, less than half of European and US firms – France (48%), UK (45%), US (45%), and Germany (42%) – have achieved this in the ASEAN region.

Current markets and expansion plans

Singapore, Malaysia, and Thailand remain the preferred route to growth for companies with existing operations in ASEAN, for another year in a row.

Looking at companies already operating in Singapore, 36% expect to prioritise growth there over the next two years, followed by 27% of those with Malaysian operations, and 24% of those with operations in Thailand. Interestingly, companies from all outbound markets except Germany are planning to prioritise growth in Singapore. Among German firms, 29% are prioritising growth in their Thailand operations compared with the 25% of German firms expecting to prioritise growth in Singapore.

Meanwhile, Malaysia emerged as the leading major destination for companies seeking to enter a new ASEAN market. A quarter of firms without a Malaysian presence plan to expand there over the next two years, a key market for mainland China (27%), the US (26%), the UK and France (both 23%). On the other hand, Indonesia, is the top new market for firms from Hong Kong (34%), India (30%), GCC (23%), and Germany (21%).

Lastly, The Philippines was also noted as a leading target, with 21% of companies saying they plan to enter the market — particularly for Australian companies, with 29% focusing on this country over the next two years. 


With large markets, skilled workforces and improving infrastructure, ASEAN countries are regarded as well-placed to make the most of ongoing technological innovation. As a basis, 31% of international businesses believe the ASEAN bloc is leading the way in e-commerce and digital platforms, ahead of artificial intelligence (AI) and machine learning, and cybersecurity (both at 29%). Digital payments are also seen as a strength of the region, with 28% of respondents citing ASEAN markets as leading in this technology. 

ASEAN’s credentials in these technologies are important to global businesses. 34% of the decision-makers in this survey believe AI will have a transformative impact on their business in the next 10 years. Cybersecurity (30%) and digital payments (29%) are also seen as transformative.

Respondents expect technological advances to affect many aspects of their operations. with 39% being especially concerned about cybersecurity issues and 38% believing new technologies will significantly impact their workforce in terms of number of employees and skills.

For now, access to trained talent and costs were identified as the key challenges for businesses’ digital transformation in ASEAN, with 36% of respondents citing a lack of digitally-skilled personnel. In line with these human resource factors are the costs of implementation and maintenance, both of which were also cited by 36% of companies.

Still, given the potential upside, international businesses are continuing to invest in their technological development, with businesses expecting to put an average of 8.3% of their operating profit to technology and digitisation over the next 12 months. For comparison, this figure stood at 8.2% in 2022.

Consolidation and centralisation

Faced with a dynamic, diverse and evolving business landscape, companies were noted to be considering centralising and consolidating their operations within the region — 84% of respondents believe businesses similar to their own are starting to centralise their ASEAN operations into one country. In pursuit of this trend, 76% have considered pulling out of some markets, or are currently doing so. In light of these issues, businesses are looking towards greater collaboration with governments to address the operational challenges they face. 

The study also noted key trends in terms of free trade, as more businesses say they are planning to take advantage of trade partnerships, and the evolving macroeconomic landscape.

Lead image / HSBC Global Connections survey

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