In an interview at AFP 2018, Raof Latiff, Group Head of Digital, IBG and Product Management, Global Transaction Services for DBS Bank, discusses key considerations for corporates when establishing treasury operations in Asia-Pacific.
Monetary authorities in Singapore and Hong Kong currently offer tax benefits to companies that locate regional treasury centers (RTCs) in those regions. This has resulted in both Singapore and Hong Kong becoming treasury hubs. However, there are some hurdles that corporates will need to go through before they can establish operations.
“Tax has been a major driver,” Latiff said. “In Singapore, if you want to have a treasury center, you would have to talk to the Economic Development Board of Singapore to understand what sort of benefits you can get, and that depends on the type of activity you have in Singapore. In Hong Kong, you don’t really need an approval, but you need to make sure you qualify all the activities so you can get the necessary tax benefits.”
Latiff noted that for many corporates, the decision also often comes down to where in specifically Asia-Pacific that corporates want to operate and the type of business they want to run. “Based on that, they will decide which geographic point is most ideal for them to actually operate as a business,” he said. “And Singapore and Hong Kong have been popular.”
Latiff noted that Singapore has been driving a lot of the activity around Southeast Asia, whereas Hong Kong has been key for companies whose primary focus is China. “Sometimes [corporates] are in the region just purely for treasury centers and procurement reasons,” he said. “So you have to weigh the benefits of having your locations in between Singapore and Hong Kong.”
For more insights on the factors that organizations need to consider when establishing and structuring treasury centers in Asia, download AFP's latest Executive Guide, Operating Regional Treasury Centers, underwritten by Thomson Reuters.