The Southeast Asia Report

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Painless Transitions

The country's Economic Development Board (EDB) makes relocating from New York to Singapore as painless as moving to Atlanta. Obtaining an employment card is simple, and the EDB will help expatriates find office space, staff, housing and even schools.

"The EDB has divisions to help you and your spouse and children settle down," Tan says. "They take care of the details so you can concentrate on running your business."

Vietnam: Overheated Economy

The streets of Ho Chi Minh City today might stun a middle-aged American who grew up with images of a destitute communist nation battered by a brutal war with the United States. Today, Vietnam's youthful population--more than 60 percent under 35 years old--is fueling an economy that grew 8.5 percent in 2007, the same year the Ho Chi Minh Stock Exchange doubled its value. The Vietnamese are eager consumers of western goods, spurring an influx of U.S. companies, which find both a growing market and an entrepreneurial spirit in the country.

Real Estate Woes

The other recent hurdle to business growth in Vietnam is the stress that rampant inflation has put on the economy.

Favored location

Still, the Philippines enjoys a growing reputation as one of the world's leading locations for call centers and outsourcing work, including legal research, document review, medical transcription and desktop publishing. That is helping its economy recover from the blows it took during the Asian financial crisis. Its economic growth rate hit a 30-year high of 7.3 percent in 2007.

The low wage structure--call center employees typically earn $5,000 to $7,000 a year--makes the Philippines particularly attractive as an outsourcing venue. For call centers dealing with American consumers, it is becoming the favored location because of the ability of Filipino workers to mimic the American accent and thus be less annoying to callers from the U.S.
But Philippine unions are strong, and the country's labor laws don't favor employers.

"It's a very pro-labor code," Espiritu says. "It states in case of doubt, the matter has to be resolved in favor of labor."

Cautious Approach

In early 2007, the U.S. government upgraded the Philippines from the IP "priority watch list" to the "watch list" due to increased enforcement actions. But the court backlog effectively means counterfeiters aren't prosecuted, so the U.S. Trade Representative and the American Chamber of Commerce are pressing the government to establish a separate court to handle IP cases, according to Jeff Williams, president of Manila-based Orion Support Inc., which conducts counterfeiting investigations.

"The only answer is to establish one court in Manila to handle IP rights matters," Williams says. "That would work and lead to fewer settlements."

Singapore's Shadow

One key to the plan is Malaysia's neighbor, the global business hub Singapore, separated from Malaysia by two highways bridging the Straits of Johor. And Malaysia has every intention of benefiting from the proximity, promoting its adjacent regions as a cheaper alternative.

"The Malaysian government has taken a lot of steps to move up the value chain, and Singapore is a very helpful synergy in that regard," says David Eich, partner at Kirkland & Ellis in Hong Kong. "Singapore is clearly not only a first-world place, but a top-of-the-first-world place."

Indonesia: Risky Business

In English, the Republic of Indonesia's national motto literally means "many, yet one," and the notion is apt. It applies to the country's 300 ethnic groups, which come together to form one massive, culturally diverse population--the world's fourth largest. And it surely applies to the 17,600 islands that make up the country.

Local Aid

Effects of the decentralization efforts are not all bad. Governments familiar with complex business deals can be a great help, and because they are localized they allow relationships to form between company and local officials. Those relationships will go far in helping discern how the law is applied.

"Consultation with the government is important in Indonesia," Reksodiputro says. "Very often laws are subject to various interpretations, and one strategy is to go check with the relevant government agencies--central or local--on interpretation of the laws, and confirm [what they require]."

Investor Perks

In some areas, business even seems to be booming--mergers & acquisitions in Thailand increased over the past year following the rejection of several proposed amendments to the Foreign Business Act (FBA) that would have led to increased government scrutiny of certain foreign partnerships. And the country remains attractive to some American companies that benefit from favored treatment.

Associate Editor

Melissa Maleske

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Senior Editor

Mary Swanton

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Assistant Editor

Christopher Danzig

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