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Strategic Considerations for Building an RTC in APAC

When evaluating the ideal location for a regional treasury center, here's what to know about how Singapore, Hong Kong, Thailand and Malaysia stack up.

Optimizing cross-border treasury functions can be challenging for even the biggest organizations—which is why many businesses operating in the Asia-Pacific (APAC) region are considering opening regional treasury centers (RTCs) to help coordinate their cash flow strategies among national subsidiaries.


A centralized RTC can help reduce costs, improve visibility, manage interest rate and FX volatility, maximize working capital and minimize taxes. And as the world’s largest and fastest growing markets begin to cluster in APAC, several APAC nations are offering competing incentives for RTCs, including Singapore, Hong Kong, and to a lesser extent, Thailand and Malaysia.


Throughout Asia’s rise as a global economic power, Singapore has positioned itself as a financial hub. The city-state’s business-friendly regulations, political stability, mature financial sector and English-speaking population have helped Singapore to build a reputation as a vital gateway to APAC markets.

To welcome RTCs, Singapore offers a host of incentives that attempt to lower barriers for international cash management under the Finance and Treasury Center Incentive scheme. Qualifying RTCs enjoy a discounted corporate tax rate of 8 percent (the region’s lowest), with no withholding taxes on interest earned. These incentives will be subject to the company implementing its plans to grow and sustain its treasury center operations in Singapore.

Singapore places virtually no controls on FX transfers and offers liberal regulations concerning cross-border fund transfers. Singapore also extends foreign tax credits and has signed double-taxation treaties with 70 nations.

The large number of regional banks headquartered in Singapore makes the city home to the world’s third-largest FX exchange market, and the World Economic Forum ranks the country as the world’s second most competitive economy.

While Singapore’s highly developed local economy may mean it doesn't offer the blistering growth rate of some of its neighbors, its Economic Development Board offers a range of concessions and incentives to select industries looking to expand their presence in the country.

Hong Kong

Hong Kong has long been Singapore’s regional rival, and the cities compete to offer the best package of RTC incentives. Hong Kong’s headline corporate tax rate is a quarter-point higher than Singapore’s at 8.25 percent (the region’s second lowest), with no withholding taxes charged on earned interest. Hong Kong also offers credits for foreign tax expenditures, does not control FX trading and has signed double-taxation treaties with 32 of the world’s largest economies. Qualifying RTCs enjoy a slate of incentives, including discounted taxes on some types of profits and deductions for intercompany interest payments.

Hong Kong’s greatest advantage is its connection with the mainland Chinese economy. The city provides a highly developed financial sector that shares the culture and language of the rapidly expanding mainland economy.

Tight currency controls can complicate cross-border transfers for treasuries operating on the mainland, but RTCs based in Hong Kong will have access to the world’s largest renminbi marketplace, where over RMB 800 billion is exchanged daily.

Thailand and Malaysia

Malaysia and Thailand have also introduced measures to compete for RTC business. Regulatory reforms have made these countries viable locations for multinational treasury operations, as both nations have progressively relaxed FX controls, as well as restrictions on cross-border transfers.

Malaysia has introduced a Treasury Management Company (TMC) incentive scheme that supports centralized treasury management, which includes tax concessions for FX. The Bank of Thailand, meanwhile, has rolled out a similar Treasury Center initiative, which streamlines FX conversion and lowers restrictions on cross-border transfers for qualifying RTCs. Companies in Thailand can also enjoy additional tax concessions under the International Headquarters Companies (IHC) structure for treasury centers.

Notwithstanding the recent strides made to enhance the attractiveness of both locations, it should be noted that Malaysia and Thailand are still subject to relatively more stringent cross-border and FX environments.

Top Factors to Consider

The ideal location for an RTC will depend on your business’s circumstances, and some of the key considerations may include:

  • The APAC markets in which your business already operates. Different locations will offer varying degrees of access to the region’s economies.
  • What industry you're in. A company seeking access to low-cost manufacturing centers will likely have different needs than those who hope to sell consumer goods throughout the region.
  • How an RTC fits into your long-term expansion plans. If your business hopes to expand into new regional markets, how will cross-border currency flows be affected?
  • The incentives and cost savings that will most benefit your business.
  • How the political and economic environment may affect your RTC’s operations. Every location will come with its own set of potential risks and challenges.
  • Availability of talent. Language, culture and geography relative to your business and location of your largest customers are all key considerations. The availability of human resources required to staff your RTC is an important factor.

Companies looking to implement an RTC should conduct an internal assessment that factors in industry, geographical footprint, business objectives and future expansion plans. Furthermore, location analysis is important, given the dynamic nature of incentive schemes, as well as economic and political changes that have resulted in regulatory and tax regime complexity. Along with obtaining senior management buy-in to support the change, implementing an RTC also requires a robust business case and superior execution capability to ensure sustainability and scalability of services to participating entities.

This document may not be copied, published or used, in whole or in part, for any purpose other than as expressly authorized by J.P. Morgan. The statements in this document are proprietary to J.P. Morgan and are not intended to be legally binding. Neither J.P. Morgan nor any of its directors, officers, employees or agents shall incur any responsibility or liability whatsoever to the J.P. Morgan client to whom this document is directly addressed and delivered (including such client’s affiliates/subsidiaries or any other party in respect of the contents of this document or any matters referred to in, or discussed as a result of, this document. J.P. Morgan makes no representations as to the legal, regulatory, tax or accounting implications of the matters referred to in this document. The products and services featured in this document are offered by JPMorgan Chase Bank, N.A., member FDIC, or its affiliates/subsidiaries. All services are subject to applicable laws and regulations and service terms. Not all products and services are available in all locations. Eligibility for particular products and services will be determined by JPMorgan Chase Bank, N.A. or its affiliates. J.P. Morgan is a marketing name for the Treasury Services businesses of JPMorgan Chase Bank, N.A. and its affiliates/subsidiaries worldwide. J.P. Morgan is licensed under U.S. Pat Nos. 5,910,988 and 6,032,137. © 2017 JPMorgan Chase & Co. All rights reserved.

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