Never a better time to set up in Southeast Asia

Why the Timing Has Rarely Been Better to Set Up in South East Asia

The current conflict involving Iran has forced many business owners to look at the future differently. It is also a moment when waiting can feel prudent, but prove expensive. For businesses looking to control costs, the case for setting up in South East Asia has become materially stronger, as the pressures facing mature markets are no longer temporary.

Conflict, trade disruption, wage inflation, supply-chain volatility, and rising compliance costs are forcing leadership teams to rethink how and where they build capability. At the same time, South East Asia continues to attract capital, deepen its labour pools, and strengthen its position as one of the most commercially relevant regions in the world. For businesses looking to protect margin, diversify operational risk, and access strong talent at a lower cost base, the timing is unusually compelling.

The global backdrop explains why. UN Trade and Development reported that global foreign direct investment fell by 11% in 2024 to US$1.5 trillion, a sign that capital has become more selective and the international business environment more cautious. At the same time, the World Bank has described the Red Sea as a route that used to carry about 30% of world container traffic, while Export Finance Australia has noted that rerouting around the Cape of Good Hope has increased journey times by roughly 30% to 50% and pushed freight and insurance costs sharply higher. These are not isolated disruptions. They are real cost drivers affecting sourcing decisions, pricing pressure, and the economics of running a business across borders.

Against that backdrop, South East Asia stands out not as a cheap alternative, but as a resilient and increasingly strategic one. UNCTAD reported that FDI into ASEAN rose 10% in 2024 to a record US$225 billion, following the bloc’s record US$230 billion of inflows in 2023. Capital is still moving into the region because the fundamentals remain attractive: growth, workforce depth, improving infrastructure, expanding digital economies, and a business environment that continues to matter globally. This is one of the clearest signals available. When global capital is becoming more cautious overall but continues flowing strongly into one region, boards should pay attention.

The labour argument is just as strong. In the Philippines, the IT-BPM industry closed 2025 with 1.82 million jobs and US$38 billion in revenue, and industry guidance indicates it is on track to reach 1.9 million jobs and US$40 billion in export revenue. That is not a fringe labour market. It is a large, mature operating environment that has already proven it can support global businesses at scale. In practice, the Philippines remains particularly strong in customer operations, business support, finance support, payroll support, recruitment support, healthcare administration, and a growing range of technology-enabled services.

Vietnam is equally important, but for slightly different reasons. Official reporting said that by the end of 2025 Vietnam had 73,788 digital technology companies and nearly 1.26 million ICT workers, with digital technology revenue of almost US$158 billion. The World Bank projects Vietnam’s economy to grow 6.8% in 2025. That matters because it shows Vietnam is not simply a low-cost jurisdiction; it is a fast-growing, increasingly sophisticated capability market, especially for software, engineering, digital products, and technical functions. Businesses setting up in the region today are not only accessing lower costs; they are accessing deeper pools of increasingly competitive talent.

This is where the conversation has changed. The real commercial question is no longer whether South East Asian talent is “good enough.” In many business functions, that question is already settled. The more relevant question is whether a company is prepared to access that talent in the right way. The quality gap between many Western and South East Asian labour markets has narrowed materially in business services, finance support, recruitment, compliance support, operational administration, and a growing range of technical roles. What remains significantly different, however, is cost. For businesses under pressure to defend margin, that combination is powerful: increasingly comparable skills at a meaningfully lower operating cost.

There is also a major strategic difference between simply outsourcing to a third party and establishing your own entity or structured operating presence in-market. As costs rise in the West, many businesses want more than a vendor. They want control over hiring, culture, service standards, governance, and intellectual property. Setting up your own business in South East Asia allows you to capture labour arbitrage without giving away operational control. It gives you the option to start with a small team, build around critical roles, and expand deliberately into support functions, client service, finance, HR, operations, or engineering as confidence grows. In a world where trade routes, tariffs, and geopolitical alignments can shift quickly, that kind of controlled operating base becomes more than a cost decision. It becomes a resilience decision.

Wage pressure in mature markets only strengthens the argument. In Australia, average weekly ordinary time earnings for full-time adults reached A$2,051.10 in November 2025. When leadership teams are dealing with Western wage bills at that level while also absorbing higher freight, insurance, and general operating costs, they need structural answers rather than short-term efficiencies. South East Asia offers one of the clearest structural responses available: access to strong and improving labour markets at a materially lower cost base, combined with growing operational sophistication and regional economic momentum.

That does not mean expansion should be rushed or treated casually. The opportunity is strongest when it is approached deliberately. Businesses need to decide which functions genuinely belong in-market, which country is the best fit, whether to establish an entity immediately or begin with an interim platform such as EOR, what level of oversight is required, and how to build local payroll, employment, governance, tax, and reporting properly. But none of that weakens the opportunity. It simply means that the winners will be the businesses that move with discipline rather than hesitation. The commercial conditions are already there.

That is the real conclusion. In a world shaped by conflict, fragmentation, elevated logistics costs, and persistent wage pressure, there has rarely been a more commercially sensible time to establish properly in South East Asia. The region continues to attract investment. Its labour markets are deeper than many boards still assume. Its economies continue to grow. And the cost advantage remains meaningful at exactly the moment many businesses need it most. For companies willing to act thoughtfully, setting up in South East Asia is no longer just a growth move. It is one of the clearest strategic responses available to the cost and volatility of the current global environment.