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Employer of Record & PEO
Published:
June 22, 2026
Last updated:
June 22, 2026
The APAC region, particularly South East Asia, is ripe with opportunities for business expansion. That being said there’s no easy, one-size-fits-all approach. Each country is unique in its cultural norms, economic systems, business management practices, and response to the pandemic. We highlight some of the key factors for HR practitioners to consider for business expansion plans in South East Asia.
Still a welcome ground for foreign companies and workers, Singapore has recently eased up on its travel restrictions, adding eight new countries to its vaccinated and quarantine-free travel lanes. This establishes its position as a prime location as a hub for activities across APAC. Organizations looking to expand here will have to ensure that their staff and accompanying family members are fully vaccinated, except for minors and those with medical exemptions.
Now that Malaysia has achieved 90% vaccination rates for the adult population, the government has begun lifting restrictions on interstate and international travel. While existing businesses in Malaysia are on the road to recovering their losses, companies intending to set up shop in Malaysia will have to play the long game. A survey by KPMG showed that nearly half of Malaysia’s workforce will need to be reskilled to adapt to the new normal. Organizations that can provide extensive training programs alongside flexible working arrangements will lead the way in attracting local talent.
The employee experience is high on the list of human resource priorities in Indonesia, with the workforce calling for more holistic job benefits packages. Along with greater health support, company management is encouraged to adopt a more skills-based approach to hiring, as opposed to a traditional focus on work experience.
On the payroll front, businesses will have to adhere to provincial minimum wages, which will apply to all workers who have been employed by the company for less than a year.
The Philippines has yet to recover from COVID-19, but new measures are promising for foreigners. Its corporate income tax rates, which were previously some of the highest in APAC, have been lowered from 30% to 25% for nonresident foreign corporations.
Recent amendments to the Foreign Investments Act (FIA) allow foreign investors to set up and own 100% of SMEs. The required number of direct hires has also been reduced to 15 from 50, relieving the burden on HR costs in small companies looking to do business there.
Companies wanting to expand into Thailand should look at qualifying for incentives under the Investment Promotion Act. This provides tax incentives and relaxed requirements on foreign participation.
To ensure a smooth transition and less hassle, organizations should consider acquiring SMART visas for inbound staff, and obtaining vaccinations to avoid the 14-day quarantine period.
Businesses setting up in economically disadvantaged areas of Vietnam can enjoy decreased tax rates and tax exemptions for the next several years. However, Vietnam faces an ongoing talent shortage, with only 22.8% of the workforce possessing vocational training and skills above elementary qualifications. Human resource management challenges will involve attracting and retaining high-quality talent or upskilling the local workforce to be business-ready.
As South-East Asia steps onto the path from pandemic to endemic living, existing policies and restrictions look to change drastically in the next several months. We provide up-to-date, expert PEO services across SEA, giving you key insights that will allow you to hit the ground running wherever you choose to grow.
Contact us for a FREE demo today!
Southeast Asia's expansion appeal rests on four pillars: growth (ASEAN is among the world's fastest-growing economic blocs, with projected GDP growth outpacing most developed markets), population scale (700 million people with a growing middle class and rapid digital adoption), talent accessibility (large, young workforces with improving skill levels across the region), and market opportunity (urbanization, e-commerce growth, and digital service adoption creating demand across sectors). Each SEA country offers a distinct value proposition — Singapore for regional headquarters, Vietnam and Philippines for talent, Indonesia and Thailand for domestic market scale.
The main expansion models are: (1) EOR-first — hire employees immediately through an Employer of Record to test market viability before committing to entity registration; (2) Representative office — limited legal presence for market research and relationship building, cannot conduct commercial operations; (3) Wholly owned subsidiary — full corporate entity, enables all commercial activities, requires 2–6 months to establish; and (4) Joint venture — partnership with a local company, required in some sectors. For a detailed cost and timeline comparison of options 1 and 3, see our guide on entity setup vs professional employment services. Most companies start with EOR, then incorporate once viability is confirmed.
The right first market depends on business objectives. For technology companies wanting regional headquarters and access to regional talent, Singapore is the standard first entry. For companies focused on talent acquisition at competitive cost, Vietnam and Philippines offer the best initial value. For companies targeting large domestic consumer markets, Indonesia is the priority. For common pitfalls in market selection and sequencing, see our guide on 7 Southeast Asia expansion mistakes to avoid. Market entry sequencing should be driven by where revenue or talent opportunity is highest.
Every SEA expansion plan should address: how employees will be hired in each market (EOR vs. entity), what the employment compliance obligations are in each country (contributions, contracts, leave, termination), how payroll will be processed and who manages statutory filings, and what the total employment cost is for the planned headcount in each market. For a deeper dive into operational planning, see our guide on corporate expansion in Southeast Asia: things to consider. HR planning is most effective when done before the first hire, not reactively after compliance issues arise.
Cultural considerations that affect business success in SEA include: relationship-building before business transacting (stronger in the Philippines, Vietnam, and Indonesia than in Singapore); hierarchy and deference to seniority (pronounced in Vietnam, Thailand, and Indonesia; less so in Singapore); communication directness (Singapore and Malaysia are more direct; Philippines and Thailand are more indirect and high-context); and religious observance (Malaysia and Indonesia have significant Muslim workforces with prayer time and Ramadan implications for scheduling). Companies that adapt their management approach to local cultural norms retain talent more effectively and build stronger local teams.
SEA expansion success metrics should include: revenue generated or validated (the business case for the expansion), talent hired and retained (headcount target vs. actual, attrition rate in first year), time-to-hire for key roles (validating talent market assumptions), total employment cost vs. budget (testing whether cost assumptions were accurate), compliance health (no enforcement actions, accurate payroll), and employee satisfaction scores in the new market (indicating cultural integration success). A 12-month post-expansion review against these metrics informs both the continuation decision and lessons for subsequent market entries.
