Thailand is a clear favourite for internationally oriented Singaporean companies looking to expand regionally, buoyed by a growing consumer market and the overall investment climate, says HSBC.
A study by the bank shows that overall investment in Asean in 2020 is expected to rise among Singapore-based companies, with Thailand a key beneficiary.
The HSBC-commission report by the Singapore Business Federation sought the insights of 1,036 Singapore-based firms regarding their interest in overseas expansion.
Of the respondents, 83% of those eyeing business expansion in Thailand cited potential customer demand, with 79% highlighting the overall investment climate and 74% mentioning the ease of building relationships.
Of those surveyed, 86% are considered small and medium-sized enterprises, defined as having annual turnover of S$100 million (2.4 billion baht) and fewer than 200 workers.
Of the surveyed companies, 80% said they already had operations in Thailand, the third highest after Malaysia (87%) and Indonesia (81%), while 29% expect to further expand their business operations in Thailand over the next two years, behind only Indonesia, Malaysia and Vietnam.
"Increased trade and investment activity from Singapore is good news for Thailand given Singapore is already Thailand's largest source of investment, behind only China and Japan," HSBC said.
In 2017, Singapore invested US$4.3 billion (143 billion baht) in Thailand versus $9.5 billion by Japan and $7.4 billion by China, according to Bank of Thailand data.
Singapore's inbound investment into Thailand includes companies founded in the city-state and many international firms. Of 37,400 international companies in Singapore, 7,000 are multi-national corporates and 60% have regional responsibilities.
"While Thailand's growing consumer base is already well-recognised by Singapore corporates, the report shows that many businesses are looking to double down on our demographic dividend," said Krisda Phatcharoen, head of commercial banking at HSBC Thailand.
"Beyond the consumer piece, Thailand's manufacturing -- while already strong -- is now entering into the higher-end space," Mr Krisda said. "So while many corporates may base their treasury and other back-office functions in Singapore, a lot of revenue-making operations are driven from Thailand."