Singapore has emerged as the top destination for Asian businesses expanding abroad, according to a UOB survey out yesterday.
The country's stable political and social climate is a strong draw in these challenging times as overseas expansion becomes more urgent amid slowing sales in domestic markets, the poll showed.
The bank's Asian Enterprise Survey was first conducted in 2014 and is now in its second edition. The latest survey polled 2,500 companies in six markets - mainland China, Hong Kong, Indonesia, Malaysia, Singapore and Thailand.
Just under one-third, or 32 per cent, of the business leaders surveyed said they would choose Singapore as the market to expand into in the next three to five years. The Republic also took top spot in the 2014 survey.
Coming in second was Japan (29 per cent), followed by Vietnam (28 per cent). China was ninth with 22 per cent.
Asian companies still see opportunities for growth in the region but are cautious about overseas expansion given the tough economic environment, said Mr Frederick Chin, the head of group wholesale banking at UOB.
The companies polled said they are drawn to a stable political climate, large and growing customer demand and a favourable tax and regulatory environment when choosing a destination for overseas expansion.
In comparison, the bank's 2014 survey showed that consumer demand was a stronger pull factor.
This reflects the more cautious investing environment and the fact that "stability is now at the top of (companies') minds", noted UOB economist Francis Tan.
"Expanding regionally is increasingly becoming a need, not just a want," he said. Singapore companies, for instance, are moving abroad to grow sales given their limited domestic market and mounting competition.
The poll also found that China continues to be the top expansion destination for Singapore companies, similar to the 2014 findings.
Of the 300 Singapore companies surveyed, 56 per cent are already doing business or operating in China. There is also growing interest in Asean markets like Vietnam and Thailand, the survey showed.
Poll results also pointed to rising costs, increasing competition and falling consumer demand as the main factors weighing on business growth in the region.
Mr Chin described the investing environment as "challenging... but it's not doomsday".
There are still pockets of growth and Asia is in a good position to weather the slowdown, he said.