Flows of direct investment is a relevant subject for private bankers to follow because so many business owners are their clients.

Singapore-based United Overseas Bank has launched its 10th Foreign Direct Investments Advisory Centre in Tokyo, supported by a dedicated Japan desk in Singapore to help Japanese companies wanting to expand into Southeast Asia.

While not strictly a wealth management move, with many HNW individuals owning operating businesses in Asia and looking for new markets, the development highlights how banks such as UOB are seeking to extend their footprint.

Explaining the scale of the opportunity, UOB cited data showing that total Japanese FDI into Southeast Asia grew by 15 per cent in 2022, compared with 2020, amounting to ¥2.65 trillion, despite the global slowdown due to the pandemic.

ASEAN destination
The group of 10 countries under the Association of Southeast Asian Nations (ASEAN) has grown to become a strong investment destination for Japanese FDIs. The total Japanese FDI into Southeast Asia grew by 15 per cent in 2022, compared with 2020, amounting to ¥2.65 trillion ($214 billion). (This data also adds to notions that the Japanese economy is one of the brighter spots globally.)

Since UOB started its FDI business in 2011, it has helped more than 300 Japanese companies expand into Southeast Asia, the lender said. This trend is set to grow due to various factors, including supply chain shifts, trade tensions, rising consumer demographic in a high-growth region and the digital economy, it continued.

As part of the process, UOB co-organised the Japan ASEAN Business Forum with Deloitte Private, alongside partners such as Singapore’s Economic Development Board, Indonesia’s Investment Coordinating Board, Vietnam’s Foreign Investment Agency, Malaysian Investment Development Authority and the ASEAN-Japan Centre. 

“UOB's FDI advisory services provide our clients with one-stop solutions to navigate the complexities of doing business in a diverse region. This new FDI advisory centre underscores our longstanding commitment to support Japanese businesses venturing abroad,” Wee Ee Cheong, deputy chairman and chief executive, UOB, said.

Wee Ee Cheong in centre of picture.

Since its start, UOB’s FDI Advisory Unit has supported close to 4,000 companies expand beyond their shores to invest over S$43 billion ($32 billion) into the region. 

Tokyo
The Tokyo FDI Advisory Centre will act as a conduit for the ASEAN investment promotion agencies, professional service providers and those on the value chain to help the Japanese companies navigate through this region.

The bank said a recent survey it conducted showed that 83 per cent of businesses are keen to expand overseas, and this desire is most pronounced in Indonesian, Chinese, Thai and Vietnamese companies. The bank said its UOB Business Outlook Study 2023 (SME & Large Enterprises) surveyed more than 4,000 businesses in Asia, and for the first time expanded beyond Singapore to survey companies in Indonesia, Malaysia, Thailand, Vietnam, Mainland China and Hong Kong SAR.

Companies in Hong Kong, Malaysia and Singapore are the most hesitant. About four in five companies value having a cross-border digital trade platform for their overseas expansion. 

However, some factors holding businesses back include difficulties in finding the right partners to work with, lack of in-house talent, and lack of legal and regulatory compliance and tax support.