Treasury Practice

Regional treasury centres

Published: Jul 2013
Victor Penna, Head of Treasury Solutions, Transaction Banking, Standard Chartered:

There is perhaps, no such thing as a ‘best’ location for treasury centres in Asia as it really depends on each firm’s circumstances. A key consideration for many corporates is the location of their operations – the ideal is to co-locate the treasury with other regional business operations. Other considerations include access to a wide range of banking services, a pool of experienced treasury staff, infrastructure, cost, the legal system, regulations and taxation.

Singapore and Hong Kong remain the two most popular places, with Shanghai in third place. Hong Kong and Singapore tick most of the boxes and they appeal especially to US and European corporates who are looking to set up their regional treasury centres (RTCs) in Asia. Hong Kong in part leverages off its proximity to Mainland China and a business friendly environment. Singapore has strongly marketed itself as a specialist treasury services location for several decades now, and boasts a substantial range of tax treaties and incentives via its Finance and Treasury Centre (FTC) award that is likely to keep it at the top of the pile for the foreseeable future.

Shanghai is a growing location for treasury centres. It tends to attract international firms with most of their operations in China. Others operate a dual treasury-centre model with one centre in Shanghai covering China and another in Singapore covering the rest of Asia. Some of these ‘China-only’ treasury centres have evolved to cover Greater China or North Asia. Over the next decade the Chinese government is expected to take further steps to make China a more competitive location for regional and global treasury centres (GTCs) in line with the objective of Shanghai becoming a major international financial centre by 2020. Malaysia and Thailand have also introduced incentives to attract treasury centres. Another emerging trend involves Asian corporates setting up their GTCs in their home markets, subject to their government relaxing some of the regulations that would otherwise make this difficult.

Gourang Shah, Head of Treasury Advisory, Treasury and Transaction Services, Asia Pacific, Citi:

The decision of where to set up a treasury centre is usually a tax-driven decision especially if that centre is also going to be a regional cash concentration location, although non-tax factors are also equally important. To facilitate efficient cash pooling and inter-company lending, treasury centres should ideally be located in low-tax jurisdictions, which offer benefits such as reduced or exempted withholding taxes on interest between treasury and other group entities.

Non-tax treasury centre location considerations include proximity to regional business management, financial costs (bank transaction fees, treasury staff salary, office rental), central bank and other regulatory reporting requirements, access to financial markets, degree of currency restrictions, availability of skilled employees, time-zone compatibility with respect to business operations under coverage, quality of physical and IT infrastructure, political stability, sophistication of banking system, and reputation of the location being a financial hub. By adding up weighted scores of the above tax and non-tax criteria, companies can identify the optimal country for treasury centre establishment.

Hong Kong and Singapore are the two most popular locations in Asia for treasury centres. Other countries considered by Citi’s corporate clients are Malaysia and Thailand, both of which offer tax incentives with financial and commercial flow benefits.


Companies that establish a RTC in Malaysia will benefit from income tax reduction and withholding tax exemption for five years. A broad double tax treaty network and relatively low cost environment also render Malaysia a treasury centre location of choice. Compared to Singapore and Hong Kong, however, Malaysia’s banking infrastructure is still at a developing phase, and there may be fewer tax and legal professionals with regional expertise.


In 2010, the Thai government substantially improved incentives under the Regional Operating Headquarters (ROH) scheme. Foreign companies locating their ROH in Thailand can now enjoy a 15-year tax break on foreign-sourced income and tax concession on income earned in Thailand, although withholding tax on interest payment is not waived. However, Thailand shares similar issues with Malaysia on banking infrastructure and availability of tax and legal professionals, and the country also has fewer fluent English speakers than Malaysia, Singapore and Hong Kong.

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