Businesses seeking the best location for a treasury hub have to weigh up many factors ranging from tax incentives to political risk. Here, David Blair offers an insight into the pros and cons of five Asian financial centres.
Asia has evolved rapidly this century, especially from a treasury perspective. From the internationalisation of Chinese yuan (CNY) to the roll-out of instant payments in India and beyond, the scope of treasury in Asia has been widening. The need for in-region treasury presence has followed, and countries from Hong Kong to Thailand have responded with incentives to draw treasury hubs to their shores. New alternatives have both enriched and complicated Asian treasury location decision-making.
Treasury centres vs shared service centres
A treasury centre (TC) is an entity comprising high-skilled treasury staff managing balances and flows and risks across a group of legal entities typically in different countries. Normally it is also a booking centre where money market and foreign exchange and other derivative transactions are recorded and taxed.
Therefore, treasury centres seek tax-efficient and open financial centres, since these tend to attract a deep talent pool with suitable experience, wide and liquid financial markets in which to trade, an open ecosystem that enables maximum coverage, and a tax regime that does not hinder treasury effectiveness.