TMF Group Releases 10th Edition of Global Business Complexity Index: Navigating Compliance Challenges and Global Risks

TMF Group, a prominent provider of compliance and administrative services, has unveiled its tenth edition of the Global Business Complexity Index (GBCI). This comprehensive report delves into the complexities of conducting business in 78 jurisdictions, encompassing 92% of the world's total GDP and 95% of net global FDI flows. The GBCI meticulously evaluates nearly 300 annually tracked indicators across various critical aspects, such as legislation, compliance, accounting procedures, tax regimes, human resources, and payroll processes.

The index reveals intriguing insights into the business landscape, particularly regarding compliance challenges and global risks. One of the notable highlights is the shifting landscape in the Asia-Pacific (APAC) region, where countries have undergone significant changes in complexity rankings.

APAC Complexity Rankings:

• Indonesia, which occupies the top position in APAC, has jumped from 6th to 11th place globally.
• China follows closely in the 15th position.
• South Korea ranks 16th, Malaysia ranks 21st, and the Philippines ranks 31st.
• Notably, for the first time in a decade, no APAC countries feature in the top ten most complex jurisdictions.

Contrastingly, India has made substantial strides, ascending to the 33rd position, courtesy of legislative reforms and regulatory changes aimed at reducing the compliance burden. Meanwhile, Vietnam, ranked 46th, has introduced online systems to update new regulations and best practices.

Hong Kong, at 74th, has managed to consistently maintain a position among the ten least complex jurisdictions. The city's prioritization of international alignment and simplified business processes have proven effective. However, the jurisdiction's business owners contend with rigorous due diligence checks and know-your-customer (KYC) requirements.

Key Global Themes:

1. Geopolitical and Economic Turbulence: The report underscores how geopolitical challenges and global economic factors impact expansion plans and business operations. The rise in inflation has led to employees seeking enhanced financial support from employers, contributing to salary demands. This trend is particularly pronounced in APAC, where 93% of surveyed jurisdictions report employee requests for better financial packages. Countries such as Vietnam and Thailand face weakened GDP growth forecasts due to geopolitical tensions affecting global demand.

2. Global Compliance Challenges: The report emphasizes how compliance requirements can drive complexity for businesses. Instances such as legislative reversals in China and the intensified due diligence checks in Australia and Malaysia due to sanctions against Russian entities demonstrate the evolving landscape of compliance. However, compliance considerations also drive the attractiveness of jurisdictions for private wealth and family office individuals, particularly in Singapore.

3. Environmental, Social, and Governance (ESG) Considerations: ESG reporting's increasing significance has prompted governments and authorities to hold businesses accountable for reducing their carbon footprint. Malaysia's ambitious goal of achieving carbon neutrality by 2050 has catalyzed ESG programs. Similarly, ESG parameters in India and enhanced disclosure expectations for funds with ESG objectives in Hong Kong have gained prominence.

Shagun Kumar, TMF Group's Head of APAC, highlights the varied complexity levels across the APAC region. The GBCI serves as a valuable guide for companies aiming to invest in the APAC region in an informed manner.

The 10th edition of the GBCI reinforces the evolving dynamics of global business complexity and the critical importance of navigating compliance challenges and global risks effectively.