Vistra Friction Index: How red tape can drive competitive advantage

04 May 2026

New research reframes operational complexity as a source of competitive advantage for businesses expanding across the region

HONG KONG – 14 May 2026 – Firms operating across borders shouldn’t be daunted by operational friction. In fact, the opposite is often true. The Vistra Friction Index: Where to Grow, Where to Execute (APAC Edition) 2026 makes the case that a company’s ability to manage these challenges can drive real competitive advantage. For many international businesses, that means the rewards for navigating friction in a high-growth economy often outweigh the costs.

The financial stakes of navigating these barriers are significant. Vistra’s data shows that technology sectors including high-tech software, hardware and IT services, accounted for $11.6 million in marketing-sourced revenue, or more than 26% of total intake, as firms aggressively pursued regional corridors. However, the cost of friction remains high: 54% of all new regional activity is driven by Entity Management Services (EMS) and statutory compliance, confirming that administrative hurdles remain the primary drag on capital flow

The report assesses 12 markets across APAC and the Middle East through two complementary lenses: a Market Attractiveness Scorecard, evaluating structural pull factors such as economic resilience and demographic fundamentals, and a Friction Index, measuring push factors including regulatory complexity, tax regimes, and data transparency gaps. Together, they give businesses a data-driven guide to aligning growth ambitions with on-the-ground execution realities.

"What the Vistra Friction Index makes clear is that the businesses set to win in Asia-Pacific are those that stop treating complexity as a problem to solve and start treating it as a position to hold," said Hailiang Zhang, Business Head, Executive Vice President, Vistra North Asia. "When you understand friction at the operational level – the regulatory sequencing, the governance structures, the talent dynamics – you stop reacting and start leading. That's the competitive edge this report is designed to give."

The Index identifies a shift in corporate behaviour: organisations are moving from defensive risk mitigation to adaptive planning. Rather than retreating from friction-heavy environments, firms are adopting three distinct pathways: absorbing higher costs to preserve optionality (such as using Employer of Record models over permanent entities), accepting higher risk to maintain speed in time-sensitive sectors like semiconductors, or prioritising governance and resilience over rapid scaling to ensure long-term stability.

The Opportunity-Friction Quadrant: Four strategies for growth

The report's signature Opportunity-Friction Quadrant categorises 12 markets across four strategic profiles, each requiring a different approach to entry, investment and operational design.

Fast-Track Markets, including Singapore, Australia, and Hong Kong SAR, offer the clearest path for businesses prioritising speed. Streamlined regulation and deep talent pools keep execution risk low, allowing companies to scale with confidence.

Competitive Advantage Markets, including Vietnam, Indonesia, and Chinese Mainland, combine high growth potential with significant operational demands: multi-step regulatory processes, complex labour laws, and data transparency gaps. Entry requires careful sequencing and a long-term view, but operational mastery in these markets ultimately becomes a barrier to entry for less prepared competitors. “Execution strategies in these markets benefit from a deliberate yet proactive approach,” the report says. “Companies should move forward without waiting for perfect clarity, as policy environments rarely reach full transparency.”

Efficiency Markets such as Korea and Japan suit businesses looking to optimise existing operations or consolidate a regional footprint rather than pursue aggressive expansion.

Precision Entry Markets, including Thailand, call for the most selective approach. High friction and lower structural attractiveness mean entry should be driven by a specific strategic rationale, not broad growth ambition.

Across all four quadrants, the conclusion is the same: successful expansion in Asia-Pacific requires aligning your operating model to the market, not the other way around.

Market rankings and key sector insights

The research surfaces findings that will challenge assumptions among business leaders across the region. Vietnam (3rd) outranks Singapore (4th) on the Market Attractiveness Scorecard, driven by strong demographic momentum and sustained economic expansion – yet it simultaneously ranks as the second-highest friction market in the region. Thailand tops the Friction Index, followed by Vietnam, Indonesia, and Chinese Mainland, each reflecting multi-step regulatory processes and complex labour laws. At the other end of the spectrum, Singapore remains the most operationally efficient market, followed by Australia and Hong Kong SAR.

"The data tells a story that will surprise many boardrooms," said Melanie Leydin, Executive Vice President, Global Solutions, South East Asia. "Vietnam outranks Singapore on market attractiveness, yet it also ranks as one of the most operationally complex markets in the region. In high-tech manufacturing, biopharma, and EVs, the opportunity is real – but so are the friction points, from multi-layered subsidy regimes to acute talent shortages. The businesses that will capture these sectors are those that go in with their eyes open and the right operational infrastructure behind them. That's precisely where Vistra's expertise comes in."

The Vistra Friction Index demonstrates that in an increasingly complex global landscape, the ability to manage operational friction effectively is the new competitive differentiator for successful global expansion.

For further information, please contact:

Vistra

Ellie King
[email protected]

Jay Cheung
[email protected]

For more information about Vistra, visit vistra.com

Weber Shandwick

Giles Harrison
[email protected]