South Korean retail giant Lotte Shopping plans to establish its International Headquarters (IHQ) in Singapore and is considering an IPO on the Singapore Exchange (SGX) to raise capital.
This decision not only represents the strategic core of Lotte’s Southeast Asian expansion but also refocuses the attention of many multinational corporations on Singapore, the “jewel of headquarters economy.” .
I. Korean Wave Sweeps Southeast Asia, Lotte Capitalizes on Momentum
Korean pop music, films, and dramas wield immense influence across Southeast Asia, positioning Lotte Shopping as a commercial beneficiary of this cultural wave.
Lotte Retail Group CEO Samuel Sanghyun Kim stated in The Straits Times: “The company aims to become the preferred shopping destination for Southeast Asian consumers.”
Source: Lotte Group, Samuel Sanghyun Kim, via Lianhe Zaobao
“Hallyu is more than entertainment—it drives growth in shopping, consumption, and brand loyalty,” Kim emphasized. His vision is clear: Lotte aims to create a closed-loop ecosystem integrating Hallyu and retail across Southeast Asia.
Currently, Lotte operates 49 stores in Indonesia and 19 in Vietnam, including Lotte Hanoi West Lake Shopping Center—a 355,000-square-meter luxury complex housing over 400 shops that has attracted more than 10 million visitors since opening in 2023.
This demonstrates Lotte’s solid physical retail foundation in Southeast Asia, providing tangible justification for its future headquarters plans.
Source: Internet
II. Why Did Lotte Choose Singapore?
Selecting a headquarters location is a core strategic decision for multinational corporations. Why did Lotte target Singapore over Kuala Lumpur, Bangkok, or Jakarta? The reasons are straightforward and pragmatic:
1. Comprehensive Infrastructure
Singapore boasts fully developed airports, ports, MRT systems, and logistics networks, offering exceptional convenience for multinational corporations managing regional operations.
2. Abundant Talent Pool
Singapore possesses a large pool of skilled managerial and technical professionals who can directly support Lotte in overseeing Vietnam and Indonesia operations, executing market strategies, and advancing brand promotion.
3. Mature headquarters economy
Singapore’s IHQ (International Headquarters) initiative has attracted multiple multinational corporations to establish regional headquarters, offering policy stability and transparent approval processes.
4. Developed retail ecosystem
Retail hubs like Orchard Road, Changi, and Jurong provide dense clusters of businesses, creating opportunities for collaboration and expansion.
5. Cultural Affinity and Market Resonance
Young Southeast Asian consumers exhibit high receptivity to Korean culture, significantly benefiting Lotte’s brand development and marketing efforts.
In summary, Singapore serves not only as a geographic hub but also as the optimal convergence point for policy, talent, and cultural alignment.
Source: Internet
III. Decoding the International Headquarters (IHQ) Program: How to Secure Tax Incentives?
If you think establishing a headquarters is as simple as registering a company, you couldn’t be more wrong.
Singapore’s International Headquarters (IHQ) Program offers attractive tax incentives, but it also comes with strict conditions.
According to the latest guidelines from the Singapore Economic Development Board (EDB), the IHQ Program provides preferential tax rates ranging from 5% to 10%, typically for a period of five years, applicable to qualifying income.
IHQ Tax Incentive Tier Structure
Under the latest regulations from Singapore’s Economic Development Board (EDB), the International Headquarters Programme (IHQ) offers preferential tax rates ranging from 5% to 10%, with a typical incentive period of 5 years. The specific tiers are as follows:
5% Tax Rate Tier: By the 3rd year, approximately 18 skilled employees must be added, while the annual Total Business Expenditure (TBE) must increase by approximately S$8 million. By Year 5: Add 30 skilled employees and increase annual TBE to approximately S$13 million.
10% Tax Rate Tier: By Year 3: Add approximately 15 skilled employees and increase annual TBE to approximately S$5.5 million;By Year 5: Add 25 skilled employees and increase annual TBE to approximately S$9 million.
15% Tax Bracket: Year 3 requires approximately 8 new skilled employees, with annual TBE increasing by approximately S$3 million; Year 5 requires 13 new skilled employees, with annual TBE increasing to approximately S$5 million.
*Key Point: TBE (Total Business Expenditure) refers to the annual total expenditure incurred by the headquarters in Singapore, including office expenses, employee compensation, and business operation costs.
Furthermore, the IHQ requires the headquarters to undertake substantive functions, including managing, coordinating, and controlling group operations, ensuring the Singapore headquarters plays a central role in the regional market.
Image Source: Lianhe Zaobao
IV. How Can Lotte Meet Headquarters Program Requirements (Planning Recommendations)?
Given Lotte’s Southeast Asian footprint, how can it secure preferential tax rates?
1. Hiring Skilled Personnel
Year 3: Add 15–18 skilled employees (depending on tax bracket);
Year 5: Add 25–30 skilled employees.
2. Meeting Annual Business Expenditure (TBE) Thresholds
Year 3: Increase by S$5.5–8 million;
Year 5: Increase by S$9–13 million.
3. Undertake Substantive Headquarters Functions
Oversee Vietnam and Indonesia markets;
Execute market, brand, procurement, and supply chain management;
Manage finance, human resources, and regional decision-making.
4. Submit Application and Sign LOA
Core Forms: Employees, Fixed Asset Investment, Total Business Expenditure;
Supplementary Forms: Technical personnel, detailed headquarters activity plan.
Provided the plan is executed as outlined and annual progress reports are submitted regularly, Lotte can smoothly secure the 10% tax bracket benefit, with potential to pursue the 5% bracket later.
Tip: When selecting an IHQ tax bracket, a prudent strategy is to first apply for the 10% bracket. After successful implementation, consider pursuing the 5% bracket to mitigate risks.
Source: Lianhe Zaobao
V. Practical Experience: Lotte’s Implementation Path
Lotte’s strategic layout is clear:
1. Defined Regional Headquarters Responsibilities
The Singapore headquarters serves not only as an office space but as a regional decision-making center, directly managing market operations in Vietnam and Indonesia.
2. Talent and Budget Alignment
Recruit skilled personnel aligned with annual TBE expenditure targets to ensure LOA compliance.
3. Parallel Capital Market Strategy
Plans for an IPO by 2030 to fund regional expansion, which also strengthens the case for IHQ application.
4. Market Reputation and Brand Influence
Lotte’s established reputation in tourism and retail demonstrates regional economic contributions during headquarters policy approvals.
Source: Lianhe Zaobao
VI. Strategic Value of the Plan
Singapore’s International Headquarters initiative genuinely offers enterprises a “low-cost, high-return” strategic foothold. Lotte Shopping chose Singapore not only for its favorable tax rates and convenient environment but also for:
Talent aggregation effects;
Business networks and collaboration opportunities;
Policy transparency and stability;
Facilitated multinational brand management and capital operations.
In the coming years, as Southeast Asia’s consumer market expands rapidly, Singapore’s IHQ policy will attract more multinational corporations to establish operations, further invigorating the headquarters economy.
Lotte is just the beginning; other multinational retailers are likely to follow suit, positioning Singapore as their regional headquarters and strategic hub.
For Lotte, the Singapore headquarters is not merely a tax incentive beneficiary but a pivotal fulcrum for its Southeast Asian strategy, brand expansion, and capital market positioning.
Source: Lianhe Zaobao
Conclusion:
Lotte Shopping’s establishment of an international headquarters in Singapore is not merely an expansion move but a signal of shifting retail dynamics in Southeast Asia.
Through the IHQ program, companies can secure 5%–10% tax incentives while building regional management centers, attracting capital and talent, and integrating supply chains.
For multinational corporations, Singapore’s headquarters initiative offers not only favorable tax rates but also an institutionalized, predictable environment for strategic development. In the coming years, as more companies establish operations, Southeast Asia’s headquarters economy will reach new heights.
Lotte’s arrival may be just the beginning. Singapore is poised to become the new “must-win territory” for multinational retail and consumer goods enterprises.