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I wouldn’t even worry about SEO implications for hosting overseas. You’re better spending your time on optimising your website and improving your site speed through caching, reduction and other forms of optimisation.
You can always use local content delivery networks if you think it’s absolutely necessery.
Get yourself some dedicated hosting, virtual or physical, however it’s likely that virtual might fall into your price range more easily. Don’t use shared services where the performance of your website is determined by other CPU hungry websites.Your recommending a VPS or Dedicated without knowing any of his requirements? So all sites need a VPS or dedicated in your eyes?
Most small businesses website can used shared hosting with ok performance.