A growing number of individuals and private businesses are increasingly deciding to incorporate in Singapore and Hong Kong. Both countries offer a good infrastructure, with a pro-business and pro-talent culture which is reflected in the country’s immigration policies, regulatory environment, and the openness of its people. Moreover, their governments have ensured policies related to laws, regulations and taxation that promote the growth of entrepreneurship and commerce in their respective countries.
Hong Kong and Singapore have been consistently topping the list in the Doing Business Report compiled by the World Bank every year. This is due to the business-friendly policies followed in both the countries like low import and export costs, well-framed laws for protecting investors, and labour regulations that favour employers.
Both countries have again been ranked at the top of the list in the Doing Business 2010 Report. For the ‘Ease of doing business’ index, Singapore and Hong Kong are ranked at first and third positions respectively, whereas, for the ‘Starting a business index’, Singapore and Hong Kong are ranked at the third and eighteenth positions respectively.
Additionally, in The Global Competitiveness Report 2009-2010, Singapore was ranked third after Switzerland and the United States in global competitiveness.
Hong Kong as a Business Destination
As one of the rising economies in Asia, Hong Kong is a preferred choice for business incorporation for many entrepreneurs. Already recognized as South East Asia’s key financial services and investment hub, Hong Kong is poised to become the main international financial centre in Asia, and is vying with Shanghai, Tokyo and Singapore to claim the top spot.
Hong Kong is preferred as a home-base by many companies doing business in Asia. There are many U.S. and European multinational companies using it as a gateway to China, and similarly many mainland China businessmen are using Hong Kong holding companies for real-estate deals.
Hong Kong businesses can gain the tax benefits related with most tax havens without compromising on their image as in the case of being based in a tax haven. Around 109,000 new companies were registered in Hong Kong in 2009 alone, which is, a record for the city. Starting a new business is a quick and simple procedure.
To make it even more attractive to investors, the Hong Kong government wants to make it still quicker and easier to set up a corporation in the country. By early 2011, the government plans to set up electronic incorporation and registration of businesses, allowing a businessman anywhere in the world to set up a company in the country through the Internet in just a few minutes. In a recent interview Hong Kong’s Registrar of Companies, Ada Chung, said “For our customers, we understand that speed means everything.”
On the subject of discouraging illicit activity and attracting legitimate business, she added, “We are trying to do both, actually, to enhance governance while at the same time allow for sufficient flexibility in the business environment.”
Singapore as a Business Destination
Singapore is a well developed and flourishing free market economy which has an open and corruption-free environment, a low tax regime and a per capita GDP at par with many developed countries in the west. It is the main centre for trading oil and other energy products, and is a key hub for currency trading.
The regulatory changes introduced by the Singapore authorities have attracted many international fund managers to transfer their operations to the city. While Japan and Hong Kong are the key players in the region’s hedge fund management field, Singapore is rising as one of the preferred Asian locations amongst hedge fund managers for fund start-ups. Singapore is climbing the hedge fund ladder at a quick pace due to the comparatively simple registration process, which is a critical issue when deciding the place to set-up.
Singapore is also keen to become an Islamic banking hub, predominantly in the area of wealth management and it working at setting up a regulatory system for the same. It will benefit greatly from being located near the Islamic states of Malaysia and Indonesia, and it has also attracted interest from Middle Eastern investors. Another key selling point is that unlike other jurisdictions, there is no need to rent or purchase a physical office in Singapore for incorporation. Virtual office services are legally permissible and can be easily set up by a local professional services firm. Singapore’s corporate tax rate is now at 17% and it allows many tax exemptions for new startup companies. Also, there is no capital gain tax in Singapore. All these factors make the country an ideal jurisdiction for business incorporation.