Globalisation in Asia – Singapore and Hong Kong
Asia remains relatively insulated from the global economic slowdown and Asian growth, powered by China, has become the major driver for the global economy. In 2010, East Asia and the Pacific grew at twice the pace (6.8%) of both the EU (2.0%) and US (3%). With the EU and US stagnating, investors and businesses are naturally heading East.
In Asia, Singapore and Hong Kong present the simplest, most viable and most lucrative options for firms, investors and entrepreneurs seeking growth. With a government renowned for efficiency and transparency, unparalleled infrastructure and a location at the heart of South East Asia, Singapore provides the ideal setting to incorporate in. While Hong Kong, with its developed and liquid financial markets and attractive tax policy, can act as the perfect gateway into China’s growing markets.
Hong Kong company registration and Singapore incorporation is remarkably safe, cheap and quick. Singapore is the easiest place to do business and has topped the World Bank’s Ease of Doing Business rankings for the last 2 years. Singapore also fares exceptionally well in other measures like paying taxes (4th best in the world), starting a new business (4th best) and trading across borders (1st). Foreign investment and firms are a significant part of the Singapore economy, for instance in 2010, output from foreign companies and foreigners accounted for 43% of GDP in 2010 and grew by 13.6%. With such a substantial foreign presence in the economy, we do not foresee the government introducing any major restriction. This combined with improving infrastructure and steady growth means that Singapore will remain a premier jurisdiction for firms and entrepreneurs for a long time.
After Singapore, Hong Kong is the easiest place to do business and ranks highly in other measures like protecting investors (3rd), paying taxes (3rd) and starting a business (5th). Firms continue to be incorporated in these 2 cities despite global economic uncertainty. For instance, 798 foreign businesses chose Hong Kong as their jurisdiction of registration in 2011, an increase of 8.3% from 2011. Over the last year Hong Kong has introduced online electronic services for company and business registration making the process even simpler. The Chinese government has shown signs of trying to attract more foreign investment especially through Hong Kong. Hong Kong can also act as an important hub for firms who want to operate in other major economies in the region like South Korea, Japan and Taiwan.
The recently released Ernst & Young Globalisation Index is another international survey that shows the strength of Hong Kong and Singapore as global centres of business. The survey ranks these two Asian hubs as 1st and 3rd respectively. The good thing about this survey is how it considers different aspects of the jurisdiction. The overall rankings score is determined from analysing the 5 areas of trade, technology, capital, labour and culture. Singapore actually scored a perfect 10 for the openness to trade category.
Healy Consultants blog
News review 21st February
European officials gather in Brussels for a critical meeting as they attempt to resolve the crisis and finalize the $171 billion Greek bailout. Japan and China have promised to help the Eurozone solve the crisis through the IMF. Shares worldwide rallied temporarily on the hopes of a resolution to the Greek crisis. Meanwhile, oil prices have surged to an eight-month high on the back of geopolitical tensions surrounding Iran.
A framework for harmonized global accounting standards received a boost when a senior American regulator said he was “optimistic” of the US adopting the International Accounting Standards Board (IASB) accounting rules. US adoption could trigger a chain reaction and force other countries like Japan to join the model. This would allow investors to compare cross-border companies from around the world and improve transparency. Read more at Reuters.
Last Friday (17th Feb), Singapore announced its budget for 2012. Labelled as a ‘budget for the future’, the budget introduced several measure to help entrepreneurs and small medium enterprises. Key highlights include increased cash payouts to SMEs and more staff training. These measures should ensure that Singapore remains as one of the easiest places to do businesses in the world. For a more comprehensive analysis of the budget and its implications for entrepreneurs, click here. Singapore already has a reputation for providing the ideal environment for start-ups and continues to attract headlines such as this article on the BBC website. For more information about Singapore company formation, visit our business website or contact us with your questions.
Hong Kong continued to stake its claim as Asia’s leading financial center with the introduction of Asia’s first volatility Index futures. While China’s aims to diversify its financial markets through the increased Yuan hedging tools.
Elsewhere in Asia, Thailand’s economy shrunk by 9% in 2011 after floods crippled large parts of the industrial north. Look at Thailand company registration to enter one of the opportunity markets in SE Asia for entrepreneurs due to lower operating costs and government goals of attracting foreign investment.
Healy Consultants blog
News Review 15th February
The Eurozone debt crisis continues to dominate the news. Greece, after much deliberation, finally approved a controversial package of austerity measures fulfilling their requirements of their bailout deal. However European officials and the markets remain far from convinced. European officials are calling for the Greek government to do more while Moody’s have downgraded the credit rating of 6 European countries leaving the markets nervous. But China has promised to step in and help by investing in the EU bailout fund. You can find the latest news and analysis on the Eurozone crisis on the BBC.
Barack Obama announced his budget for the US economy in the fiscal year 2012-13. The major proposals include an increase in the tax rate for millionaires, closing tax loopholes for oil, gas and coal companies and increased investment in infrastructure projects. The Economist provides an in-depth analysis of the Budget Proposal here. The American President has also had talks with Xi Jinping, the future Chinese Premier, with trade issues being a major focus. The full story can be read at the New York Times.
Over in Asia, the Bank of Japan surprisingly loosened their monetary stance in an attempt to spur growth. The central bank also cut their inflation target to 1%. While in India, inflation hit its lowest level in 2 years as food prices fall, raising the possibility of a rate cut. But the spotlight is on tax havens with the Indian Central Bureau estimating that around $500 billion of Indian money is deposited in foreign accounts around the world. In particular, there has been a strong of flow of funds to Mauritius, Switzerland, Lichtenstein and the British Virgin Islands. Full story at Times of India.
In Dubai, high set up and financing costs are holding back the formation of small and medium enterprises (SMEs). Despite this, the number of new businesses in Dubai increased by nearly 4% last year. You can read more on the National. To find, out more about setting up a business in Dubai check out our website.
And finally Singapore remains one of the world’s most expensive cities . A strong Singapore dollar combined with rising home prices has meant that Singapore is now the world’s 9th most expensive city. The city-state was ranked 97th in 2001 and the surge up the rankings is a reflection of Singapore’s increased prominence in the global economy. You can read the full story on the Wall Street Journal.
Healy Consultants blog
News summary – Feb 7
The uncertainty surrounding Europe's debt crisis continue to hinder markets worldwide. Major indices in Europe and US edged lower on Monday as Greek leaders try to reach an agreement on a rescue passage. Read more here.
Chinese shares have fallen with the prospect of slower economic growth. The IMF, in a report on China's outlook, highlighted their vulnerability to global demand and estimated Chinese growth could fall by as much as 4% in an extreme downside scenario. In light of this negative outlook, China is trying to attract more investment by changing its strategies with Yuan. E Fund Management, one of the China's largest asset managers, has given Hong Kong investors the option of investing Yuan directly in mainland stocks and options for the first time. Read more at the BBC.
Similarly Hong Kong is opening up as well with Chinese regulators accepting an application for an ETF (exchange traded fund) linked to Hong Kong shares. Full story at Market Watch.
Global growth concerns are having little impact on Indonesia, which grew by 6.5% in 2011, a 15 year high. Unlike other Asian economies, Indonesia is not heavily reliant on exports to the EU and US. Growth was driven by robust domestic consumption and increased investment. With strong growth and the recent upgrade of Indonesia's debt rating, a confident government is even considering a re-denomination of the local currency (rupiah). Indonesia company registration, which allows 100% foreign ownership, has potential for being an attractive strategy for entrepreneurs wanting to incorporate in Asia. Read more here.
Australia home loan holders would be disappointed after the Reserve Bank of Australia surprised the market by leaving rates unchanged at 4.25%. Part of the resulting effect was to cause the Australian dollar to climb to a 6-month high. Analysts had expected cut of 1/4% due to global growth concerns and a low inflation environment. Read more on ninemsn.
Healy Consultants blog
Offshore Investing – Why Is It Underutilised?
There are many stigmas attached to the ideas of international, or offshore corporate bank accounts, as well as offshore companies. Basically, this refers to the practice of investing assets or setting up a company in a jurisdiction other than your place of residence, hence the term ‘offshore’. The truth is that offshore banking and offshore company formation are legitimate strategies if done correctly in respect to the laws of the investment jurisdiction and laws of person’s, or company’s, resident jurisdiction.
Unfortunately what most people see are stories in the media about cases in which these financial tools have been misused for things such as tax evasion and money laundering, and so the result is a perception that these strategies are not an option. Without international markets, the majority of businesses today would not exist. Globalisation and technology means international business operations are not just for large multinational companies. Entrepreneurs and small business can just as easily take advantage of offshore opportunities to maximise efficiencies.
Continue reading more about some of the reasons why investing offshore is often underutilized.....