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
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.....
Healy Consultants blog
The Fight Against Improper Use Of Offshore Banking
The United States Internal Revenue Service (IRS) is again starting a ‘voluntary disclosure program’ intended to reveal hidden offshore bank accounts and assets. Those who chose to participate in the program will be asked to pay as much as 27.5% in taxes. Interesting that the tax rate has increased from 22.5% in 2009 to 25% in 2011 and now the 27.5%.
On the previous occasions, the program yielded US$3.9 billion and US$1 billion, respectively, with more than 33,000 disclosures being made.
The program is part of the IRS’s ongoing efforts to reduce and prevent tax evasion. The government agency has also prosecuted clients of banks and financial institutions such as UBS and HSBC, and charged bankers and advisors who helped clients conceal their assets.
This program of fighting tax evasion is not new and is also a goal of the Organisation for Economic Cooperation and Development (OECD). The OECD promotes policies aimed at being universally recognized and implemented globally and hence contribute to improvements in fairness and social wellbeing of people around the world.
One such policy is related to the disclosure of financial and bank account information. The OECD has been successful in encouraging jurisdictions around the world to agree to implement the internationally recognized guidelines for disclosure of information related to financial accounts. Due to their efforts, there are now no jurisdictions on the OECD ‘black list’ that once included a number of traditional tax haven markets.
Despite the publicity gained through such initiatives by the OECD and the US government, illegal activity via the use of offshore banking and offshore companies is few and far between. The practice of setting up offshore bank accounts and offshore company registration is not illegal. If structured properly and all laws of the home jurisdiction as well as the jurisdiction where the account/company is set up are followed, offshore investment strategies can be an effective way to grow personal assets and expand business operations.
More information about offshore incorporation and offshore banking can be found on Healy Consultants website. Or send us an email with some details about your business and investments to see how our firm can assist.
Healy Consultants blog
News Review – 19 December
The Shine Is Off Asian Properties
From WSJ.com
Real-estate prices are falling across much of Asia as government measures to rein in once-booming prices start to bite and the slowing global economy hits export-dependent economies.
Markets such as Beijing, Hong Kong, Singapore and Sydney are all seeing outright price declines, while prices are flat in Seoul. In smaller markets, prices are flat in Bangkok and Kuala Lumpur. In Japan, land prices are down for the 20th consecutive year.
More than 100,000 new residential units in Singapore are expected to be completed in the next three years, according to Standard Chartered analysts. The construction boom comes as prices have risen 70% in the past five years, prompting the government to impose taxes on sales to foreigners or on locals buying multiple units. Foreigners, mostly Chinese, Indonesian, Malaysian and Indian, made up 36% of all new-home sales so far this year.
Read more of the article here - WSJ.com
Russia Pledges to Support Euro Zone
From WSJ.com
Russia on Thursday became the first international heavyweight to promise extra financial support for the euro zone's latest rescue plan, but political opposition elsewhere still makes it difficult to put enough money together to fund bailouts for Italy and Spain, if needed.
Read more of the article here - WSJ.com
Indonesian Credit Rating Raised Above Junk Level
From WSJ.com
Fitch Ratings lifted Indonesia's sovereign credit rating to investment grade for the first time in more than a decade, in a move expected to trigger more investment in Southeast Asia's largest economy.
Read more of the article here - WSJ.com
China May Appoint Yuan Clearing Bank in Singapore, Deutsche Says
From Businessweek
The People’s Bank of China may let Singapore host a yuan-clearing bank, which will make it the second place after Hong Kong outside of the mainland to have one, according to Deutsche Bank AG.
The amount of China’s overseas trade settled in yuan will probably rise to 2 trillion yuan ($314 billion) this year from 506 billion yuan in 2010, the bank said in a note dated Dec. 13. Hong Kong banks handled 1.49 trillion yuan of this in the first 10 months of 2011, more than double last year, it said.
Read more of the article here - Businessweek
Healy Consultants blog
Private Placement Life Insurance: Tax-free choice for offshore investment
From our friends at Invest Offshore
The American dream. That picture will look slightly different to everyone, but the end result is often the same. Grow up, land a dream job straight out of high school, marry the man or woman of your dreams, use the money from your dream job to buy a cottage or a beach house and spend your days relishing in your happiness and success. And then get taxed for it.
Something happened to that picture, didn’t it?
Americans have placed a high value on a strong work ethic. The country was founded on the backs of men and women who worked tirelessly to build a nation of prosperity, and that same drive lives on hundreds of years later. It’s that work ethic that also values reaping rewards of work efforts. Paychecks, summer bonuses, stock investments, etc., are all consolation prizes for a job well done. So, naturally, people want to protect what they’ve earned.
In years past, those chasing the American dream have ventured outside of United States to secure their assets; offshore bank accounts have stepped outside the fantasies of James Bond movies and into the common household financial plans of America. Securing funds overseas created a tax-free way to accrue interest on hard-earned money.
In 2010, however, the Foreign Account Tax Compliance Act was enacted, causing U.S. taxpayers with offshore bank and investment accounts to be taxed on their overseas assets. In an effort to cut back on the ever-present tax evasion problem, U.S. investors and taxpayers were stripped of a large percentage (often over 36%) of their earnings.
That’s where Private Placement Life Insurance comes in.
Private Placement Life Insurance is a means of investing that same hard-earned money in a tax-free manner. By purchasing a mutual or hedge fund within an insurance policy, individuals are able to continue to collect interest on an investment while not having to claim the investment to the IRS. Because the investment lives inside of an insurance policy, which is never taxed, Private Placement Life Insurance is helps to insure a life and grow an investment, simultaneously.
With new changes to offshore investment structures taking place within Washington, D.C., at the moment, Private Placement Life Insurance is looking like a more appealing option with each passing day. For those building up their estate plan, Private Placement Life Insurance is also a great option. Not only is the offshore investment tax free for the planner, but the beneficiary receives the cash value completely tax free as well. Tax free investment for you and your heirs? Seems like a win-win situation.
No matter what stage of life you’re in, Private Placement Life Insurance is an effective way to management your assets and investments.