Compare HK to Singapore 2

Singapore and Hong Kong have been competing for decades to gain dominance as Asia’s ‘Best Place to Do Business’. Both the regions have been luring foreign investors with their tax friendly policies, easy company incorporation procedures and excellent infrastructure, amongst several other factors. Hong Kong has a longer history as a centre for business but Singapore has fast caught up undermining Hong Kong’s dominance in the region. Singapore has been quick and nimble to adopt business friendly policies that continue to attract bulk of the foreign investors to establish their Asian presence on its shores.

There is no clear cut and definitive black-and-white answer to the question of which jurisdiction is currently more attractive. It is a highly competitive landscape and some investors choose Singapore, driven by lifestyle reasons or by the strength of infrastructure and the quality of service providers. Some choose Hong Kong mainly to tap into the greater Chinese and North Asian markets. Smaller businesses often choose Singapore as it offers more attractive tax benefits and lower cost environment when compared to its rival.

This article examines the advantages and challenges of setting up business operations in the two jurisdictions namely Singapore and Hong Kong, taking into consideration factors like location, political climate, economic environment, legal landscape, taxation policies, workforce productivity, quality of life, infrastructure set-up and the overall ease of doing business.

Location

• Both Singapore and Hong Kong are strategically located at the heart of the Asian continent, with most Asian countries accessible within a five to seven hours flight radius. However, if you need to tap into the Mainland Chinese market you will find that Hong Kong is perfectly situated on the southeast coast of Mainland China, flanking the mouth of the Pearl River Delta. With Hong Kong as your base, you can travel back and forth to Beijing, Shanghai and other major Chinese cities in a single day.
• Singapore’s Changi Airport and The Hong Kong International Airport are considered the best in the world and provide you easy access to major cities in the Asia Pacific, North America, Europe and the Middle East. Singapore is also home to the busiest port in the world and having the most extensive international port connections makes Singapore the top docking destination for trade. On the other hand, Hong Kong is confined to being a focal point of all maritime activities in southern China. In recent years Singapore has surpassed Hong Kong as the world’s busiest container port.

Ease of doing business

• Singapore and Hong Kong are renowned for being easy places to set up businesses. You may open your company in approximately three working days in both Singapore and Hong Kong. Infrastructure facilities such as business premises are easily available. There are strict regulations regarding intellectual property protection and various dispute resolution channels are available. The simple and business friendly tax system draws foreign investors to both the countries. An open immigration policy with appropriate work visa provisions facilitates the relocation of foreigners who wish to set up business in Singapore or Hong Kong.
• Both the countries often vie with each other in rankings regarding the ease of doing business. In this regard Singapore stands out overall and is ranked as the best place in the world to do business in the World Bank’s “Doing Business 2012″ report. In both economies, it takes only 3 procedures and 1-3 days to incorporate a business. However, Singapore fares much better when it comes to trading across borders (1 vs. HK’s 2), registering a property (14 vs. HK’s 57) and resolving insolvency. (2 vs. HK’s 16). Compared to the Asian region’s 7 procedures and 38 days, it is no surprise that Singapore and Hong Kong are ranked highly.

Ranking Category	Singapore’s Ranking	Hong Kong’s Ranking	Source
World’s easiest place to do business	1	2	World Bank Report: Doing business 2012
Most Competitive Economy	2	11	World Economic Forum’s Global Competitiveness Report 2011–2012
Ease of Paying Taxes	4	3	PWC Paying Taxes 2011
Openness to Trade	1	2	World Economic Forum’s Global Enabling Trade Index 2010
Most Competitive Economy	3	1	2011 IMD, World Competitiveness Yearbook
World’s Freest Economy	2	1	Heritage Foundation’s Index of Economic Freedom

Quality of Life

• While Singapore and Hong Kong score more or less the same on most of the parameters, Singapore really edges out in the quality of life factor. Singapore is considered an easier place to adapt to when relocating from elsewhere. The social and ethnic fabric is a unique blend of cultures and people rendering a cosmopolitan lifestyle. The city is considered modern and westernised and English is widely spoken on the island. Hong Kong’s population however is predominantly Chinese and Mandarin or Cantonese continue to remain the common language of communication.
• Expatriates continue to cite safety as one of the most attractive features of living in Singapore and it records the lowest crime rates in the world. According to a survey by Mercer Human Resource Consulting, 2010, Singapore tops the Asia-Pacific list of cities for ‘Quality of Living’.
• Singapore’s population enjoys one of the highest levels of health and nutrition in Asia. Singapore promotes a clean, green and healthy environment, free from traffic congestion. According to the National Environment Agency, air quality in terms of Pollutant Standard Index (PSI) was good on 93% of the days in 2010 and moderate on 7% of the days. Hong Kong on the other hand experiences a high level of air pollution and traffic congestion. Executives have been relocating to Singapore because the air pollution is either causing health problems for them or for their families.
• When it comes to food, Singapore follows urban living standards of both east and west. Hong Kong is commonly cited as the food capital of China and every Chinese regional cuisine is celebrated here. Eating out is a common activity in Singapore and is considered pocket-friendly when compared to its rival Hong Kong.
• Singapore offers expatriates a wide variety of accommodation options to cater to all types of needs, preferences and budgets. Rentals are still considered affordable when compared to other major developed cities. In Hong Kong you will find that residential rentals are much more expensive than in Singapore and are considered in line with those in major international cities such as London and New York.
• A common encumbrance cited by some expatriates is that the cost of living is much higher in Singapore when compared to Hong Kong. However, many of them still prefer Singapore for the opportunities it offers.
• Although Singapore and Hong Kong have both established world-class health facilities, excellent infrastructure, efficient transport systems and international schools/universities to cater to the expatriate community, Hong Kong expats earn less than Singapore expats, according to a 2011 report by ECA International, a company that researches living conditions in the world’s top cities for corporations. It is now in a category where businesses should think about paying more allowances to employees.