Hong Kong has taken a series of unfavourable hits in the last year, their unfortunate magnitude clear to see for the watching eyes of the world. The latest of which is United States Secretary of State Mike Pompeo publicly stating that the country no longer considers Hong Kong to be adequately independent from China.
Whilst just a statement at this stage, sadly there will almost certainly be ramifications for Hong Kong’s reputation as a global investment bridge between East and West. The world’s two biggest superpowers are playing geopolitical chess, and Hong Kong is in danger of being an involuntary pawn on the board.
Looking from the relative stability here in Singapore, It’s a real shame for Hong Kong on many levels. Singapore and Hong Kong have long shared a connection as the two places to be in Asia for foreign investment, and it has been difficult to watch Hong Kong slide from its once proud position as the freest economy in the world.
It’s that declining freedom, most recently in the form of China’s national security law, that has caused the US to publicly state it is not satisfied with Hong Kong’s ability to remain independent from Chinese rule.
Whilst I doubt much will change in the immediate future, the US may have to treat Hong Kong as part of the Chinese Mainland, rather than an independent region. Among other things, this will mean that the US will revoke Hong Kong’s special status afforded to them in 1992, which has allowed them to bypass tariffs put on the Mainland.
China has already threatened to “take strong countermeasures” if the US is considered to be interfering with its sovereignty, and so the tumult would only grow stronger from there. China will want its preferred form of near-total autonomy over the Hong Kong economy, and foreign business may be regulated and controlled accordingly.
We have to remember too, that Hong Kong will be hurt most of all out of the three parties, whilst the much larger and battle-hardened US and China continue their economic and political wrestle. For China, capital of the political variety in Hong Kong is far more important than the economic capital.
This will surely make the 9,000 foreign companies in Hong Kong justifiably nervous, as the inherent advantages of accessing the Chinese Mainland through Hong Kong start to slip away.
Hong Kong’s Hang Seng Index (HSI) echoed that fear almost immediately after China’s announcement of the national security law, enduring its worst day since 2015. If the US actions start to mirror their statements, I can only assume things will get worse.
However we cannot ignore the reality of Hong Kong’s loosening grasp of its own destiny — businesses will surely be looking for alternative safe haven in the region in the future.
I believe Singapore must continue to step up to support businesses in the region, and provide refuge for any business compelled to relocate. High networth families who are keen to diversify their wealth will be well supported by the mature and highly trustable banking and wealth management platforms in Singapore.
We have the capacity, and we have the infrastructure. Singapore is the number two nation on earth to do business with according to the World Bank. We are the most competitive country in the world according to IMD Business School. We are ranked number one in the 2015 OECD Global Education Report. Not to mention, Singapore is just a superb place to live.
Many of the businesses we’ve helped move into Singapore are putting more and more emphasis on the need for political and social stability, and that’s something Singapore can be very proud to offer. Also, we cannot ignore the fact that Singapore remains an attractive financial hub in Asia due to many reasons other than political stability.
Whilst we all hope for the best for Hong Kong’s future, I know Singapore will be waiting and willing to embrace any business that is looking for safe harbour.
As the business environment has highly transformed in Singapore, the incorporation process is smooth and *foreigners can look forward to setting up businesses here in a matter of a few hours, if all documents are in place. Whilst there are many types of business structures available, here are the basic requirements of setting up a Private Limited Company (most common) in Singapore:
Image Credit: incorp.asia
*Foreigners setting up a company in Singapore, are required to engage a corporate service provider to assist with the process.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Eric is the Chief Business Development Officer (CBDO) of InCorp Group. He provides consultancy to local and foreign entities on the ideal market-entry strategies for setting up or expanding operations in Southeast Asia.
Before joining InCorp, he was the Senior Vice President and Team Lead of the International Subsidiaries Banking division of HSBC and OCBC.
An ex-corporate banker for more than 11 years, he has extensive experience in working with companies of different sizes: tech startups, scaleups, international SMEs, and multinational corporations in Singapore and the rest of the world.
At present, Eric regularly participates as a guest speaker in business forums sponsored or organised by the Singaporean government or by InCorp’s corporate partners. He also participates as an advisor in mentorship programs for tech startups in Singapore.