by: Mark Lazell
The global recession has created financial market turmoil, which has
led to severely depreciated real estate and financial assets, with
huge values being wiped off stock markets on a consistent basis since
2008. According to the Asian Development Bank (ADB), the financial
crisis wiped $50 trillion off the value of financial assets during
2008. Approximately 20% of those losses were in developing Asia, which
is equivalent to one year's GDP.
The success and rapid expansion of Asian nations over recent years has
meant Asian developing economies have been impacted more than other
parts of the developing world by the global nature of the recession.
However, the strength of many Asian economies and the lessons learnt
from the 1997 financial crisis position Asia as a region that could
emerge from the recession before western nations.
Financial and economic industry experts agree that Asia's stronger
economies, banking confidentiality laws and pro-business incentives
are driving capital flows eastward. The combination of severe economic
downturn and the increased scrutiny being placed on the traditional
'tax havens' of the world are providing an advantage to the strong
markets within Asia. Two key, distinct factors are evident in this
shift.
Emerging markets
Some of the biggest economic growth rates lie in Asia. China, which
has recently become the world's 3rd largest economy, has had annual
economic growth averaging 9% for many years. Of the G-20 nations,
India has the second highest GDP growth rate (following China).
Aidan Healy, managing director of Singapore-based Healy Consultants,
agrees that incorporating a company in Asian markets including China,
India, Singapore and Hong Kong provide immense opportunity for
entrepreneurs, but while regulations and bureaucracy are easing, much
still needs to be addressed.
"The business cultures and legal frameworks are hugely different in
emerging markets. In some cases company incorporation is still a
cumbersome procedure which requires expert knowledge," he explains.
These factors clearly work to the advantage of Singapore incorporation
and Hong Kong incorporation. Hong Kong is a natural gateway into
China, while Singapore is busy promoting itself as the regional hub of
choice.
Both economies consistently rank as the world's freest. In its 2009
Index of Economic Freedom, US-based The Heritage Foundation places
Hong Kong and Singapore as first and second in terms of economic
freedom. Hong Kong has a record of openness to global trade and
investment. While Singapore has a relatively small economy, it's
openness to international business and investment means undertaking
Singapore incorporation gives access to one of the world's most
competitive economies.
The report praises the two city-states' policies on inward foreign
investment. "Singapore is a world leader in most facets of economic
freedom. Regulations are straightforward, virtually all commercial
operations are performed with transparency and speed, and corruption
is almost nonexistent," it explains.
According to Singapore's Economic Development Board, the government
agency tasked with attracting overseas businesses to incorporate in
Singapore, the country ranks highly in miscellaneous global surveys.
The World Economic Forums' Global Competitiveness Report 2008-2009
ranked Singapore as the fifth-most competitive economy in the world
and the most competitive in Asia.
In another global report, the World Bank's Doing Business 2008 Survey,
Singapore is listed as the world's easiest place to do business.
Factors considered in the survey include company incorporation
procedures, time, cost and the minimum capital required for Singapore
company formation.
Illustrating the benefits of Hong Kong company incorporation, the
Heritage report says, " The small island is one of the world's leading
financial centers, and regulation of banking and financial services is
transparent and efficient."
Both Hong Kong and Singapore have extremely competitive tax systems.
Whether considering personal or corporate implications, the tax burden
is low in both markets.
Singapore company incorporation and Hong Kong company incorporation
appeal to investors and entrepreneurs looking for a reputable
tax-efficient corporate vehicle to conduct international business.
"Everyone wants to be in Asia at the moment. It's fashionable, and
profitable," Healy says.
'Tax haven' stigma
Another key factor in the capital shift has been the increased
attention from Governments directed at the practice of using tax
havens to evade tax obligations. Not long ago, Switzerland was the
world's quintessential private banking center. And although in some
eyes it still is - after all, its banks still hold an estimated 30% of
global offshore assets - its mantle is rapidly being taken over by the
likes of Singapore and Hong Kong.
What caused this eastward transition? A major factor is this clampdown
on tax evasion and money laundering by the European Union and
Organization for Economic Cooperation and Development, which have been
applying ever more pressure on traditional tax havens, to disclose
information about their account holders. The importance of this issue
is illustrated by the fact it was part of the agenda during the G-20
summit in April.
The OECD has praised Singapore and Hong Kong for recent concessions on
tax evasion. Singapore will endorse the OECD standard to assist with
effective exchange of information. Hong Kong will also make amendments
to its tax laws.
Following the OECD standards for exchange of financial information
should not be the end of banking privacy nor should it have a negative
impact on Singapore or Hong Kong's reputation as an efficient
jurisdiction for company incorporation. Avoiding the tax-haven stigma
is critical to maintain the appeal of Singapore and Hong Kong to both
multinational corporations (MNCs), and small to medium enterprise
(SMEs).
"I'm not surprised by the increased capital flows to Asia from
Europe," Healy says. "The proof is that Asia has been booming - we've
noticed a huge increase in demand for Singapore and Hong Kong company
incorporation, corporate and personal bank accounts in Singapore and
Hong Kong, and China is also on the increase."
Banking officials clearly agree with the positive sentiment. A
chairman of one Swiss bank has said a Singapore office for the bank
represented "a platform of growth in Asia". Another banking executive
believes "Singapore will be the fastest-growing offshore banking
center over the next five years".
Healy also believes that international investors and entrepreneurs
prefer the positive image presented by Singapore and Hong Kong to the
tax-haven image of some western offshore jurisdictions.
"The bottom line is this: Singapore and Hong Kong are built on
internationally respected economic models and legal frameworks," says
Healy. "The image they present is unrivaled in tax-free
jurisdictions," he adds. "A Singapore company can be tax-free, looks
good to customers and suppliers, and has absolutely no stigma attached
to it."
"Both countries have also signed [double-taxation] treaties with more
than 50 countries, have laid down investment guarantees, and [their]
banks offer highly competitive corporate financing, generally without
seeking equity," he says.
As well as the business benefits of Singapore and Hong Kong company
incorporation, there's a human angle to the tale. The 2008 Quality of
Living Survey, produced by Mercer Human Resource Consulting in April,
ranked Singapore as the most livable city in Asia, and 32nd out of the
215 international cities covered in the survey. Hong Kong comes in at
70th in the world, while China's Beijing comes in at 116th in the
world. Singapore is the region leader in personal safety.
"Singapore really is the focal point of corporate and financial
activity in Asia, and should remain so for the foreseeable future,"
Healy concludes.
Healy Consultants is an experienced corporate services consultancy.
Headquartered in Singapore, the firm provides advice to a broad range
of the international clients on all aspects of Asia business setup.
Currently, popular engagement requests are for services related to:
- Tax efficient financial structures
- Singapore company incorporation
- Hong Kong company incorporation
- International tax planning
- International banking
- Business turnaround services
- Global recession opportunities
http://www.healyconsultants.com
About The Author
Mark Lazell is a PR and marketing specialist and freelance journalist
with working knowledge and experience of the offshore financial
industry in the Middle East and Asia-Pacific regions.
No comments:
Post a Comment