Fri, Mar 30, 2018 page10

• Singapore says it rivals Hong Kong as hub

  • Bloomberg
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  Hong Kong has become more “China-centric,” enabling Singapore to take the lead when multinational companies look to set up their Asian headquarters in the region, the city-state’s Economic Development Board (EDB) said.

  With Hong Kong becoming more focused since 1997 on servicing the massive Chinese economy, it has given Singapore a leg up as a hub for companies’ Asia-Pacific operations, said Beh Swan Gin (馬宣仁), chairman of the EDB, a government agency that helps attract investment to the city-state.

  “The importance of China to the Hong Kong economy has grown disproportionately,” Beh said in an interview on Tuesday. “If you’re a company that’s thinking about coordinating and managing your activities across Asia, then Hong Kong becomes, I suppose, more and more China-centric and it becomes perhaps less suitable for those activities.”

  About 37,400 international companies base their operations out of Singapore, including 7,000 multinational corporations, with more than half of those running their Asia-Pacific businesses from the city-state, the EDB Web site said.

  “The numbers speak for themselves,” he said. “More companies are now having their APAC headquarters, or at least APAC non-China headquarters, in Singapore.”

  Beh said he sees Hong Kong continuing to “grow in importance,” with companies looking to tap the Chinese market probably considering Hong Kong, along with Shanghai or Beijing, to base those operations.

  Hong Kong is still a leader when it comes to financial activity, boasting the world’s fourth-largest stock market. While Singapore’s is a fraction of the size, it is the largest in Southeast Asia.

  Beh sees Singapore’s lead as a magnet for multinationals continuing to widen as it bills itself as an innovation-led economy, attracting investors with its strong spending on research and development, a still-generous tax regime, and targeted labor laws, he said.

  “We’re a small place — we’ll never be a self-sufficient Silicon Valley that constantly just generates from within,” Beh said. “We believe that we’ll always need to attract industry leaders from outside.”

  Singapore’s government spends the equivalent of about 1 percent of GDP on research and development, while the private sector contributes about 1.3 percent of GDP, Beh said.

  Authorities are focused on raising overall expenditure on research and development (R&D) to about 3 percent of GDP, in line with other small, innovation-focused economies such as Sweden and Switzerland, Beh said.

  Switzerland’s R&D expenditure tallied about 3.4 percent of GDP in 2015, while Sweden’s was at 3.3 percent, Organisation for Economic Co-operation and Development figures showed.

  Businesses scored an extra incentive from Singapore’s budget this year to boost that spending: The tax deduction for R&D project costs and consumables was raised from 150 percent to 250 percent.

  While some firms have reported difficulty in hiring staff amid stricter rules for foreign workers since 2011, Beh said he is confident that the regulations have not hurt Singapore’s competitiveness.
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