As Asia's top international trade hub, Hong Kong has faced some serious competition in recent years. Although Singapore and Seoul have always been biggest competitors, other countries like Malaysia, Thailand, and Indonesia are now starting to draw attention of entrepreneurs around the world.
It's challenging to take over Hong Kong's key position in Asia.
In its Global Competitiveness Report for 2019, the World Economic Forum (WEF) Hong Kong ranked as having the best financial system in the world, placing it far ahead of its closest rival, the United States.
Due to strict pandemic management, Hong Kong has had very low Covid infection rates over the past ten months, avoided lockdowns, and has remained mainly open for business. Few other major cities, whether in Asia or the world, can make the same claim.
Following the uncertainty caused by Covid in 2020, the number of new Hong Kong firms swiftly increased again, resulting in 110,000 new Hong Kong companies in 2021.
Here are seven factors that, in my opinion, will keep Hong Kong at the top of the list for global trade in 2022:
1. Easy and fast company incorporation process.
In one the articles we compared Hong Kong and Singapore incorporations. Setting up a new company in Hong Kong normally takes seven days. In addition to saving time, opening a business in Hong Kong does not even require physical presence. Application and documents requirements are simple with no limits on foreign directors or shareholders. Aside from saving time and effort, incorporating in Hong Kong is also a financially advantageous choice because there are no minimum share capital requirements and many businesses may be launched with just $1 in share capital.
2. Low tax rates
In Hong Kong, the corporate income tax rate is 16.5%. Low corporate and individual income tax rates have traditionally been a feature of Hong Kong.
Personal income taxes range from 2 to 17%, which is quite modest. Due to the fact that Hong Kong offers expat workers of multinational corporations a significantly higher compensation package than other locations, it is a desirable place for them.
Hong Kong does not impose indirect taxes, such as a goods and services tax (GST) or a value-added tax (VAT).
3. Hong Kong's offers free trade policy.
Hong Kong follows a free trade policy and hence maintains basically no barriers on trade. There is no customs tariff on goods imported into or exported from Hong Kong. Import and export licensing are kept to a minimum.
4. Lack of currency restrictions.
Working in several currencies is almost a given for ambitious firms in our globally linked world. Foreign exchange regulations are absent in Hong Kong, enabling unrestricted payment and receipt of services across the world.
Additionally, Hong Kong makes it simple to utilise foreign currencies in a variety of formal settings. A company's share capital, for instance, may be paid in any significant currency other than the Hong Kong Dollar.
5. World’s financial hub.
Hong Kong, a hub of global finance and investment, is well-stocked with payment services and options to help entrepreneurs handle their money. Multi-currency business accounts are simple to set up and use, saving you a tonne of money when transacting in other currencies by avoiding the need to convert currencies.
Transactions are made considerably simpler by the presence in Hong Kong of many businesses that are based primarily in locations like Shanghai, Shenzhen, or Guangzhou.
6. Business privacy
Hong Kong allows foreign businesses to serve as directors of Hong Kong companies, hence a director of a Hong Kong company need not be a natural person. This enables multinational corporations and business owners to manage their Hong Kong entity without having to reveal their identities in any public documents. To represent the foreign firm and maintain the confidentiality of all personal information, a nominal director may be selected.
Although this information is not publicly available, Hong Kong corporations must continue to report the regulatory authorities about any persons who are substantial controllers of Hong Kong companies.
7. Outstanding global reputation.
Hong Kong is one of the few truly global cities, ranking with New York, London, and Paris. International businesses view companies incorporated in Hong Kong as partners and clients because of the city's longstanding reputation as a business hub.
For businesses headquartered in other regions of Asia like Indonesia, the Philippines, or Thailand, while their prospects are increasing, the same cannot be said for them. In order to conduct their worldwide operations, many Asian companies opt to establish a subsidiary in Hong Kong.
Hong Kong is likely to remain Asia's top international business hub due to its well-established reputation as such, low trade restrictions, and affordable tax and compliance costs. Because of its special geographic position connecting the east and west, Hong Kong is still the best place to expand your business.
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