SINGAPORE – Singapore and Hong Kong have been named the best and third-best places in the world to do business by an Economist Intelligence Unit (EIU) survey.
Singapore and Hong Kong retained their positions in first and third place from a previous EIU study, which covered the period from 2009 to 2013. The other countries which will now be ranked in the top 5 until 2018 are Switzerland (2nd), Canada (4th), and Australia (5th).
The survey measures the attractiveness of the business environment in 82 locations around the world by “examining ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labor market and infrastructure.”
These categories were specifically chosen in order to accurately reflect the criteria used by companies when deciding whether to do business in a particular location. Each category contains a varying number of indicators, with approximately an even split between quantitative and qualitative data. The survey is based on sources from 2009-2013 and EIU forecasts for 2014-2018.
Singapore and Hong Kong have retained their top rankings due to favorable finance and foreign investment policies. Additionally, competition between East Asian cities in the spheres of manufacturing, logistics and international finance has caused the business environments to flourish.
Singapore and Hong Kong both enjoy low levels of corruption and low-interest rates. In Singapore, the top corporate tax rate is 17 percent and the top individual income tax rate is 20 percent, compared with a top corporate tax rate of 16.5 percent and a standard individual income tax rate of 15 percent in Hong Kong. It is straightforward to start a business in both places, and neither city requires a minimum amount of capital to do so. The average tariff rate is zero percent in both cities.
Hong Kong and Singapore have also been rated highly in other global rankings this year. The latest edition of the Index of Economic Freedom, which is published by The Heritage Foundation and The Wall Street Journal, was released on January 14, 2014. It rated Hong Kong as the world’s freest economy for the 20th consecutive year, with Singapore coming in second place. Hong Kong was applauded for improvements it has made to its regulatory environment, its ability to navigate global booms and busts, and its trade, investment and financial freedoms.
Last week, PricewaterhouseCoopers (PwC) released the sixth edition of its “Cities of Opportunity” report, a comprehensive ranking of the 30 cities around the world that offer the greatest opportunities for both businesses and residents. The two top-ranking Asian cities in the report are Singapore and Hong Kong, which overall took third and eighth places respectively. Singapore, in particular, was applauded for advancing four places since last year’s edition.
Singapore dominated among the 30 cities in terms of transportation and infrastructure, ranking first in this indicator by a large margin. Importantly, Singapore and Hong Kong were rated first and second respectively in terms of ease of doing business. In the “Technology Readiness” category, Hong Kong jumped six places to fourth place this year.
Several other Asian cities also ranked first in key variables, such as Tokyo in “Resolving Insolvency,” Dubai in “Total Corporate Tax Rate,” Beijing in “Rate of Real GDP Growth,” Shanghai in “Attracting FDI,” and Mumbai in “Cost of Living.”
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asia@dezshira.com or visit www.dezshira.com.
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