There is no secret of the tumultuous times in Hong Kong right now. Almost one third of the Hong Kong population has protested in the streets, fighting against the proposed Chinese extradition bill.
Tear gas, arrests, and injuries, as well as the constant fear of an escalating Chinese crackdown looms large. That sort of chaos seems unfathomable to most Singaporeans, who value order and peace above all.
Singapore and Hong Kong have long shared a kinship based on being ex-British colonies, as well as diverse, bustling financial centres of Asia. As a result of this, the Singapore government has declared no intent to exploit the current misfortune of Hong Kong.
Law and Home Affairs Minister K. Shanmugam has said, “We benefit from stability across the region, including Hong Kong. If China does well, Hong Kong does well, the region does well, we do well. There’s no profit in seeing instability. And if Hong Kong is at odds with China, it’s a problem for everyone, including us.”
Unfortunately, the markets are beginning to speak for themselves.
There is already a shift to the safety of Singapore
There are rumblings of a shift of capital from Hong Kong to Singapore amidst the current tension and uncertainty.
From Tara Joseph, president of the American Chamber of Commerce in Hong Kong, “The real concern here, which we’ve seen slight signs of, is that people are moving their companies and their money in greater numbers to Singapore.”
One Hong Kong tycoon has already shifted over $100m from Hong Kong to Singapore, and several private banks have reported a trend of a shift of wealth out of Hong Kong.
What are the risks for businesses in Hong Kong?
If China succeeds in passing their extradition bill, it won’t just affect native Hongkongers but foreign nationals too.
In this scenario, Beijing will claim jurisdiction in cases where anyone commits a crime in Hong Kong, including foreigners.
The term ‘crime’ is a loose one.
Given Beijing’s notoriety for harsh enforcement with high discretion, this is a genuinely concerning prospect for any foreigner operating out of Hong Kong.
If you or your family is seen to have different political views from the Mainland, you may well be targeted.
If your company holds intellectual property that Beijing deems a threat, they may regulate you out of operation.
This may sound like fear mongering, but it is a real possibility that all Hong Kong businesses must be considering right now.
And it’s not just foreigners that will be scared away, but Chinese resident investors too. Notably, Mainland China will be able to collect income and asset data of Chinese residents in Hong Kong, motivating them to move their wealth offshore.
The United States may also decide to remove the special independent status that Hong Kong has, which will mean they will have the same tariffs and customs that Mainland China has. Reducing trade from the largest economy in the world would have dire effects for Hong Kong.
These collective fears almost seem overwhelming and could lead to total economic disarray for Hong Kong.
Singapore’s role in the region
If Hong Kong is to lose its identity as an economic force in the region, Singapore needs to continue, and even step up its role as a safe haven for investors looking for stability and prosperity.
It is Singapore’s responsibility to continue to be a beacon of steadiness and success in the region, and embrace any business looking for refuge from the instability from Hong Kong.
The advantages of operating out of Singapore are clear:
How would a company move to Singapore?
As you might expect of a country with Singapore’s reputation, the incorporation process can be relatively simple — however, with all things business, it’s best to have an expert onboard.
Singapore company incorporation specialists Rikvin (an InCorp Group) have seen an influx of Hong Kong-based companies looking to move to Singapore, and have already started to assist some in moving forward with the process.
Eric Chin, Group Head - Business Development of InCorp Group says, “Our latest clients want to ensure they are based in a politically and economically stable location that appeals to consumers and investors, and Singapore is the obvious answer for them. Thankfully, incorporating a new company or deciding to set up a subsidiary in Singapore is simple, with minimal paperwork that can be done within a day if all documents are in order. Noteworthy, depending on the situation of the companies (be it large corporates, start-ups or SMEs), we will be able to advise further to ensure our clients’ long term objectives can met post shifting to Singapore.”
It’s that sort of economic freedom that will keep Singapore in fine stead for a long time to come. Whilst we wish Hong Kong a safe and speedy recovery to normality, Singapore will keep their arms open for those looking for certainty and sure-footedness in worrying times.
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 Hongkong Business. The author was not remunerated for this article.
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Satish Bakhda is the Chief Operating Officer at Rikvin. He brings with him over 15 years of experience in the corporate services industry and is a regular speaker at marketing events around the world. He is also a consultant on matters relating to incorporation, relocation, accounting and taxation in Singapore.