Business costs are more expensive in the Asian financial centre than the lion city.
Hong Kong trails behind close regional competitor Singapore to snag second place in the top locations for startups in Asia-Pacific, according to a study conducted by ValuePenguin.
Despite strong economic indicators with high GDP per capita of $43,741 and historically low unemployment rates, the cost of doing business in the Asian financial centre is slightly higher than in Singapore. This includes borrowing costs, tax rates and wage costs.
Although Singapore is similarly expensive, it offers tax incentives for startups with exemptions including 75% of the first S$100,000 earned and 50% of the next S$100,000 which makes it more attractive for capital-burdened startups. The list did not note if Hong Kong offered similar packages to incentivise startups to set up shop.
The quality of the workforce in the lion city is also the best in Asia as this metric takes into account the secondary and tertiary education rates. Adults with tertiary education in Hong Kong account for only a fifth (21.7% of the population) but Singapore boasts higher figures at 42.9%.
“Singapore, Korea and Japan are have very well-educated adult populations, which bodes well for startups hiring in these countries,” the report noted, adding that the city-state offers wide access to specialised training services.
However, Hong Kong has Singapore beat in terms of business climate which takes into account businesses’ trust in public institutions, technological development and availability of funding from both public and private sectors. Successful startups produced in Hong Kong include video sharing website 9GAG.
Japan clinches third place in the list as tech startups can find the country a good springboard thanks to comprehensive internet and low interest rates. Taiwan, Malaysia and South Korea occupy the fourth, fifth and sixth spots respectively whilst China, India, Indonesia and Thailand round out the top ten.
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