Hong Kong Vs Singapore, where is an ideal place for starting a business?

In Asia market, the city of Hong Kong and Singapore are two potential destinations for doing

business. Hong Kong has its own uniqueness, language, culture, and opportunity, as well as

its own legal system, which is very different from the mainland China government. On top of

that, Hong Kong holds a top position in Asia’s economy attracting many entrepreneurs and

businesses that open and expand their operations in the region.

Singapore, on the other hand, has an international legal system and it is a vibrant country

that is also famous as an Asian central of economy and finance. Compared to Hong Kong,

both countries have a tremendous financial hub, and banking system that provides such a

great opportunity for starting businesses.

1. Ease of business

Singapore versus Hong Kong has its own pro and cons, advantages and drawback

for starting a business

Hong Kong

According to The World Bank, Hong Kong is one of the most open economies in

Asia, ranked the 3rd after Singapore in terms of ease of business. Hong Kong

government open a great opportunity for ners foreigo buy property, hire employees,

and do business in Hong Kong. To encourage investment, they offer low taxes, fast

processes, and reduced regulation.

Singapore

Singapore is ranked 2nd in The World Bank which is higher than Hong Kong, as well

as, an incredible option for business to kick-start their investment. Singapore's

government supports small businesses by offering not only subsidies but also tax

breaks. However, compared to Hong Kong, the regulations of Singapore are stricter

and take longer to process.

According to Bertrand T 2023, Hong Kong is well-known for its free imports and

exports duty-free. While Singapore is famous for being a global trade gateway and

an offshore banking center for foreign investors with affordable financing and easy

export across ASEAN borders.

2. Business incorporation

Hong Kong

Opening a business in Hong Kong is fairly simple due to the open regulation, you do

not need to register anything with the government, also, extra fees are not required.

You also need to assign a director, they don’t necessarily have to be Hong Kong

residents but have to live in Hong Kong for at least 6 months and prepare all the

documents including a passport, proof of residency, and two personal references.

However, you will still need to fill out some paperwork before you can officially

incorporate it. Compared to Singapore, it is easier to set up a new business.

Singapore

On the other hand, it is pretty straightforward to incorporate a business in Singapore.

The procedure is not complicated, the same as in Hong Kong, you need a valid

passport, proof that you reside in Singapore, and three personal references. Besides,

both countries require a director, in particular, a business opening in Singapore

needs to hire a company director who has resided in Singapore for at least one year.

You also need to sign a power of attorney document, giving them the authority to act

on your behalf.

Comparing Hong Kong and Singapore, Hong Kong proposes speedy incorporation, a

simple process, and affordable costs for start-up companies. While Singapore offers

a faster process taking less than a week and has minimal capital requirements and

flexible legal frameworks.

3. Banking infrastructure

For a business, a strong banking infrastructure plays an important role to help

businesses flourish and develop, a system that provides a smooth and effortless

financial service. Both Hong Kong and Singapore have first-class banking facilities.

Hong Kong

The banking system in Hong Kong is advanced and supportive for any start-up

business that plans to operate in Hong Kong. It is straightforward and has a network

of connections with many international banks that is reliable and has competitive

foreign exchange rates and efficient wire transfer services. However, Hong Kong is

also known for its tricky procedures for non-residents to open an account.

Singapore

Compared to Hong Kong, the banking system in Singapore is nearly identical to

Hong Kong, it is well-developed and famously reliable. With a new business, opening

a bank account in a city-state is usually low risk which means hassle-free and

worry-free, direct access to multiple and various financial services including

multi-currency accounts and efficient international wire transfers. In both territories,

the bank requires an in-person interview with directors that will take about two to four

weeks to process.

4. Corporate taxation

Hong Kong

This can be seen as the greatest advantage for doing business in Hong Kong,

especially for a start-up, corporate taxes in Hong Kong is technically 0% for any

businesses conducted outside Hong Kong’s borders. For business activities done

within Hong Kong territory, 16.5% of taxes will be charged. The offset of this taxation

is you would not be charged VAT or Foreign Exchange Controls in place for

businesses in Hong Kong.

Singapore

In the same category, Singapore taxation is slightly different in the taxes rate, it is

negligibly 0.5% higher than Hong Kong. Nevertheless, the good news is companies

that operated in Singapore don’t be asked to pay for their income tax on their foreign

earnings, just like Hong Kong.

Final Thoughts

Choosing Hong Kong or Singapore for starting a business eventually depends on the

objectives, goals, and specific requirements. Both countries have their own advantages and

disadvantages, both have diverse services and opportunities for different business sectors.

By providing these valuable elements and comparisons above, you can consider which one

is suitable for your long-term business goals in a promising and vibrant area like Asia.