SINGAPORE & HONG KONG: FROM A COMPANY PERSPECTIVE

Does this sound familiar?  I am committed to expanding my business overseas, I read a lot about emerging markets and Asian economies but am not comfortable with the knowledge I have about this region.

This feeling is not uncommon, most small businesses (and many large ones) start out with some hesitation on the part of those responsible for the investment.  The successful companies are likely the ones that have undertaken the necessary research and planning before executing the company registration.

As company incorporation specialists, our firm has seen entrepreneurs succeed but also seen entrepreneurs fail.  Preparation is a key aspect of business expansion as it sets the platform for your business and helps guide your future success.  The steps in preparing for setting up a company in an offshore market can include:

-       Create a comprehensive business plan, including objectives for the company, researching jurisdiction options, market analysis for your industry in the region you intend to operate.

-       Sourcing the assistance of an experienced company incorporation agent.

-       Developing an execution plan for required company formation processes.

In recent years, Asia has drawn significant attention as a key region for international business, and as a result, huge volumes of foreign investment. This investment has been driven by giant economies of China and India. However, there are other emerging markets within Asia that offer entrepreneurs potentially lucrative opportunities.  For example, Vietnam has expectations of becoming an industrial powerhouse in the next ten years. 

Two options in Asia that offer a diversity of benefits are Singapore company formation and Hong Kong company formation.  Both jurisdictions are respected international business hubs with world-class infrastructure and facilities while being ideally located to give easy access to other south, south-east and north Asia markets. 

Various international business surveys support Singapore and Hong Kong as being advantageous jurisdictions to choose for company formation.  HK and Singapore are ranked number 1 and 2 in the Heritage Foundation’s Index of Economic Freedom, which measures freedom enjoyed within business, trade, monetary, financial, investment and labour markets.  IMD ranks Hong Kong and Singapore as 1 and 3 in their World Competitiveness Scoreboard. These acknowledgements don’t guarantee a company its success but they do provide reassurance for someone choosing a jurisdiction in which to base their company.  Financial and economic industry experts agree that the strengths of Singapore and Hong Kong such as legitimate tax breaks and pro-business incentives are driving capital flows eastward.

Following are some comparisons between Singapore and Hong Kong for key aspects related to setting up a business in these jurisdictions:

-       Both jurisdictions allow 100% foreign ownership of a business entity.

-       Both jurisdictions provide legitimate tax exemption for foreign sourced income, along with other incentives specific to startups.

-       Neither Singapore nor Hong Kong carries any ‘tax haven’ stigma. They are reputable trading jurisdictions, especially in financial services industries.

-       Both jurisdictions take up to approximately 5 weeks to complete company setup, including the opening of a corporate bank account.

-       A Hong Kong company provides a gateway to Mainland China, while a Singapore company is ideal for ASEAN markets.

-       The current corporate tax rate in HK and Singapore is low compared to other international business hubs at 16.5% and 17% respectively.

-       Minimum capital requirements are low at just $1.

-       Both jurisdictions require annual reporting and have a public register of shareholders / directors.

Company incorporation requires planning to effectively build a corporate structure that helps achieve the business objectives. From legal tax minimisation to world-class infrastructure and transport facilities, along with various government incentives, both Singapore and Hong Kong allow entrepreneurs to enjoy benefits that directly contribute to the successful operation of their business. 

So as the saying goes, there is no time like the present.  If you are confident with your knowledge and experience of your industry and you have carried out the required planning and research then you could be missing out on lucrative opportunities by not taking action on your business expansion dreams.  There are many resources and professional consultants to assist with making the process as smooth as possible.