Hong Kong Shines Bright As Leading Asian Financial Centre

by Mary Swire, Tax-News.com, Hong Kong

06 September 2006

Hong Kong's abundant skilled personnel, robust regulations and extensive access to international markets have established the city as Asia's leading financial centre, according to a study by the territory's Securities and Futures Commission.

The study, conducted for the Corporation of London, identified 14 competitive factors key for a financial centre. It used these factors to compare data from 13 Asian economies, namely: Australia, Mainland China, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, Thailand and Hong Kong.

The analysis identified the main factors affecting the competitiveness of Asian financial centres as: availability of skilled personnel and access to suppliers of professional services; regulatory environment and government responsiveness; access to international financial markets and access to customers; availability of business infrastructure and a fair and just business environment; corporate and personal tax regime; and other factors such as operational costs and quality of life.

Hong Kong was rated first in all of these categories, except for operational cost and life quality, where it was ranked fifth.

The study highlighted Hong Kong's critical mass of expertise in the financial services and related professional sectors, and concluded that this has played a crucial role in helping the city to stay ahead of the competition. For instance, it has 3,000 chartered financial analysts - Asia's largest and the world's fourth-largest pool after the US, Canada, and the UK. Meanwhile, the number of certified public accountants has grown in 10 years from about 11,500 in 1995 to more than 25,000, while the number of qualified actuaries has almost tripled over the same period. More than 5,000 solicitors and about 1,000 barristers are now practicing in Hong Kong, and these professions have also swelled their ranks substantially.

The study also underlined Hong Kong's eminence as a global banking power, noting that its banking sector adheres to the Basel Committee's core principles for effective banking supervision, making it compliant with international standards. This, it said, had attracted about 70 out of the world's largest 100 banks to set up offices here.

In addition, Hong Kong's open economy and benign tax regime have helped to attract about 3,800 companies to set up local offices in the city. Hong Kong was rated the world's most free economy by the Heritage Foundation/Wall Street Journal Index of Economic Freedom, and the study said that the territory has the simplest, most transparent and most effective tax regime among the selected economies.

However, the study warned that Hong Kong has no room for complacency in an increasingly globalised economy, and the SFC stated that it foresees a competitive challenge from mainland China and its major financial centres, such as Shanghai.

Other Asian markets are also striving to provide attractive opportunities for entrepreneurs and investors, facilitating their growth and enabling them to become more significant players in the region, the study observed.

The SFC concluded that Hong Kong should continue to hone its competitive advantages and improve other areas such as enhancing competition, ensuring ease of doing business, improving quality of life, and addressing environmental issues, in order to stay ahead.

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