Singapore Tops Asia-Pac 'Good Governance' Index

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

14 December 2011

Vriens and Partners, an Asia-focused corporate advisory firm, has issued its 2011 ‘Good Governance for International Business’ index of 19 economies in the Asia-Pacific region, in which Singapore has edged out Hong Kong for the number one position.

Within the index, economies are evaluated on six ‘pillars’: the rule of law, openness to international trade and business, political stability, taxation, corruption, and fiscal and monetary administration. It is said that each of those pillars “has a major impact on business and investment decisions, and together they reflect an important aspect of an economy that is beyond the standard quantitative measures of market size, proximity, economic growth or wage rates that also drive those decisions.”

For example, ‘taxation’ assesses the tax environment, such as transparency and efficiency in tax collection, as well as local taxation rates, particularly the corporate tax rate, while ‘fiscal and monetary administration’ assesses the management of state finances and monetary regulations that encourage economic growth and stability.

In its overview of the results of the index, it is emphasized that, with both Singapore and Hong Kong “well known for maintaining open economies, these two cities have focused on providing good governance for international business across all six pillars in order to attract investment and grow their economies”.

Singapore and Hong score 90.2 and 87.3, respectively, followed closely by New Zealand and Australia with scores over 80, although the latter does suffer as a result of its score on taxation.

It is pointed out that, in the second group with scores ranging from 60 to 79, were Taiwan, Japan, South Korea and Malaysia. Taiwan tops the group with even performance across all six pillars, while Japan has a weak score on taxation and fiscal and monetary administration.

On the other hand, while South Korea scores strongly on fiscal and monetary administration and, if its free trade agreement with the United States is implemented in 2012, should improve its score on openness to international trade and business, Malaysia now “joins this group of advanced economies with a strong score for taxation and a continued commitment to openness to international trade and business.”

China and Thailand’s scores are said to place them in a category of their own. China’s score on fiscal and monetary administration has reduced over the past year, as has its openness to international trade and business. Thailand has “scored weakly on political stability and, though July’s successfully-held elections present an opportunity to improve on that score, the on-going flood crisis presents a degree of uncertainty.”

Vietnam, Indonesia, India, Sri Lanka, Philippines, Cambodia and Laos score between 40 to 49 in the index, with each facing “its own unique set of challenges in providing good governance for international business,” while the lowest scores are attributable to Bangladesh and Myanmar, both scoring in the 30s.

“The Good Governance for International Business index provides a timely and useful resource for business leaders and governments alike,” said Hans Vriens, the firm’s Managing Partner. “International business is increasingly interested in emerging economies across Asia, and there has been a clear effort by governments to improve governance for international business in order to attract investment.”

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