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Hong Kong Urged To Reduce Business Costs

by Mary Swire,, Hong Kong

21 December 2012

Following a question in the Legislative Council (LegCo) on why Hong Kong is ranked second to Singapore in the World Bank’s "Doing Business 2013" report, the Secretary for Commerce and Economic Development Gregory So confirmed that the government is committed to providing suitable assistance for Hong Kong’s various industrial and commercial sectors.

The questioner noted that, in the World Bank report, and among the 185 economies compared in the report, Hong Kong has been ranked second behind Singapore on the overall ease of doing business, while, in respect of the ranking on starting a business, Hong Kong has slipped from fifth to sixth.

It was said that the report itself points out that the costs for choosing a company name and obtaining the required certificates account for 1.9% of the costs for starting a business in Hong Kong, which is more than two times higher than the 0.6% in Singapore. According to the results of a public opinion survey, around one-quarter of the respondents considered that the reasons for Hong Kong's ranking on ease of doing business lagging behind Singapore included the high costs for starting and closing a business.

So emphasized that the government is committed to improving the business environment, and that Hong Kong's attributes, including a simple tax regime, low tax rate and excellent infrastructure, already facilitate the development of its commercial and industrial sectors and maintain its global competitiveness.

With regard to reducing the cost of starting a business, So noted that, with effect from June 1, 2012, the government had abolished the capital duty levied on local companies under the Companies Ordinance, thereby reducing the cost of starting a business.

In addition, in July 2012, LegCo passed the new Companies Ordinance to provide a modernized legal framework for the incorporation and operation of companies, and introduce a host of new measures to cater for the needs of small- and medium-sized enterprises (for example, streamlining the incorporation procedures and making the use of a common seal optional). The government is making active preparations for the implementation of the new Ordinance in early 2014.

He also disclosed that the government will continue to implement various business facilitation measures and programs on the advice of the Business Facilitation Advisory Committee and its task forces, with a view to further enhancing Hong Kong's overall business environment and long-term competitiveness.

In respect of encouraging the starting of businesses, in accordance with the request of the Financial Secretary in the 2012-13 Budget, the Hong Kong Mortgage Corporation Limited launched in June 2012 a Microfinance Scheme in collaboration with banks and non-governmental organizations.

The Scheme includes providing business start-ups with a Micro Business Start-up Loan. The maximum loan amount is HKD300,000 (USD38,700) and the maximum loan tenor is five years. A principal repayment holiday for up to 12 months is available, and, as at December 7, the Scheme had approved about 40 start-up loans with a total loan amount of more than HKD10m.

TAGS: tax | business | company formation | law | fees | offshore company formation | offshore | legislation | Hong Kong | standards

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