Telling the truth about SME life today

Hong Kong or Singapore Choosing where to expand in Asia

As the panel at the event explained, competition between Hong Kong and Singapore is intense, but this is the way they like it. One drives the other on, with each country introducing new initiatives to become even more attractive for inbound investment.   

From my experience of having worked with companies expanding into Asia, it is clear that there is no easy one size fits all answer to the question. However, some useful factors that all businesses should consider when comparing Hong Kong and Singapore are as follows:

Country data

Companies may find some meaningful insight from the vast amount of country data that is readily available on the internet. Some of the most relevant surveys include:   

Global Cities Index 

The 2012 Global Cities Index, prepared by AT Kearney, measures global engagement of cities across five dimensions: business activity, human capital, information exchange, cultural experience and political engagement. Hong Kong scores fifth in the ranking and Singapore 11th. Both are highly regarded, but have to give way to New York and London (the cities that hold the two top spots).

Quality of Living survey 

The 2012 Mercer Quality of Living survey ranks Singapore 25th and Hong Kong 70th out of 221 cities. This annual survey uses 39 criteria, including safety, education, hygiene, healthcare, environment, recreation and public transport. This survey is likely to be of greater relevance where companies are undertaking cross-border relocations of their staff. 

Doing Business 

The World Bank guide to doing business has Singapore and Hong Kong right at the top of the 183 country tree. They rank as follows: Ease of Doing business – Singapore 1 and Hong Kong 2; Starting a Business – Singapore 3 and Hong Kong 5; Paying Taxes – Singapore 5 and Hong Kong 4; Trading across borders – Singapore 1 and Hong Kong 2. 


A clear differentiator between the countries is their geographical location, and this is to some extent one of the main factors that SMEs may use to decide between the countries. 

Hong Kongs location means that it is undoubtedly a better base for doing business in China. Its geographical proximity makes it possible to travel to and from the major Chinese cities in a day. Hong Kong is also a hub for Chinese investment, and remains the number one offshore RMB centre.

Singapore is better placed for trading in South East Asia. Its membership of the Association of South East Asian Nations (ASEAN), an organisation of ten nations within Asia, facilitates trade and economic growth within the region. Similar to the EU, ASEAN provides for the free movement of goods and services, investment and capital, as well as skilled labour. 

However, both cities are well situated in the heart of Asia, and most countries are accessible within a five to seven hour flight time. And as you might expect, both countries have very efficient transportation hubs – Singapore Changi Airport ranked first and Hong Kong International ranked fourth in the World Airports Award! 


Tax is an important consideration when countries compete for inbound investment, and wherever you go, it is worth exploring the tax structuring. Hong Kong and Singapore are no different in this respect. 

Corporate taxes – Hong Kongs headline rate of corporate tax is 16.5 per cent and Singapore 17 per cent, and both countries operate a territorial tax system. Beyond the headline rate of tax, Singapore offers a reduced rate of tax for small start-up companies, and subject to certain conditions, it is possible that the effective rate of tax in Singapore can be reduced to between zero per cent and 8.5 per cent for profits up to SGD300,000 ( £148,000) in the first three years. 


A recent call with the HLB International firms in Singapore highlighted that Singapore provides a number of tax incentive schemes for intellectual property, R&D and other activities that enhance its economic and technological development. 

Holding Company regimes 

Both countries provide exemption for inbound dividends (although qualifying conditions must be met in Singapore). Withholding tax on dividends from China can be reduced to five per cent under both countries respective tax treaties. In terms of outbound payments, Singapore has withholding tax on both royalties and interest, with Hong Kong imposing withholding tax on certain royalty payments. 

Tax treaties 

Hong Kong has concluded 25+ tax treaties and Singapore in excess of 70. Importantly, both countries have concluded tax treaties with the UK. Singapore has also concluded a favourable tax treaty with India, making it a useful stepping stone for investment into India.

Income tax 

For expats being assigned to work in these countries, personal income tax is low (at least compared to the UK), with a maximum income tax of 20 per cent in Singapore and a maximum effective income tax rate in Hong Kong of 15 per cent.   

Having been to both Hong Kong and Singapore, I know first hand that both countries have a compelling story to tell. However, it is often one or two factors that make all the difference, and the advice has to be to go and talk to people on the ground to find out what really matters for you.

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