Tale of two cities: Singapore and Hong Kong make ideal trading partners
The two cities have long enjoyed a competitive relationship, but continuing trade and other ties between the two jurisdictions increase their prosperity and that of the region
Singapore is celebrating its 52nd anniversary this year and the city’s regional presence and relationships have never been stronger. More so when it comes to a competitive yet fruitful trade relationship with Hong Kong.
Singapore and Hong Kong have always had a rivalry when it comes to business, influence in the region, attracting investors and hosting global giants in finance, media, law, and other professional services. While this can also extend to even sillier extremes – who has the better food? – or to the political and cultural – who enjoys the most freedom or has the best entertainment and lifestyle choices? However, the debate aside, Hong Kong and Singapore enjoy a symbiotic relationship with each other.
This is highlighted by Wenda Ma, senior economist at the Hong Kong Trade Development Council, who pointed out in a November 2015 report that Hong Kong and Singapore have much in common. “Both are small, open economies with no natural resources, but have developed into international trade and services centres in Asia. From a regional development perspective, the two economies are nodes connecting the hinterlands of mainland China and Asean countries, which are set to strengthen economic ties and integration,” Ma wrote.
At the end of 2015, Singapore’s investment in Hong Kong was US$38.4 billion and, as of June 2016, companies from the Lion City had established 40 regional headquarters, 102 regional offices and 240 local offices in Hong Kong. Singapore could be considered critical for Hong Kong, being the city’s eighth largest export market and the biggest trading partner in Asean, although Vietnam has become Hong Kong’s largest export market within that organisation.
In the first four months of this year, Hong Kong’s exports to Singapore fell 4.2 per cent year-on-year to US$2.4 billion. However, Singapore is the third largest import source for Hong Kong, with imports from the Lion City increasing 13.3 per cent year-on-year to US$11.2 billion in the first four months of 2017.
The types of goods that have been traded between the two cities are wide ranging. Exports include semiconductors, electronic valves and tubes, telecom equipment, engines and motors, computers, and components for electrical circuits. Meanwhile, significant import items include semiconductors, electronic valves and tubes, petroleum oil (ex-crude), office machines, computers, telecoms equipment, perfumery
With this strong and varied economic presence, it is little surprise that Singapore’s companies in Hong Kong cover all types of sectors, including property, financial services, transport, food and beverage, retail, trading, travel and tourism, information technology, publishing and management services, according to InvestHK. “Hong Kong and Singapore are close business partners. Over the decades, many Singaporeans have come to work or start their business in Hong Kong and venture into China,” Robert Ng, chairman, Singapore Chamber of Commerce (Hong Kong), told the governmental body. “Over the decades, many Singaporeans have come to work or start their business in Hong Kong and venture into China.”
Major Singaporean corporations in Hong Kong include the Development Bank of Singapore (DBS), MediaCorp News (Channel NewsAsia), Raffles International Hotels & Resorts, and Singapore Airlines. “Hong Kong is an economic forefront, bustling in vibrant energy and a wide range of activities; such great combustion creates an ideal professional and social environment for those who dare to venture,” Stanley Tee, chairman of The Singapore Association of Hong Kong, told InvestHK. As much as many in Hong Kong trumpet the rivalry between old foes, there is clearly much interchange, suggesting a genuine economic sphere of cooperation has emerged.
For international companies, including those from Hong Kong, Singapore offers businesses looking to set up in the city a range of advantages. Tax rates are competitive, and the city focuses on wellness and connected living, including urban living, ageing and health care, and lifestyle products and services. Meanwhile, the city has a robust intellectual property (IP) regime, and is rated fourth in the world for IP rights protection in the Global Competitiveness Report 2015/16, according to the Singapore government.
Incentive schemes are numerous for businesses looking to invest in the city. These include enticements for companies in research and development; science and technology; conducting training in new technologies, industrial and professional skills; companies engaged in energy, water, land or labour efficiencies; those using Singapore as a base to conduct strategic finance and treasury management activities; and organisations carrying out aircraft leasing.
While cultural, political and geographical differences separate Singapore and Hong Kong, perhaps it is time to view the divide in a different light. As Ma explains: “Rather than a zero-sum game, Hong Kong and Singapore may complement each other in many ways that could contribute to the prosperity of the region.”