2024 RT Amination Banner.gif

China Daily

HongKong> Opinion> Content
Wednesday, June 19, 2019, 23:23
HK should leverage Bay Area to become a fintech hub like Singapore
By Oriol Caudevilla
Wednesday, June 19, 2019, 23:23 By Oriol Caudevilla

There is a tendency among many Hong Kong people to compare Singapore with Hong Kong, usually as a way to praise the former while criticizing the latter. Hong Kong people habitually find fault in its own backyard only to cite Singapore as the model of perfection. The only apparent reason for this tendency to self-flagellation is that Hong Kong and Singapore bear many similarities in economic structure, reliance on finance and trade, as well as size of territory and population. In some ways, Singapore does better than the special administrative region: Public housing and financial technology; while Hong Kong excels in other areas such as public transport, minimal government intervention, and has a higher ranking in the Global Liveable Cities Index.

However, Hong Kong and Singapore have also substantive differences. Singapore is an independent country, while Hong Kong is an SAR of China, under the “one country, two systems” principle, meaning that, in Singapore, its leaders can independently formulate policies and implement them while in Hong Kong its officials have to take into account many things including its complex relationship with the central government. It does not mean that Hong Kong is worse when it comes to governance, it just means Hong Kong is different.

For many analysts, Hong Kong and Singapore have entered a new phase of their rivalry: Technology and fintech. Thus far, this battle has been won by Singapore, according to industry participants and analysts, as it has become one of the world’s leading centers for technological innovation.

A report published last year by the United States-based Startup Genome project, which covered 10,000 startups and 300 partner companies, stated that Singapore has overtaken Silicon Valley as the world’s No 1 location for startup talent.

When talking specifically about fintech companies, it is important to note that fintech investments in Singapore more than doubled to $365 million in 2018, up from $180 million in the previous year, placing it among the top five fintech markets by funds raised in the Asia-Pacific last year, according to an analysis by Accenture, just behind Australia, China, India and Japan. About 28 percent of the total funds raised in Singapore last year went to fintech companies in lending, while those in payments took 26 percent, and insurtechs took 20 percent.

As part of the Bay Area, Hong Kong brings to the table its financial expertise (like New York does in the US), while Shenzhen brings its technical innovation (like Silicon Valley does in the US), with the added advantage that Hong Kong and Shenzhen are neighboring cities...

On the other hand, Hong Kong is doing well but not as well as Singapore. The first reason for being behind is Singapore is a country, while our city is not. This is a relevant fact because, while Singapore only needs to balance its own interests, Hong Kong needs to find a constant balance between its own interests and those of the mainland, which fortunately are usually in harmony.

Singapore takes a simpler regulatory approach to fintech than Hong Kong, which has a multilayered regulatory structure. This renders Singapore more attractive to fintech companies trying to avoid dealing with multiple regulators.

In terms of funding, Singapore fintech companies surpassed their Hong Kong peers in 2017, raising $983.6 million for Singapore fintech ventures versus $596.8 million for Hong Kong fintech ventures.

In a study published by Deloitte in 2017, London and Singapore were found to be the most successful fintech hubs, followed by New York and Silicon Valley. Hong Kong was rated sixth.

However, this situation may be changing as Hong Kong is developing itself as a leading fintech hub. In March, the Hong Kong Monetary Authority announced the issuance of the very first virtual banking licenses.

More importantly, Hong Kong’s fintech industry has the potential to develop much faster now if it can leverage its involvement with the Guangdong-Hong Kong-Macao Greater Bay Area project.

As I mentioned in my article “Bay Area creates new opportunities for Hong Kong” published in China Daily Hong Kong Edition on March 13, the Bay Area has been dubbed by some media as “China’s plan to beat Silicon Valley”, and not without reason. Also, Hong Kong’s proximity to Shenzhen can and should be used to Hong Kong’s advantage.

As part of the Bay Area, Hong Kong brings to the table its financial expertise (like New York does in the US), while Shenzhen brings its technical innovation (like Silicon Valley does in the US), with the added advantage that Hong Kong and Shenzhen are neighboring cities while New York and Silicon Valley are thousands of miles away. In other words, with the combined support of Shenzhen and other Bay Area cities, it will not be long before the SAR narrows the gap with Singapore in fintech.

The author holds a doctorate in Hong Kong real estate law and economics. He has worked as a business analyst for a Hong Kong publicly listed company.

Share this story

Also Read