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Thursday, October 6, 2016, 22:45

Lion City’s roar worries HK professionals

By Luo Weiteng
Lion City’s roar worries HK professionals
Commuters walk across a road in the central business district of Singapore. Hong Kong is urged to focus on diversification of its economy by nudging toward the promising fintech (financial technology) business, which is where the Chinese mainland and Singapore are already targeting. (Sam Kang Li / Bloomberg)

Singapore remains Hong Kong’s biggest challenge to its competitiveness in the coming year, even outstripping the Chinese mainland, according to a survey of business and finance professionals.

The annual economic sentiment study by CPA Australia found 46 percent of respondents cited Singapore as the main threat to Hong Kong’s competitiveness in 2017, followed by the mainland (44 percent). The study surveyed 226 professionals in Hong Kong’s accounting, financial and business sectors.

However last year, more respondents pointed to the mainland as being the major competitor.

Hong Kong and Singapore have been vying for years to hold the crown of most competitive place to do business. The two cities are constantly locking horns, with both finishing on top in different global rankings and indexes.

Last month, Hong Kong finished behind Singapore in the annual Global Competitiveness Index compiled by World Economic Forum, slipping down two points to rank ninth among 138 international economies. This was mainly due to the daunting task it faces to “evolve from one of the world’s foremost financial hubs to an innovative powerhouse”.

Singapore again reclaimed the crown of the most competitive economy in Asia this year, and came second in the world for the sixth year in a row, only trailing Switzerland.

But Hong Kong stands as a clear winner in the latest World Competitiveness Yearbook from Swiss business school IMD, knocking the United States off the top spot and leading Singapore by three positions.

“Basically, the competitive edges the SAR enjoys include its geographic advantage as the gateway to the mainland and the bridgehead of a spate of China-led policy initiatives, its low tax base, and a well-educated talent pool of professionals with international visions,” said Jeffery Chan, divisional president of greater China at CPA Australia.

The CPA Australia survey found growth in the mainland’s economy has been listed as the top positive factor for Hong Kong’s economic performance next year, followed by low interest rates. The huge infrastructure investment opportunities from Hong Kong-Zhuhai-Macao Bridge, the nation-backed Asian Infrastructure Investment Bank and Belt and Road Initiative were also positives.

The SAR has long polished its brand as the intermediary and “super-connector” between the mainland and the world. It has what it takes to benefit from the ripple effect of the Belt and Road ambition and play a leading role in the initiative, said Peter Lee, CEO of La Vintoll Capital Management.

But what makes Singapore a formidable competitor lies in its government responding much more aggressively and quickly to external opportunities and business trends, Chan said.

He said Hong Kong has much to learn from its longtime rival, which has made bold moves to facilitate inter-governmental exchanges, and set up a continuing education fund to retrain its citizens.

More effort should be made to attract more multinational corporations to build up regional headquarters and a corporate treasury center in Hong Kong, tapping the city’s already well-established financial framework and benefiting both the upstream and downstream of its business community, said Chan.

Lee said Hong Kong should focus on shifting its economy away from its traditional pillar industries and toward the promising financial technology (fintech) business, which is where the mainland and Singapore are already targeting.

Hong Kong may not have much time left to rely on local talents to narrow the gap in fintech race, and the SAR government should consider the relaxation of visa requirements to attract more overseas talent from Silicon Valley to stimulate the local fintech industry, Lee said.
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