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Thursday, October 27, 2016, 23:36

HK urged to utilize strengths in global competitiveness race

By Oswad Chan

HK urged to utilize strengths in global competitiveness race
Hong Kong is still recognized for its favorable business environment, encouragement of innovation through low and simple taxation, free flow of capital and the city’s role as a gateway between the Chinese mainland and global capital markets. (Cho Seong-Joon / Bloomberg)
“We should look at the wider picture as hubs like Hong Kong, Shanghai and Singapore have different strengths. Hong Kong should look forward, focusing on what to do next to accelerate its competitiveness.”

The International institute for Management Development ranked Hong Kong as the most competitive economy in the world in its World Competitiveness Yearbook released in May. It was recognized for its favorable business environment, encouragement of innovation through low and simple taxation, free flow of capital and role as a gateway between the Chinese mainland and global capital markets.

Hong Kong is also the most-desirable global destination for expatriates who want to further their career, according to HSBC’s Expat Explorer survey. The survey interviewed 26,871 respondents in 190 countries and regions, including 616 expatriates in Hong Kong.

About 68 percent of expatriates in the city agreed it was a location suited to career progression — higher than Singapore (62 percent), the UK (62 percent) and the US (61 percent). Around 62 percent said they earned more in Hong Kong than in their home country, compared to the global average of 45 percent.

Hong Kong has also  improved its efficiency in doing business, climbing one spot from last year to fourth in the World Bank’s report on doing business released in late October. It found that the Hong Kong government had made setting up and running a business less costly last year by reducing the business registration fee and cutting red tape for companies wanting to apply for new electricity accounts.

Among various pillars of economic competitiveness, the city should not neglect the financial services sector to propel future economic development.

Auditing advisory firm PricewaterhouseCoopers (PwC) expects Hong Kong to be the world’s top fundraising platform in 2016, with an estimated 130 initial public offering (IPO) deals worth over HK$220 billion.

Hong Kong should fortify itself as the largest offshore renminbi trading center in response to increasing foreign exchange demand after the renminbi’s entry into the SDR basket

E Zhihuan, a chief economist of Bank of China (Hong Kong)

Strong fundamentals, adequate capital and active turnover are supporting the Hong Kong SAR as the first choice of a fundraising platform in China, PwC said.

Deloitte China’s national public offering group agreed, and predicted that the city will raise HK$200 billion through 115 IPO deals in this year.

“Hong Kong’s IPO momentum is expected to brace capital inflows after the renminbi is added to the International Monetary Fund’s (IMF) Special Drawing Rights (SDR) currency basket, investment from mainland insurance companies into the Shanghai-Hong Kong Stock Connect and US interest rate stabilization,” the firm said.

Bank of China (Hong Kong) (BOCHK) also agreed that the renminbi’s inclusion into the IMF’s SDR basket provides opportunities for Hong Kong to brush up its competitiveness in the offshore renminbi financing business.

“Hong Kong should fortify itself as the largest offshore renminbi trading center in response to increasing foreign exchange demand after the renminbi’s entry into the SDR basket,” BOCHK’s Chief Economist E Zhihuan says. “The city should establish itself as a center of offshore renminbi asset management, risk management and financial products development.”

According to Jersey Finance, the flow of capital from Chinese mainland high-net-worth individuals into Hong Kong soared 47 percent between 2012 and 2014, compared to a 32-percent increase in Singapore over the same period.

oswald@chinadailyhk.com

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