Starting a business: Singapore versus Hong Kong
8 minute read
Both cities are English speaking countries with excellent banking services, robust legal systems, and low tax rates. These qualities make them ideal choices as a gateway between the East and West. Due to their similarities, there has always been a friendly competition of sorts between Hong Kong and Singapore to become the #1 destination for companies wanting to set up their base in Asia.
This article is a primer intended to show the key differences in Singapore’s and Hong Kong’s corporate structures. So what are they? Let’s take a look.
- Global ranking
- Secretary vs. Director Requirements
- Target a market
- Quality of life
- Work visas and relocation in Singapore and Hong Kong
Based on World Bank’s Ease of Doing Business Report 2018, Singapore is ranked #2 in the world whereas Hong Kong is ranked #4. This is how Singapore fares compared to Hong Kong:
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Both countries boast world-class banking systems.
- Due to their global customer base, banks in both countries do not see large amounts of international business transactions as red flags.
- While Singapore used to be the more expensive choice due to high banking fees and minimums, the bank fees for Hong Kong banks have been steadily increasing in recent years.
- Typically, in order to open a corporate bank account, an in-person meeting is required to assess the company.
Hong Kong is known for having a notoriously difficult bank account opening procedures (particularly in comparison to Singapore) for non-locals. Fortunately, alternative providers such as Neat have started to meet this need.
Secretary vs. Director Requirements
Here is one of the significant differences in the legal requirements of Hong Kong and Singapore.
- Hong Kong: All foreign directors OK but need a local company secretary: A board of directors can be completely made up of foreigners, but the company needs to have a secretary that is local. That individual can either be a Hong Kong-born local or a registered Hong Kong limited company.
- Singapore: Need x1 local director and a local company secretary. This means that in order for fully-foreign companies to meet the legal requirements it is often necessary to fork out for a company secretary service as well as a nominee director service.
Therefore, in this case, Hong Kong has a slight edge over Singapore due to the cost savings of having a non-local board of directors.
Aside from jurisdictional, tax and banking decisions, it’s worth considering your target market within the Asian region, and where your customers are based.
Singapore – “The gateway to Southeast Asia”
For decades, South East Asia has been trailing behind the global economy. But in recent years the region has seen tremendous momentum. More foreign investors paying close attention to the rise of wealthy middle class in countries like Thailand, Vietnam, and Cambodia.
Although these countries are experiencing growth, their infrastructure is still sorely lacking. These countries are inadequate in handling large amounts of foreign capital. Therefore, most businesses choose Singapore to set up their business structure due to its close proximity. While you can still own a Southeast Asian company in Hong Kong, a Singapore structure is a more popular option.
Hong Kong – “The gateway to China”
The best thing about Hong Kong is that it is situated right next to Mainland China. Being a SAR (Special Administrative Region), it enjoys a reasonable degree of autonomy especially when it comes to economic policies.
This makes Hong Kong an ideal place to base your company at as you prepare to enter the elusive Mainland Chinese market. As your Hong Kong business matures, you can also use your HK company as the parent company in a WFOE (wholly foreign-owned entity) structure.
Quality of Life
The living standards of both countries are pretty amazing, and it is worth mentioning here.
- Both countries have a world class standard of living. Everything just works, whether it’s the public transport, or the medical facilities. The nightlife is vibrant, and the population is multicultural.
Work visas and relocation in Singapore and Hong Kong
It is reasonably easy to get a visa to work in Hong Kong. Visas can be granted for startups that are accepted into a select list of incubator programmes (such as StartmeupHK Venture Programme and the Design Incubation Programme, to name a few). There is also an “Investment as Entrepreneurs” visa intended for foreign entrepreneurs who want to start a business and relocate to Hong Kong, which grants an initial stay of about 24 months.
Relocation to Singapore is possible under many different work visas such as the Employment Pass or the Entrepreneur Pass. Salary requirements, your academic qualifications and employment history matter – take a look at our guides to learn more.
Whether you choose Singapore or Hong Kong, both are great options to set up your business. Interested in setting up your investment vehicle or regional base in Singapore or Hong Kong? Talk to us.