Till now western countries boasted of having the major financial hubs like New York and London, but with the outset of the global recession and eastern part of the world, no longer being dependent on the west for the resources, the inclination of the business world has shifted towards the east.
In east, Singapore has developed as a major financial hub because it provides for the ease of doing business, cosmopolitanism, strict legal framework and world-class infrastructure, although Singapore does not have resources of its own, but still it managed to become the biggest financial centre not only in the eastern part of the world, but also worldwide. Although earlier, Hong Kong used to be one of the best business hubs for many decades, but later, Singapore outshined it.
In an attempt to restore its sheen, Hong Kong wooed India Inc. to make investment and set up their business ventures in its country, and thereby promoting ease of doing business in Hong Kong. One of the major incentives for the Indian MNCs and other Foreign MNCs is that the Hong Kong is a chief connector to Mainland China and Asia at large and by setting up ventures in Hong Kong, they can also expand their foothold in the Mainland China and other countries in Asia as well.
Hong Kong is one of the most tax-friendly economies in the world, the reason being that imposition of three direct taxes and generous allowances and deductions which reduce the net taxable amount.
- Profits tax is capped at 16.5 percent
- Salaries tax is a maximum of 15 percent
- The property tax is 15 percent
Moreover, Hong Kong does not impose taxes such as sales tax or VAT, withholding tax, capital gains tax, tax on dividends, and estate tax. Indian companies are required to pay only 5 percent withholding tax for their businesses in China if they are routed through Hong Kong or else there’s 10 percent tax.
There is no import tax except on tobacco, cars and petrol because of Hong Kong’s free port status and easy customs procedures.
The Hong Kong government set up the Invest Hong Kong department to facilitate the foreign direct investment. The easy world-wide connectivity and the world-class infrastructure and telecommunications system further makes doing business a piece of cake.
There were 12 Indian companies with regional headquarters, 15 with regional offices and 37 local offices in Hong Kong. Currently, there are 1,500 Indian companies operating in Hong Kong in various sectors. With Seven new Indian companies been registered in Hong Kong last year through the assistance of invest Hong Kong, this year the count is expected to rise.
The focal zones for Indian investors are tourism and hospitality and its sub-sector – food and beverage. Indian companies which are food suppliers and traders can look at the possibility of setting up sales offices here, not only to cater to local needs of Hong Kong consumers, but also make use of Hong Kong as a hub to sell products in mainland China. This will further lead to the problem of food availability which is most often faced by the Indian people in Hong Kong.
Indian companies have strong position in doing jewellery, diamond, and other luxury trading business and they can also make Hong Kong as a hub for the same. Other sectors include logistic companies, shipping as well as companies making industrial products.
According to Economic Times, Hong Kong’s total exports to India expanded 8.1 per cent to USD 13.1 billion in 2015, with export items including telecom equipment, pearls, and precious stones, among others. Hong Kong’s imports from India totalled USD 10.6 billion in 2015 with major import including jewellery, leather, among others.
English being the official language and usual language for business and contracts, the ease of doing business gets further enhanced. Also, the free market policies , free flow of information and independent legal system are conducive for the business ventures.