The Special Administrative Region (SAR) of Hong Kong officially enjoys the highest level of economic freedom in the world according to a recent survey conducted by the Heritage Foundation in association with the Wall Street Journal; and as a result, Hong Kong is emerging as an exciting offshore business centre.
The latest figures relating to the amount of foreign direct investment received and the number of new local companies registered in Hong Kong in 2007 really highlight just how successful the government of the special administrative region of China has been in creating an attractive fiscal environment. And according to offshore industry sources, despite the predicted 2008 global financial slowdown, Hong Kong is still positioned to expand as an offshore tax haven.
The Sovereign Group, offshore fiscal and business solution providers, recently highlighted both the fact that Hong Kong is the world’s freest economy and that new company registrations in 2007 hit a record high in the SAR. They further commented that there is nothing to suggest that the increasing popularity of the offshore tax haven will diminish, although they did highlight the fact that the current worldwide fiscal squeeze may have a limit on the amount of developmental progress that Hong Kong can realistically make in 2008.
In naming the SAR the world’s freest economy in the ‘Index of Economic Freedom 2008’ report, the Wall Street Journal and the Heritage Foundation based their assessment of Hong Kong, and indeed all nations cited, on economic performance. Employment rates, inflation and per capita income for example, were all used to measure the levels of freedom available.
Hong Kong came out first, closely followed by Singapore, and the Asia-Pacific region is in fact home to three of the top five freest economies in the world as determined in the ‘Index of Economic Freedom 2008’ report.
Commenting on the findings of the report, the Hong Kong Financial Secretary reiterated his government’s position on the development of the SAR as a leading international business environment. John Tsang stated that it is the government’s intention to act as a facilitator to ensure Hong Kong’s business and fiscal environment expands, is appropriately regulated, is competitive and has integrity.
Clearly the government’s efforts are paying off. In 2007 there were over 63,000 more local companies registered in Hong Kong than in 2006, and 748 new overseas companies established a place of business in the SAR. Additionally, 259 prospectuses were registered which included 82 mutual funds, and foreign direct investment into China that was routed through Hong Kong surged to USD 27.7 billion.
Thanks to the SAR’s well-developed corporate service and banking sectors, its official position as the world’s freest economy, the government’s determination to maintain the appeal of Hong Kong and its industry reputation as a leading offshore tax haven, it is highly likely that Hong Kong will continue to emerge as an exciting offshore business centre throughout 2008.