The Rise Of The Asian Tigers
Hong Kong and Singapore, two of the four Asian tigers that experienced sky-high growth since the 1970s, have a long-dated rivalry in becoming Asia’s preferred location for offshore business. Generally, Singapore has won businesses oriented towards Southeast Asia (such as Malaysia, Vietnam, Thailand, Indonesia), whereas Hong Kong has always been seen as the gateway to China. The Celestial Empire’s meteoric rise has resulted in Hong Kong leading the way by being Asia’s largest financial center, although Singapore has the second busiest port.
Political Unrest Is Plaguing Hong Kong
However, since last year, things have changed. The political situation in Hong Kong is getting worse after China’s move to exert more and more influence over its Special Administrative Region. As a result, protests have erupted in the streets of Hong Kong one year ago already. The current crisis is just making things worse.
And yet, there is more than that. Hong Kong’s economic development has been driven by unfettered economic liberalism, which resulted in high inequalities, pricing people out of the real estate market and letting an entire generation feeling they have no future. We believe that this also contributes to the recent unrest.
Singapore Pursues a Different Approach
In contrast, Singapore has pursued a government-driven economic development, with so strong decisions sometimes has been accused of being too authoritarian. And yet, those two advantages have contributed in making Singapore a better business location than Hong Kong, now more than ever
1) The World’s Safest Country
Singapore is the safest country in the world, ranking even better than wealthy, welfarist Northern European countries such as Norway, Switzerland, Denmark, and Austria. Combined with its low taxation and great infrastructure, Singapore is home to the highest number of millionaires in the world. By contrast, political turmoil is weighing on Hong Kong, which used to rank close to Singapore, but now it does not make it in the top ten.
2) Strong Regulations To Balance The Economy
One of reasons of Singapore’s economic and social success was government interventions to stabilize the economy in case of imbalances. Perhaps the most striking example is real estate. Instead of letting housing prices go sky-high as in Hong Kong, the Singaporean government introduced hefty taxes for foreigners willing to buy a house in Singapore. In some cases, the levy can be as high as 25% of the price of the property. There is little scope for loopholes, as companies would pay even more.
As a result, housing is more affordable in Singapore than in Hong Kong, and its people have one of the highest rates of home ownership in the world. This, of course, helps to keep the country together.
While not really representing orthodox liberalism, these policies have contributed to the city-state’ economic and social stability, a much-sought characteristic during such turbulent times.
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