Some of the biggest economic growth rates lie in Asia. China, which has recently become the world’s 3rd largest economy, has had annual economic growth averaging 9% for many years. Of the G-20 nations, India has the second highest GDP growth rate (following China).

Aidan Healy, managing director of Singapore-based Healy Consultants, agrees that incorporating a company in Asian markets including China, India, Singapore and Hong Kong provide immense opportunity for entrepreneurs, but while regulations and bureaucracy are easing, much still needs to be addressed.

"The business cultures and legal frameworks are hugely different in emerging markets. In some cases company incorporation is still a cumbersome procedure which requires expert knowledge," he explains.

These factors clearly work to the advantage of Singapore incorporation and Hong Kong incorporation. Hong Kong is a natural gateway into China, while Singapore is busy promoting itself as the regional hub of choice.

Both economies consistently rank as the world's freest. In its 2009 Index of Economic Freedom, US-based The Heritage Foundation places Hong Kong and Singapore as first and second in terms of economic freedom. Hong Kong has a record of openness to global trade and investment. While Singapore has a relatively small economy, it’s openness to international business and investment means undertaking Singapore incorporation gives access to one of the world’s most competitive economies.

The report praises the two city-states' policies on inward foreign investment. "Singapore is a world leader in most facets of economic freedom. Regulations are straightforward, virtually all commercial operations are performed with transparency and speed, and corruption is almost nonexistent,” it explains.

According to Singapore's Economic Development Board, the country ranks highly in miscellaneous global surveys. The World Economic Forums’ Global Competitiveness Report 2008-2009 ranked Singapore as the fifth-most competitive economy in the world and the most competitive in Asia.

In another global report, the World Bank's Doing Business 2008 Survey, Singapore is listed as the world's easiest place to do business. Factors considered in the survey include company incorporation procedures, time, cost and the minimum capital required for Singapore company formation.

Illustrating the benefits of Hong Kong company incorporation, the Heritage report says, "The small island is one of the world's leading financial centres, and regulation of banking and financial services is transparent and efficient."

Both Hong Kong and Singapore have extremely competitive tax systems. Whether considering personal or corporate implications, the tax burden is low in both markets. "Everyone wants to be in Asia at the moment," Healy says.

‘Tax haven’ stigma

Another key factor in the capital shift has been the increased attention from Governments directed at the practice of using tax havens to evade tax obligations. Not long ago, Switzerland was the world's quintessential private banking centre. And although in some eyes it still is - after all, its banks still hold an estimated 30% of global offshore assets - its mantle is rapidly being taken over by the likes of Singapore and Hong Kong.

"I'm not surprised by the increased capital flows to Asia from Europe," Healy says. "The proof is that Asia has been booming - we've noticed a huge increase in demand for Singapore and Hong Kong company incorporation, corporate and personal bank accounts in Singapore and Hong Kong, and China is also on the increase."

Banking officials clearly agree with this. A chairman of one Swiss bank has said a Singapore office for the bank represented "a platform of growth in Asia". Another believes that "Singapore will be the fastest-growing offshore banking centre over the next five years".

Healy also believes that international investors and entrepreneurs prefer the positive image presented by Singapore and Hong Kong to the tax-haven image of some western offshore jurisdictions.

"The bottom line is this: Singapore and Hong Kong are built on internationally respected economic models and legal frameworks," says Healy. "The image they present is unrivaled in tax-free jurisdictions," he adds. "A Singapore company can be tax-free, looks good to customers and suppliers, and has absolutely no stigma attached to it."

As well as the business benefits of Singapore and Hong Kong company incorporation, there's a human angle to the tale. The 2008 Quality of Living Survey, produced by Mercer Human Resource Consulting in April, ranked Singapore as the most livable city in Asia, and 32nd out of the 215 international cities covered in the survey. Hong Kong comes in at 70th in the world, while China's Beijing comes in at 116th in the world. Singapore is the region leader in personal safety.

"Singapore really is the focal point of corporate and financial activity in Asia, and should remain so for the foreseeable future," Healy concludes.

About the Author

Mark Lazell is a PR and marketing specialist and freelance journalist with working knowledge and experience of the offshore financial industry in the Middle East and Asia-Pacific regions.

Resource Box

Healy Consultants is a corporate services firm providing international clients with a range of offshore company formation and corporate advisory services. Headquartered in Singapore, the firm has an exceptional knowledge of business set up procedures and a comprehensive understanding of legitimate, tax efficient financial structures. Visit Healy Consultant’s website for more detailed information on the firm’s services.

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