Magazine article Business Asia

Putting the Heat on Hong Kong

Magazine article Business Asia

Putting the Heat on Hong Kong

Article excerpt

Hong Kong used to mock Singapore's claims to business dominance in the Asia-Pacific region. However, the tide appears to be turning. VALERIE LEE reports from Singapore

It used to be a no-contest: Hong Kong was easily the place of choice to do business in Asia.

Singapore, swaddled by redtape and policed by a stern central bank, was a distant runner-up, a destination of necessity.

However, more than a year into the Asian crisis, Singapore appears to have edged in front and is winning kudos from investors, credit-rating agencies, securities analysts and foreign media for having one of Asia's best-run economies and financial sectors.

It has at last thrown down a serious challenge to Hong Kong.

"Singapore has finally got it right," said one managing director of a regional securities firm in Singapore.

"It is not about doctrine or ideology, it is all finally driven by commercial considerations -- what can we do to get your business to thrive.

"That is the best way to win in this game with Hong Kong."

Some of the world's biggest companies are putting their faith in Singapore, including Caltex Petroleum Corp, which said in October it would relocate its headquarters from Dallas.

The fight for supremacy between Singapore and Hong Kong began last year in the securities industry.

Trading of Hang Seng index futures on the Singapore International Monetary Exchange marked the official start of hostilities, said IDEA senior economist Ms Jacqueline Ong.

The issue was costs, Ms Ong said, and a Singapore government S$10.5 billion (US$6.36 billion) package of cost-cutting measures has boosted the city state's competitiveness.

The centrepiece of the November package was a 50 per cent cut in employer contributions to a state pension fund. Trade unions accepted the move without any apparent rancour. …

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