Singapore has cemented its dominance as the leading destination for international companies in Asia, overtaking Hong Kong, according to a comprehensive report by Bloomberg Intelligence. The study shows that Singapore will host 4,200 multinational companies for regional headquarters in 2023, a number that far exceeds Hong Kong's 1,336.
Major companies such as Microsoft, Google, FedEx, Rolls-Royce and Mead Johnson have established their headquarters in Singapore. Other companies such as Shein, an online fashion retailer, and TikTok, a social media platform, have also chosen Singapore as their business hub.
Even Chinese companies seeking to reduce geopolitical risks and expand their business footprint are more inclined to choose Singapore. For example, electric vehicle manufacturer Nio Inc. has a strong presence in the city-state. Meanwhile, technology companies such as Huawei Technologies Co. and Alibaba Group Holding, which owns the Post Office, are also expanding their operations in Singapore.
Singapore's success is based on several key factors. These are explained in this 50-page report. The report highlights Singapore's closer ties with Western countries, a diverse talent pool, a robust and diversified economy, and attractive tax incentives as key factors that make companies prefer Singapore.
In addition, the report notes that Singapore is perceived to offer greater political stability and freedom, especially given the increasing geopolitical risks in the region.
While Hong Kong solidified its position as China's financial center by handling political protests and adhering to the country's COVID-zero policy during the pandemic, Singapore demonstrated its independence and emerged as the preferred location for international business offices.
According to the report, despite Hong Kong's lower standard corporate tax rate of 16.5 percent, Singapore has programs that can reduce the country's 17 percent tax rate to 13.5 percent or even lower for certain activities. Singapore also offers targeted incentives to foreign companies seeking to establish regional hubs, an approach that has proven effective.
