A tale of two cities - why western capital flows eastward
Mark Lazell, Marketing & Media Director, Healy Consultants
Financial and economic industry experts agree unanimously that Asia’s booming economies, strong banking confidentiality laws and pro-business incentives are driving capital flows eastwards. And it appears that two key, distinct factors have emerged to explain the trend.
Firstly, the biggest economic growth rates lie in Asia. In China, annual economic growth is running at up to 9%, and there’s a long queue of hungry investors looking for a foothold there. Likewise, Dubai’s growth in recent years has been staggering. And India is becoming a major economic power.
Aidan Healy, managing director of Singapore-based corporate consulting company Healy Consultants says that China, Dubai and India are the new frontiers of opportunity, but that although regulations and bureaucracy are easing, much still needs to be addressed.
‘The business cultures and legal frameworks are hugely different in emerging markets. And in some cases company formation is still a cumbersome procedure which requires expert knowledge,’ he explains.
This is clearly to Singapore and Hong Kong’s advantage. Hong Kong is a natural gateway into China, while Singapore is busy promoting itself as the regional hub of choice.
Both countries consistently rank as the world’s freest economies. In its 2006 Index of Economic Freedom, drawn up by the US thinktank, The Heritage Foundation, Hong Kong and Singapore were first and second respectively. The 2006 report heaps praise on the two Asian country’s policies on inward foreign investment. ‘Singapore's investment laws are clear and fair, and they pose few problems for business. Foreign and domestic businesses are treated equally, there are no production or local content requirements, and nearly all sectors are open to 100 percent foreign ownership,’ it explains.
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