& the
it may extent of employing hight quality
statt.
- 24
since Hong Kong has revised its regulatory arrangements. Furthe pre the banking supervisory arrangements in most countries are now converging on the Basle standards and in any case the value of high regulatory standards is increasingly accepted.
.3.22 Hong Kong still remains much more attractive than Taiwan where
the regulatory picture is still developing. The authorities appear to be more bureaucratic in their approach to regulation, and at times to take a view based on national self interest rather than prudential considerations. The Stock Exchange has been noted in the past for manipulation and for the shallowness of the number of shares actively traded. Another area of concern for the Taiwanese authorities is the large underground financial system reflecting both the
unsophisticated nature of depositors and their innate suspicion of the government controlled banks
3.23 In the area of banking and financial markets regulation it does not therefore seem likely that Hong Kong is out of line with Singapore or Taiwan in terms of supervisory regimes. Also the creation of the Hong Kong Monetary Authority will if anything raise Hong Kong's reputation in financial regulation, even though there is no suggestion that it will lead to tighter supervision.
Taxation
3.24
Hong Kong's tax regime has long attracted international companies because the rates of tax are generally low (eg corporate tax rate of 17.5%) and because income derived outside Hong Kong itself is not taxed. However, Singapore has sought to compete with Hong Kong's tax policy via a large number of special tax concessions for international companies and their employees, such low tax rates during the first few years of locating in Singapore.
Momentum
3.25
As implied in Section 2, Hong Kong has been able to build up considerable momentum, with a large number of international companies, both financial and industrial, siting their regional centres there. At present it probably has a larger population of international companies than Singapore although anecdotal evidence suggests that more international companies are currently choosing to locate their regional centres in Singapore than Hong Kong.