Should You Relocate Your Hong Kong Business to Singapore?
From time to time, businesses find themselves needing to relocate to adapt to current changes in geopolitics and to ensure the best environment for their growth. With many pull factors, Singapore is seen as a viable location for businesses in Asia to move and relocate their operations.
Read more: Is Hong Kong Still Relevant Post Pandemic?
There has been a sharp influx of foreign money flowing into Singapore since 2019. Furthermore, bankers and wealth managers have reported that they have received more queries from clients to move funds from Hong Kong to Singapore.
Why should businesses relocate to Singapore?
There are many factors to why most Hong Kong businesses are relocating to Singapore instead of any other country. Singapore has made a name for itself as a reliable financial and trading hub in the region, as well as being the best place to invest in Asia Pacific. Recently in the ranking for the world’s freest economy, Singapore took the top spot overtaking not only Hong Kong but Taiwan and even Switzerland.
Singapore has one of the busiest ports in the world, connecting West and East Asia. It has other factors including a strategic position, a competitive workforce, a pro-business environment, and forward-thinking economic policies.
Apart from all geographical factors, companies choose to relocate to Singapore because the process of starting a business is relatively simple and fast. Other than that, Singapore has an attractive tax rate for both personal and corporate sectors. There is also access to various incentives which may help in funding. The low trade barriers and welcoming attitude to foreign investment is also added factor to why more businesses are choosing to relocate to Singapore.
A private company limited by shares is the most common type of entity to be established in Singapore.
Examples of Hong Kong business relocation to Singapore
Establishing a Singapore parent company for the Hong Kong business
This type of business relocation strategy allows you to set up a company in Singapore that acts as a parent company for your Hong Kong operations.
The advantage of this is that the Singapore operation can continue to run concurrently with the Hong Kong business. If any events occur that will affect the Hong Kong company, the headquarters in Singapore can take over the operating responsibilities while still offering strong legal protection throughout any transition.
And when all operations have been transferred to Singapore, you can have the option to close and deregister the Hong Kong operation. This means that you can either continue to run the Singapore company under the original parent company or have a standalone company.
Establishing a Hong Kong parent company with a subsidiary in Singapore
In this scenario, the parent company is established in Hong Kong while a new subsidiary is created in Singapore. This option is said to be relatively easier to secure Singapore working permits and visas since it is a subsidiary of a foreign parent company.
Gradually, you can shift the business from the original Hong Kong company to the new Singapore company. Once the transition is complete, you have the option to close both the parent company and the original company in Hong Kong, keeping all your business in Singapore.
Converting current Hong Kong company into a parent company
With this type, the present Hong Kong business will still serve as the parent company for the new Singapore branch. This approach is preferred because it is much simpler. On the downside, you would not be able to provide as much legal protection if the Hong Kong company becomes unstable over time.
Concerns when relocating a company from Hong Kong to Singapore
Deciding to relocate to a new country is not an easy task. Here are several factors to consider when relocating to Singapore from Hong Kong:
- Employees & Staffing
Human resources are the engine of your company. You would want to keep and relocate your best employees and make the transition as easy and smooth for them as possible.
For the employees you want to move to Singapore, you need to obtain employment passes for them and their dependents. Working with a reliable corporate service provider to aid the process in obtaining the relevant passes will be the best solution.
You can also consider hiring new staff in Singapore and work with recruiters to find the best match for the new job. Bear in mind that Singapore employers are required to follow the guidelines established in the Fair Consideration Framework (FCF).
Compliance & Regulations
A Singapore-based company must have a Singapore resident director and a Singapore company secretary. As long as the individual is not the sole director of the company, one person may serve as both the resident director and secretary.
The Singapore company would also need to get all necessary permits and licences after it is established and before its business operations start. If a company utilises trademarks in its business, it should be registered in Singapore to provide the company with trademark protection.
Assets & Banking
The transfer of assets is often the most complex part of any business relocation. You can start by evaluating your tangible and intangible assets to determine what should be brought to Singapore. Would it be economical to bring equipment and machinery to the new location? What about your Intellectual Property (IP) and how would that intangible asset be transferred?
For banking, plan out a robust way to transfer all your banking assets to Singapore. Think about creating a corporate bank account in Singapore to do business there. The transfer should be smooth and orderly so your new business will have uninterrupted banking transactions during and after the move. When interacting with Singapore banks, be prepared for background checks, credit assessments, and various local bank policies.
Other Business Operations
When relocating, how will customers, vendors, partners, and other stakeholders be onboarded? Customers and clients must be assured that the change will have little effect on them and that service level quality would not be affected. As for vendors and partners, they too can be informed early on so the relationship can be maintained. You could also consider working with new vendors in Singapore and re-evaluate the costs and logistics of supplies.
Other than that, issues such as office premises and manufacturing facilities must be addressed before making the big move. Would you need both office and manufacturing spaces in Singapore or could your manufacturing stay in Hong Kong/China? How would your supply chain be affected? For service sectors, would a new office base affect service delivery?
All these concerns and issues can be daunting to think about. This is why a lot of our clients come to Ledgen to get professional advice and consultation on the best way to make the relocation process hassle-free.
Since 2019, many Hong Kong-based businesses have changed their regional strategy and moved their headquarters to Singapore, thanks to both push and pull factors. The whole relocation process does not have to be complex and hard. Engage with a corporate service provider to craft a good relocation strategy in-line with your business goals. If you are deciding to relocate to Singapore, contact Ledgen Group.
Ledgen Group (previously Ecovis Bizcorp) has helped a variety of clients to launch and incorporate their businesses successfully over the past 15 years. At every level, from incorporation to regional expansion, Ledgen continues to serve clients by offering them a complete solution across key Asian markets in Hong Kong, Singapore, and Malaysia.