Economic Growth of Firms in Hong Kong and Firms in Singapore

2021-05-19 11:59:37
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Singapore is one of three city-state with supreme authority remaining on the Planet, next to the Vatican and Monaco, although it is much more extensive, occupying an area of 710, 2 km2. It is located at the southern tip of the Peninsula, to the north of the equatorial region, and Indonesia, being a country smaller in Southeast Asia. Is a country extremely small, without natural resources and no space for agriculture, but with an economy that continues to grow, especially as an export platform.

Hong Kong is a special region of China, which has existed since July 1997. located on the estuary of the Pearl River, as a Hong Kong island, with an area of 1104 km2 very different of Singapore area. The British colonized these two cities during nineteen centuries. Both are competitive against each other.

Singapore and Hong Kong vying for there are times the crown place more competitive for business.

For a better understanding, I have explored some method currently being used to encourage economic growth for the typical firm in Hong Kong and for the typical firm in Singapore such as Private strong sector, without international help, Market economy, Taxation.

 

Private strong sector

It was the remarkable efforts of Singapore to create private companies of excellence, with the characteristics of a first world and genuinely competitive in the global market. This was achieved mostly through low taxation, bureaucracy is almost non-existent and minimal regulation. All this in conjunction with import tariffs null and void and of free trade, the full system (identical to the one adopted in Hong Kong).

Without international help

Was the total absence of foreign aid. Lee Kuan Yew has forbidden that the country asked for international aid. Singapore refused to accept foreign aid of any type.

This is a posture opposite of many other developing countries, in which that there are corruption schemes in which politicians and bureaucrats trying to rob some type of foreign aid.

These were two of the objectives of the strategy of Lee Kuan Yew: strong and stable currency, nothing helps foreign private companies from the first world, fully competitive, operating in an arrangement of free trade in full and without any regulations onerous, and an arrangement of law and order.

Market economy

Proponents of economic liberalism advocate free market.

Market economy or free enterprise when the economic agents to act freely, with little intervention of the State. Therefore, a market is conceived, where all the actions in the economic and individual, relate to the transfer of money, goods and services voluntarily. However, the compliance with voluntary agreements is mandatory. Law protects private property and nobody may be forced to work for third parties.

Differently what occurs in the planned Economy or the Economy of the state, where the economic production is directed by the State, the market Economy most of the economic production is generated by private initiative. Private Citizens control industry, trade and provision of services, or in other words, are private sector companies, which hold the largest share of the means of production.The State has a role in the regulation and supervision of the economy, in addition to meeting the priority sectors as: energy, security, education and health, among others.

So, we can say that in countries called capitalist dominates a market economy and in its opposite we have the socialist countries where there is an economy primarily of the state.

This system brought the end of the era of communism. Therefore, the citizens were able to possess their properties, which stimulated the growth of the free-market economy. In addition, as a conclusion, the policy has engrossed directly the foreign investment, leading to rise the both economies Singapore and Hong Kong.

Taxation

The tax system offers numerous benefits, after all if a company established in Hong Kong are not doing business or does not generate any profits in Hong Kong, it will not be taxed in that jurisdiction.

The legal system of Hong Kong is mostly created in common law of British. The local companies are associated, Hong Kong is considered as a commercial center of low taxation.

Taxes are imposed on incomes, moneys and property with rates varying. Only the income obtained, which are collected from the assessment, for tax purposes and offshore operations are not subordinate for taxation in Hong Kong. However, it is important to note that the Inland Revenue Department (IRD) is extremely diligent in the determination of what qualifies as profit local or foreign

In the center of the thriving business culture of Singapore is a unique blend of competitive strengths that makes Singapore the location of choice for global companies. The combination of core skills, physical location, and sophistication of the west and the growth potential of the eastern confer numerous benefits to companies.

The tax system in Singapore is local or territorial and, as such, the returns taxes is imposed only on the net income of the found revenue obtained in Singapore or on international source proceeds nested to Singapore.

Presently it is 17% of the rate of tax on income from collective persons. Does not have a tax on capital gains Singapore does not enforce deduction tax on the payment of dividends, lease contracts or technical help. On the other hand, it is necessary to say that Singapore provides certain exemptions on international source proceeds nested to Singapore. If such proceeds has incurred a tax minimum 15% in the sender country. Such countries as Vietnam, Thailand, Taiwan, Indonesia, Pakistan, Malaysia, China, and Korea are included on the extensive network of convention on dual taxation accord that Singapore has created for covering 80 countries.

In my opinion relative to the growth of the economy in Singapore and Hong Kong, the four method reported in the text, it is necessary to understand that all the things work together. In the country, we can even have property rights, the business will not be open for everyone if the government puts the taxes too high mainly to the companies, and they even will not want to do the business in this place. In addition, the economy is a game sometimes you win and some do not. Therefore, it is imprudent to put all your bread in one bag. One of the way for encouraging developing the economy of a country, are leadership and management, must always be placed to the front of the goal. Try with less method or even just a single method does not help but with innumerable methods, working together can get rapidly the success in better levels.

Taking into consideration the geographical characteristics, mainly the extension, we can conclude that the extraordinary success of Singapore and Hong Kong given by the fact of being small cities that sought as a priority in their public policies the development of the country. In addition, the creation of rigid institutions in their action, the union between the public and private sectors, higher investment in education, the qualification of the labour, the investment in the industrialization and production, the formation of a financial center globally-recognized, the intensive residential program and all other factors presented in this work. It explain the development of Singapore's society and Hong Kongs society the economic growth relevant for these cities, in a short time of independence.

 

References

Ludwig Von Mises Institute, The characteristics of Market Economy

Ministry Of Economic Development

http://www.guidemehongkong.com/story/doing-business/hong-kong-worlds-second-best-country-for-businessPressRun.net. (2011). Singapore 2nd freest economy: Heritage Foundation. Retrieved July 9, 2011from http://www.pressrun.net/weblog/2011/01/singapore-nominally-democratic-2nd-freest-economy-heritage-foundation.htmlThe World Bank. (2011). About Us. Retrieved July 9, 2011 from http://www.worldbank.org

 

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