Wealth Solutions & Wealth Planning
China Hong Kong is the Second Simplest Jurisdiction for Business; Mainland China and Indonesia Drop in Complexity
Hong Kong remains a great place for business according to the Global Business Complexity Index (GBCI) by TMF Group, a leading professional services firm.
The report analyses key areas of business administration and compliance across 77 jurisdictions, from the time it takes to incorporate a company, to changes in tax legislation, policies around wages and benefits, through to the challenges of opening a bank account. In all, over 290 different criteria are factored into this year's rankings, the firm explained in a press release.
Second only to Denmark, China Hong Kong is one of the easiest jurisdictions in the world in which to do business, mostly due to its openness to globalisation and simple rules. In the area of accounting, for example, the jurisdiction follows the Hong Kong accounting principle, which is closely aligned with the International Financial Reporting Standards (IFRS). Another factor is that incorporating a business usually takes only one week, while only one governmental body needs to be notified. Firing an underperforming employee is a relatively simple process, requiring around 3-4 weeks. Hong Kong is also a digital-friendly jurisdiction: official legal entity documents do not require an official stamp, chop or seal to be legally effective,
The wider Asia Pacific region presents many challenges and opportunities. China is one of the biggest economies in the world but has always been among the hardest jurisdictions to do business in the world, but the recent trend shows this may be changing. The country dropped from 6th to 12th over the last year, with Indonesia following the trend, dropping from 1st to 6th. The latter is clearly showing a commitment to opening up to foreign direct investment, with the introduction of new laws to actively reduce the layers of complexity.
The contrast in the region is evidenced by South Korea and India featuring in the top 20 most complex jurisdictions, while Singapore, Australia and New Zealand are all closer to the bottom of the index so are simpler for business.
One interesting revelation from the report is that none of the region's jurisdictions allow employees to be dismissed without citing a reason. Globally, that number is currently at 20%, compared to 29% in 2020, a fact mostly driven by the COVID-19 pandemic and the implementation of laws to protect employees.
Paolo Tavolato, Head of APAC at TMF Group, commented: “The Asia Pacific region is marked by its great diversity and opportunities. In general, countries in the region have been trying to apply more business-friendly legislations. China Hong Kong is a hub for businesses in APAC, and it has simplified even more its corporate environment. Challenges are still very present in countries like China and Indonesia, but it is my belief that the investment opportunities are enough to attract companies and investors.”
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