HK versus Singapore as International Financial Centres: its strengths and weaknesses.
An International Financial Centre (IFC) is a collection of markets that trade financial services or products and help to allocate resources or property rights efficiently. It is not an easy task to become a successful IFC. HK and Singapore have always tried to reach the position of the second biggest financial centre in Asia; they have been rivals of each other for over 30 years. HK has always been in the top 4 ranking in Asia; however its relative position had a little change after the Asian Financial Crisis and Singapore is catching up with vigorous competition. For example, Singapore has designed many tax incentives schemes and other policies to attract fund management, and investment banking to relocate from HK to Singapore. It can be clearly seen that Singapore government made no effort to hide their idea of trying to replace HK's financial position, especially after 1997. Both the countries have lots of common features, including economic freedom, former British colonies, predominantly Chinese, with an English based legal system. In judging HK and Singapore's entitlement to the label of IFC, we must consider the countries in historical context including strong commercial heritage of banking and financial services, their position as the regional centre for the exchange of information and expertise on Asian and Western market opportunities. Both countries have their own good and bad points, therefore in this essay; I aim to analyze each of the country and their financial position showing their advantages and disadvantages in terms of being a good and recognizable International Financial Centre. .
With HK as an IFC, the HKMA takes the target of maintaining its position in Asia very seriously. Since 1945 HK's financial sector increased its importance largely because of the colony's unique position in the Bretton Woods system.