World Economy

Singapore May Replace London as World’s Financial Hub

Singapore’s growing business clout makes up about 13% of the economy.Singapore’s growing business clout makes up about 13% of the economy.

Singapore is next in line if London loses its status as leading business hub in the world.

The Asian island nation ranks behind London as the best global city, PricewaterhouseCoopers LLP said in a new study, based on social and economic data published before the UK voted to leave the European Union, Bloomberg reported.

The Cities of Opportunity Index places Singapore ahead of Paris and Amsterdam, two European cities that are seeking to attract foreign businesses if they decide to shift jobs out of London.

Superior technology, low taxes and efficient transport and infrastructure systems helped Singapore to overtake New York and move one notch higher in the rankings since the previous study in 2014, according to PwC.

Unlike other surveys that rank financial hubs based on their competitiveness, the PwC index assesses cities on their social and economic health too, measuring indicators such as the ease of doing business, demographics and technology readiness.

The results show Singapore’s growing business clout, driven in part by an expanding financial and insurance industry, which makes up about 13% of the economy.

Singapore leads its main Asian rival, Hong Kong, in categories such as ease of doing business, infrastructure and health, safety and security. Hong Kong dropped one spot in the overall index to ninth, partly due to a decline in the category measuring intellectual capital and innovation.

Few cities beat Singapore on taxes. The corporate tax rate of 17% compares with more than 30% in France, 35% in the US and an average of 22.8% for the 35-member Organization for Economic Cooperation and Development.

“An analysis of corporate total tax rate, personal rate, and tax efficiency shows that Singapore, along with Dubai and Hong Kong, have the lowest rates and highest efficiency collectively,” PwC said.

To be sure, the No. 2 spot on the index doesn’t mean Singapore will attract companies seeking to shift their operations out of London as the UK untangles itself from the EU. For a start, the city state has been tightening rules for foreign workers and has a perennial pollution problem from forest fires in Indonesia.

Ravi Menon, head of Singapore’s central bank, said Tuesday that businesses set up operations in Hong Kong and Singapore to tap Asian markets and Brexit may not dent London’s appeal as a financial hub.

“London will remain a major financial center,” he said.