Factors for Encouraging Economic Growth in Hong Kong and Singapore

Topics: Tax, Corporate tax, Income tax Pages: 2 (541 words) Published: October 16, 2011
Factors for Encouraging Economic Growth in Hong Kong and Singapore People have often wondered what factors has allowed small states such as Hong Kong and Singapore to develop a diverse economy as well as continue success in marketing their resources to encourage multinational organizations to conduct business with them. Factors that have encouraged economic growth have been land, low personal and corporate taxes, and investments in infrastructure. Land is a scares resource for both city states and their creativeness in managing the resource has given them a substantial return. Hong Kong is the only landowner in its state with Singapore being the largest landowner for its state. Most would say that government owning all or majority of land is inefficient and leads to economic problems; however these two states have implemented policies to create markets for state land and lease contracts in order to manage this limited resource affectively and encourage economic growth. With the sale of land leases, revenue generated enabled the states to build infrastructure such as ports, hospitals, schools, housing, and roads in order to attract other multinational companies to set up offices in their states. With the government generating revenue from their land policies, it has allowed them to offer competitive rates on corporate income tax as well as personal income tax. In order for a business to grow and continue to prosper, business leaders look for ways to reduce the companies expenses and one way is to move to a country with a low corporate tax. Both Singapore and Hong Kong instrumental in providing businesses with a low corporate tax rate as well as other incentives for conducting business within their states. Low corporate tax fuels business to hire employees, promotes capital investments, and stability to the economy. Low personal income tax also contributed to the growth of the economy. In Hong Kong, most of the labor force does not pay taxes and others are able to...
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