Singapore has not 'supplanted' Hong Kong, both benefit from each other's growth: Shanmugam
SINGAPORE: The suggestion that Singapore has "supplanted" Hong Kong gives too much weight to short-term factors, Singapore's Law and Home Affairs Minister K Shanmugam said on Wednesday (Mar 29).
Commenting on comparisons between Singapore and Hong Kong as financial hubs in Asia, Mr Shanmugam said that both economies benefit from each other growing and bringing vibrancy to the region.
The minister was speaking at the South China Morning Post's China Conference: Southeast Asia in Singapore, with Hong Kong's Financial Secretary Paul Chan in attendance.
He said that the topic of Singapore versus Hong Kong has been "rather hyped up" in the media, with the narrative being that only one can benefit at the other's expense.
"The truth I think is a little different, and rather less dramatic, because each has its strengths, each has its hinterland, and both can do very well," he said.
Hong Kong has "strong links to the Chinese hinterland" and close financial integration with the mainland, with mainland companies accounting for more than 75 per cent of market capitalisation on Hong Kong's stock exchange.
It is the largest offshore yuan centre and is also in China's Greater Bay Area, which has a gross domestic product of about US$2 trillion, he added.
"And Beijing wants Hong Kong to succeed, and that counts for a lot," said Mr Shanmugam.
He said that talk of Hong Kong "being in terminal decline, that it does not have democracy and so on leaves me bemused", and that many of the factors necessary for the city to continue to succeed are present.
He added that, like Singapore, this was premised on there being no major internal or external disruptions, such as a war or political upheavals.
"NEVER A ZERO-SUM GAME"
Turning to Singapore, Mr Shanmugam said it was "always a great place to invest", and the common consensus was that post-COVID, Singapore has emerged even stronger because of how the country handled the pandemic.
"A lot of people found that their money was safe, and they were safe, with a world-class healthcare system and rational policies," he said.
"Investors from all over the world are looking at Singapore."
He pointed to a steady increase in the net inflows of assets under management. The number of family offices in Singapore grew from 400 at the end of 2020 to 700 as of end-2021.
He said that Singapore will do very well as long as two conditions are fulfilled: For Asia, or at least significant parts of it, to grow; and for Singapore to remain "sensible" on its employment, tax and business policies.
"So by virtue of the geography of both places, and what Hong Kong and Singapore have built ourselves into, both can and I think will do very well. It's never a zero-sum game," said Mr Shanmugam.
HONG KONG'S TRANSITION
Hong Kong saw widespread anti-government protests in 2019. The following year, China passed a national security law to punish crimes of secession and sedition in the city.
Mr Shanmugam said that Hong Kong has been "in transition" in recent years and that there is a "recalibration of its position, vis-a-vis China", but he said analyses of the recalibration and protests have been "far too skewed".
"In many ways, I think Hong Kong has been a collateral casualty of an anti-China mood in some parts of the world, and their media," said the minister.
"I believe the smart money will look beyond the media narratives and effects of periods of transition. And they will know that the trend for Hong Kong is clearly up," he added.
"It will be more integrated with the mainland, politically and economically. And it is a Hong Kong which will compete with other Chinese cities, and which is extremely well placed to benefit from the growth of the mainland."