Skills shortages in Hong Kong and Singapore will do more to advance Australia’s status as a regional financial services centre than anything our Government is doing in response to the ‘Johnson report’, according to a regional custody chief.
The Hong Kong-based director of Citi Global Transaction Services, Chee-Ping Yap, said that recommendations to reduce withholding tax and abolish tax on non-Australian assets managed by Australia-based firms would only bring Sydney and Melbourne into line with Hong Kong and Singapore, assuming the proposals make it into law.
“You need to put your money where your mouth is if you want to attract funds managers to set up in your country. Both Hong Kong and Singapore offer three year tax breaks to financial services companies in return for them putting people on the ground, and you have to remember that Taiwan, Shanghai, India and others are all trying to do the the same thing. I’m not sure whether Australia’s Government will want to go that far,” Yap said, notwithstanding that State Governments had offered incentives in the past, such as the accommodations made by NSW to encourage Deutsche Bank to set up its regional foreign exchange hub in Sydney, and UBS its global IT help desk.
Noting that the ‘Johnson’ recommendations also called for Australia to lead the development of a ‘regional fund passport’, Yap said such attempts at mutual regulatory recognition had failed in Asia in the past.
“The regulators are encouraged by their governments to look at each other’s markets from this competitive standpoint. Hong Kong and Korea know that Australia has the bigger funds management market, and that more products would be coming in from Australia [under any regional passport regime] than products from their managers going into Australia.”
Yap said that Australia’s attractive lifestyle, and the infrastructure required for its compulsory superannuation system, had done and would do more to attract foreign capital than any ‘hub’ measures. He added that Hong Kong and Singapore were both suffering skills shortages, so decision-makers would gravitate to Australia’s well-educated, English-speakinhg population.