Business Indicators
| Last Updated: July 2010 |
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Hong Kong SAR |
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Business Indicators Summary
With an overall score of 11.23/12, Hong Kong SAR is at standard on the economic, legal, and political indicators that make up our Business Indicators Index. Hong Kong SAR is a free market-based economy, with the government active in several economic sectors, including the subsides for most medical and educational services and about half the population's housing. Hong Kong imposes few restrictions on foreign capital flows and investment which has helped the country to become a regional hub for the finance industry. Overall, foreign investment is highly encouraged, and foreign capital is treated the same as domestic capital. An effective court system, efficient incorporation and business registration procedures, and straightforward corporate reporting requirements contribute to an environment conducive to foreign investment. Furthermore, the rule of law is strong and the judicial system is transparent. The level of corruption is low which is reflected in Hong Kong high rating in Transparency International's 2009 Corruption Perception Index.
Business Indicators
- Economic Model
- Forex Regulations
- Foreign Investment Law
- Trade Regulation
- Tax Regime
- Tax Rates
- Bankruptcy Indicators
- International Dispute Settlement
- Political Environment
- Political Stability
- Corruption
- Adherence to global labor standards
Economic ModelMarket-based economy
The 2009 Economic Freedom of the World Annual Report by Gwartney et al. awards Hong Kong a score of 10 out of 10 for the factor "Government Enterprises and Investment" as a percentage of total investment. Higher values signify greater economic freedom. This rating means that the country has few state owned enterprises, and government investment was generally less than 15 percent of total investment. The Heritage Foundation's 2010 Index of Economic Freedom ranks Hong Kong at the top of its list of countries with regard to economic freedom, and notes that total government expenditures, including consumption and transfer payments, are low, totaling 14.5 percent of GDP in the most recent year for which data was available.
The U.S. Department of State's 2009 Background Notes on Hong Kong notes that Hong Kong is "a separate customs territory and economic entity, separate from the rest of China." As a Special Administrative Unit of the People's Republic of China (PRC), it is empowered to act on its own behalf in international agreements and to participate as an independent entity in international organizations such as the World Trade Organization and the Asia-Pacific Economic Cooperation Forum. The U.S. Department of Commerce's 2010 Country Commercial Guide (CCG) to Hong Kong describes it as a free-market economy and as a free port that imposes virtually no duties or tariffs. However, the CCG adds that Hong Kong's government is directly active in several economic sectors, including the subsidization of most medical and educational services and about half the population's housing. The government also owns the stock exchange, airport, and railway company. There have been calls from the private sector for the government "to adhere more closely to the Guidelines on Corporate Governance of State-owned Enterprises" as promulgated by the Organization for Economic Cooperation and Development. The CCG further notes that Hong Kong "enjoys a high degree of autonomy except in foreign affairs and defense." Hong Kong's legal system is based on common law, unlike the PRC, and it has its own currency. The IMF's 2009 Article IV Consultation report notes that Hong Kong's economy was significantly affected by the larger global economic downturn, but is currently showing signs of recovery.
Sources
Gwartney, J., et al., "Economic Freedom of the World: 2009 Annual Report," 2009. Available from Frazer Institute website. Accessed on April 11, 2010. (Gwartney et al. 2009)
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Heritage Foundation, "2010 Index of Economic Freedom: Hong Kong," 2010. Available from Heritage Foundation website. Accessed on April 11, 2010. (HF 2010)
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International Monetary Fund, " People's Republic of China, Hong Kong Special Administrative Region: 2009 Article IV Consultation – Staff Report; and Public Information Notice on the Executive Board Discussion," IMF Country Report No. 08/44, Washington, D.C.: IMF, February 2008. Available from International Monetary Fund website. Accessed on April 11, 2010. (IMF 2008)
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U.S. Department of Commerce, "Doing Business in Hong Kong and Macau: 2010 Country Commercial Guide," 2010. Available from U.S. & Foreign Commercial Service and U.S. Department of State website. Accessed on April 11, 2010. (U.S. DoC 2010)
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U.S. Department of State, "Background Notes: Hong Kong," December 2009. Available from U.S. Department of State website. Accessed on April 11, 2010.
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