2023-Public-Sector-Perspectives

Asia In Asia, Hong Kong and Singapore remain the leading IFCs. However, mainland China’s hubs — Shanghai, Beijing and Shenzhen — have leapt up the rankings and are now closing the gap with traditional Asian strongholds. Shanghai leads the pack, largely due to its role as the financial center of China, the second largest economy in the world. The competition between Hong Kong and Singapore has been friendly but intense over the years. In the latest GFCI ranking, Singapore overtook Hong Kong to become the region’s top financial center. Concerns over the New Security Law and COVID-19-related travel restrictions in Hong Kong have affected its perceived attractiveness as a long-term financial center. The city’s population has been declining in recent years due to a variety of factors. Over 113,000 residents left Hong Kong in 2021, representing 1.6% of the total population. On the other hand, Hong Kong remains ranked as one of the world’s freest economies according to the Fraser Institute, a Canadian think-tank. While Hong Kong has experienced talent losses, Singapore has been welcoming expatriates. The country aims to add as many as 20,000 finance jobs over the next five years as the government seeks to bolster areas such as wealth management and sustainable financing. Figure 4: Ranking of select Asia IFCs 0 5 10 15 20 25 30 35 40 45 50 55 60 Shenzhen Beijing Shanghai Tokyo Singapore Hong Kong 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 60 65 50 45 40 35 30 25 20 15 10 5 0 Shenzhen Beijing Shanghai Tokyo Singapore Hong Kong 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Source: GFCI Index Report 1 to 32 Conclusion Due to a variety of political, economic, health and social factors, the competition between IFCs has intensified over the past five years, particularly in Asia and Europe. There has not been this level of fluidity in the top five global IFC rankings for decades and it is unclear which centers will prevail. This competition will ultimately result in better and more efficient financial services worldwide. While the main competitors are changing, the factors that determine which IFCs succeed have remained constant over the years. The mix is different for each successful IFC but the basic ingredients or building blocks remain the same. • Government: Pro-business government with a commitment to open markets and the free flow of capital, people, and ideas. • Legal: Independent and credible legal system that is transparent and impartial. • Regulation: Independent, transparent, and resourced regulator. • Infrastructure: Modern and efficient transport, real estate, utilities, and IT and telecoms. • Human capital: Technical and soft skills and English language. • Lifestyle: Personal welfare, cost of living, children’s education, cosmopolitan, i.e., do families want to live there. The six factors listed above are all critical. However, the two most important of these remain — as they have for decades if not centuries — an independent and credible legal system, and the provision of an attractive environment for individuals and their families. Due to a variety of political, economic, health and social factors, the competition between IFCs has intensified over the past five years, particularly in Asia and Europe. 18 What Makes a Successful IFC?