Hong Kong crackdown drives businesses to Singapore
Hong Kong businesses are protecting critical information by moving their companies and data to Singapore following the enactment of a repressive security law by the People’s Republic of China (PRC).
The law, which took effect June 30, 2020, criminalizes a broad spectrum of vaguely defined activities ranging from secession and subversion to terrorism and collusion with foreign forces, the BBC reported. It enables Beijing to install security and intelligence services in Hong Kong and deprive the territory of its autonomy. Beijing bypassed Hong Kong’s parliament to enact the law, sparking local protests and international condemnation.
Singapore-based consultancy CorporateServices.com in early August 2020 reported a sharp uptick in Hong Kong-registered companies relocating to Singapore. More than one-third of the 1,220 companies belonging to the American Chamber of Commerce in Hong Kong reported in July 2020 that they were trying to move assets out of Hong Kong, with 90% naming Singapore as a potential destination. (Pictured: Singapore is an attractive destination for Hong Kong businesses seeking to relocate.)
A big concern for Hong Kong-based companies is sovereignty over their proprietary data and intellectual property (IP), Dr. Andrew Ladley, an international policy advisor in Wellington, New Zealand, told FORUM. They fear Beijing will extend “the great internet wall of China” into Hong Kong and take “control of local media, internet, chat rooms, topics, external material, Google, etc.”
Ladley said there’s abundant evidence that Beijing will use “whatever means works” to acquire technology and IP for its strategic goals. “It may be hard to keep some sort of wall between IP abroad and local manufacturing or other business,” he said.
As Beijing tightened its grip, the flow of companies moving from Hong Kong to Singapore appears to have gone from a trickle to a flood, Ladley said.
“There seems to have been a decade or more-long trend in which Singapore has increased its attractiveness by efficient administration and compliance, whilst Hong Kong has decreased its attractiveness. All this is likely to have dramatically accelerated over the last year.”
The Chinese Communist Party relies on “constant economic growth” to exercise domestic control, which fuels the desire to obtain IP and data, he said.
Citing enactment of the security law, the U.S. Department of State announced in August 2020 that it had suspended three bilateral treaties with Hong Kong, including an extradition treaty. That came a month after the United States ended the preferential trade and diplomatic status it had granted Hong Kong.
Tom Abke is a FORUM contributor reporting from Singapore.