The outstanding foundation that enables Singapore to successfully build an international financial center

In the context of fierce global competition, Singapore has risen to become one of the world's leading international financial centers, on par with New York, London and Hong Kong. According to the Global Financial Centres Index (GFCI) 34 in September 2023, Singapore ranks 3rd globally, leading Asia, surpassing Hong Kong thanks to its outstanding infrastructure, stable policy environment, and strong innovation ecosystem[1]. This success is not a coincidence but the result of a series of fundamental factors: a transparent legal environment, preferential tax policies, advanced financial-technological infrastructure, high-quality human resources, political stability, and the ability to quickly adapt to new trends such as fintech and green finance. This article will analyze the key factors that make up Singapore's position, and compare it with other major financial centres to clarify its competitive advantages and key differences.

 

Singapore offers superior tax incentives to attract global technology corporations to conduct R&D activities in the country. Source: Legal Electronic News

 

Singapore's position as an international financial centre in Asia

Singapore is not only the financial center of Southeast Asia and Asia but also in the global leading group. With a strategy to develop financial services since the late 1960s, Singapore has attracted hundreds of international financial institutions, becoming a leading center for foreign exchange, banking, asset management and commercial finance in Asia. Under the regulation of the Monetary Authority of Singapore (MAS), the country maintains a solid legal foundation, an independent judiciary, and a clean government, giving strong confidence in the market. The Singapore dollar (SGD) is stable thanks to a flexible exchange rate mechanism, which has helped the country avoid major inflationary shocks and financial scandals for decades. Initiatives such as the Asian Dollar Market (ADM) and tax incentives for foreign banks have made Singapore an attractive destination for international capital flows.

Compared to other major financial centers, Singapore has distinct advantages. New York and London lead in terms of market size and long history, while Hong Kong stands out as a gateway to China. However, Singapore excels thanks to a combination of a transparent regulatory environment, modern infrastructure, and the ability to quickly adapt to new trends, especially in the field of fintech and sustainable finance.

Environment and Legal Regulations

Singapore is transparent and business-friendly

One of the main pillars of Singapore's success is a transparent and stable legal environment. The World Bank ranks Singapore 2nd globally in terms of favorable business environment (2020), thanks to a legal framework that supports contract enforcement, easy start-up, and close supervision from MAS[2]. An independent court system, clear procedural procedures and a clean government make Singapore a "safe haven" for international financial activities. MAS plays a dual role: both as a central bank and as a financial regulator, ensuring synchronous policies and quick response to fluctuations. As a result, Singapore rarely experiences domestic banking crises or major financial scandals, strengthening investor confidence.

Singapore in relation to other international financial centres

• Hong Kong: Hong Kong has a legal system based on English common law, with reputable regulatory bodies such as the HKMA and SFC. However, the 2020 and 2024 National Security Laws have raised concerns about independence and freedom, although core financial regulations remain transparent[3]. Hong Kong has the advantage of being connected to China, but its reliance on Beijing's policies makes it less predictable than Singapore.
• New York: The US legal system is complex with multiple regulatory bodies (Fed, SEC, OCC, CFTC). U.S. law has strong investor protections, but strict and government-changing regulations increase compliance costs. New York remains attractive thanks to its market size and reputation from a long-standing, transparent, and low-volatility legal system.
• London: London has a stable English common law legal framework, with bodies such as the BoE, FCA and PRA ensuring effective risk management. After Brexit, London adjusted regulations to increase competition, but losing the right to a "financial passport" to the EU caused some activities to move to other cities such as Frankfurt and Geneva.

Commonalities and differences

All four centers have a strong rule of law, protecting property rights and contracts. Singapore and Hong Kong stand out for their simple, business-friendly procedures, while New York and London have more complex legal systems but good investor protection. Singapore leads the way in transparency, especially for companies that want a stable environment and less regulatory risk.

 

 

Tax policies and incentives for investors

Singapore is a prestigious tax haven

The preferential tax policy is a great competitive advantage of Singapore. With a corporate income tax of 17% – the lowest in the world – and tax exemption schemes, Singapore attracts many global financial institutions[4]. The country does not tax capital surplus, dividends or deposit interest on foreign investors, and provides incentives for startups and financial sectors such as investment funds and commercial banks. More than 80 double tax avoidance agreements (DTAs) help reduce costs for international investors. Singapore's transparent, simple and stable tax policy not only optimizes costs but also encourages substantive business activities, unlike "tax havens" that only focus on and avoid taxes.

Singapore in relation to other international financial centres

• Hong Kong: Hong Kong has a corporate tax of 16.5% (8.25% for the first HK$2 million), which does not tax capital surplus, dividends or peripheral income[5]. Territorial tax policies and incentives for investment funds and fintech help Hong Kong compete closely with Singapore. Hong Kong, however, is slightly more liberal in terms of foreign income tax exemption.
• New York: New York's corporate taxes are high (21% federal + ~15% state and city), plus progressive personal income taxes (up to 37% federal + ~10% state).[6] The U.S. has no special incentives for finance, but the large market size offsets the high tax costs.
• London: UK corporate tax is 25%, [7]higher than Singapore and Hong Kong. The "non-domiciled" policy and tax exemption for securities trading help London attract investors, but overall the tax rate is less competitive than that of Asian financial centers.

Commonalities and differences

Singapore and Hong Kong lead the way in low taxes and direct incentives, especially for fintech and investment funds. New York and London, despite higher taxes, are still attractive because of their market size and prestige. Singapore stands out for its combination of low taxes, transparency and business support, giving it a distinct advantage in the race to attract capital from global businesses looking to operate in the Asian market.

Financial and technology infrastructure

A modern and globally connected Singapore

Although the market size is smaller than New York and London, Singapore possesses the most advanced financial and technological infrastructure in Asia. The Singapore Stock Exchange (SGX) is a regional derivatives and commodities trading hub, while the FAST/PAYNOW payment system allows for 24/7 instant money transfers. Singapore's telecommunications and IT infrastructure ranks first in the world, with high-speed and secure Internet. The geographical location between the European-American time zone helps Singapore become the 3rd largest foreign exchange center globally (after London and New York). Marina Bay Financial Centre is a symbol of modern infrastructure, with secure financial data centers and international standard clearing systems.

Singapore in relation to other international financial centres

• Hong Kong: Hong Kong has Asia's largest Stock Exchange (HKEX) by capitalization, with Stock Connect and Bond Connect programs connecting China. RTGS and data center payment infrastructure is robust, but high operating costs and recent COVID disruptions have significantly reduced the traction.
• New York: New York owns the NYSE and NASDAQ – the world's two largest stock exchanges – as well as the Fedwire and CHIPS payment systems for the dollar. Financial technology infrastructure is outstanding, but urban physical facilities (traffic, electricity) are sometimes limited.
• London: London leads the forex market (about 38-40% global market share[8]) and precious metals. The CHAPS, Euroclear, and LCH payment systems ensure its role as a global financial center. London is also the European fintech capital, with startups such as Revolut and Wise.

Commonalities and differences

New York and London excel in terms of infrastructure scale, but Singapore and Hong Kong have comparable quality at a more reasonable cost. Singapore stands out for its modernity, ASEAN connectivity, and strategic time zone location, while Hong Kong has a unique advantage in terms of connectivity to China.

Quality of human resources

Singapore with lean and elite human resources

Singapore invests heavily in education and training, ranking 1st in Asia and 3rd in the world in talent competition (INSEAD, 2020).[9] The government supports the retraining of financial staff, coordinating with businesses to update new skills. The open visa policy attracts international professionals, creating a multilingual and highly productive workforce. A safe living environment, world-class education and health services make it easy for Singapore to retain talent.

Singapore in relation to other international financial centres

• Hong Kong: Hong Kong has an experienced team of financial personnel, bilingual English and Chinese, especially strong in the Chinese market. However, the political turmoil of 2019 and COVID policies drained talent, although new visa programs are gradually overcoming these weaknesses.
• New York: New York has the largest financial workforce, with experts from Ivy League schools. The environment is competitive and highly specialized, but the H1-B visa limits international talent.
• London: London attracts global talent thanks to its English language and top universities (Oxford, LSE). After Brexit, the new visa policy helped London maintain its position, with strong expertise in international finance and foreign exchange.

Commonalities and differences

All four centers have high-quality human resources. Singapore and Hong Kong are strongly internationalized, suitable for the role of a bridge between Eurasia and the United States. New York and London have outstanding size and thickness, but labor costs are high. Singapore stands out for its simplicity and attractive living environment with global experts.

Political stability and investor confidence

Singapore is considered the safest destination in Asia

Singapore stands out for its rare political stability. The government led by the PAP has been continuous since 1965, with a consistent pro-business line. Good security and order, very low corruption (top 3 countries with the lowest corruption in the world according to CPI in 2024[10]) and strict rule of law create strong trust. AAA credit ratings and large foreign exchange reserves make Singapore a safe haven, especially during periods of crisis (1997, 2008).

Singapore in relation to other international financial centres

• Hong Kong: Hong Kong used to be very stable, but the 2019 protests and the 2020 and 2024 Security Laws dented confidence. Still, the "one country, two systems" principle and Beijing's support for Hong Kong's recovery remain the gateway to China.
• New York: The U.S. has stable democratic institutions, but political fluctuations (elections, partisan polarization) pose little risk. Faith in the U.S. dollar and U.S. laws still keeps New York as the top destination.
• London: Brexit is a cause for concern, but British law and policies that support the "City of London" guarantee confidence[11]. London remains a global financial hub thanks to its long-standing reputation.

Commonalities and differences

Singapore leads in political stability and the rule of law, rivaling Switzerland. Hong Kong recovers from unrest, but political risks are higher. New York and London are stable at the institutional level, but policy swings cause little concern. Singapore took advantage of stability to attract capital flows from unstable areas, especially from Hong Kong in the 2019-2020 period.

 

 

Ability to adapt to new trends

Singapore – A pioneer in fintech and green finance

Singapore leads Asia in fintech, with the Singapore Fintech Festival attracting tens of thousands of people each year. MAS has pioneered the regulatory sandbox and digital banking licensing since 2020[12]. In green finance, Singapore has the first national green taxonomy in ASEAN and supports the issuance of green bonds. In terms of cryptocurrencies, Singapore tightens retail but promotes blockchain (Project Guardian, Ubin), ensuring controlled innovation.

Singapore in relation to other international financial centres

• Hong Kong: Hong Kong licenses 8 virtual banks, develops FPS, and leads crypto (Bitcoin ETFs, Ether). The virtual asset-friendly policy helps Hong Kong surpass Singapore in this segment (Hong Kong ranks 2nd and Singapore 4th[13]).
• New York: New York leads private fintech and traditional blockchain (JPM Coin). However, the federal regulatory framework on this issue has been delayed (Bitcoin ETF has not yet been approved), leaving New York lagging behind in crypto.
• London: London at the forefront of Open Banking, RegTech and ESG. Britain is perfecting crypto laws and has had a sandbox since 2016[14], holding the leading position in Europe.

Similarities and differences: Singapore and London are proactive with government policies (sandbox, green taxonomy), Hong Kong accelerates in crypto, and New York is strong thanks to the private economy. Singapore stands out for its flexibility, rapid testing and international collaboration, which helps to maintain its position in the future.

Singapore has successfully built an international financial center thanks to the perfect combination of legal transparency, preferential taxation, modern infrastructure, quality human resources, political stability and the ability to adapt to new trends. Compared to Hong Kong, Singapore excels in legal stability and flexibility; Compared to New York and London, Singapore has the advantage of low cost and strategic location in Asia. In the context of global competition and the emergence of trends such as fintech, ESG, Singapore is continuing to strengthen its position, not only as a regional financial center but also as one of the world's leading financial destinations with the presence of big names,  brands, and the largest financial empire in the world. And Vietnam, with its position as a laggard in this field, learning and learning from Singapore's success is essential to be able to soon form an international financial center as desired by the country in the near future.

Lawyer Nguyen Van Phuc

HM&P Law Firm

Read more: Nền tảng vượt trội giúp Singapore xây dựng thành công trung tâm tài chính quốc tế