Tale of two cities: Singapore and Hong Kong make ideal trading partners

Singapore is celebrating its 52nd anniversary this year and the city’s regional presence and relationships have never been stronger. More so when it comes to a competitive yet fruitful trade relationship with Hong Kong.

Singapore and Hong Kong have always had a rivalry when it comes to business, influence in the region, attracting investors and hosting global giants in finance, media, law, and other professional services. While this can also extend to even sillier extremes – who has the better food? – or to the political and cultural – who enjoys the most freedom or has the best entertainment and lifestyle choices? However, the debate aside, Hong Kong and Singapore enjoy a symbiotic relationship with each other.

This is highlighted by Wenda Ma, senior economist at the Hong Kong Trade Development Council, who pointed out in a November 2015 report that Hong Kong and Singapore have much in common. “Both are small, open economies with no natural resources, but have developed into international trade and services centres in Asia. From a regional development perspective, the two economies are nodes connecting the hinterlands of mainland China and Asean countries, which are set to strengthen economic ties and integration,” Ma wrote.

At the end of 2015, Singapore’s investment in Hong Kong was US$38.4 billion and, as of June 2016, companies from the Lion City had established 40 regional headquarters, 102 regional offices and 240 local offices in Hong Kong. Singapore could be considered critical for Hong Kong, being the city’s eighth largest export market and the biggest trading partner in Asean, although Vietnam has become Hong Kong’s largest export market within that organisation.

In the first four months of this year, Hong Kong’s exports to Singapore fell 4.2 per cent year-on-year to US$2.4 billion. However, Singapore is the third largest import source for Hong Kong, with imports from the Lion City increasing 13.3 per cent year-on-year to US$11.2 billion in the first four months of 2017.

The types of goods that have been traded between the two cities are wide ranging. Exports include semiconductors, electronic valves and tubes, telecom equipment, engines and motors, computers, and components for electrical circuits. Meanwhile, significant import items include semiconductors, electronic valves and tubes, petroleum oil (ex-crude), office machines, computers, telecoms equipment, perfumery

and cosmetics.