Hong Kong is decaying — its brain drain is gathering pace and many corporations have contingency plans in place to relocate out. Its strength is financial services, and while Singapore is an alternative hub in Asia, it is one of the most censored countries in the world and so should not be the only option.
Taiwan is an ideal alternative: it is a vibrant, safe and socially progressive democracy, and becoming an alternative that is within reach.
Hong Kong is no more than a special economic zone (SEZ) of China. But Taiwan was on the SEZ scene way before China, opening an Export Processing Zone in 1966.
So why not tap into this legacy and make a physical (or even virtual) ‘Taiwan Financial SEZ’, with its own laws and governance? Taiwan lags behind Singapore in some key ways: its way of doing business and legal system are less familiar, talent is in shorter supply, and there is the thorny issue of English proficiency — but these issues can all be overcome.
The quickest way to get such an SEZ up and running would be to establish a common law system for the zone within Taiwan’s broader civil law system — an exact parallel of Hong Kong’s legal framework within China. That would enable Hong Kong’s laws and financial regulatory framework to be copied lock, stock and barrel — the best way of ensuring continuity for companies that want to relocate.
Solving the talent problem is easy: Taiwan regularly tops out as one of the best places in the world for people to live in, and it is cheaper than both Hong Kong and Singapore.
As for English, what better way of reinforcing president Tsai Ing-wen’s Bilingual 2030 Country Project than by making it a practical reality, with English being made the official language of the SEZ?
As with any audacious goal like this, there are risks. If relocating to the new SEZ is perceived by companies in Hong Kong as being too risky, it could start by offering comprehensive outsourcing services so that they could relocate bit-by-bit.
China would get riled: but if enough Chinese park their money in Taiwan, and enough global financial companies invested there, it would buttress Taiwan’s defence and spread its word into more boardrooms and governments worldwide.
A Taiwanese SEZ would bring huge diversification to Taiwan’s economy, and with political will it could quickly become a reality.
Lee Faulkner is a Fellow of the Institute and Faculty of Actuaries. This article is an abridged version of an article that first appeared in Taiwan News on 27 September 2021
This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here.