Hong Kong has become the favoured location as the hub of regional treasury centres (RTCs) for global corporates, according to research from East & Partners.
The research and analysis firm cites China’s booming economy, Hong Kong’s proximity to the mainland and its Corporate Treasury Centres (CTC) tax incentive implemented in 2016 as factors that have worked to position Hong Kong as the biggest hub of RTCs for multinationals
East’s Regional Treasury Centre report is based on direct interviews with 649 chief financial officers (CFOs) and corporate treasurers from the top 100 corporates in seven locations: Australia, China, Germany, Hong Kong, Singapore, the UK and the US.
Among global multinational corporations (MNCs) and large domestic corporates 27.1% have an RTC located in Hong Kong. British Virgin Islands and other Caribbean nations are home to RTCs for 23.6% of corporates with the Channel Islands rounding out the top three with 14.2% of large corporate RTC locations.
Singapore, Hong Kong’s long-time rival in Asia Pacific, is the location of RTCs for 13.1% of companies, marginally behind the UK, but ahead of Switzerland, Germany and Belgium and growing quickly.
East’s research also showed that specific industries base their RTCs in differentiated ways, with Hong Kong the preferred choice of RTC location for manufacturers (32.7%), retailers (31.8%) and wholesalers (21.7%).
The traditional centres for non-bank financial institutions (NBFIs) of the British Virgin Islands/Caribbean and Switzerland continue to represent very high RTC concentrations, with 78.3% and 73.9% of NBFIs respectively running established RTCs in these tax friendly centres.
More than one in five global companies (21.4%) are also looking to implement an additional centre over the coming 12 months.
China and UK-based businesses are the most bullish in their plans with 49.5% of Chinese and 32.6% of UK headquartered enterprises looking to extend their existing treasury network. Current political climates and their ensuing opportunities and challenges are partly driving the need for additional RTC resourcing for these two regions.
While 21.4% of corporates have plans in place to expand their number of treasury centres, 25.2% are still unsure on the location. This significant portion of businesses presents a clear opportunity for RTC destinations looking to attract such investment.
The location for those still undecided however is likely to be in Asia with Hong Kong (15.8%), China (10.8%) and Singapore (9.4%) nominated as the top three expected locations for additional RTCs over the coming year.
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