Hong Kong Towards a Leading Global FinTech Hub

54 55 Business Environment Part I: Examination of Seven Fintech Hubs 2017 and 2018, investments in New York fintech companies nearly doubled from around US$1.8bn to more than US$3.4bn. 153 In the first eight months of 2019, the city recorded 101 fintech deals at US$1.93bn investment value, ranking third globally after London and San Francisco. 154 Currently, there are 650 for-profit fintech companies in New York. As of March 2021, there were 46 fintech unicorns recorded in the US, 155 of which 10 are based in New York and include Unqork, Symphony, Payoneer, Trumid and Better.com . San Francisco is the country’s leading technology hub, with the densest concentration of tech companies in the world, with 2,000 tech companies as of 2019. 157 At the same time, the city is a principal banking and financial center and houses more than 30 international financial institutions. San Francisco is also known as a startup heaven. The entrepreneurial environment of Silicon Valley is characterized by innovation, collaboration, and risk-taking, all of which have helped create this dynamic startup ecosystem. Singapore: Customized Government Policy with Transparent Business Regulations and a Streamlined Process As of 2020, Singapore has more than 1,000 fintech companies. The number of completed fintech deals increased 52%, from 71 deals in 2018 to 108 deals in 2019. 158 With over 20 accelerators, startups are well supported with seed investment and mentorship in Singapore. 159 Total value of fintech deals in Singapore jumped to almost S$1.01bn (US$735mn) in the first nine months of 2019, a 69% YoY rise compared with the S$585.38mn (US$435mn) recorded over the same period in 2018. 160 Singapore takes the lead in Southeast Asia fintech investments. In 2015-2019, Singapore ranked first in total cumulative fintech investments in the Southeast Asian market, reaching US$2,498mn, which is almost four times more than received by Indonesia who ranked second. 161 Dozens of global studies consistently rank Singapore as one of the top places to start a business. Among other Asian countries, Singapore ranked first for innovation, second for easiest location in the world to do business, 162 and third on the International Property Rights Index 2020 and the Corruption Perceptions Index 2020. The fintech adoption rate in Singapore leaped from 15% in 2015 to 67% in 2019. 163 With the rise of the Southeast Asia market, the Singapore government positioned itself as a base to access to the region and a gateway to go global. To encourage MNCs and innovative startups to set up business in Singapore, the government established transparent business regulation with a streamlined process. For example, it only takes 15 minutes to register a company online, which will be set up in less than two days, at a cost of S$315 (US$237). 164 Although it currently has no fintech- specific tax incentives, tax incentives exist for more general categories. Singapore has the world’s fastest approval process for an AI patent, which can be done within six months for eligible applications. According to the KPMG Budget 2018/19 report, Singapore is the top location for MNCs to set up regional headquarters in Asia. 165 The Singapore government also provides strong support to new businesses. Announced in its Budget 2020, the government provided S$8.3bn (US$6.3bn) to spur business growth and economic transformation, offered a safety net for new companies through absorbing bank loan risk up to 70%, injected S$300mn (US$226mn) funding for deep-tech startups 166 and arranged tailored assistance for large and promising companies from the Economic Development Board (EDB) and other agencies. It also launched a pro-business tax system to support long-term economic activities, providing low corporate and income tax rates, and a 100% tax deduction for eligible R&D activities. 153. FinTech Innovation Lab. | Report: Emerging Fintech Trends (Jul 2019).| https://www.fintechinnovationlab.com/ news/new-york/report-emerging-fintech-trends/ 154. Prolific London. | London overtakes New York as UK FinTech investment hits record high (Sep 2019). | https:// www.prolificlondon.co.uk/marketing-tech-news/tech-news/2019/09/london-overtakes-new-york-uk-fintech- investment-hits-record 155. Fintech News. | All 96 Fintech Unicorns: Worth a Combined US$404B (Mar 2021). | https://fintechnews.ch/ fintech/all-96-fintech-unicorns-worth-a-combined-us404b/43748/ 156. Failory. | +50 Unicorn Startups Founded in New York City [2021 List] (Apr 2021). | https://www.failory.com/blog/ unicorn-startups-nyc 157. Jonathan Gruber and Simon Johnson. "Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream." Public Affairs, 2019. 158. The Strait Times. | Fintech investments in Singapore more than double to $1.2 billion in 2019: Accenture (Feb 2020). | https://www.straitstimes.com/business/companies-markets/fintech-investments-in-singapore-more- than-doubles-to-12-billion-in-2019 159. Findexable. | Findexable Global Fintech Rankings 2020 (2019). | https://findexable.com/wp-content/ uploads/2019/12/Findexable_Global-Fintech-Rankings- 2020exSFA.pdf 160. Findexable. | Findexable Global Fintech Rankings 2020 (2019). | https://findexable.com/wp-content/ uploads/2019/12/Findexable_Global-Fintech-Rankings- 2020exSFA.pdf 161. Singapore Fintech Association. | Singapore fintech landscape 2020 and beyond (2020). | https://www. oliverwyman.com/content/dam/oliver-wyman/v2/publications/2020/dec/singapore-fintech-landscape-2020- and-beyond.pdf 162. World Bank Group. | Doing business 2020: Comparing business regulations in 190 economies (2020). | https:// openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402.pdf 163. EY. | Global Fintech Adoption Index 2019 (2019). | https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/ topics/banking-and-capital-markets/ey-global-fintech-adoption-index.pdf 164. Singapore Economic Development Board. | https://www.edb.gov.sg/en/why-singapore/business-friendly- environment.html 165. Hong Kong Business. | Hong Kong loses to Singapore as top Asian location for MNC headquarters (Feb 2018). | https://hongkongbusiness.hk/financial-services/news/hong-kong-loses-singapore-top-asian-location-mnc- headquarters 166. The Business Time. | Budget 2020: Deep-tech startups to get more support under Startup SG Equity (Feb 2020). | https://www.businesstimes.com.sg/government-economy/singapore-budget-2020/budget-2020-deep-tech- startups-to-get-more-support-under Singapore 1 2,498 Indonesia 2 654 Philippines 273 Thailand 162 Vietnam 135 Malaysia 91 Source: CB Insights, Oliver Wyman analysis Note: 1. Investments in Grab excluded. 2. Investments in Gojek excluded. [ Exhibit 17 ] : Total Cumulative Fintech Investments in Southeast Asian markets from 2015-19, US$ million