KUALA LUMPUR: Small and medium enterprises (SMEs) should tap Hong Kong’s access to the markets in China, Japan and South Korea to gain tax advantages under the double-taxation deduction pact signed between Malaysia and HK.
Hong Kong Trade Development Council deputy executive director, Margaret Fong, said HK SMEs paid five per cent loading tax compared with ten for others if they were set up in China, Japan and South Korea.
The Malaysia-HK pact, signed in 2012, would help local SMEs avoid paying double taxes, she said.
Fong said SMEs could expand their businesses overseas, particularly in sectors such as consumer products and services, using HK as a gateway like to Mainland China.
“Using HK as a base allows Malaysians to explore the strong network that already exists with China, Japan and South Korea,” she told reporters on the sidelines of a seminar on ‘Hong Kong: Your Ideal Partner in China’ here yesterday.
Currently about 100 Malaysian companies are operating in Greater China and North Asia.
Fong said going through HK to set up their businesses in other countries would also benefit Malaysian firms.
The former British colony also offered a similar legal system to Malaysia’s, which was based on the common law system, she said.
“For many local companies, going into Mainland China, South Korea or Japan would be difficult due to the legal systems which are completely different than in HK,” she said.
She said HK also has the added advantage in sharing the same cultural heritage and speaking the same language as the mainland counterparts.
Malaysian businessmen should also take advantage of the Closer Economic Partnership Arrangement, which offered HK-registered companies easy access to Chinese markets and preferential treatment, especially the low-tariff regime, she said.
Malaysia is HK’s 10th largest trading partner.
In 2013, total bilateral trade between Hong Kong and Malaysia rose 1.7 per cent to US$14.65 billion. — Bernama