Japan and South Korea try to attract companies to leave Hong Kong for fear of security laws, but their business environment is limited.

The Standing Committee of the National Assembly of China on June 28 plans to start a three-day meeting to discuss more about Hong Kong's security law, which targets separatist activities, subversion, terrorism and collusion with

The details of the new security law with Hong Kong, as well as the actions that constitute the crime, remain unclear.

Many foreign companies are considering withdrawing plans in case Hong Kong security laws limit the flow of free information in the city, or affect their ability to attract human resources.

At the same time, Japan and South Korea made moves that seemed to target the "throne" in Hong Kong's financial sector.

According to SCMP commentator Gavin Blair, Japan has long boiled its desire to bring the country back to the glorious days of the late 1980s, when its stock market accounted for one-third of the world's capitalization.

In 2017, Tokyo Mayor Yuriko Koike launched the "Tokyo - Global Financial City" project, with the building of business support centers, improving the speed of processing business applications

"This year, we set up a new program, specifically targeting companies from Asia. However, due to Covid-19, those activities are not feasible. We are studying how to reallocate resources.

TMG participated in discussions with the Financial Services Agency (FSA), Ministry of Foreign Affairs, and Japanese Ministry of Trade and Industry, on how to take advantage of the confusion in the Hong Kong business community.

"The simple answer is no. If Japan wants to become more attractive, it has to dramatically change its tax and management policies," said Tony Moore, president of recruitment firm BMES in Tokyo.

Moore pointed out that the capital surplus tax rate in Japan is 17%, while this figure in Singapore is zero.

Tokyo possesses several advantages, at least in the short term.

However, in the long run, Singapore and Hong Kong are expected to continue to compete as Asian financial centers.

"The problem is you want to do business with China? If yes, why turn away from Hong Kong? There, at least you will have a contract in English," Rosa explained.

"Tokyo is not well connected to the region. The distance from Narita Airport to the inner city is too far. Japan is a big market, but it is their own planet. Meanwhile, administrative procedures and transportation

An unnamed businessman at a global investment bank in Tokyo also assessed Singapore would be the first choice for any major financial company to move out of Hong Kong, adding that the main reason was the low tax.

"Japan has full press freedom, constitutional protection and a smooth democracy, but financial companies don't pay much attention to those things," said the anonymous businessman.

Korea has long dreamed of becoming a financial center in Northeast Asia, competitive with Hong Kong, Singapore and Japan.

However, a series of South Korean efforts, including campaigns to attract foreign investors since 2009, did not help to increase the number of foreign financial companies there.

Experts say a financial center must possess the ability to convert currencies, low taxes, government support policies and the global environment to attract talent.

Obstacles include complex administrative procedures, lack of transparency, and lack of English-speaking financial experts.

Hank Morris, senior securities and asset management expert, said he did not see any significant policies or incentives, such as tax breaks, that would be enough to entice foreign financial companies to come to Korea.

The other big issue in Korea is that the reporting requirements are extremely complex and expensive.

"In my opinion, instead of moving to South Korea, foreign financial companies, in some cases, want to sell businesses and leave this market," Morris said.

A veteran unnamed financial manager in Hong Kong is also skeptical of Korea's attractiveness to foreign companies.

"The top three factors for businesses when considering relocating are profits, regulations and taxes. Korea does not own any of the factors," he said, adding that the establishment of the company.

Korea has a very solid manufacturing industry.

"Smart investors will go wherever they have money, no matter what. China is a huge and growing market. In contrast, Korea is a small market and deadlocked in growth.