ASIAN CITY OF THE FUTURE:

Winner: Hong Kong

A member of the elite group of truly world-class cities on a par with London, New York and Paris, Hong Kong continues to fend off pretenders to its Asian throne. While Sydney is stunning, Singapore is serene and Shanghai is sizzling, there is still only one Hong Kong. Its status of being Chinese, yet at the same time not entirely, allows it to benefit from China’s ascendance without being steamrollered by it.

This is, in turn, the unique advantage that Hong Kong provides to its foreign investors, and it is one not to be underestimated: come and get a piece of the Chinese action, the city says, but from a safe, stable, somewhat familiar base camp. It is an alluring pitch that will ensure Hong Kong’s spot near the top of the FDI league tables for many years to come.

On quality of life, Hong Kong is tough to beat, as the judges in fDi’s first ever Asian Cities & Regions of the Future competition concluded. But, as much fun as it is to play in this exotic, cosmopolitan city, it is primarily a place for doing business – and on that front there is also much to applaud.

In addition to its first place ranking in the quality of life category, the former British colony and now Chinese special administrative region also came top in transport, IT and telecommunications, and FDI potential. It came in second place, after Sydney, in human resources.

Although Hong Kong’s lead in fDi’s competition was comfortable, overall runner up Sydney did manage to better it in the human resources category, proving that the Australian city’s primary competitive strength is to be found in sheer people power.

Sydney’s quality of life was deemed second only to Hong Kong’s, impressing our judges with its high-calibre housing and excellent schools, not to mention its array of cultural offerings. Situated on beautiful Sydney Harbour, anchored by the world-famous Sydney Opera House, the capital of New South Wales boasts a culturally diverse and highly educated population, magnificent scenery and an Antipodean friendliness – all of which make it an exceedingly enticing place in which to live and work.

ASIAN REGION OF THE FUTURE:

Winner: Tamil Nadu, India

Competition was closer and the playing field more level in the regions section of fDi’s contest, with the Indian state of Tamil Nadu edging ahead of Australia’s New South Wales to claim the title Asian Region of the Future 2005/06. Tamil Nadu took first place in the all-important category of best FDI potential.

As investors such as Ford, Hyundai, Nokia and, most recently, BMW have discovered to their delight, Tamil Nadu has managed to avoid or mitigate problems that dog other locations in India, such as infrastructure and energy failings. Through pro-active and business friendly government policies, the state has harmonious industrial relations, a matured business culture and abundant skilled manpower.

Things should only get better: several new fly-overs and by-passes are under construction that will ease traffic congestion in heaving Chennai, and an ‘IT Expressway’ project will widen the main access road to that city’s thriving software cluster. This hints at Tamil Nadu’s real secret weapon: Chennai’s IT corridor employs nearly 50,000 people, and this number is set to increase to as much as 90,000 when some of the major IT companies investing there get their operations up and running.

Second place overall winner New South Wales, however, had a better spread of features, showing up at the top of the lists for human resources, transport, quality of life and, in a tie with South Korea’s Jeollanam-do, IT and telecommunications. Victoria, Australia, also put in a strong performance, coming in second to its domestic rival for human resources, transport and quality of life.

The home of fDi’s second place overall winner for cities, Sydney, New South Wales has a long list of attributes that includes access to large markets across Asia-Pacific through well-worn trade routes and various free trade agreements; a low-risk business environment with robust political, legal and regulatory systems; a highly skilled, multilingual workforce; and a time zone advantage for worldwide ‘follow the sun’ trading strategies.

Winners: Seoul/Macao (tie)

South Korea’s capital city of Seoul bagged 1483 FDI deals last year for a total of $5.6bn, while the country as a whole attracted 3068 deals worth $12.7bn. Aiming to make Seoul the financial hub of northeast Asia, the local government, led by Mayor Myung-bak Lee (fDi’s Personality of the Year 2005), is constructing Seoul International Finance Centre in collaboration with AIG Group, one of the city’s key investors.

Among other FDI successes, Seoul last year attracted the Korea-German Institute of Technology, bringing a $250m investment, and Trump Korea, for $160m, to the city’s Digital Media City. And the economy looks solid: Seoul posted 6.2% GDP growth in 2004.

Seoul shares the win for best economic potential with Macao, which, like Hong Kong, is a special administrative region of China. Macao’s GDP was $10.7bn in 2004 with a growth rate of an astounding 28%. In 2003, the latest year in which information is available, the former Portuguese colony attracted $263m in FDI inflows. According to the World Trade Organisation, Macao operates one of the most open trade and investment regimes in the world.

BEST ECONOMIC POTENTIAL (REGION):

Winner: Chugoku, Japan

With a reported GDP of $232bn and per capita GDP of $30,005, the Japanese region of Chugoku comes first for economic potential among Asian regions. Investors are drawn by the region’s easy access to Tokyo and cluster of supporting industries such as machinery. And the region is putting the money flowing in to good use, such as the Hiroshima Seifu-Shinto development project which is to culminate in a new urban centre of some 100,000 people with facilities that support living, working and enjoying recreation in the foothills of northwestern Hiroshima City.

Runners up: Cambodia/Thailand (tie)

Runners up Cambodia and Thailand also post impressive numbers. Cambodia experienced a whopping 19% growth from 2004 to 2005 and brought in $230m in FDI in 2004. Thailand had a GDP of $164bn, boasted 6.4% growth and attracted $7.5bn in FDI last year.

METHODOLOGY:

fDi began its search for the Asian Cities & Regions of the Future in the spring of 2005. It asked investment promotion agencies, development authorities, and national and regional governments to return questionnaires giving detailed reasons why their locations should be chosen for an award.

In October, fDi’s panel of judges examined applications from the more than 60 cities and regions that entered the competition. fDi used 34 criteria to judge which locations offer investors the best deal (see below).

The top three locations in each category scored as follows: three points for first place, two for second and one for third. The overall winners in each category are those that picked up the most points.

MORE WINNERS (PART TWO)

THE JUDGING PANEL

Votes were cast by members of fDi’s editorial team as well as by the following independent guest judges:

Jeremy Sargent Partner Stephenson Harwood Lo Guangzhou, China

Christian Stauffer Managing director Eurofin Asia Singapore

Lawrence Yeo CEO & principal consultant AsiaBiz Strategy Singapore

James E Thompson Chairman Crown Worldwide Group Hong Kong

Economic potential:
• GDP
• GDP growth
• GDP per capita
• Foreign direct investment in 2004

Cost effectiveness:
• Out of town office rent
• Centrally located office rent
• Industrial rent
• Secretarial salaries
• Graduate executive salaries
• Middle management salaries
• Manual labour rates
• Telecommunications charges

Human resources:
• Literacy level
• Percent of population with a degree
• Number of universities
• Quality of universities [judged category]

Transport:
• Transport infrastructure [judged category]

IT and telecommunications:
• Phone lines per 1,000 people
• Mobile phone ownership (% of population)
• Internet access (% of population)
• Broadband access (% of population)

Quality of life:
• Cost of housing
• Quality of housing [judged category]
• Hospitals and healthcare [judged category]
• International schools [judged category]
• Crime and security [judged category]
• Cultural and environmental heritage [judged category]

Best FDI potential:
• FDI promotion strategy [judged category]
• FDI deals [judged category]
• Average number of days to register a company
• Peak corporate tax rate
• Infrastructure and development projects [judged category]
• Investment incentives [judged category]
• FDI attractions [judged category]

Note
Information in this competition has been provided from government sources. While fDi has made attempts to check the information where necessary, it has not been possible to verify all figures provided by government agencies.

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