HK$33b slips away without even a 'thanks'
SCMP Friday May 15 2009
Politicians, media, academics - please wake up to the continuing erosion
of Hong Kong's supposed autonomy. All of you appear to have been asleep
at the wheel when it was announced on May 3 that Hong Kong would contribute
HK$32.76 billion (US$4.2 billion) to something called the Chiang Mai
The announcement came not from the Hong Kong government or Monetary
Authority but at a press conference of finance ministers of the Asean
plus three grouping - the 10 members of the Association of Southeast
Asian Nations, plus China, Japan and South Korea.
It was made in Bali at the time of the annual meeting of the Asian
Development Bank, of which Hong Kong is a member in its own right.
Yet no one from the Hong Kong government was on hand to explain this
commitment of public funds.
Indeed, it now appears likely that local officials were simply told
by Beijing what Hong Kong's contribution would be, even though Hong
Kong is not a member of the Chiang Mai Initiative (CMI). Its US$4.2
billion is part of China's US$38.4 billion contribution. Though it
is separately identified, and Hong Kong will be able to borrow up to
2.5 times its contribution, it has no representation on the fund's
No wonder, then, that Chief Executive Donald Tsang Yam-kuen and Monetary
Authority chief Joseph Yam Chi-kwong, both given to crowing about government
efforts to develop Hong Kong as a financial centre, kept quiet. I can
find no mention of it on the government website or that of the Monetary
Authority, and no hint of a need to inform legislators or the public
about the commitment.
The press, too, largely failed to notice it. This newspaper carried
a Reuters report on the creation of the Chiang Mai Initiative Multilateralisation,
with no mention of Hong Kong.
The Chiang Mai Initiative Multilateralisation is an excellent idea
and should help maintain currency stability in East Asia at a time
when the International Monetary Fund, which is supposed to do the job
globally, has insufficient resources.
But what is the point of Hong Kong pretending to be autonomous in
economic and financial affairs, or of having its own currency, if its
resources are to be used as a pawn by the mainland without a hint of
consultation or joint decision-making?
Although the CMI is a grouping of sovereign states, it is closely
associated with the ADB, which will take the lead in providing an economic
surveillance mechanism. The CMI group will also establish a guarantee
fund administered by the ADB to encourage the issuance of local currency
corporate bonds and try to develop cross-border trading. In other words,
there was every opportunity for Hong Kong to leverage its contribution
to the Chiang Mai Initiative Multilateralisation to get a seat at the
table and promote the city as the global centre for issuing and trading
local-currency Asian bonds.
But a leadership obsessed with Beijing, and ignorant of events elsewhere
in Asia, is failing to exploit membership of international organisations
to develop its regional role. No wonder that the IMF's representative
here, Olaf Unteroberdoerster, is quietly moving to Beijing.
The Hong Kong market already hosts a key element in the ADB's efforts
to develop regional bond markets - the listed Asian Bond Fund Pan-Asia
Index Fund. But, instead of thinking regionally about how to provide
a market for non-US dollar Asian issues, the government is issuing
Hong Kong dollar bonds, which it does not need. These are make-work
jobs for investment banks and add to Monetary Authority empire building.
Yes, Hong Kong wants to be a yuan and Hong Kong dollar bond trading
centre. But what about being one for won, rupiah or baht issues?
Hong Kong is getting nothing from its HK$32 billion commitment. No
wonder the government has kept so quiet about it. And shame on the
media for failing to notice it.