SCMP June 30 2009

Missed opportunities


The list of ideas for revitalising the Hong Kong economy, the product of Donald Tsang's Yam-kuen's Task Force on Economic Challenges, made depressing reading for two reasons. First, the good ideas in it have been bandied around for years without being implemented. Second, the assumption is that the government should do more, rather than less, to stimulate desired sectors.

Between 1999 and 2002, I participated in annual off-the-record forums titled 'The Servicing Economy' bringing together the government, business, consultants and academics in discussions about spurring high-value-added services in Hong Kong. Some of the sessions were interesting and showed up ways in which relatively small changes in policy could have a potentially big impact.

Yet, regular attendees gradually became frustrated. The report for 2002 noted that, although certain issues were repeatedly raised, 'action by government was painfully slow due to bureaucratic inertia and vested interests'.

That year, health care got particular attention from the perspective of both local needs to narrow the gap between the public and private sectors and of the potential to develop Hong Kong as a medical tourist centre by encouraging private hospital development. Seven years on, the government has taken this up - but only in principle and assuming that vested interests who want to limit competition do not stall the process.

Education, secondary as well as tertiary, was another perennial at the forums. Since then, there has been only a very modest rise in non-local university enrolment; the public universities remain very high-cost, highly bureaucratic institutions; and private secondary education has attracted very few students from overseas.

Another issued raised at the forums was getting the right migrants from the mainland. While a few very highly qualified people are allowed in, the vast majority of the daily quota are unskilled and unsuitable for the jobs Hong Kong should be creating. So, many end up in remote estates unemployed or in low-paid jobs. Meanwhile, tens of thousands of skilled mainlanders able to contribute their talents cannot come. Why is migration not a topic that can be discussed?

The government is now acknowledging that high land cost is a major problem - but not just for schools and hospitals. Yet it persists in trying to maximise land revenue, not merely by limiting land sales and indulging in a pretence of market forces, but through policies that hinder revival of old industrial areas. Now we are told that it would be good to 'facilitate the conversion of underused industrial buildings for the cultural and creative industries'. Why only them? And what is the definition of 'creative'?

While its policies hinder better land use, we are now told that the government should be more involved in handouts to a favoured few chosen by the bureaucrats. Thus, Mr Tsang's announcement was followed by Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan's article in this newspaper lauding Cyberport as an example of government investment in research and development. Has she no sense of irony?

The government is also now to 'explore the use of financial and policy incentives to encourage more R&D in the private sector'. Meanwhile, there is already HK$4.6 billion sitting unused in the Innovation and Technology Fund.

Officials like to show increased budget spending then cannot, or will not, find viable projects. One wonders how much money is being spent on the civil servants, few of whom have any experience either of innovation or entrepreneurship, administering these schemes and writing platitudes about how to be a leader in R&D.

Now we have another bureaucrat's boondoggle, CreateHK, to add to the other bureaucracies that take public money away from those who really need it (the elderly and young families), and the self-assuming bureaucracies who talk of being creative but allow heritage to be destroyed and the countryside to be despoiled because they dare not stand up to New Territories power interests and enforce the law.

The government's proposals make more gestures towards the environment but fail to address the big pollution issues head on. Who cares whether the government changes its light bulbs or 'expands the scope of green procurement' (whatever that means) while refusing to spend real money on reducing emissions, for fear of courting the wrath of vested interests?





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