Immobile minds that are holding back Hong Kong

SCMP April 30 2009

Hong Kong Mobile - Making a Global Population: I commend this collection of essays on Hong Kong's past and potential future, published by Hong Kong University Press with the support of the 2022 Foundation, to those who care about sustaining its dynamism. Indeed, if the authors could distil its 480 pages into a 20-page executive summary it should be made compulsory reading for all senior officials and members of government advisory bodies.

I will not attempt a summary in just a paragraph. Suffice to say that it is about the crucial importance of geographic and social mobility, and the need for constant renewal if Hong Kong is to retain its global outlook and dynamism at a time when its population is ageing and when forces protecting the status quo may be growing more powerful.

Hong Kong is an anomalous place that can only thrive by doing things that are to the advantage of its neighbours, be they the mainland, East Asia or the world of commerce and finance. And it can only do those if it is open to the talent and ideas of individuals; local, mainland and foreign.

A platitude? Perhaps. But look at some of the news from the past week, which point in a backward direction. The Mortgage Corporation is to expand into Shenzhen. A fine example of taking advantage of the Pearl River Delta? No, expansion of the government bureaucracy via the out-of-control Hong Kong Monetary Authority. The Mortgage Corporation is barely needed in Hong Kong itself, yet uses its status as a government entity to supplant private funding.

Its move into Shenzhen, like its earlier one to Malaysia, simply creates more high-paying jobs, and hence patronage, for officials. The Mortgage Corporation, and other trading entities, should be sold off or at least become public companies. It should focus on the proper role of government. Yet in every direction, from culture to finance, civil servants with qualifications that only appeal to fellow civil servants are taking over.

Sports sector legislator Timothy Fok Tsun-ting is, this newspaper reports, grooming his son to succeed him. I do not doubt that Mr Fok senior works hard to promote sports' interests. But also I do not doubt that he holds this position because his father, Henry Fok Ying-tung, was a major business and political figure. Feudalism has its place in decentralised, pre-industrial societies - not in Hong Kong. Let Mr Fok and the landed aristocracy enjoy their wealth, but put sports in the hands of those with proven leadership in sport, as players or managers, or in some business requiring inspirational skills.

The Consumer Council has again confirmed what we already knew - that the two supermarket chains routinely engage in practices designed to maximise profits from their duopoly. They confirm Adam Smith's comment that 'people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices'. Hong Kong's cartels deliver unearned rents to these groups at the expense of the individuals and businesses that provide Hong Kong with its dynamism.

New housing starts have fallen to a multi-year low. This suits developers with old land banks and a government that wants to keep land prices high. The government's application system is claimed to reflect a free market. But, as the government determines both the number of sites on offer and the acceptable price, that claim is nonsense. The result? Feeble private construction that is a drag on the economy, and high costs that deter new businesses.

Russian tourists are to be allowed visa-free access. It is only 20 years since Glasnost, only 10 years since I raised the issue in these columns. And the now the government has made a decision! Well done, lads. There's mobility for you.

This is just a week of events holding back Hong Kong. Later I will look at five things that could drive it forward. Meanwhile, look at that book.

 

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