Whenever I talk about the business environment in Hong Kong, I get worried. Though on the surface Hong Kong is a jewel, the city is actually losing its competitiveness. Most worrying is that many people are using all kinds of excuses to oppose or delay Government proposals that are beneficial to our economic infrastructure and business environment. Sadly the Government prefers to do less in order to avoid making mistakes in the face of such vocal opposition in society and claims that the administration is merely upholding the “big market and small government” principle. The Government prefers keeping the status quo rather than making changes for the better. Hong Kong, therefore, is still living on its reputation and credibility that have been built over the years in order to keep the ball rolling.
On the business environment, it is inevitable to compare Hong Kong with its arch rival Singapore, which has been ranked number one in the World Bank’s Doing Business Report for 7 consecutive years. The drive behind the Lion City’s success is the proactive role that the Singaporean Government has been committed to, the state’s long-term policies and economic innovation, and introducing measures which are business environment friendly. Their mission of attracting global investors is not carried out only by one single government department, but shouldered by all top government officials who are keen to provide all kinds of advice and help to potential investors. Friends in the business sector have told me when Singaporean officials spot potential investors, they would act like bees to honey. Their great efforts to woo investors tells us loud and clear that Singapore secures the top ranking for 7 consecutive years by hard work, and not by luck. Hong Kong, which came second in ranking, seems to be doing well, but actually it is merely relying on support from the Mainland and the Central Government’s favourable policies to Hong Kong. I think the Hong Kong Government should really learn from the Singaporean experience.
Singapore has always welcomed investors with open arms while Hong Kong is still embracing bureaucracy rather than making things easy for investors. Take insurance and the finance sector as an example. The Hong Kong Government has introduced new measures since the Financial Tsunami to step up regulation over financial products and services in order to correct any wrongs. But the Government’s over-regulation is killing the healthy and steady development in the financial sector. A source in the financial sector told me it only took about 6 weeks to get an approval for launching a new financial product in Singapore but it took more than half a year to go through the same process here in Hong Kong and still no sign of approval. And this is not an isolated case. It has become common practice. Singapore’s control over financial products and services should be as tight as Hong Kong, then why can the Lion City be so much more efficient than Hong Kong? Some investors find it so time-consuming to launch a financial product in Hong Kong that they have given up launching their products here. If the situation continues, then Hong Kong is pushing investors out of the city to our competitors. I think Hong Kong should stop the bad habit of over-regulation in order to maintain a business environment that is friendly to investors.
Another factor worsening our business environment is rising business costs, especially the sky-rocketing rent. Regardless if they are multinationals or small and medium size enterprises, they are all victims of expensive rents. Many shops with long history that convey tradition have been driven out of business due to expensive rents. Multinationals avoid setting up offices in Hong Kong due to expensive rents. Sky-rocketing rent is also fatal to Hong Kong’s business environment. If this problem cannot be solved, it will continue to worsen the business environment in Hong Kong. The Government is trying to address this issue by turning East Kowloon into a commercial district and conducting a search for land which can be used for commercial purpose. I hope, given time, these measures will bear fruit.
I also have to state that air pollution and the lack of school places in international schools are also affecting the business environment in Hong Kong. Investors and global talent will not be willing to work in Hong Kong due to our poor air quality. Talented people are reluctant to come to Hong Kong to work and invest if they cannot make educational arrangements for their children. These two factors, to some extent, also weaken investors’ willingness to come to Hong Kong and these issues must be addressed seriously.
I have suggested measures to promote economic development in Hong Kong by introducing friendly measures to woo potential investors to set up business in Hong Kong, but the Government seems to have no interest in doing this. Hong Kong is losing its competitiveness and it is time to review and adjust the existing policies. I hope the Government can reconsider my suggestions, as I believe, if we can bring in more investors to Hong Kong, that means we will have better economic development, more employment and more business opportunities for small and medium enterprises. And this is beneficial to Hong Kong.