Look out Hong Kong, a new financial rival has arrived

PUBLISHED : Sunday, 05 February, 1995, 12:00am
UPDATED : Sunday, 05 February, 1995, 12:00am

THE sound of Asian governments trumpeting their capital city as the regional finance centre of the future is a familiar one.

The 'we'll bury Hong Kong' line is a favourite of Singapore, and both Bangkok and Taipei have aspirations in this direction.

Now the Philippines is preparing its own challenge in the shape of the former Fort Bonifacio Military site on the edge of Manila's Makati financial district.

A consortium led by First Pacific subsidiary Metro Pacific coughed up HK$12.5 billion for the land and was last month explaining its strategy to financiers at a conference attended by President Ramos.

Most were impressed at the audacious plans but almost choked on their soup as the president of Metro Pacific Ricardo Pascua told them: 'We are going to make this into the region's premier financial centre.' More surprises followed when he started demanding respect from his banking friends, asking them to discard stereotyped images of his countrymen as domestic servants for Asia's wealthy.

Mr Pascua has held senior positions in First Pacific Bank and worked extensively on Wall Street. Few of his dinner guests had confused him, or his $12.5 billion consortium, with domestic servitude.AIR Travel to Indochina is big business these days. The fall of the bamboo curtain has opened up Vietnam, Burma, Laos and to a lesser extent war-torn Cambodia as a dumping ground for low-wage manufacturing.

Yet for Thai-owned Cambodia International Airlines (CIA), which had been operating as the country's de facto international carrier, its routes proved too hot to handle.

Last month the Cambodian Government grounded the company, and in partnership with Malaysian business interests launched its own carrier called Royal Air Cambodge.

Cambodian air travel might be on the threshold of a brave new future but an estimated 35,000 passengers were left holding worthless CIA tickets. The airline denies the figure, saying only 1,750 were affected.

These are, of course, the perils of doing business with Asia's newest frontier economies.

The outraged can find solace in Hong Kong, where our rigorous regime of company law and disclosure means foreign companies have to play it above board.

Any firm running an office in the territory is required by law to make a formal application to the Companies Registry. For one thing the ordinance requires the name of a company representative to be specified in the event of any legal procedure.

Yet, despite running an office in Hong Kong for over a year, CIA never obtained its chop of officialdom. Technically this places the airline in breach of section 32 of the Companies Ordinance although the Registry has taken an open-minded approach to enforcement in the past.

Last year Vietnam Airlines was in the same situation and, like CIA, has still to disclose audited accounts as required by the ordinance.

This is more than academic nit-picking. Should a court judgment be obtained against a company which had not disclosed its accounts, tracing the assets could prove extremely difficult.IT was the 1980s that never stopped. While New York, London and Tokyo adjusted to the post-money-culture era, Hong Kong kept the beacon of financial yuppiedom alive and kicking.

All that changed last year. The industry has a nose for these things, and the sense is of the great Hong Kong bull run being over - the viable vehicle to be milked for brokerage and transaction commissions is stalling.

For those who wound into town from Tokyo after the Japanese bubble burst - or left depressed European finance citadels and recession-bound Wall Street - the feeling seems to be, 'it's over and time to move on'.

Firms from the United States have come under most scrutiny and the latest rumours have J P Morgan laying off between 20 and 30 staff. Yet, more significantly, there seems to be an exodus of brokers who simply see better opportunities elsewhere.

These are the itinerant international professionals who gravitate to where the action is and are the first out when the party gets boring. They now seem to be voting with their feet.