Implicit rebuke for Tung
As making Hong Kong more competitive is one of his priorities, it was perhaps fitting that Chief Executive Tung Chee-hwa should speak at a seminar on 'Hong Kong's Competitiveness' organised by the Central Policy Unit on Wednesday. He said: 'Competitiveness is not all about costs. It is about rule of law. It's about credibility of government policy. It's about a clean, accountable government civil service.' Or did he? Mr Tung was not actually at the seminar, which was attended by about 200 local and overseas businessmen and professionals. It was Ken Davies, chief economist of The Economist Intelligence Unit (EIU) in Hong Kong, who made Mr Tung talk.
Winding up his speech, Mr Davies read out Mr Tung's words from an interview he gave to the Asian Wall Street Journal early this month to illustrate how several incidents have seriously affected overseas perception of Hong Kong's business environment.
They included the granting of legal immunity to state bodies under the Adaptation of Law (Interpretative Provisions) Ordinance, the decision not to prosecute Sing Tao Holdings chairman Sally Aw Sian in the Hong Kong Standard case and the failure to prosecute Xinhua even though it had breached the Personal Data (Privacy) Ordinance by failing to reply in time to Emily Lau Wai-hing's request about whether the agency had a file on her.
'Perceptions by the international investor community that individuals and organisations with good guanxi (connections) are being allowed to disregard the laws that the rest of us have to obey do not help Hong Kong's economy,' said Mr Davies. 'Nor do attempts to bend the Basic Law to suit current needs or to enact retroactive legislation. Business confidence depends on the survival of an impartial system of civil and criminal law.' Mr Davies' remarks were an implicit rebuke for Mr Tung. Coming as they did a day after the World Competitive Yearbook once again ranked Hong Kong as the third most competitive economy, they were a timely reminder the SAR cannot rest on its laurels.
Because of a time lag, the negative perception about the rule of law in Hong Kong was apparently not taken into account by the ranking authority - the International Institute for Management Development - this year, but will most likely pull down the SAR's scores next year.
A more alarming fact is that even without those legal blunders, the EIU's separate five-year economic forecast has downgraded Hong Kong's ranking, from first for the period 1993-97 to ninth for the period 1998-2002. Mr Davies said the SAR's fall in its international ranking was largely attributed to improvements made by other economies outside Asia.
Hong Kong still remains a top-rated economy second to Singapore in the Asia and Australasia region. However, the EIU does see causes for concern for the SAR's future.
In essence, the EIU's reservations revolve around the efficacy of Hong Kong's political system, in the absence of a full democratic government, in forestalling mainland interests from tilting the economic playing field in their favour now that the SAR is part of China.
Unfortunately, while the central government and its organs in Hong Kong appear to have largely behaved themselves since the transfer of sovereignty, the SAR Government's record over the past 10 months has lent credence to those concerns.
The seminar also heard other threats to Hong Kong's competitiveness. Trade Development Council chairman Victor Fung said a new framework for understanding Hong Kong as a metropolitan economy, rather than a national economy, was needed to appreciate the system's dynamics.
As a metropolitan economy, most of Hong Kong's economic activity is directed beyond its geographical boundaries, with firms engaged in a huge amount of offshore trade and offshore investment which underpin the SAR's wealth. Dr Fung saw two challenges: upgrading the technological capacities of firms and the skills of the workforce. Hong Kong's technological environment and the technological sophistication of the workforce were 'not yet' among the world leaders, he said.
Mr Davies was more blunt, pointing to a need for Hong Kong to pay serious attention to its 'human infrastructure'. Despite a laudable expansion of both further and higher education, he pointed to an evident deterioration in the quality of English. The education system in Hong Kong also failed to encourage independence of thought.
Mr Davies' last, but not least, concern about the SAR was its poor quality of life, which could threaten to deter people from coming to live and work here.
'No one has yet tried to persuade me that it is good to breathe in heavy diesel fumes or to smell sewage in the street. The Garley Building burns, pieces of buildings fall and crush passing pedestrians, buses crash, the pavements are constantly being drilled open with dust flying, poisonous fumes are emitted by builders. What do people say? 'That's Hong Kong', ' he lamented.
Perhaps Mr Tung and his administration may want to do something to address the concerns of these interested observers to prevent the publication of such headlines as 'Hong Kong falls in global rankings under Chinese rule' next year.