PUBLISHED : Thursday, 16 August, 2001, 12:00am
UPDATED : Thursday, 16 August, 2001, 12:00am

I WORKED FOR the Economist Intelligence Unit (EIU) for four years before accepting this newspaper's offer to man its Guangzhou bureau.

The Economist Intelligence University - as I preferred to think of it - was a fabulous place to work. The benefits included great colleagues, an emphasis on quality over quantity that I wish more employers would emulate, and long sessions at Time After Time, the EIU's post-production Wan Chai watering hole and by far the best little bar in Hong Kong.

So I have followed the recent ruckus kicked up by the EIU in Hong Kong with much interest. It began last Friday when Ken Davies, the EIU's chief economist for Asia and my former boss, announced that it was cutting Hong Kong's gross domestic product growth forecast this year from 2.4 per cent to 0.7 per cent.

Before the dust had settled from that shock, on Monday the EIU said it expected Hong Kong to slip from the No 3 slot in its 1996-2000 Global Business Environment Rankings to No 10 for the 2001-2005 period.

Rubbing salt into the wound, the EIU notes that Hong Kong will be 'the only country [sic] where the business environment is expected to deteriorate in absolute as well as relative terms'.

Asked about the downgrade, Financial Secretary Antony Leung Kam-chung said the EIU was being 'unduly pessimistic'.

Mr Leung was asked for his reaction to the EIU downgrade, and far be it for a journalist to encourage a high-ranking government official not to answer questions from the press. However, government officials seem to have acquired the ungracious habit of rushing headlong to Hong Kong's defence after every perceived slight to its honour. Over the past year, other senior government officials including the likes of Chief Executive Tung Chee-hwa and then financial secretary Donald Tsang Yam-kuen have also gone out of their way to issue lengthy rebuttals of other EIU downgrades.

However, do they know what they are rebutting? Even when I worked at the EIU, I felt its Global Business Environment Rankings were something of a mystery.

It was my impression that they were generated by a clever bloke sitting in a cubicle in London. Said clever bloke would enter lots of numbers into a clever computer program, press a button and - presto - produce a number for each country that would then be stacked against other numbers.

This impression is reinforced by the EIU's official explanation that its 'global business rankings model . . . seeks to measure the quality or attractiveness of the business environment and its key components. The model considers 70 factors which affect the opportunities for, and hindrances to, the conduct of business in each country'.

For 1996-2000, Hong Kong got an 8.64 and ranked third. For 2001-2005, an 8.51 popped up and Hong Kong slipped to 10th behind the Netherlands, the United States, Britain, Canada, Switzerland, Ireland, Finland, Singapore and Sweden.

But does the fact that the Netherlands and Ireland got, respectively, 0.33 and 0.08 more points than Hong Kong mean you are going to move your Asia-Pacific headquarters or China-trading operation to Amsterdam or Dublin? Probably not.

More usefully, the EIU's analysis pinpoints structural weaknesses. Last week, Mr Davies highlighted worsening pollution and deficiencies in Hong Kong's education system. Mr Leung, to his credit, addressed the latter issue in his reply on Tuesday.

Still, Hong Kong would do better if it worried more about getting the big things right - like education and the environment - and less about its points standing in vague indices. Success, after all, speaks for itself.

Jake van der Kamp is on holiday