Unhook the TDC's drip now and see if it's a shop worth keeping

PUBLISHED : Wednesday, 26 July, 2006, 12:00am
UPDATED : Wednesday, 26 July, 2006, 12:00am

YOU MAY HAVE read in this column before that I think the Hong Kong Trade Development Council has long passed its sell-by date. I can now tell you that the date approaches when we can finally get it off our shelves and sell it.

But the background first. In days gone by, when China's trade was still only minuscule and our economy was heavily dependent on manufacturing, we faced a problem. We had large numbers of small entrepreneurs who were not well acquainted with the potential foreign markets for their goods, and being only a colony, we had no foreign service to help them.

We thus created a proxy foreign service, the TDC, and in those days, it did a sterling job. It set up offices around the world to introduce our industrialists to the foreign buyers and organised trade shows at home to introduce the buyers to Hong Kong. A good measure of our export success was attributable to the TDC.

Things have changed, however. The manufacturers have gone across the border and the TDC has come to be at loose ends, although it will furiously deny this. It still pushes Hong Kong-made goods when it can but it has taken two other approaches to justify its existence, both of debatable value to us.

The first is to offer its support to our growing trade in services. This is of debatable value because the TDC cannot really do much to tell bankers how to bank or shippers how to ship and we already have a tourist board to deal with our tourist trade.

The other approach is to say that many of the export businesses in China are funded by Hong Kong investment and thus the TDC still serves Hong Kong by promoting these as it used to promote Hong Kong-made wares.

Well, perhaps, but would we ever have set up the TDC in the first place if its job was only to help entrepreneurs who had taken their money out of Hong Kong? This objective is certainly a very elastic stretch of the original intention.

Meanwhile, the TDC continues to spend about $1.7 billion a year, helped by an $8 billion investment that the public purse made in its showcase facilities and by the stranglehold this privilege gives it over the trade show and trade publication businesses, one only recently threatened by a competing exhibition centre at the airport.

Past its sell-by date, I say. Isn't it about time we had a rethink of what we are doing here?

That's unfair, I hear the TDC saying. Most of what we spend we raise ourselves from trade fairs, trade publications and other activities. Out of $1.76 billion in revenues last year, only $341 million came from the public purse and we are on course to balance our books entirely without public assistance.

It is a legitimate point, as the accompanying table shows. At the rate the TDC's finances improved in the last financial year, another three years should suffice to unhook the drip and get a discharge from the public ward.

But perhaps we can give these people a little push and do it sooner. The trouble lies in the nature of the subvention. It comes from what is called a trade declaration charge, a niggling little export tax that involves mountains of paperwork and big headaches to calculate and pay. Its real cost in trouble and pointless effort is hardly worth what it brings in.

Our government realises it, too. In the recent consultation paper on goods and services tax, it proposes using GST income in part to reduce this tax.

Why stop there? Why not get rid of it completely? Last year, the government already started getting tougher on how much of the proceeds would go to the TDC and now, having brought this tax up for discussion, we have a perfect opportunity to abolish it entirely and tell the TDC to stand on its own two feet at last.

Could it do so? The bureaucrats are obviously still a little hesitant. What if the TDC should run a loss one year? Who would make up the shortfall then?

Welcome to the world that all of us in the private sector face, fellas. Tell any real entrepreneur that he can have $8 billion of centrally located show facilities virtually for free plus the virtual stranglehold that comes with it on trade shows and trade publications and see if he would not consider it a winning inducement to enter the business.

If you people at the TDC cannot do it with such advantages, then we really do have firm evidence that you are either running your shop rather badly or that there is little use for that shop any longer.

Come on. Stop crawling and see if you can walk.