Forget UAE, Donald should embark on Space Station visit

PUBLISHED : Friday, 01 February, 2008, 12:00am
UPDATED : Friday, 01 February, 2008, 12:00am

Speaking at a luncheon co-organised with the Abu Dhabi Chamber of Commerce & Industry today, Mr Tsang said the UAE [United Arab Emirates] is Hong Kong's largest trading partner in the Middle East with bilateral trade worth US$3.4 billion in 2006.

Government news release, January 30

Let's think about this for a bit. Bilateral trade would mean both exports and imports and I have a hard time coming up with anything we import from Dubai and Abu Dhabi, which isn't just a pass-through for them.

I mean unless Allan Zeman has decided he wants some camels for a new attraction at Ocean Park, what could there be? We don't want construction sand from the Middle East. It doesn't have enough salt in it. I suppose the answer is that we ship in some gold from Dubai occasionally when we don't want to know where it came from before Dubai.

And don't tell me that the answer is oil. Abu Dhabi has lots, although Dubai has none, but I can hardly conceive anyone in Abu Dhabi saying: 'Oh we must sign a treaty of perpetual harmony and friendship with Hong Kong because they use oil and some of it may come from us before it's refined elsewhere.' That's not the way the oil business works.

On the other side of bilateral trade, I also can't imagine anyone in the UAE believing that consumer goods bought from China actually come from Hong Kong because they are called re-exports when they passed through Hong Kong as a dodge around China's taxman.

Thus in trade links we really are left with Hong Kong's own domestic exports and to the entire Middle East in 2006 these amounted to only US$115 million.

My guess is that this consisted mostly of garments, which is another cheat as these clothes are actually made in China. I'm sure that very, very little made in Hong Kong merchandise went to and stayed in the UAE.

This makes me wonder what our chief executive was doing in talking of US$3.4 billion of trade. It strikes me that we probably do more real trade with the Space Station than we do with the UAE.

But Donald had another tack in trying to whip up a sandstorm - 'Strong co-operation between Abu Dhabi and Hong Kong already exists, involving companies such as our Mass Transit Railway Corp ... as well as sharing of ideas between our two governments.'

What this? The MTR in Abu Dhabi? Do we really mean anything more than that the MTR may, or may not, bid for construction of part of a metro system that Abu Dhabi is considering but has not yet taken past the dreaming stage? Strong co-operation, was it?

And as to that sharing of ideas, Donald, I recommend e-mail. It's the best way of getting ideas out there for people to share. Whether anyone reads them is a different matter, of course, but do you read all of theirs?

The fact is that where investment and co-operation is concerned, we once again turn out to have stronger links with the Space Station than we do with the UAE.

Our Donald is a resourceful man, however. As he knows, when short of the real goods, lay on the praise, lay it on heavy - 'Earlier this month, Hong Kong was ranked as the world's freest economy by the US-based Heritage Foundation, for the 14th year in a row. I note that the same survey gave the UAE a high ranking of 99.9 per cent for fiscal freedom and, of course, I find it interesting that the UAE has no income tax and no federal-level corporate tax.'

Here is what the Heritage Foundation also had to say: 'The UAE is weak in business freedom, investment freedom, financial freedom, and property rights. Foreign investment is restricted, and majority Emirati ownership is mandated even in the free zones. The UAE is a regional financial hub, but its financial sector is subject to considerable government interference. The courts are dominated by the UAE's rulers.'

Okay, Donald, I can quite well understand why you didn't want to include that particular bit in your speech to the Abu Dhabi Chamber of Commerce.

What I don't understand, however, is why you bothered at all. Surely there are better things to do with your time than go to parts of the world with which Hong Kong has nothing in common and pretend that great relationships exist.

I know the official reason, of course. Hong Kong's role as an international financial centre is based too narrowly on China finance and Shanghai wants to steal it from us. We therefore quake in fear, fooling ourselves that Shanghai is a big, big place on account of how it once was.

What shall we do, oh, what shall we do? Got it! We'll make ourselves an Islamic financial centre because the Middle East has lots of money.

But, Donald, all you need for this is to call interest a capital gain and put an Arabic disclaimer on the paperwork. What sells Islamic finance is the same as what sells any financial arrangement - a better deal than either the creditor or borrower think they can easily get elsewhere.

You don't have to go to Abu Dhabi for it.