HK better placed than most to weather storm, says Steve Forbes

PUBLISHED : Friday, 20 March, 2009, 12:00am
UPDATED : Friday, 20 March, 2009, 12:00am

Hong Kong is in a better position to handle the financial crisis than most other places in Asia, Steve Forbes, the editor-in-chief of Forbes magazine, said yesterday.

In an interview with the South China Morning Post, he spoke about the world economy and the US response to the financial meltdown, as well as Hong Kong and its ability to deal with the global problem.

'Obviously, Hong Kong is weathering it better than most because Hong Kong went through a terrible period in 1997 and 1998. The property market collapsed, the economy went through the wringer, unemployment became very high. And, you know, the area was hit by Sars' - severe acute respiratory syndrome, in 2003.

'So Hong Kong has already taken its hits, and that's why its banking sector is strong. It made reforms a decade ago. So, while it has hurt, it's doing better than others in the region.'

Asked whether Hong Kong could handle further damage caused by the financial crisis, Mr Forbes said: 'Better than most. When things don't go well, you get hurt - you just won't be as hurt as much as others are.'

This week, Mr Forbes visited Singapore, Thailand and Hong Kong, 'gathering information and trying to gather revenue', he said.

Yesterday, the former US presidential candidate was a special guest at a Republicans Abroad breakfast. Later, he discussed the current situation in Hong Kong and the United States with Chief Executive Donald Tsang Yam-kuen.

Mr Forbes said the US stimulus package contained 'good pieces' for small businesses, and electricity-grid improvements, but it was not going to do a lot of good in the long term.

'It just spends money, which [raises] the question: what do you do for an encore? It doesn't lower tax rates, so it doesn't increase incentives.'

Mr Forbes recommended a different way to stimulate the US economy. He called for tax cuts, the scrapping of 'mark-to-market capitalisation' accounting rules that devalue long-term assets, and the buying of mortgage-backed securities by the US Federal Reserve.

'If the banking system is working, the US economy is starting to function again. That has collateral benefits for everybody,' he said.

Mr Forbes said he would not run for presidential office again. 'Been there, tried that - twice,' he said. 'Time to move on.'

He suggested Republicans could strengthen their base by going 'back to basic principles', including 'creating an environment where people have a chance to do their own thing, start their own businesses, keep more of what they earn'.

Mr Forbes added: 'What I think you'll see happen is that while [US President Barack] Obama's popularity will remain high for a while, the popularity of his policies won't.'

After being critical of former US treasury secretary Henry Paulson and current Treasury Secretary Timothy Geithner, Mr Forbes was asked what he would do if he were US president.

'I certainly would have moved quickly on mark-to-market - suspended, gotten rid of that - put in the road bumps on short-selling, enforce the rules, tell the Fed to get off its duff and replace [Fed chairman Ben] Bernanke for immediate starters, and impose the flat tax, stabilise the dollar.

'That would be a good start.'