The government has reviewed the Capital Investment Entrant Scheme, and noted an upward trend in real estate investment, which accounted for 42 per cent of the total investment under the scheme for the first nine months of this year. Despite the fact that real estate investments under the scheme in recent years have only represented about 1 per cent of the total market turnover, the government, in view of public concern, has decided to temporarily remove real estate from the investment asset classes under the scheme.
Donald Tsang Yam-kuen
Policy address
But why not scrap the entire scheme? It does not do what it is meant to do, and never did, but it does put the wrong sort of pressure on the Hong Kong dollar and contributes to driving up property prices through more than just direct purchase.
The original idea was that the scheme would attract needed foreign investment to Hong Kong, HK$6.5 million from each foreigner (read Chinese national with a foreign passport) who wants a Hong Kong ID card, and it has indeed brought in almost 8,000 people who have brought almost HK$55 billion with them.
The immediate fallacy, however, is that we don't need foreign investment. We already have a surfeit of it. We are in fact one of the world's biggest net providers of foreign investment. This is a classic case of bringing coals to Newcastle.