Down with monopoly
As demonstrated in the case of the Canadian Wheat Board, a market without monopoly does not necessarily bring benefit to the business environment. But in Hong Kong, tighter control over monopoly might be what we need in order to maintain a free market, according to a former lawmaker.
Hong Kong is well known for being 'business friendly' but this is not the same as being competitive. In fact, the public is fed up with monopolies, price fixing and cartels. The International Monetary Fund has been a strong advocate of a competition law. Its special investigation of competition in Hong Kong concluded in 2000 that our economy was not competitive when compared with an average member state of the Organisation for Economic Co-operation and Development.
Hong Kong officials have a very long tradition of tolerating anti-competitive behaviour. The bank interest-rate cartel established in 1964 was only abolished in 2001 because it was a hindrance to Hong Kong's success as an international financial centre. In 1995, the city ended a long-standing telephone monopoly and introduced an industry-specific competition law to regulate the telecoms sector, as well as setting up the Office of the Telecommunications Authority to safeguard market competition.
The property sector does not have to observe the normal rules of buying and selling. Many families make the largest investment of their lives when they buy a home. Yet the government has refused for years to force developers to supply basic information about the size and features of new flats, or prohibit them from circulating misleading price details. Only now, as a result of public pressure, is it willing to consider legislation to regulate the sale of all new residential properties and impose tough penalties.
A year ago, the government also put forward a general competition bill to the legislature. If the competition bill is not passed during the current legislative term, it will lapse and Hong Kong will have to wait for the next administration and a new legislature to pick up the pieces.
Greg So Kam-leung is the minister responsible for ensuring we get a competition law that's on a par with those of other advanced economies. He has had problems winning support. In 2009, he delivered a speech, titled 'Why Hong Kong needs a competition law', which focused on the need to keep up with market developments and the evolution of best practices worldwide. But he failed to explain how such a law would benefit Hongkongers. He needs to make the link between fair markets and the benefits for families and the community if he is going to win this battle against vested interests.
Not even students are safe from exploitation. In June, officials admitted unfair practices were increasing in the textbook market. The solution was to set up a task force, as if this were a new problem. Let's pass the competition bill and be done with the constant rip-offs we all have to suffer.
This is an edited version of an article by Christine Loh Kung-wai, chief executive of the think tank Civic Exchange, which appeared in the South China Morning Post on November 4