BusinessGlobal Economy

The bolder the better

HK has lacked urgency in reinvigorating the economy, but with arch-rival Singapore willing to take big risks, old attitudes must change

PUBLISHED : Tuesday, 20 August, 2013, 12:00am
UPDATED : Tuesday, 20 August, 2013, 5:12am

Hong Kong must think bigger and bolder if it is to meet the competitive onslaught it faces from a clutch of cities around the region that are eroding its once unassailable status as Asia's most successful economic hub.

"Hong Kong should set out its priorities," Andy Kwan Cheuk-chiu, a respected local economist, told the South China Morning Post. "We have to make big moves."

Kwan's urgings were echoed by a raft of others contacted by the Post in the wake of a weekend master plan sketched out by Singapore's Prime Minister Lee Hsien Loong that envisages doubling the capacity of its airport, shifting the world's second-busiest container shipping port to make way for new housing and moving a military base.

The plan, while uncosted and lacking details, at least makes a clear statement of intent that analysts say struggles to be matched in Hong Kong's slow and piecemeal attempts to come up with plans to reinvigorate an economy in need of innovation.

Both Hong Kong and Singapore have slipped down the rankings of the latest IMD world competitiveness report, but Hong Kong's ranking in the Swiss business school's assessment fell faster than its southern counterpart's, dropping two places to third this year from the top spot last year. Singapore edged down one place to fifth.

Critics of Hong Kong's tortoise-like approach to economic rejuvenation point to the years it took to redevelop the former Kai Tak airport into a cruise terminal, which finally opened in June, but the HK$8.2 billion complex has underwhelmed visitors.

The clearest example is to compare the plans that Hong Kong and Singapore have for their airports. Expansion at Hong Kong International Airport may be under way, but a plan by the Singapore government to double its airport capacity still threatens to shake Hong Kong's role as the region's aviation hub, especially when there is still a big question mark as to whether Hong Kong's HK$136.2 billion third runway project could really come to fruition.

According to data from Airports Council International, Chek Lap Kok continued to outperform Singapore's Changi airport as regional passengers' preferred stopover - with an annual passenger turnover of 56.1 million last year, but Changi is catching up quick. Not only was Hong Kong's traffic growth rate just half that of Changi, its ranking among the world's busiest airports slipped from 10th place in 2011 to 12th last year, while Changi rose three places to 15th.

You need to have capacity [at the airport] to be able to try out new models

The Airport Authority has said Hong Kong's competitiveness as a regional aviation hub would be taken over by its rivals if it fails to expand, as Thailand, Malaysia, mainland China and Dubai were all aggressively adding capacity. While Hong Kong is also set to build a third runway, which will raise its capacity by 50 per cent, there were worries in the aviation sector that the project would be subjected to serious delays, or even that it would proceed at all.

The project, now under the scrutiny of the Environment Protection Department, is said to face one of the toughest environmental impact assessments ever, as works cannot begin without a permit from the department's commissioner.

Michael Fung Ka-yiu, an executive director of Aviation Policy and Research Centre at Chinese University who went to Changi airport in May to study its plans, said Hong Kong could lag behind Singapore if it failed to expand. Capacity was needed not just for meeting demand, but was also important as a test-ground to try out different business models, he said.

"During my trip there, I found that they plan to do a lot of integration work on their regular and budget carriers in the next few years so that long-haul passengers can jump onto a domestic route offered by a budget carrier in Singapore, and that will bring down ticket prices," Fung said. "You need to have capacity to be able to try out new models."

Look too at the approach to housing - a touchstone issue in both Hong Kong and Singapore.

Singapore plans to free up 800 hectares for redevelopment as discontent grows among its people on issues ranging from cheap foreign labour to rising living costs. Its plans to relocate the massive container shipping terminal will help create homes in the heart of the city.

Hong Kong, meanwhile, has freed up only tiny patches of land for redevelopment and the government shows few signs of being prepared to move 680 hectares of public golf courses to enable much-needed housing.

There are six more private golf courses in Fanling, Deep Water Bay, Clear Water Bay, Discovery Bay, Shek O and the airport, which pay nominal rents to the government while running the site like an exclusive club for the rich.

Kwan, also a member of Hong Kong's Long Term Housing Strategy Steering Committee, said at least three of these private golf courses could be considered for redevelopment.

And while he concedes that not all the courses could be rezoned, he says the government must decide how best to use land when faced with crucial problems of rising inflation and slowing global trade that drive down real incomes and undermine consumption.


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