• Tue
  • Dec 23, 2014
  • Updated: 12:39pm
PUBLISHED : Friday, 01 February, 2013, 12:00am
UPDATED : Friday, 01 February, 2013, 3:02am

Officials taking the wrong approach to resolve infant formula shortage

Albert Cheng says instead of putting controls on the export of milk powder, the government should supply it for free to local parents


Ir. Albert Cheng is the founder of Digital Broadcasting Corporation Hong Kong Limited, a current affairs commentator and columnist. He was formerly a direct elected Hong Kong SAR Legislative Councillor. Mr Cheng was voted by Time Magazine in 1997 as one of "the 25 most influential people in new Hong Kong" and selected by Business Week in 1998 as one of "the 50 stars of Asia".  

As the saying goes, "Those whom the gods wish to destroy they first make mad". This applies to the way Chief Executive Leung Chun-ying and his administration are handling the latest scandal involving one of his formerly staunch supporters, Lew Mon-hung. His government is attempting to ride out the scandal by diverting attention to the shortage of infant formula. But it won't work.

Leung and his top officials, such as Chief Secretary Carrie Lam Cheng Yuet-ngor, Secretary for Food and Health Ko Wing-man and Secretary for Commerce and Economic Development Greg So Kam-leung are all putting on a show. Let's look at their shoddy diversion tactics.

On January 23, following a meeting with health officials, baby formula suppliers stressed there was adequate supply for locals while retailers said they would limit each purchase to four cans.

On January 25, Ko called a second meeting with suppliers. After the session, suppliers again reassured the city of their commitment to ensure adequate supply. Ko once again held off taking action and said the government would monitor the situation. The next day, the only so-called measure introduced was the setting up of an inquiry hotline for the public.

Then, on January 27, the one-man show by Ko continued. This time, he said that although the government would not rule out taking more severe measures, it was worried that they could have negative effects.

Elaborating on his policy address on RTHK's Letter to Hong Kong programme, Leung took the credit for being the main advocate of the individual visit scheme that allows residents of more affluent mainland cities to come to Hong Kong as tourists without having to join tour groups. He said that, because of this measure, the mainland has now become Hong Kong's biggest source of tourism income. But, of course, he did not mention how some of these travellers are buying up infant formula here, causing a severe supply shortage for locals.

On Tuesday, Leung ignored Lew's allegations and addressed the baby formula problem; he pledged the government's support to resolve the issue by setting up an interdepartmental working group.

The commerce department then joined in the chorus, with So saying that the government would review and assess the situation.

The government then finally said it was considering action, such as whether to make infant formula a reserved commodity, which means setting a price ceiling and restricting its exports. This may mean limiting sales to two to three cans per traveller.

The problem is in fact not difficult to resolve. Hong Kong could learn from other governments that help pay for the costs of raising a child. For example, the government could supply each local infant five to six cans of baby formula each month for three years. The distribution could be handled by maternal and child health centres.

Let's be clear, though: parallel trading is not illegal. In fact, it is a legitimate and common economic activity the world over. This practice exists due to the difference in taxes imposed on the same commodities in two areas. Hong Kong people are actively involved in parallel importation, bringing goods in from Japan years ago. Now the popular destination is South Korea. Many small fashion boutiques rely on this trading practice to survive.

It's understandable why so many drug stores near the border in Sheung Shui and Fanling are hoarding products such as infant formula and selling them to mainlanders in mass quantities. It's no different from the way our property market works.

Moreover, the majority of people involved in the parallel trading of baby formula are Hongkongers. This kind of economic activity does help to stimulate the economy. Imposing restrictive measures will bring no positive outcome.

The idea of making baby formula a reserved commodity is naive. The Reserved Commodities Ordinance is outdated, and rice, a staple food in Hong Kong, is the only food product scheduled as a reserved commodity under the related regulation.

Hong Kong's success relies on being a free port that thrives on free trade and its open-door policy. Controlling the import and export of certain products such as baby formula would risk making Hong Kong an international laughing stock.

There are many solutions available - the only problem is that the government is incompetent and the mainland's customs officers are too lax.

Leung would do well to draw inspiration from our national leader Xi Jinping, who said that as long as our spirit remains unbroken, there will always be more solutions than problems. The problem is, our chief executive seems more interested in keeping his own power intact.

Albert Cheng King-hon is a political commentator. taipan@albertcheng.hk


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This article is now closed to comments

Albert, is HK really a freely economy? If yes, how come Carefour and Walmart is not here? How come international builder are not here ? We don't even have a competitive law to ensure proper competition.
Btw, giving free is wasting tax payers money. As I suggested earlier, government coordinated hot lines with guarantee supplies from manufacturers to fulfill the orders is the best solution. By doing this manufactures can no longer play games. There were playing games as they want to rip of Hk people. That's why their hotlines never answered calls.
Once the supply to local babies was guaranteed (by government and manufacturers) there is no need to change the law and keep your free trade HK, right ?
Diverting attention tactic allegation not agreeable. But agree that restrictive measures will hurt HK economy and free port image. The problem caused by parallel trading should be resolved through separation and facilitating instead of restriction. The Govt's response to problems caused by mainlanders is too slow.
Can SCMP get Albert off with his absurd commentaries?
Give away free powder? Trying to score brownie points with the masses?
Parallel trading is not encouraged by most countries, what is this guy talking about? Why do you think Blu-ray movies are coded for certain regions? etc etc.
if suppliers and traders are in collusion, one saying enough supplies, and other selling to traders, why not scan HK ID's of buyers when purchasing and then you know who/where the goods are going. Once people know it's trackable, be more careful unless you are legitimate users.
Albert you are so anti government it is not funny and like to complain with no solution. This is a supply and demand issue that will balance out. Stores want to make money if they see demand going up they will stock supply to meet it. This is a temporary situation that perhaps we can apply temporary restriction on the number individuals can buy until supply go up. Why does HK over react in every situation. What is your solution great solution? limit tourism when Tourism is one of the driver of the economy. I have a child and it is difficult but let not over react to every thing. There are countries and city that would happily appreciate that they sales increasing in product. Yes we have infrastructure issue that is part where the government needs to invest and find solution.
We all know about diversion tactics. We have witnessed the Democratic Party in action over the last few years. Ask them to come up with a policy initiative to solve a livelihood issue and they throw shoes and scream for universal suffrage. This little spat between CY and Lew should not distract the Government from getting on with business.
Albert Cheng you put a lot of effort into weaving this fable, but put your shoes back on a take a hike, the Government now wants to get on and govern and the majority of people also want that.


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