OpinionSale of hotel rooms shows the limits of government intervention
Alice Wu says that, in the outrage over the sale of Apex Horizon hotel rooms, there's a lesson about the limits of government intervention
We need to examine just why Cheung Kong's recent selling of rooms in its hotel, Apex Horizon, caused so much stir. Is it about loopholes? Yes and no. Yes, because any hotels approved by the government after 2003 must be resold as a whole. So, all can appreciate the sentiment that Cheung Kong has somehow taken advantage of this "loophole". Yet, it isn't a loophole, in that the developer did nothing it was not legally entitled to do.
It comes down to supply and demand. The hefty 15 per cent stamp duty imposed on non-local buyers, which was put in place last year to curb speculation, has discouraged a number of buyers. But no government can outlaw intentions.
Governments can, as this one did, intervene in the market by putting up harsh "conditions" to dampen incentive. But the demand remains. The people who have their hearts set on buying and reselling for profit are still there. Apex Horizon was just an opportunity that became attractive in the wake of the special stamp duty. In a sense, the hotel rooms are a by-product of the stamp duty and our inadequate pre-2003 land policy.
Loopholes are as common as potholes. In this case, the conditions were set unintentionally by our policymakers, and the business-minded among us turned it into an opportunity for those shut out by the stamp duty. The sellers and buyers were just doing what they are, at least according to Adam Smith, supposed to do - pursuing their own interests. And the government regulates, where it can.
We need to clear our heads on what the government can and cannot do. The need for government intervention in the case of market failure, whether for efficiency or equality, has never been so apparent. But, government intervention almost always comes at a price. We wanted our government to step in to curb residential property speculation, and it gave us the stamp duty. But that duty makes selling Apex Horizon rooms lucrative. Our latest "outrage" is a by-product of government intervention.
The government must learn to be smarter when it comes to policymaking. Otherwise, it's just inviting shrewd businesspeople to milk policy blind spots.