As Hong Kong stands still our economic rivals forge ahead

PUBLISHED : Tuesday, 27 May, 2014, 5:12am
UPDATED : Tuesday, 27 May, 2014, 8:52am

When it comes to freedom and competitiveness, few economies can rival Hong Kong's. We topped the world rankings two years ago, and have been named the freest economy for 20 years in a row by the United States-based Heritage Foundation. But this is not the case with our competitiveness.

In another blow to our reputation, the city has slipped one place to fourth in the IMD World Competitiveness Rankings. Hong Kong was overtaken by Singapore, which climbed to third after dropping one rank to fifth place last year. The United States and Switzerland maintain the top two positions. The study by the leading Swiss business school takes into account a wealth of criteria, including efficiency, economic performance and infrastructure in 60 places.

There are those who think it is too early to ring the alarm bells. After all, we are still the world's fourth most competitive place. Our economy remains alive and kicking, with steady growth and near full employment. Nonetheless, the news has given alarmists more reasons to fret about losing out.

The significance goes beyond catchy headlines of Hong Kong dropping out of the top three for the first time in a decade. It also turns the spotlight on a number of factors that are said to be eroding our competitiveness. For instance, our economic performance had already slid from fourth to eight in the 2012 report, mainly due to soaring property prices. Infrastructure as well as government and business efficiency also worsened. The latest report shows a slight improvement in economic performance. But government efficiency continues to draw concerns, with our position on the "decision-making" index plunging from 18th to 25th.

The report resonates with the prevailing problems facing the city. There appear to be endless rounds of studies and policy consultations without decisions. Efficiency is further hampered by filibusters staged by a handful of rebel lawmakers. The lack of a firm support base in an increasingly fragmented political landscape also makes the chief executive's job more difficult.

There is no question that Hong Kong's economy is still envied around the world. But in a rapidly changing global environment, standing still is lagging behind. We cannot afford to rest on our laurels while our rivals continue to harness their strengths for new growth and development. This setback is a timely reminder of our weaknesses and the need to catch up.