Where was Citibank's Asian hub in 1973?
That was the question put by former secretary for commerce and economic development Frederick Ma Si-hang to a table of media friends and Citibank executives at a meeting last week. There was silence for a moment and even the Citibank executives did not seem quite sure. Ma then gave the answer: the Philippines.
Ma, a veteran banker turned government official and now professor of finance at Hong Kong Polytechnic University, gave everyone at the table a quick impromptu lecture.
"When I first became a banker in 1973, the Philippines was a major banking centre and all big international banks sent their senior executives there. Hong Kong was not an international financial centre at that time," Ma said, adding that his old friend former financial secretary Antony Leung Kam-chung was also trained in the Citibank office in the Philippines when he was at the US lender.
Ma recalled his time as a young banker at another US lender, Chase, which took the Philippine market seriously. Many senior bankers were based there or flew there to do deals and other business. The Asia Development Bank still has its headquarters in the Philippines.
Times have changed a lot since then. With economic progress in Hong Kong and mainland China since the economic reforms of 1978, many banks have focused on the Hong Kong market and even Citibank has shifted its Asian regional hub here. The other popular choice for lenders wanting to expand in the Southeast Asian region has been Singapore.
"Gone are the days when all bankers needed to rush to do business in the Philippines. Now all banks have their eyes on Hong Kong, Singapore or Shanghai," Ma said. "This shows the market situation changes so quickly that a city like Hong Kong needs to upgrade itself all the time to prevent itself from losing to rival cities."
Ma said that besides the Philippines, Japan also serves as a lesson for Hong Kong. Japan was an important economy in the 1980s, but in recent years its ageing population has weighed on its fortunes. Japan has been pushed into third place in the economic rankings by China, now the world's second-largest economy.
In addition, it has lost out as a maker of consumer products. Japanese brands were pioneers in the '80s, but now South Korean brands are increasingly popular among young consumers, who swoon over South Korean singers and movie stars rather than Japanese ones.
Even as Japan tries to boost its economy with a massive monetary easing programme, Ma is not optimistic.
"Japan has an ageing population with too few young people to work, while the old people dare not spend too much money," Ma said. "Japan has a low birth rate and it does not accept people migrating from other countries. The other problem is its high taxation, which has discouraged investment."
Tax rates in Hong Kong are low, but Hong Kong also has a low birth rate and an ageing population. Looking at Japan's woes may shed light on a problem Hong Kong may well face itself in the future.