TWO words explain how Hong Kong transformed itself from a few rocky outcrops with no natural resources into one of Asia's wealthiest economies - free trade. One word summarises the threat to Hong Kong's future prosperity and growth - protectionism.
We all know about external protectionism - the European Community's quotas against Chinese-made toys, the Multi-Fibre Arrangement that restricts Hong Kong's exports of apparel and textiles. But now, a new threat looms - protectionism at home.
The Futures Exchange has announced plans to launch a new product - futures on the shares of Hong Kong Shanghai Banking Corporation and Hong Kong Telecom.
We should all welcome innovation in the financial sector. For too long, Hong Kong has been a follower in financial innovation and not a leader. Consider some recent new products in Hong Kong's financial sector - no-load unit trusts, mortgage-backed securities, long-term government bonds. All of these were imitations of foreign products.
As everyone agrees, Hong Kong's future is in services such as banking and finance. Only a leader can secure growth and prosperity. To transform itself from a follower to a leader in financial services, Hong Kong must change from being an imitator to being an innovator.
The Futures Exchange is proposing an international innovation. Yet, it is being criticised from all directions. (Allow me to note that I have an interest in this issue; my wife is an official of the Exchange).
