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SCMP Reporter

MOVES by the Hongkong and Macau Affairs Office (HKMAO) to set up an investment company in conjunction with some of Hongkong's biggest tycoons raise ethical concerns about the way business will be conducted in the future.

  It is accepted in China for Government organisations to take an interest in private businesses - for example, many Government departments have interests in trading and, in some cities, even military units have interests in karaoke lounges.

  However, the case of the Hongkong and Macau Affairs Office is an entirely different one.

  However legitimate the motivations of the Office, it should not be seen to be involved in the hurly-burly of the business world on which it can have an effect due to its political influence.

  The confidence of the international business community will be sorely tested over the next few years as Hongkong adapts to its new relationship with China. This kind of move will send out the message that if you want to get a business deal done you will have to get in bed with the politicians.

  That is surely not the intention of the setting up of the new firm but that is how it will be read.

  Over the last few months the link between business and politics has become a strong one with political statements delivered to order for the purpose of boosting or depressing business confidence and the stock market.

  Perhaps it is because cadres at the Hongkong and Macau Affairs Office now feel more familiar with Hongkong's business world that they are venturing into it.

  If that is so it is an ill-advised notion. Authorities in Beijing should act to ensure that the Office retains its credibility. If not it is the credibility of Hongkong as an international business centre that will suffer.

     NEWS of P & O's plans to run a container service to Shekou are a significant indicator of the capacity crunch facing Hongkong.

  The shipping line is to launch the service this week and claims the congestion at Hongkong's borders is one of the reasons for the move.

  It is the first blow to Kwai Chung's pre-eminence as southern China's main port but it may not be the last.

  The huge boom in exports from southern China has not yet been matched by a growth in infrastructure or a relaxation in border controls.

  Terminal operators have for years been calling for 24-hour opening at the border to ease the bottleneck. At present border crossings are open for only 14 hours a day and there are long queues at peak times in the morning and evening.

  In addition, China's transport rules mean that Hongkong container lorry drivers must accompany their container boxes both in and out of China.

  This is an inefficient system as it means drivers often head northwards with empty containers. It would be far better to store the empty containers at sites within Guangdong, where there is more space and where they are actually needed.

  The practice also contributes to the blight of the New Territories where containers are stacked high in the paddyfields.

  In this column last week I wrote that Kwai Chung was the only major port in the world without a railhead. Significantly, a 40-kilometre rail spur to the Shekou port is under construction.

  It has to be stressed that Shekou is not an ideal port being in fairly shallow water. Yet P & O has decided to push ahead with its service, surely an indication of how serious is the border bottleneck.

  A far more attractive port for shippers would be the deep water port of Yan Tian on the east of the Shenzhen Special Economic Zone, which is set for expansion.

  Wharf and Hutchison have been in talk's with China's Ministry of Communciations over Yan Tian's development although no letters of intent have been signed.

  It appears that Wharf is looking at Yan Tian, rather than Kwai Chung, as the southern link in its Hongkong plus-plus concept.

  The idea calls for freight to be shipped from Wuhan, in the centre of China, to the coast by rail.

  It had always been assumed that the coastal outlet would be the Kwai Chung container terminal. However, the missing link is the few miles of railway to Kwai Chung.

  It may be too late for the rail link but improving road communications and negotiating to keep the borders open longer are matters that should be tackled with urgency.



HKMAO's move cause for concern