HONGKONG is holding its own among Asia's newly industrialised economies of Singapore, Taiwan, Thailand and South Korea. In terms of international distribution, foreign investment and international commercial alliances, the territory ranks top in the region, according to the World Competitiveness Report 1993. The result of the work of a team of economists from the World Economic Forum and the Institute of Management Development, the report assessed competitiveness as a multi-dimensional concept, guided by 330 criteria coming under eight major categories. The report combines hard data from international organisations on economic performance, inflation rates and gross domestic product (GDP) growth, as well as insights derived from a survey of 18,000 business executives worldwide. From the views of those surveyed, Hongkong emerges with a positive image of an internationalised economic city, even in the wake of the unsettled Sino-British verbal conflict that plagues the territory. Indeed, the amount of confidence shown from both the international and domestic arenas is very encouraging. While the territory's GDP for 1991 was at US$70.1 billion - against the United States' $5.67 trillion - tailing behind countries such as Thailand and Taiwan, eight out of 10 people surveyed nevertheless thought the territory was unlikely to be in recession over the next two years. GDP per capita for 1991 was also recorded at $12,299, closely behind Singapore which topped the list for the newly industrialised economies at $14,492. But where the territory really shines is in trade and investment areas. Foreign investment raked in a high index of 9.7 out of a possible 10, an indication that respondents believe that investors are free to acquire control in a domestic company. In 1991 alone, Japan and the US together pumped in a total of HK$20.62 billion, occupying a substantial 59.9 per cent of total foreign investment in the territory. Another trading attraction the territory offers is the fact that competitive products are not prevented from being imported. Out of 10 people surveyed, about nine supported the claim. The economy also supports international activities of the local companies in the long term, eight out of 10 respondents believed. Although this makes the territory just slightly behind Singapore, which took top place, the territory headed the list in making trade alliances with foreign companies, with the index rating of 8.7 clearly reflecting the trend. With the booming Chinese economy and the vast opportunities that come along with it, nine of every 10 respondents also felt that trading joint ventures with firms across the border could be easily negotiated. The countless agreements signed between the territory's businessmen and their mainland counterparts have made it difficult to put even an estimate on the exact amount of money that has been involved in the process. The survey showed a common belief that the manufacturing base of the economy has been seriously eroded over the past five years (index of 4.2) as manufacturers tapped in on the cheaper labour costs in China. But the flip side of the coin is that more economic ties have been established with the mainland. By contrast, while the territory overtakes many a country in trade matters, the report found the emotional fight by locals for a sense of national identity is decreasing; six out of 10 respondents stood by the belief. This is perhaps not surprising with the uncertainty of the territory's future, although businessmen have repeatedly voiced their optimism in the future. Optimism is also expressed in the inflation rate for the territory. Hongkong's spiralling inflation rate, quite accepted as part and parcel of life, has experienced single-digit rates since March. Seven out of every 10 surveyed were confident that a low rate of inflation could be expected in the next 12 months. The better trend very likely came from the downward slide in the prices of food, fuel, transport and clothing. But positive as it may appear, it is worth remembering that inflation could be fuelled by the escalating service sector. Despite the report's reflection that the local service sector is currently ahead of main regional competitors - at an index of eight out of 10 - wage inflation could be a result of a sophisticated service industry. But the report failed to put a ranking for the real growth in the service industry. Two reasons for this could be either there is no direct relevance to competitiveness or the impact of the data cannot be judged without ambiguity. As economists expressed confidence that inflation would be under control, the report also says the inflation percentage change for the year is 8.5 per cent. The territory also ranked second after Singapore with regard to the possibility of succumbing to an economic slump. For every 10 interviewed, about eight thought a recession could not be experienced over the next two years. The survey also found that government price controls do not affect pricing of products in most industries, at an index of nine. Hiring and firing practices in the territory are also believed to be flexible enough. An index of 8.9 recorded also enhances the fact that the Government adapts economic policies to the new realities effectively. The report showed that Hongkong has the biggest disposable income. For 1991, the amount was US$8,508 per capita.