If InvestHK wants to show real returns, it should close its doors
'We recognise the importance of bringing in new ideas, services and technologies into Hong Kong to strengthen the overall competitiveness of our economy.'
Invest Hong Kong
IT IS THE time of year again when Rowsie gets to praise himself, 144 companies assisted by InvestHK in expanding operations or setting up shop here in the first six months this year, which is 13.4 per cent more than for the same period last year.
The initial investment by these companies topped $1.5 billion, the press release said, but did not reveal how this compared to last year's figure. Was it perhaps because the growth in money terms was significantly less than 13.4 per cent? I have some experience in reading InvestHK press releases. Just asking.
Let me get out my usual message about coals to Newcastle. The world is divided into providers and recipients of foreign investment and the bar chart gives you some indications of how firmly we are in the provider camp, on a per capita basis possibly the world's biggest foreign investor barring some underpopulated oil states.
Take just the shortest of these bars, our current account surplus at the equivalent of more than 11 per cent of gross domestic product - the result, mostly, of that balance in services which stands at almost 15 per cent of GDP. This is one of the ways we generate money for foreign investment and, while the bars may appear short, those figures are sky high by international standards.
Then, measuring the actual foreign investment position, we get our foreign reserves which now stand at 74.5 per cent of GDP and the net external claims of our financial sector where the figure is 112 per cent.
Finally there is our net international investment position, how much we own abroad less how much foreigners own in Hong Kong, and this is now 263 per cent of GDP. To put it into context, the $1.5 billion investment figure that Mr Rowse crows about amounts to barely one tenth of 1 per cent of GDP.
So why should we go to such efforts to attract paltry amounts of foreign money when we already have an enormous surfeit of our own? Good investment opportunities in Hong Kong need never run short of capital. Bringing foreign money to Hong Kong is bringing coals to Newcastle.
But Mr Rowse was obviously making a different case for InvestHK in the excerpt I quoted above. It is that we do not need foreigners for their money but for the ideas and the technology they can bring us. This helps diversify our economy and makes us more competitive by opening new opportunities for us.
Well, if that is the last we hear of the coals to Newcastle approach I am all for it, although it still leaves me wondering why in that case there was more about money than ideas in this press release.
The ideas came down to new openings by a jewellery company, a financial services group and a cruise marketing company. Ideas they may be but I have some difficulties in thinking of them as new. Jewellery, financial services and tours to Hong Kong? As I was saying, coals to Newcastle.
But perhaps it is just as well. Diversification is not necessarily a good thing. It could amount in practice to spreading our efforts too thinly across too many endeavours and succeeding in few of them as a result.
What is wrong with specialising when you have the skills and resources to do it? Why be all things to all people? Specialising is certainly how Hong Kong continues to prosper.
We are the experts in financial and trade services. We tried diversifying into knowledge economy and small company subsidies under our previous chief executive and all we got was wasted public money while services continued to see us through.
What it comes down to in the end is that we also have a market economy that excels at exploring new opportunities without any official assistance. It does it even better when government does not additionally waste our money on duplicating what Hong Kong people do best on their own.
I still say that the very best idea ever proposed for InvestHK is to scrap it and save the money we spend on it. Whether it brings foreign investment to a source of foreign investment or ideas to a source of ideas, it all still amounts to coals to Newcastle.