Capital investment scheme doesn't bring in new money

'The Capital Investment Entrant Scheme, which requires applicants to invest at least HK$6.5 million before they are given residency in Hong Kong, is currently not applicable to mainland investors unless they obtain a foreign passport for their permanent resident status ... ' ... Among the successful mainland applicants, most held passports issued by Gambia, Canada and New Zealand.' SCMP, August 30 I wonder why they bothered with difficult ones like Canada and New Zealand when the world also contains Upper Volta, South Ossetia and North Phumbuck. It reminds me of Carrian boss George Tan Soon Gin who was an undischarged bankrupt in Singapore. Little did he care. He held passports from Paraguay and Tonga. But apparently we do have a problem for the Capital Investment Entrant Scheme. It is closed to mainlanders because the mainland imposes capital controls. If we allowed mainlanders to take advantage of the scheme we would encourage a breach of the law. That's a no-no, even under one country, two systems. The difficulty, however, is that Beijing has now adopted a scheme for mainlanders to invest in the Hong Kong stock market through a special channel in Tianjin and Hong Kong equities are investments that qualify under the scheme. What shall we do? Oh, what shall we do? Mainlanders will be able to sneak into Hong Kong through a loophole in the law if we are not careful. Let us be glad that the Immigration Department is aware of the scale of this potential calamity and will consult Beijing on it. Let us also marvel at the spectacle of an Immigration Department completely out of touch with reality. To start with, there is little evidence so far that mainlanders will make much use of the Tianjin channel. They can already open illegal stock trading accounts with great ease in Hong Kong, almost as great as the ease with which they can enter Hong Kong on easily obtained passports from tinpot republics. Both of these channels get them right around capital controls and the Beijing taxman, which the Tianjin channel does not. The greater delusion, however, is the one that conceives of the Capital Investment Entrant Scheme as being of any use to us. The idea behind it is that it will encourage capital inflows to Hong Kong, which is a good thing to the minds of civil servants. But what they don't know, because the workings of the balance of payments are a complete mystery to them, is that it doesn't actually bring any new money here at all. What it does is change the title deeds on some financial assets from one owner to another with no increase in net investment. Ask any economist if you don't believe me. And we wouldn't need the money anyway. As the chart shows, we are now running a current account surplus equivalent to more than 13 per cent of the size of our economy. Hong Kong's problem is how to invest all the money it has raised, not how to raise it. But I suppose the scheme has its plus sides in creating paper-shuffling employment for civil servants who need to shuffle paper because there would otherwise be no jobs for them at all. Civil servants have to eat too, you know. Department assistant director Helen Chan Wing-mui admitted there was 'not a vast number' of applications and blamed lack of publicity. SCMP, August 30 I see I'm not quite finished yet with the Immigration Department. Yes, that was them again, explaining why another let's-bring-some-good-people-in idea, the Quality Migrant Admission Scheme, has gone flat. Listen, Ms Chan, I have the real explanation for you. The reason we have problems attracting brainy people with skills we need is that employers won't pay them enough here. You can't start such people off at HK$10,000 a month any longer. There are too many other places where they can get more, including across the border. Mainland companies are risking long-term earnings by relying on short-term investment gains made from speculating on the stock market while ignoring their core business, the securities regulator said. SCMP, August 30 What a discovery. Some companies make money in bull markets by speculating on the stock market and this can be a dangerous tactic. It has never happened before, no, never. I have some other news that may interest the China Securities Regulatory Commission. Did you know, sirs, that America has been discovered? Fact. Fellow by the name of Columbus did it 515 years ago. Some of your ancestors may have got there even earlier. You may also be interested to know that water is wet, the Pope is Catholic and bears do it in the woods. These are generally reliable facts of nature, although none of them, of course, are quite as reliable as the emergence of zaitech in a bull market.