Picking winners not for the faint-hearted

Three weeks ago, the Task Force on Economic Challenges highlighted six industries which, our officials believe, could offer ways for Hong Kong to diversify its economy. One of the ideas was medical services, which I know a bit about because my company owns stakes in health care providers in several parts of Asia. We would be happy to expand in Hong Kong, but I must say it currently looks unlikely. Costs here make it impossible to compete with centres like Thailand, or with Malaysia, Singapore, India, the Philippines, South Korea and Taiwan, which all want to be medical tourism hubs.

Another proposal was education services. As with medical care, our city certainly has good-quality people and facilities. But, again, lots of other centres in Asia want to be education hubs, including Singapore, Beijing, Shanghai, Seoul and Malaysia.

The media reported these and other task force ideas, like environmental and creative industries. But there was very little reaction from the community.

Even our own officials did not seem all that excited. They remember the controversy around Cyberport and Disneyland. They are afraid of allegations of collusion if they offer incentives that benefit the usual big local tycoons. Bureaucracy and procedures slow things down. Critics and opponents spread doubts about possible initiatives. Too often, we have raised expectations of building a hub of one type or another - remember Chinese medicine? - only to see nothing come of it. After hearing so many grand-sounding ideas about new industries, people are sceptical.

This is in contrast with places like Shanghai and Singapore. When officials in those places announce plans for a such a project, they mean it. They set up high-profile departments with real power, they mount big publicity campaigns, they cut through bureaucracy, they revise regulations or legislation. They go all out to make it happen and they seem confident of success.

The rest of the world is left with the impression that they are up-and-coming centres for this or that industry. And the local population also believes it. The 'can-do' attitude of their officials probably helps to build up morale and civic pride.

Whether they eventually succeed is a different matter. So far, Singapore has had limited success in developing clusters of medical and educational services. Shanghai faces so many barriers to becoming an international financial centre that I don't have the space to list them. Time will tell.

There are real reasons to doubt whether governments can turn a city or region into a hub. No policymaker or bureaucrat decided that Hong Kong should become a financial centre; it was an organic process that took decades. Investors, not governments, decided to open the hospitals that made Bangkok into a centre for medical tourism.

Our officials recognise that the biggest opportunities for new medical services in Hong Kong come from our own middle class. Education, too, offers many prospects, as seen in the popularity of international schools among local parents.

If these and other sectors develop in response to market demand, even starting from a small base, we might be pleasantly surprised by what happens later. I am sure sectors like private hospitals or independent schools would find niches to attract overseas clients. Although the task force did not mention it, arbitration services are another example of a sector that could build regionally on its success in meeting local needs.

If our officials really feel confident enough to pick winners, they should make decisions and act on them as boldly as other cities in our region do. Rather than build up expectations, they should deliver an environment that allows new (or not so new) industries to evolve naturally as private investors identify new opportunities and markets. Traditionally, that's been one of our government's greatest strengths.

Bernard Chan is a former member of the executive and legislative councils