Inflation hurts HK

Sean Kennedy

HONGKONG Bank's Paul Selway-Swift is right on the money with his concerns about spiralling inflation, and the Government would do well to listen.

He said high staff turnover and human resource units that work on 'cost plus inflation plus a bit more' were not helping the territory.

He said that unless human resource units delivered the goods to management, then the territory's recent recognition as one of the most competitive economies in the world would quickly be forgotten.

Measure Hong Kong's price trend against prices in the Group of Seven industrialised nations and the numbers bear him out.

The G7 averages 1.95 per cent annually - Hong Kong's official consumer price index (A) is a year-to-date 8.1 per cent, and anecdotal evidence suggests that any single digit inflation number from Hong Kong is suspect.

Even if the official 8.1 per cent is accepted, Hong Kong is losing ground against emerging markets and developed countries as the territory's inflation gallops away.


Even in the emerging markets in the region, few suffer inflation that is substantially higher than that of Hong Kong. Malaysia and Singapore have less than half Hong Kong's rate, and South Korea with 6.5 per cent, Taiwan (6.7 per cent) and Thailand (5.3 per cent) also highlight the territory's problem. The only near neighbour worse than Hong Kong in terms of inflation is China.

Some of the territory's biggest companies have started voting with their feet: Cathay Pacific has decided to move its accounting division to Guangzhou and its computer reservations centre to Sydney. Hongkong Bank is importing workers from China and exporting some operations to Guangdong.

If the Government does not reduce inflation and competitiveness continues to ebb, perhaps those human resource units could be usefully employed putting up billboards outside Kai Tak and Chek Lap Kok: 'Would the last company to leave Hong Kong please turn out the lights.'