Not everyone will agree with British Prime Minister David Cameron's ambitious idea of Big Society as an instrument to transform Britain's social sector. Yet, we cannot fail to admire the thought and effort behind last Thursday's launch of Big Society Capital, an independent investment firm, funded by GBP400 million (HK$5.1 billion) in unclaimed assets in bank accounts and GBP200 million from four of Britain's largest commercial banks. Hong Kong sorely needs such bold ideas.
If successful, this audacious experiment in applying financial techniques and discipline to the social sector will provide hundreds of civil society organisations with needed capital and advice. London deserves credit for taking a major step towards the creation of a serious social investment market to complement its role as a global financial centre.
Besides Britain, initiatives to build social investment markets are also taking shape in Brazil, India, Canada, South Africa, the US and Singapore. Yet Hong Kong has been content to watch while the rest of the world steams ahead.
We may lead the world in initial public offerings, thanks to China's explosive growth in 2009 and 2010, but we have done little to boost the social investment market. One reason for this lethargy is because our social sector is dominated by non-governmental organisations that are primarily funded by grants rather than investments. As long as our government continues to dole out grants, very little incentive exists for the sector to seek private capital to fund growth.
The recent proposal to set up a charities commission is a welcome step to invigorate the sector, but the government must continue to innovate and learn from other jurisdictions. For Hong Kong to maintain its position at the forefront of financial innovation, the creation of social investment markets is a must.
Hong Kong is China's window to the world; the city is free to experiment with financial innovation, which, if proven effective, could be transplanted to the mainland. So if impact investing becomes an established way to put private capital to work for public good in Hong Kong, the ramifications for mainland China, with its billion-plus population and myriad of social and environmental issues, would be very positive.