Government inertia is strangling Hong Kong's can-do spirit

Touring a city while seated on the upper deck of an open-top bus sounds a bit fuddy-duddy, but is actually quite a good way of getting an overview of a destination's major attractions. While thus engaged this summer in London, Washington and New York on vehicles owned by one particular operator, I naturally cast my mind back to when the same company sought to open shop in Hong Kong a decade or so ago.

The initial reaction of our transport authorities was interesting: you can't have such an operation here, you need a licence and we don't issue licences for such a purpose, our streets are very crowded etc. Sound familiar?

After many months of badgering, and with the support of my old department InvestHK, eventually there was a change of heart and some licences were duly issued to our client, the Big Bus Company. Hong Kong thus escaped the ignominy of being the only major tourist destination not to permit such an operation.

Which brings us to the case of Uber. I will not dwell long here because the subject has already been covered by just about every other columnist and there has been overwhelming public support for the American company, notwithstanding its typically brash ways. Uber built a better product and local consumers voted with their feet, and their wallets.

But while Singapore was examining its licence regime to see what changes were needed so that consumers there could enjoy the service, the authorities here were busy organising raids on the company's office, arresting staff and some participating drivers. To hell with what the customer wants, they seem to be saying, we must protect the interests of taxi licence holders.

It is not only in land transport matters that Hong Kong has been slow to welcome new products and services. Take the case of Jetstar Hong Kong, recently refused a licence to operate by the Air Transport Licensing Authority.

Now, parent Jetstar is clearly an Australian airline; it is the low-cost-carrier operating arm of Qantas. But the company had the idea of setting up baby Jetstars around the region together with local partners. These babies would run their own operations but would join together with each other and the parent to achieve economies of scale in various aspects of operations and secure savings in such things as aircraft purchase. Thus there is a Jetstar Asia operating in Singapore, Jetstar Japan operating from Tokyo, and Jetstar Pacific operating from Vietnam. As a result, there has been an explosion in the range of choices available to consumers in these places. The percentage of passengers using low-cost carriers in Singapore has soared to over 25 per cent of the market. In Hong Kong, we are still in the low single digits.

Naturally, the incumbent operators here objected to Jetstar Hong Kong's licence application, arguing that our city was not its "principal place of business" (a requirement of the Basic Law). Incredibly, in defiance of all common sense and the facts on the table, the Air Transport Licensing Authority swallowed this argument, notwithstanding the fact that Hong Kong is Jetstar Hong Kong's only place of business. Once again, the forces of inertia have proved triumphant.

I do not want to unfairly single out transport. The same mindset affects other policy areas too, such as parcel delivery (the DHL case in the 1970s) and, more recently, television - just ask Ricky Wong Wai-kay.

For many years, bodies like the Heritage Foundation and Fraser Institute have rated Hong Kong as the world's freest economy, a title our leaders naturally are happy to brag about. One day, the foundation will recover from its myopia and we are going to lose that title. The slight damage to our reputation is one thing: the damage to our economic development if we continue to resist new ideas is far more serious.

Mike Rowse is the CEO of Treloar Enterprises and an adjunct professor at the Chinese University of Hong Kong. He was a paid consultant to Jetstar Hong Kong. [email protected]