Lack of agility could cost us title of world’s most competitive economy
Hong Kong scores high marks in government and business efficiency yet we lag behind others in adopting to the digital era
Hong Kong remains the darling of free enterprise institutions. Despite concerns that it is losing its competitive edge to the mainland and regional rivals, it has been declared the most competitive economy for the second consecutive year, by the Swiss-based International Institute for Management Development. But the city did not get straight As. The rankings include warning signs that will be a challenge to a city that prides itself on its capacity to adapt to change and prosper from it.
Out of four indicators of competitiveness, Hong Kong came first for both government and business efficiency. But these two strengths were not reflected in a slip from fifth to 11th place in economic performance and 20th place for infrastructure – including “soft” assets such as education, science and health. This hardly suggests the kind of depth and resilience – and capacity to adapt – you would expect of a city with an open economy prone to external shocks. The city came seventh, behind Singapore, Sweden and the United States in the top three, for ability to adopt and explore digital technology, and success in transforming government practices, business models and society.
Such relative lack of agility could be a challenge for chief executive-elect Carrie Lam Cheng Yuet-ngor and her new team. If rankings put more weight on digital adaptation and development, not to mention high business costs such as rent and political climate, the city could risk losing its edge. That said, Lam has inherited the recently established Innovation and Technology Bureau, the head of which, Nicholas Yang Wei-hsiung, wants Hong Kong to become a knowledge-based economy by 2025. By that he means the creation of high-value-added reindustrialisation in hi-tech fields to boost productivity and growth, and to create quality jobs. That means broadening a quick-profits mindset and diversifying the economy from finance-based services. It calls for a culture that encourages study of science and engineering and an economy that creates such jobs and rewards risk-takers. The government must invest more in education, technology and innovation to help small and medium-sized business grow in a hi-tech environment.