Editorial | Why global business community still has confidence in Hong Kong
- The introduction of a national security law has seen some firms draw up contingency plans, but that does not mean an exodus from this city
Few companies are moving out. At most, some have drawn up contingency plans to relocate some operations outside the city, such as data centres and cloud servers. Their concern seems to be maintaining the free flow of information. According to a recent survey by the American Chamber of Commerce in Hong Kong, only 30 per cent of 180 members may consider moving capital, assets or operations to potential destinations such as Tokyo, Singapore and Taiwan.
However, Beijing has already promised to maintain Hong Kong as a premier business hub. It is simply in its own interest and that of Hong Kong to do so. Foreign businesses would be wise not to jump to conclusions but maintain faith in this great city. Even though the full details of the new law have not been published, it is clear that Beijing has no intention to target foreign companies when it comes to protecting national security.
Of course, this will not stop rival cities from exploiting the uncertainty to woo firms to move there. Tokyo, for example, has reportedly offered rent concessions to attract businesses away from Hong Kong, but high taxes in Japan remain a serious deterrent. In any case, any fears of the new law may have been exaggerated and sensationalised.
So far, American and British firms have not expressed concerns about being potential targets of the new law. Some European firms such as those from Italy and France reportedly even think the new law could calm social unrest and stabilise society rocked by prolonged violent protests last year. Hong Kong still has many irreplaceable advantages. Among these are a low tax rate, free currency convertibility, and a common law jurisdiction and an independent judiciary.
According to the Hong Kong General Chamber of Commerce and the Hong Kong Monetary Authority, there have been no significant capital outflows or companies retreating from Hong Kong.