David Fong of Hip Shing Hong sees need to help young get a start
Hip Shing Hong scion urges tax and wealth reforms to tackle social challenges, reflecting his unusual approach in a dog-eat-dog city
Hong Kong needs a progressive taxation and wealth redistribution system to tackle its social and welfare challenges, the head of one of the city's largest privately held real estate developers says.
The seemingly off-beat remarks were made in a wide-ranging interview with David Fong Man-hung, the son of a Forbes Rich List member and managing director of the Hip Shing Hong Group.
"Traditionally the tax system in Hong Kong is almost like royalty - it cannot be touched," said Fong. But, he said, the wealthy now needed to support society, and a progressive tax system would help those at the bottom of the social ladder.
Changes could include increases in personal tax rates for the wealthy and a reduction in or the scrapping of mortgage interest tax relief and other tax rebates for higher income earners.
"Tax is a powerful tool in managing income disparity. Although [other tycoons] do a lot of philanthropy, it is targeted at small groups of people," Fong said.
Being accountable only to family and staff, rather than hard-nosed external investors, might help explain Fong's liberal views and a level of social awareness not usually associated with the city's tycoons.
He also favours short-term interventionist measures when bubbles are forming in the property sector.
While these views were "not broadly shared" by his fellow developers, Fong said he had identified some acceptance among second- and third-generation business leaders of greater wealth redistribution. The acceptance was partly self-serving, he noted, since without upward social mobility, "who is going to buy the real estate"?
It is a pertinent question. In the past five years, workers in the city have seen wages rise an average of 16.7 per cent, according to surveys by the Employers' Federation and the Hong Kong Institute of Human Resource Management. But inflation over the same period was 18.8 per cent.
The pattern mirrors economies in the developed world, where salaries for a broad swathe of society have stagnated or even declined once inflation is factored in.
Over the same period, average rents have increased 50 per cent, according to the Ratings and Valuations Department.
Founded in 1948, the Hip Shing Hong Group started life trading sesame and cinnamon before moving into real estate in the 1950s. The firm now owns more than two million square feet of assorted real estate around Hong Kong. It does not disclose annual revenue.
One of eight children, Fong is the only sibling involved in managing the firm. Forbes estimates his 88-year-old father, Fong Yun-wah, has a net worth of US$2.5 billion, ranking him 21st on the Hong Kong Rich List.
A passionate advocate of start-ups and helping "disillusioned" young people, Fong's political inclinations were on display when he donated 5,000 square feet of industrial space in Wong Chuk Hang to graffiti artists.
"Wealth gets controlled in the hands of the top companies," he said. "This is what globalisation has brought about. The big get bigger and wealthier. The corporate world and wealthy individuals should really help the younger generation to realise their dreams."
Fong followed this up with the launch of Collab earlier this year in Sheung Wan.
Managed by Office Plus, the concept is based around co-sharing workspaces designed for start-ups looking for low overheads and a collegial environment to swap ideas.
Spending his formative years in California gave Fong a lasting admiration for the American approach to fostering entrepreneurial spirit.
When he took on the role of managing director in 2009, he pushed to expand the firm's asset base. "I realise the danger of not developing and the danger of being complacent with what we have. There is a force outside pushing me to do this," he said.
Drawing on family savings, the group has funded the construction of seven redevelopment projects, including Madera, a five star hotel; co-shared office spaces; and managed apartments. Whenever possible the firm avoids taking out bank loans.
"Hong Kong is a top-three city in China for public safety, health, education, and its legal system," Fung said. "In the longer term, capital goes to places of quality where financial interests are well protected. I think a lot of capital will come from China and Southeast Asia."
Within the next year he expects speculative capital to leave the city once the United States Federal Reserve ends its programme of quantitative easing and interest rates start rising.
He estimates flat prices will then drop by 10 per cent and commercial property prices by 7 per cent.