Bow Tie Sieries (III) - 27 Jun, 2005

The Bow Tie Series (III)
Donald Tsang’s Economic “Platform”
Full steam ahead …

Dear Subscribers and Friends

Donald Tsang (DT) says he will “drive Hong Kong’s economy at full steam”. Beijing believes with a strong economy, political tension will ease and the people will live in “harmony”. Essentially, the degree of “harmony” is how DT will be judged.


A. DT’s buzz words

1. “Principles”: free enterprise; fair competition; key business centre; leverage China’s growth; CEPA; more mainland visitors; low taxes etc.

2. Promise: Reduce taxes when things get better.

3. Hard “Investments”: Increase spending on “infrastructure”, more “tourism infrastructure”; and speed up public works.

4. Soft investments: Protect the environment; increase opportunities for education and training.

5. Jobs: DT reminds Hong Kong that the tourism push is tied to creating jobs for lower-skilled workers.

B. Picking winners

1. Stated policy: It does “not seek to direct or plan the course that the economy or the markets should take, as investors and entrepreneurs are deemed to understand markets far better than officials. Its fundamental role is to provide the most business-friendly conditions possible and a level playing field.

2. But, we have favourites: The government invests public money in specific sectors with much hard investments going into logistics, IT and tourism, not forgetting all kinds of contruction works big and small!

3. Land grants: The investments usually come in the form of land grants or land subsidies e.g. Cyberport, industrial parks, logistics parks, West Kowloon etc, as well as massive public works.

C. Observations

1. DT the Builder?: Perhaps DT sees himself as a builder of impressive hardware, such as more roads, the canopy to West Kowloon, new container port on Lantau etc.

2. Environment: The environment is likely lose out to massive developments. Watch whether environmental assessments will be bent to support large projects.

3. Land use: This highly political subject has never been adequately debated in Hong Kong. The use of this resource as a subsidy has been decided by a few with no debate on opportunity costs and not much transparency. This is where LegCo can shine but many functional members have vested interest in seeing large projects proceed as quickly as possible.

4. Lingering suspicion: DT’s challenge is to assure the public that his policies are not made in a ‘black box’; his priorities are not the same as big business interests; and he doesn’t feel beholden to the tycoons who promoted him to Beijing.

5. CFA: Watch out for government ideas on the Closed Frontier Area and what proposals they will come up and who might benefit.

CHRISTINE LOH
Civic Exchange - HK’s independent think tank
For other publications: www.civic-exchange.org