Removing doubts about B
Updated: 2016-06-07 07:41
By Ho Lok-Sang(HK Edition)
Ho Lok-sang writes that more should be done to educate ordinary people about the significant role Hong Kong can play in the nation's bold development plan
There has been a lot of talk about the Belt and Road (B&R) Initiative and yet there is still considerable doubt and skepticism over how it relates to the man in the street in Hong Kong. This is most unfortunate. We recall how the 2016 Policy Address was booed by some members of the public just because there was a whole chapter devoted to the B&R plan. Quite a few commentators said the Chief Executive was more interested in pleasing the central government than serving Hong Kong people. While they are completely mistaken, one cannot blame them because there is indeed a lack of transparency as to how one can play a role in the strategy and benefit from it. Thus we need to launch a major effort to let Hong Kong people know more about the B&R.
Because inevitably a lot of money will be involved in various B&R projects there is a possibility for some officials, as well as middlemen, to benefit from illegal kick-backs and corrupt practices. While these things cannot be eliminated entirely, there is a need to do everything we can to reduce the likelihood of this happening. In his Policy Address, the CE announced that a Belt and Road Office will be "established to take forward related studies, and coordinate work between government departments and other organizations, such as the TDC (Trade Development Council) and the HKTB (Hong Kong Tourism Board)". Even more important, however, is to build an online platform so everybody who participates in B&R projects finds information which might interest them. More specifically, all projects, both private and public sector ones, should be classified and, if their values exceed a certain threshold, should be listed for tendering. All tenders should be appraised according to clear criteria. The appraisal process should be transparent and subject to audits. Similarly, job openings and requirements, along with terms and conditions, should be classified, advertised, and verified as authentic. In order to imbue confidence, agreements should be signed between governments of B&R countries and the central government, so the governments concerned are known to undertake whatever is needed to protect investors and workers who locate there.
Although the number of Hong Kong people and Hong Kong-based organizations directly involved in B&R projects will likely be relatively small, the SAR government should educate the public that as long as the B&R strategy helps push up the economy, the government will take in more revenue from profits tax, from income tax, and from other fees. Given that we expect government expenditure will rise considerably in the next 10 years due to a growing and aging population pushing up healthcare costs and welfare spending, we will need more sources of revenue.
The Swiss research institute IMD rated Hong Kong as the most competitive economy in the world in its latest ranking exercise - but let us not be complacent. In five out of the past eight years, Hong Kong's economic growth was less than 3 percent and the picture does not look good in the current year either. Thus, all that the IMD report says, let it be clear, is that we may have the greatest potential to do well. In practice, we are not really doing that well. Our competitiveness as a global financial center is under threat. Singapore just overtook us and obtained third place in the Global Financial Center Index ranking. We are losing marks as the other three top global financial centers are gaining them. Our tourism industry is in decline. Our exports are very weak, having registered negative growth year-on-year for the last four quarters for goods and for the last three quarters for services. While consumption is not strong, business investment is extremely weak. Growth in gross fixed investment year-on-year has been negative for the last three quarters, and steadily getting worse each quarter, reaching 10.1 percent in the first quarter of this year. Thus, although Hong Kong is the freest economy in the world according to Heritage Foundation, and the government is very efficient, many of our businesses appear to have lost faith. They need new growth areas to kick-start new activities.
The B&R Initiative offers exactly the growth points we need now. Since domestic demand is weak and since we have not many levers to boost domestic demand, the best bet is demand from overseas. With traditional markets showing little sign of true revival any time soon, the B&R Initiative offers great opportunities such as infrastructure construction, infrastructure financing, professional services like design, legal services, project management, etc. The B&R Initiative may also eventually lead to big markets for our exports. Equally important, it will prove a great service especially to the landlocked countries whose development potential has been limited for centuries. Hong Kong can indeed serve as "super-connector". Improving transparency so more of us understand it for what it is will enable us to do well in this role.
The author is an adjunct professor at Lingnan University.
(HK Edition 06/07/2016 page1)