Make Hong Kong Great Again? With some creative planning, it's possible
Hong Kong has for decades served as one of Asia's most important financial hubs, and its English-language media was a bastion of free speech.
The city's proximity to China and welcoming nature to foreign businesses made it the most sensible place to set up shop to do business in the region. But the combination of the pro-democracy protests, the new national security law and the sheer cost of living is leading many global firms to consider an exit.
I've personally spent much of my time since April on such an exit, closing down a 10-year-old global hedge fund and becoming a rudderless Responsible Officer. A sign of the times.
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As business in Hong Kong shrinks, several Asian cities are eager to take over its position as the key financial centre in the region.
Tokyo could become a serious threat to Hong Kong if it focuses on the job, writes Neil Newman. Photo: AFP alt=Tokyo could become a serious threat to Hong Kong if it focuses on the job, writes Neil Newman. Photo: AFP
TOKYO MAKES A STRONG BID
One of the highest-profile contenders in Asia is Tokyo. Ever since the 1990s slump stripped the city of its position as the leading Asian financial centre, Japan's hapless politicians have been trying to plot their way back to regional supremacy - with more than a few false starts based on ill-conceived ideas like more late-night spaghetti restaurants in Otemachi or free Bloomberg terminals in Naha.
Today, the objections of moving an asset management operation or headquarters to Tokyo are simple: high taxes, complex regulations, and low standards of English. None of those arguments posed much of a problem in the 1980s, however. Back then all you had to do was make lots of money! We gladly suffered the high taxes, worked around the rules and learned some survival Nihongo to get around Roppongi.
The city's current attempt is led by the second-term Tokyo governor Yuriko Koike, following on from her promises during her first term to make Tokyo a financial powerhouse again, which didn't happen.
However, there are new directives from Prime Minister Yoshihide Suga to see Tokyo, Osaka and Fukuoka compete for the accolade of Asia's financial centre - muddying the whole plan a little more than necessary for a prize that is not his to give.
I met Koike briefly twice during her first term, and she was very aware of the problems Hong Kong was facing. At the same time, she reminisced over her earlier career as financial anchor for Nippon TV when Tokyo was at the top of its game, and wanted it back.
In her first term, Koike had assigned the task to attract financial firms back to a crack team of high-profile Japanese and foreign financial executives that covered the groundwork. But the city government was sidetracked by the tasks of relocating the Tsukiji fish market and figuring out how to keep the cost of the Olympics in check.
If she can continue the work to a conclusion this time and make Otemachi an effective financial economic zone that is easy to access, Tokyo could be a serious threat to Hong Kong.
Singapore is becoming less welcoming to foreign firms, which could throw a spanner in the works. Photo: Bloomberg alt=Singapore is becoming less welcoming to foreign firms, which could throw a spanner in the works. Photo: Bloomberg
SINGAPORE'S APPEAL COOLS
Singapore is so brimming with money it is at risk of overflowing. I ventured there at the end of 2018 with a fresh CV, and while standing in line with everyone else looking for a job, I got invited to an evening meetup with a group of fun-loving wealthy women and their financial advisers.
Amid all the champagne and caviar, it was clear the advisers were seeing an influx of money from Hong Kong, which added nicely to the business from their existing clientele paying for the vittles.
Although the inflow of cash has been downplayed by the Singapore government, it is an open secret that the city has been raking it in. It was confirmed by the Monetary Authority of Singapore earlier this year reporting that new deposits were running at the highest rate since the early 1990s.
However, Singapore is becoming less welcoming to foreign firms, which could throw a spanner in the works. It is difficult to get work visas as employers are under pressure to hire locals first or in addition to foreigners, which pushes up costs as local office workers are now in short supply.
Also, the behaviour of some foreign workers early on in the Covid-19 crisis - who ended up being deported for flouting the rules - has spoiled the pot for everyone else.
If I were to make a guess at this point, Singapore's appeal to newcomers is declining - and at the moment we can't even get there anyway.
The downtown shopping mecca of Myeongdong in Seoul. Photo: EPA-EFE alt=The downtown shopping mecca of Myeongdong in Seoul. Photo: EPA-EFE
HOW ABOUT TAIPEI OR SEOUL?
Despite being a possible future flashpoint between Washington and Beijing, with the US still backing Taiwan and supplying it with copious amounts of arms, perhaps Taipei will become more of a draw as the Americans will be keen to increase their presence there. Certainly, there has been a migration of English-speaking journalists from Hong Kong who would prefer not to holster their pens.
Meanwhile, eyebrows were raised when The New York Times started to relocate its Hong Kong bureau to Seoul in July because of South Korea's freedom of the press and friendly attitude towards foreign firms. The Times is not the only international newspaper operating there, with pan-Asian stories from other big publications such as the Financial Times coming out of Seoul.
But to take over as the region's major financial powerhouse, Seoul will face challenges. While it has a very well-developed financial market and internationally minded investors, the South Korean government has done little, if anything, to attract foreigners.
Nevertheless, it is up and coming, in no small part due to South Korea's global profile in the arts. Two of the largest musical acts on the planet are BTS and Blackpink, so the cultural future is looking bright - as it did in the past for Hong Kong with its award-winning and vibrant film, television, radio, and Canto-pop scene.
A view of Shenzhen in the Greater Bay Area. Photo: Martin Chan alt=A view of Shenzhen in the Greater Bay Area. Photo: Martin Chan
MAKING HONG KONG GREAT AGAIN
To my mind, all is not lost for Hong Kong despite the pessimistic mood that prevails at the moment. But we need some strategic thinking from our government, and a plan of action with enthusiasm to match.
As part of the Greater Bay Area, Hong Kong will need to integrate to survive and compete favourably with the rest of the economic zone rather than try to be something different. But it has some distinct assets:
" Hong Kong has an English-speaking culture and common law legal system. It has been suggested that foreign firms operating in the Greater Bay Area may choose the city as the applicable jurisdiction for contracts.
" It has a well-developed and broad stock market that can be further promoted with new products absent in Asia as well as new incentives for asset managers, making it easy for them to come here - or stay put.
" As a trade hub, it can hold a dominant position through the Hong Kong dollar as the transit mechanism between the renminbi and freely exchangeable currencies, although as I have argued before the peg could be reformatted and strengthened.
Most urgently, it has to become cheaper to live and operate a business here, with commercial and residential rents and the basic cost of living being brought sharply into check. There have been a few sharp words from Chief Executive Carrie Lam aimed at the supermarkets, but I haven't noticed much change in my monthly outgoings.
With perhaps China seen to be coming to Hong Kong to do business with the world rather than the world coming to Hong Kong to do business with China, there will be more interest locally that will slow down the exodus, particularly in the financial industry led by the power of the Hong Kong stock exchange to launch initial public offerings.
In any event, some creative planning from Legco members to rewind the clock and make Hong Kong an attractive place to do business again, rather than napping or ordering hairy crab during office hours, would be very welcome - I think that is why they are paid the big bucks.
This article originally appeared on the South China Morning Post (SCMP).
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