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Hong Kong is proud to declare itself the “world’s freest economy,” said Margaret Fong, the territory’s commissioner for economics and trade affairs. The Index of Economic Freedom, compiled annually by the Heritage Foundation and the Wall Street Journal, has ranked Hong Kong first among the world’s economies for 13 straight years, while the Economic Freedom of the World Report, published by the Cato Institute, has placed Hong Kong first for 10 consecutive years, Fong said on March 28 to alumni and friends of the GSB at the Singapore campus.
“When we talk about being the freest economy in the world, we really are, and have been acknowledged as such,” she said.
Additionally, when Hong Kong calls itself the “gateway to Asia,” its officials are not exaggerating. It sits within a four-hour plane ride to all of Asia, and is and within a five-hour plane ride to half of the world’s population, largely based in China and India, Fong said. “It’s not just geographical,” she said. “We have our own free trade agreement with mainland China. The Closer Economic Partnership Arrangement (CEPA) is the first free trade agreement that mainland China has entered into with any economy in the world, and covers goods, services, and investment facilitation.”
Many American companies have benefited from CEPA, Fong said. “Especially for people who are thinking of setting up business in Hong Kong, this is a great incentive,” she said. “Under CEPA, all goods that are produced in Hong Kong will be immediately able to import into China tariff-free. A certain beverage company was able to avoid a 20 percent tariff by expanding in Hong Kong and thereby increased sales in the mainland by 20 percent.”
Even mainland China has recognized that Hong Kong is the business hub of Asia, Fong said. “For mainland China, Hong Kong is the launching pad to go international,” she said. “When they start to look outside, Hong Kong becomes the natural window to the outside world. We have over 25 years of experience doing business with mainland China, and we have good networking. When they come to Hong Kong, they are able to access firms from across the world.”
Hong Kong officials are “quite confident” the territory will continue to play a significant role in Asian business growth and hold an edge over booming cities in mainland China for business opportunities, Fong said. “That is primarily for the fact that in Hong Kong you get a larger pool of talent —which will take quite some time to build up—than in any other city in mainland China,” she said. “Firms going directly into mainland China tend to be more manufacturing-based. That is the strength of mainland China.”
Over the next 10 to 20 years, cosmopolitan Hong Kong is the “place to be” for business, Fong said. “Hong Kong offers a very fun, convenient, and extremely safe place to be,” she said. “You don’t need to worry about changing a lot of your habits in order to blend in. You can basically just move in and start living as you’re used to. Moving into mainland China, there will be some things to get used to. That is a big consideration. Also, for people with children, the provision of international schools is much more advanced in Hong Kong.”
— Phil Rockrohr