Economic Development
News that the government was withdrawing from tender two land sites to facilitate faster development of the Northern Metropolis comes while Hong Kong is still celebrating the anniversaries of various economic initiatives from a previous era. There could not be a better illustration of the changes in the city’s approach to economic development.
The Development Bureau announced last week that it was withdrawing from the market two sites that had previously been open to bidders from the private sector. The first, a three-hectare lot in Yuen Long, would instead be given to the wholly government owned Hong Kong Science and Technology Parks Corporation which already runs an innovation park on adjacent land. The new site will be used to build a microelectronics eco-system.
The second, an eight-hectare site in Hung Shui Kiu, will be developed as an industrial estate by a government-owned company to be established following a further study.
In both cases the administration is clearly taking much more of a leadership role and “hands on” approach. This contrasts with the philosophy prevailing immediately after establishment of the SAR.
At that time then financial secretary Donald Tsang Yam-kuen set up a Business and Services Promotion Unit as part of his own office to play a much more proactive role than the laissez faire approach that had largely applied under British administration. The Unit was responsible for drawing up and implementing a helping business programme (basically, cutting red tape) and a services promotion programme to support development of the service sector of the economy. Each programme had its own advisory committee comprising business leaders and academics, with support from relevant government departments.
Tsang encouraged the unofficial members to put forward suggestions for strengthening and improving the economy in general and the operating environment in specific sectors as necessary. The Unit would then study how best to improve the situation with the help of outside consultants if required.
One such study looked at how best to encourage and assist companies from around the world establish themselves in Hong Kong to do business here. Among the options considered was giving responsibility to the Trade Development Council, however the conclusion was that it would be better to establish a new dedicated government department focussed exclusively on investment promotion. That would avoid potential conflicts of interest. Hence Invest Hong Kong was formed on I July 2000 and is now celebrating its silver anniversary. In the ensuing quarter century the department has attracted thousands of companies creating many tens of thousands of jobs and bringing in billions of dollars in business investments.
One suggestion from the business sector was to establish a dedicated convention centre because, it was claimed, important conferences had difficulty securing a venue in the Hong Kong Convention and Exhibition Centre in Wanchai as they could be squeezed out by more profitable trade shows. After study the conclusion reached was that Hong Kong should establish a new facility in north Lantau capable of handling both exhibitions and conventions. The government subsequently invested in a joint venture company co-owned with the Airport Authority and a private company selected by open tender. AsiaWorld-Expo celebrated its 20th anniversary last year.
The other major joint venture around this time was of course in tourism. In late1998 The Walt Disney Company’s theme park division was looking for ways to tap the China market while the government was looking for ways to boost the tourism sector. This mutuality of interest was explored in nine months of intensive negotiation in 1999 which led to an agreement to build a facility at Penny’s Bay with capital investment from both the company and the government. Hong Kong Disneyland is celebrating its 20th anniversary this year. Coincidentally 1999 also saw the appointment of the first Commissioner for Tourism.
What these three initiatives have in common is that they were pursued on a collaborative basis with the private sector. The government was proactive in the sense that it actively sought ideas and suggestions, it didn’t just sit back and wait for them. And after assessment it took action on a partnership basis.
This approach still falls a long way short of the Singapore Economic Development Board model, which has a firm mandate for a much more direct role than Hong Kong has traditionally pursued. One sign that we might be taking a tentative step further in the EDB direction was the establishment in December 2022 of the Office for Attracting Strategic Enterprises which reports directly to financial secretary Paul Chan Mo-po.
Given what has been said about the need to speed up development of the Northern Metropolis, including by the Director the Hong Kong and Macao Affairs Office Xia Baolong. I can see an enhanced role for InvestHK and OASES. It is all very well erecting a new building and sticking a sign on the wall saying “microelectronics eco-system”, that by itself is not going to fill the premises with private companies. The departments will have to find the tenants either by encouraging local entrepreneurs or by attracting others from around the world. Some in both categories will be looking for co-investment.
It will be interesting to observe the results of these efforts over the next 25 years. One thing is for certain, Hong Kong’s economic development approach has come a long way, and still has further to travel. This is a work in progress.