HONG KONG: Business executives in Hong Kong have a wish list for its new leader: Scrap COVID-19 quarantine rules, and promote the rule of law and transparent regulations to revive foreign investor confidence - before the territory becomes a hardship posting.
Former security chief John Lee, who becomes chief executive of the former British colony on Friday (Jul 1), needs to reboot the once-teeming global financial hub, eight business leaders said, because its border has effectively been sealed since 2020 and international arrivals subject to stringent quarantine and testing protocols.
These measures, including one week of mandatory hotel quarantine, and stool testing of babies for coronavirus have hammered Hong Kong’s competitiveness, the executives said.
"Hong Kong, once one of the most sought-after postings for executives, has become a hardship posting due to the lack of international connectivity," said Stuart Bailey, chairman of the Hong Kong Exhibition & Convention Industry Association, which has been battered by the restrictions.
"The first step is to resume quarantine-free travel to the city," he added. "We are almost the last place in the world that still requires travellers to quarantine upon arrival and this must change as soon as possible. The next step is a major PR exercise to get people to come."
Hong Kong’s once-buzzing nightlife scene has sputtered, with many popular bars empty on what would typically be packed weekends. The city saw a net outflow of more than 134,000 people in the first half of this year, compared with just 1,813 in the same period of 2021.
Data shows residents leaving the city for good withdrew a total of HK$9.014 billion in 2021, up 52 per cent from the previous year. For the first quarter, withdrawals from MPF accounts - government-mandated savings, which departing residents can cash out on - amounted to HK$2.014 billion, up from HK$1.931 billion a year earlier, the latest data shows.
Hong Kong has tried to emulate China's "dynamic zero COVID" approach. But unlike in the mainland, Hong Kong’s territory, home to more than 7 million people, remains highly reliant on international travel and business.
Talent, corporations and conventions have left in droves for places such as Singapore and Dubai, fed up with more than three years of turbulence, starting with anti-government protests in 2019.
In a sign of the city's growing remoteness from the rest of the region, Citigroup chief executive Jane Fraser and JPMorgan's Jamie Dimon have both visited Singapore in the past two months, trips that would normally include Hong Kong, to visit key banking clients and senior staff.
"HALT TO HONG KONG"
Lee is faced with managing the needs of the international community and the local community, whose priority is to open up with mainland China, said government adviser Bernard Chan, a convener for the city’s Executive Council and a deputy to China’s National People’s Congress.
The government “cannot just forego China for the international market, I think if we send that message the local community will be upset. Managing both is actually very challenging for the next administration".
While many Asia Pacific-headquartered businesses have left, those whose business largely relates to China would still prefer Hong Kong, Chan said. However, the city needs to improve its liveability to lure back talent.
“It’s not just about doing business, its where you put your family, education, school," he said. "If we continue to improve on that then we can be competitive to Singapore, Dubai, but it will take time because this time around we have put a halt to Hong Kong.”
Some executives are still optimistic on the outlook for Hong Kong as a finance hub, and they believe it will remain the springboard for accessing mainland China.
Emphasizing Hong Kong’s rule of law and transparent regulatory system is critical for drawing back talent, said Kher Sheng Lee, the Asia Pacific co-head of the Alternative Investment Management Association.
“The new administration must focus on what are the key factors that drive Hong Kong’s competitive advantages against the rising tide of competition at a time when people are leaving,” Lee said.
A timetable for opening to the rest of the world and a new marketing team to revitalise Hong Kong’s image are crucial, said Stewart Aldcroft, a funds management consultant who has been in Hong Kong for 37 years.
Lee must start by stanching the outflow of talent, said Sally Wong, chief executive of at the Hong Kong Investment Funds Association.
“The longer we delay opening up, the more we are turning away talent," Wong said. "Effectively, we are chipping away our competitiveness.”