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Thursday, October 27, 2016, 23:36

HK urged to utilize strengths in global competitiveness race

By Oswad Chan
HK urged to utilize strengths in global competitiveness race
Singapore’s central business district. The Lion City — Hong Kong’s traditional business and financial rival — had edged past the SAR as the second most competitive economy in the world in a recent survey. The city state had also outpaced Hong Kong in sustainability. (Sam Kang Li / Bloomberg)

Hong Kong’s recent slide down the economic competitiveness rankings means the city should flex its muscles in established institutional leverages to move its economy forward.

Poor performances in recent surveys have reignited concerns that the local economy lacks the momentum to propel economic development.

The city fell two spots as the ninth most-competitive economy in the world under the annual Global Competitiveness Index compiled by the Swiss-based World Economic Forum. Released in September, Asian economies Singapore (second) and Japan (eighth) both leapfrogged Hong Kong.

The survey found that Hong Kong still excels in infrastructure, leading the world for the seventh time in the history of the index. It also ranked second for market efficiency and fourth in financial market development.

But the city’s poor showing in innovation (27th) dragged down its overall competitiveness. Other surveys have also highlighted innovation development as Hong Kong’s Achilles’ heel as it strives to become a more competitive economy.

Hong Kong also fell three spots to 14th in the Global Innovation Index 2016, which measured the world’s most innovative economies. The August report by Cornell University, INSEAD, and the World Intellectual Property Organization ranked Singapore (sixth) and South Korea (11th) ahead of the city.

The report found Hong Kong performed well in its institutions, infrastructure and market sophistication, but struggled in knowledge and technology output. Expenditure on education and government spending per pupil are two areas in need of improvement, the report showed.

Singapore and South Korea also outpaced Hong Kong in sustainability. Hong Kong trailed its rivals being the third most-sustainable city in Asia (16th globally), according to the Sustainable Cities Index released in August by global consultancy firm Arcadis.

While Hong Kong was strong in the profit, environment and planet categories (national parks and islands providing easy access to green spaces), its poor performance in the people sub-index (work-life balance and the wealth gap) affected its sustainability ranking.

“The city has to be able to attract and retain the best talent. This includes addressing and finding faster, more connected and sustainable solutions to housing, social infrastructure and environmental issues,” said Francis Au, city executive for Pearl River Delta at Arcadis.

“Air pollution, urban space, waste management, long working hours and high cost of living all hamper Hong Kong’s social sustainability performances,” he said.

Global accounting professional body CPA Australia warns that Hong Kong is being confronted by growing pressures from competing economies.

“There is a real appetite for reforms to improve Hong Kong’s competitiveness,” CPA Australia Chief Executive Alex Malley said.

“Other recommendations to enhance the city’s competitiveness include cementing a regional headquarter economy in Hong Kong, providing greater support for businesses to undertake financial technology and research to foster innovation, and providing more information for local small and medium enterprises to improve their understanding of the Belt and Road Initiative.”

However, it’s not all doom and gloom for Hong Kong’s economic competitiveness, with Canada-based think tank Fraser Institute in September rating the city as the freest economy in the world. Hong Kong led in “government size”, “freedom to trade internationally” and “regulation of credit, labor and business”.

Richard Corrigan, interim director of financial services for Government of Jersey, told China Daily there is enough room in Asia for both Hong Kong and Singapore.

“Asia is large enough that can accommodate Hong Kong and Singapore as two major business and finance hubs in the region. The two cities serve different home markets: Hong Kong is the gateway to the mainland and Singapore is the hub for Southeast Asian and Indian businesses,” he said.

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