Unconvincing Speech

It is a speech given by Donald Tsang at the opening of the Asia Financial Forum, which was themed “The Changing Face of Asia”. Whoever the target audience may have been, it would not make a difference to the point made here.

Beneath the patina of seemingly confidence-inspiring but empty and vain cliches are much less pleasant realities that the Tsang administration has been trying to sweep under the carpet. In only these two short paragraphs, one can detect at least five issues that lack veracity or about which Tsang is not totally honest:-

“We believe in open markets, free trade, low taxes and a free flow of people, ideas and information.

We have a sound legal system, freely convertible currency, liberal immigration policies and a deep and broad pool of talent. Today, more than 6,600 mainland and overseas companies have a base in Hong Kong and about 70 per cent of the world's largest 100 banks have a presence here. Although our stock market has taken a battering over the past 12 months, it remains the seventh largest bourse in the world and the third largest in Asia by market capitalization.”

“Low Taxes” is more of a self-delusional trait than solid fact because they do not take into account the humongous “Hidden Tax” – which is the land premium charged by the government, borne by developers temporarily after buying land in auctions and then passed entirely onto flat purchasers who are likely already payers of other taxes.

“A sound legal system”? Indeed Hong Kong’s legal system had been sound before the handover. The interpretation of the Basic Law by the Standing Committee of the National People’s Congress on three separate occasions (the first in 1999 related to the reduction of the number of Mainland immigrants, the second in 2004 regarding constitutional reform and the third in 2005 regarding the length of Donald Tsang’s first term of office) throws into question not only the efficacy of Hong Kong’s Final Court of Appeal but also the degree of autonomy that Hong Kong enjoys.

In recent years, the courts seem to have even taken on a political bias in controversially indicting political and/or heritage conservation activists for assaulting policemen during certain protests.

“Freely convertible currency” in fact means a currency that is pegged to the US dollar and as such is an administratively controlled one which at times causes exaggerated gyrations to Hong Kong’s asset prices.

How “liberal” is Hong Kong’s immigration policy seems to depend on how much money the applicants have, or where they are from. In 2002, in order to prop up property prices, the Tung administration introduced an investment migrant scheme offering residency in exchange for the purchase of local assets. 80 percent of applicants attracted by the Quality Migrant Admission Scheme introduced in 2006 were from the Mainland.

The stock market may rank high in the world or Asia by market capitalization, but in terms of the regulatory regime it obviously does not, as otherwise corporate scandals such as Citic Pacific’s brazen management malpractice would not have occurred. Even worse is the fact that the authorities show no mettle when confronting the mighty tycoons – backing off from needed and reasonable regulatory proposals (instituting a black-out period ahead of company results announcement) that seek to weed out unscrupulous insider trading by company directors.

Thus one can probably gauge, from those two small paragraphs, the truthfulness and candidness or, to be more accurate, the lack of it, in the CE’s speech.