Tuesday, September 13, 2005

Singaporization of Hong Kong

The World Bank has just released its third study on the burden of business regulations around the globe, read some background info about this report here.

The top ten business environments in the world, as measured by the 'Ease of Doing Business index':
1. New Zealand 2. Singapore 3. United States 4. Canada 5. Norway 6. Australia 7. Hong Kong, China8. Denmark9. United Kingdom 10. Japan.

The surprise here is that Singapore gets a much higher ranking than that of Hong Kong. Hong Kong has long been seen as much less interventionist than that of Singapore, and one would naturally incline to think that the former should have obtained a much higher ranking than the latter. So what is going on here?

I do not have the full answer. But my sense is that Hong Kong, used to be seen as the last bastion of the free market, is undergoing some sort of transformation right now. It is turning itself into a place that looks very similar to what Singapore used to be. Hong Kong government, with the backing from Beijing, not only wants to have a tight grip on all matters political, at the same time it slowly but gradually has extended its visible hand on economic matters. Witness the increasing number of "public-private partnership projects" that are launched since the handover of Hong Kong back to China in 1997. The list includes projects like Cyberport, Hong Kong Disneyland....

In sharp contrast, Singapore is trying very hard to become more and more like Hong Kong. Not the Hong Kong as is now, but the one when the principle of Lasseiz-Faire used to rein. Thus, Singapore has recently lifted the ban on gambling, partially lifted the ban on importing chewing gum, asking people to be more bold and not afraid to express themselves in a bid to boost entrepreneurship....all with the aim of letting people to have more say in what they do.

Bottomline: Hong Kong is gradually drifting away from its free market past and getting more and more interventist right at the same time that Singapore tries hard to shed its interventionst past to embrace the free market. Ironic? Yes. Sad? Definitely.

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