The Hong Kong government has reportedly hit back at an Economist Intelligence Unit (EIU) report in which Hong Kong's rating as an international business centre has plunged from third to12th place.
The report says there are doubts hanging over the future business environment of Hong Kong due to a number of factors. Using the example of the SAR's high-tech Cyberport, it says that there is a lack of transparency in Hong Kong, because the Cyberport contract was granted without a general tender. In addition, the EIU report points out that China's entry into the World Trade Organisation will mean foreign investors will be able to deal directly with China, bypassing Hong Kong.
The EIU rankings are published every five years. In 1996-2000, Hong Kong came third but in the latest rankings, spanning 2001 to 2006, the SAR comes in 12th behind Singapore. The Hong Kong Standard's online newspaper quoted EIU spokesman, Daniel Franklin, as saying there were 'concrete worries about Hong Kong on the political side, such as the way the government deals with right-of-abode issues and Falun Gong cases'.
However, both the government and leading Hong Kong business groups have played down the significance of the EIU rankings. Both the General Chamber of Commerce and the American Chamber of Commerce claim that the EIU ranking will not affect investor confidence but said that the government needed to take all possible steps to overcome any perceptions that Hong Kong was losing favour with investors.
As details of the EIU report emerged, the government expressed confidence in Hong Kong's continued growth as a major international business centre. A government spokesman said: 'In 1999, Hong Kong was the second-largest recipient of foreign direct investment in Asia after mainland China. A total of US$23.1 billion was injected into Hong Kong's economy. This record surpassed that of economies in the region. In the year to October 2000, US net buying of Hong Kong equities amounted to US$5.3 billion, far higher than other places in Asia.'
Statistics from the government show that the number of regional headquarters being set up in Hong Kong continues to rise, and the spokesman concluded: 'These facts and figures demonstrate clearly the confidence of foreign investors in Hong Kong's future and that they are translating their confidence into action. Following the accession of China to the WTO, the Hong Kong economy is forecast to expand by an additional 5.5 per cent in 10 years. Also, the external trade of mainland China is expected to grow substantially. This will provide business opportunities for both international and local companies in Hong Kong and will benefit the transportation, air cargo, import and export business and other spheres of the Hong Kong economy.'
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