Hong Kong Floats Manufacturing Zone Idea

by Mary Swire, Tax-News.com, Hong Kong

15 January 2002

Hong Kong's People's Daily newspaper, in effect an official mouthpiece, says that the SAR should set up a 'new manufacturing industry zone' along its border with Shenzhen to provide jobs for low-skilled workers. The newspaper's website, which carried the suggestion, said the SAR could mirror Shanghai by setting up such a zone where labour and land were cheap enough to lure back local investors who had moved their factories up north.

The article said that Shanghai's low-cost initiative, which had provided tax benefits and cheap land for some selected industries such as printing, paper-making and textiles, had succeeded in attracting investors, and that the Shanghai government had established a 'new manufacturing city' to recapture economic success following the relocation of textile and machinery factories to other mainland cities during the country's economic transformation in the 1990s.

However, businessmen and academics were quick to reject the idea. Hong Kong Economic and Trade Association president Eddy Li saidinsisted such a zone would not entice local manufacturers to move their factories back: 'I don't believe that the prices of land and labour can be cheaper than the rents and wages in some mainland cities, namely Panyu and Dongguan,' he said. 'It is a waste of resources for the SAR government to build infrastructure and housing along the border. Such facilities already exist in neighbouring Shenzhen.'

Baptist University associate economics professor Chan Hing-lindismissed the proposal as unfeasible: 'I think there will be no local employee who will be willing to work and live in the zone. The cost of employing a worker on the mainland is between $500 and $1,000 a month. I think Hong Kong workers are unwilling to accept such a low wage,'' Chan said.

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