‘New ideas, bottom-up innovation’ key to reviving flagging economy
The central government and the HKSAR government should be more open to new ideas and allow bottom-up innovation and experimentation to revitalize economy after the COVID-19 crisis, a leading banker and economist suggests.
Andrew Sheng, distinguished fellow of Hong Kong-based global think tank the Asia Global Institute, stressed that more investments in software, knowledge and entrepreneurial business will help find ways to revive the economy in a difficult time.
In an interview with China Daily, the former central banker and Asian financial regulator said the global lockdowns forced by the pandemic have altered the old business model, creating a slower and resilient situation, where each economy is lucky to operate at 60 to 70 percent capacity, as social distancing requires enterprises to cater for smaller crowds and usage.
He said although many businesses have moved online and trained employees to respond to the new business model, the reality is that most workers are mentally unprepared for the shift. “The transition will be very painful.”
In Sheng’s view, it’ll be up to entrepreneurs to find answers to how to adjust. And the government won’t succeed by supporting enterprises that don’t make the transition because such support only makes them less and less competitive, resulting in deeper and longer depression.
“The government has to be more open to new ideas and allow bottom-up innovation and experimentation,” he urged.
However, the central and HKSAR governments are lucky because there’re huge savings and both are actually quite practical rather than ideological, he said.
The central government also understands that monetary and fiscal policies that Western countries are using almost without restraint are unsustainable if there’re no structural policies to help make the transition to the post COVID-19 economy and society.
Sheng spoke highly of the central government’s measured policies in the latest Government Work Report which, he believes, provides a medical, social and educational safety net to reserve jobs and livelihoods, and support smalland-medium businesses.
For instance, the return to market stalls or street food creates jobs and improves livelihoods, he noted. “Everyone is happier and it’s people that matter the most.”
Hong Kong, he said, should follow the practice and allow the operation of more street businesses.
The economist believes that COVID-19 will linger in the community for a considerably long time, underlining the importance of investing in software, including technology, people and knowledge.
“Investing in people has always provided the best return on investment, but we keep on increasing hardware infrastructure. We forget that the latest hardware actually carries outdated software. So, improved software can update older infrastructure and get more efficiency and robustness,” Sheng said.
This means investing in software, knowledge and skills, he explained. These will not depreciate because people are always learning, and much more adaptable than physical hardware.