Hong Kong in dire need of rejuvenation

MONEY cannot solve everything. Just look at Hong Kong. It is one of the world’s richest cities, but also one of the least happy.

The sadness can be seen, for example, in a recent South China Morning Post survey of young people indicating that close to 60% of respondents wanted to emigrate if possible.

Regarding Hong Kong’s future, those polled gave it an average score of only 2.95 out of 10.

The irony is that we are talking about a very prosperous city, on paper. Based on the most recent World Bank data, Hong Kong‘s gross domestic product per capita is US$42,300 (RM174,106), Japan’s US$40,200 (RM165,463) and Malaysia’s US$11,500 (RM47,334).

Hong Kong needs to re-invent itself. The national security law introduced last year has restored law and order.

But in the long run, true security isn’t possible if there is no social stability and people feel insecure in their livelihoods. These factors are all inter- linked.

Currently Hong Kong practises an extreme form of capitalism that has resulted in one of the world’s widest rich-poor gaps.

Ordinary Hong Kongers generally have not improved their wellbeing for a long time, taking into consideration such adversities as high living costs, chronic overcrowding, environmental degradation and deteriorating civic pride.

The breakthrough required is to give priority to the overall happiness of Hong Kong residents, rather than stick to long-standing laissez-faire policies that allow a blind pursuit of corporate profits.

The economic system has to evolve from shareholder capitalism, which focuses on shareholders‘ interests, to stakeholder capitalism, which takes responsibility for not only shareholders, but also employees, the overall community and the environment.

One important first step is to strengthen anti-monopoly legislation. Furthermore, taxes on the very rich will have to be raised significantly, and a goods and services tax introduced.

We have to acknowledge that housing is in crisis, justifying an emergency response. Hong Kong’s supply response should include massive land reclamation, converting a part of country parks into housing estates and enlisting the help of the central government in Beijing to lease land in neighboring Guangdong province for Hong Kong’s use.

Another idea is to initiate a study on whether to introduce Universal Basic Income (UBI). UBI would provide a basic income guarantee – for example, HK$6,000 (RM3,190) a month – to every adult permanent resident, which in certain respects is the most efficient way to spread the wealth around.

In future, immigration into Hong Kong will have to be tightly restricted, to reduce overcrowding and prevent less deserving outsiders from rushing in to dilute the benefits of social improvements.

A reformed capitalist system like the one described above is unlikely to cause discomfort in Beijing.

Indeed the system on the Chinese mainland, sometimes called “state capitalism” by the media, has a resemblance to stakeholder capitalism, with attention paid to sustainability and the public interest. Beijing has long promoted stability and prosperity in Hong Kong and the social turmoil in recent years was a setback for national prestige, so it should be glad to go along with initiatives such as this.

Currently, if Hong Kong gets into serious trouble, the Chinese government is expected to step in to help out, but during normal times, it is a small elite in Hong Kong that gets most of the benefits.

Indeed, Hong Kong‘s renaissance should encourage the central government to allow another key reform: universal suffrage. This would enable the direct election of the chief executive based on one man, one vote, under certain conditions, as provided for under the “one country, two systems” formula governing Hong Kong.

A democratic system would further promote the “buy in” of Hong Kong people in their community.

So what’s stopping Hong Kong from being born again?

The key obstacle is the mindset of the Hong Kong elite, in business, politics, the civil service and the professions. Simply, a majority of these people lack the courage and imagination to adapt. Typically, these are men and women above 50, who came of age during Hong Kong’s economic miracle in the 20th century, and they are wedded to obsolete ideas dating back to the British colonial era. To be fair, there are also some outstanding, far-thinking individuals in these groups, but these are a minority.

The lack of vision is such a pity. The entrenched elite fail to see that a rejuvenated Hong Kong would eventually achieve new heights of prosperity, attracting a flood of money and talent from the mainland and overseas, as is the case with highly attractive cities around the world.

In 2047, Hong Kong’s status as a Special Administrative Region is scheduled to end, unless an extension is granted by Beijing. We need to turn around the situation in Hong Kong now, to build up the case for such an extension to be given.

Datuk Seri Cheah Cheng Hye is the co-chairman and co-chief investment officer of Value Partners Group, an asset management firm in Hong Kong. He is also an independent non-executive director of Hong Kong Exchanges and Clearing Ltd. The views expressed here are the writer’s own.