Hong Kong buckles up for economic turbulence

This time around, the tigers around us are being hit by the economic downturn. Singapore and Hong Kong, the most aggressive of the regional tigers are mobilizing their resources to meet the crisis. Last Tuesday, a government trade development delegation from Hong Kong briefed us on how the former Crown colony is buckling up for the economic turbulence. I have to admit I was impressed and was left wondering why our own government isn’t doing as much.

It all began with their version of our SONA. Tung Chee Hwa, the Chief Executive of Hong Kong delivered it before their Legislative Council two weeks ago. They are taking the effort of going around the region to spread the word. It is obvious that they are worried.

Tourism, one of Hong Kong’s mainstays, is suffering. Were it not for tourists from the mainland, their hotels would be empty. Exports are also down significantly. And the cost of leasing office or residential space has also plummeted, indicating a serious business downturn. The growing attraction of Shanghai as a business gateway to China is also making Hong Kong seem like yesterday’s news.

They are bravely supporting the fixed exchange rate of the Hong Kong dollar to the US dollar. But I am sure they are worried about being able to hold out if there should be another round of sharp currency depreciation in the region. Worse, if China is forced to devalue to remain competitive, it may be stupid to hang on. Being extremely pragmatic, I am sure the Hong Kong taipans will protect their competitiveness.

What impressed me is their clear thinking about what they should do to cushion the impact of the downturn and keep themselves in fighting form to take full advantage of an upturn. They are also addressing the concerns of common citizens.

Unlike us who pay lip service to IT development, the Hong Kong administration seems determined to stay ahead in a knowledge-based economy. They are increasing their investment in education for the next 10 years, regardless of the economic situation. "Education," Mr. Tung said, "sits at the top of our social policy agenda."

They will upgrade the quality of teachers specially at the kindergarten and secondary school level. They will employ more native English speaking teachers to improve English language teaching at the primary schools. They will encourage what they call "life long learning" at the community level by subsidizing those who want to study more.

Calling the small and medium enterprises the backbone of Hong Kong’s economy, they plan to spend about HK$1.3 billion to fund four new assistance funds to benefit about 100,000 enterprises. The funds will be used to help boost training, open up markets, improve competitiveness and to buy business equipment and appliances. An additional HK$500 million will be used to set up a loan guarantee scheme. Each enterprise can now borrow a maximum of HK$2 million, up from HK $1 million.

Hong Kong’s infrastructure is already first world, but they are doing more. They are focusing particularly on railways, since "railways are one of the most environmentally-friendly and cost-effective modes of transport." Two railway corporations are working on six projects worth HK$600 billion, including a fast train service to Guangzhou. The projects are also expected to generate jobs to keep them busy during the downturn.

Here in the Philippines, they have been talking of improving train service for decades. During the Ramos era, they brought in commission-hungry Spaniards to build the Clark-Bonifacio line. Expectedly, nothing happened. The Ayalas had long wanted to improve the South Line that will bring the Calabarzon industrial areas closer to Metro Manila. But politics and graft hungry bureaucrats have frustrated it.

I think a working railway line that goes north to Clark and South to Laguna and Batangas will decongest Manila, alleviate our acute housing problem and spread the benefits of growth beyond the National Capital Region. Of course the squatters along the tracks pose a big problem but that should be nothing a determined government cannot do something about.

I could go on and on about what the Hong Kong government is doing and end up frustrating everyone here. I chanced upon Sen. Manny Villar after the press conference of the Hong Kong trade group and gave him a copy of Mr. Tung’s SONA. Hopefully, the copy gets passed on to you-know-who so that we can get something going here. I forgot to ask if Mr. Tung also used some paper boats and unwashed poverty stricken kids during his speech. But I doubt it. Those guys are very businesslike. We are so very dramatic, too press release oriented.

World Bank

A World Bank subsidiary, International Finance Corporation (IFC) is supposedly accusing the former management of All Asia Securities of what can be kindly referred to as playing hocus pocus with some $20 million of IFC funds invested in All Asia. This why they will undertake what is called a "forensic audit" to find out where the money went.

Looks like the IFC exposed its stupidity again. They haven’t exactly demonstrated the kind of competence expected of a high overhead organization funded by the World Bank. IFC is the same group that drafted the privatization agreement for MWSS that failed to provide for extraordinary movement in the foreign exchange rate. That stupidity caused all the problems we’ve had that delayed a program to improve the water delivery infrastructure in Metro Manila.

In fact, the privatization project itself was on the verge of failure because the IFC apparently didn’t know what it was doing. Maybe they are too First World oriented. A Third world environment like what we have is alien to them. But the Worse part was IFC’s failure to speak up while problems with their privatization baby were blowing.

While I am not condoning whatever evil tricks may have been done on them at All Asia, I am glad that at least at All Asia, IFC has to bear the cost of their stupidity. These Harvard Business School types at IFC are just too naïve, are no match for the sharks that infest our business environment.

Reason why

Fe dela Cruz e-mailed this one.

A Sunday school teacher asked her little children, as they were on the way to church service, "And why is it necessary to be quiet in church?"

One bright little girl replied, "Because people are sleeping."

(Boo Chanco’s e-mail address is [email protected])