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December 2003

Don't believe everything you read

The Washington Times, owned by the Rev. Sun Myung Moon's controversial Unification Church, has this insight on recent developments in Hong Kong.

Highlights of their incisive analysis include:

Hong Kongers simply are not happy being part of the PRC.
Hong Kong's free market made it rich. It is questionable whether it can continue to prosper if businesses are punished for supporting greater democracy. While celebrating Sunday's election results, it is wise to remember that the regime has not hesitated to send tanks to quell democratic demonstrations in Beijing or troops to crush secessionists in Tibet



Phil has some interesting thoughts on the changing role of politicians in Hong Kong. The story is that a cross-party committee of legislators is concerned that the government has appointed a former civil servant as director of audit in spite of his lack of professional qualifications. After 29 years as a civil servant is he likely to be truly independent when he investigates the way the government spends money?

This follows on from the controversy about Michael Wong's brief tenure as chairman of the Equal Opportunities Commission. Mr Wong decided to terminate Patrick Yu's employment as Director of Operations before he had even taken up his post, apparently on the basis of an interview he gave to the South China Morning Post. Yu had been recruited by Wong's predecessor at the EOC, and was highly regarded in Northern Ireland, where he was (and presumably still is) a member of the Human Rights Commission, which was established in March 1999 as part of the implementation of the Good Friday Agreement (see below).

What seems to have caused a problem is not that Patrick Yu demonstrated any lack of ability or competence, but rather that he was a bit too keen to use his position at the EOC to deal with racial discrimination. You might think was exactly what that organization was supposed to do, and why he had been recruited, but Wong's predecessor, Anna Wu Hong-yuk was unpopular with the government because of her enthusiasm for taking action to enforce the anti-discrimination laws, and her contract was not renewed. Instead a retired judge with no known interest or involvement in the subject (Wong) was brought in as her replacement, apparently with the remit of giving the EOC a lower profile. His insensitive handling of this matter actually had the opposite effect, creating much greater interest in the EOC, and re-igniting the controversy that surrounded the government's refusal to renew Wu's contract!

The point here is that legislators, pressure groups, and the media are proving very effective at scruitinizing the actions of Tung Chee-Hwa's government. Michael Wong was most indignant at the way that the newspapers pursued this issue so vigorously, but anyone in public life in North America or Europe would regard this as quite normal. Hong Kong most definitely has a free press, and the popularity of Apple Daily and Next magazine demonstrate that taking an independent line and criticising the Hong Kong and PRC governments doesn't have to be bad for business. Sadly, the SCMP is not so bold.


I've never actually been to Northern Ireland, though people I know who've visited or lived there say it's a fine place as long as you keep out of the areas where the terrorists (of either hue) are in control. It's easy to believe that the whole place is in a mess because of what we see on the news, but it's not really that bad.

Events in the last few years have been moderately encouraging, with the British government seemingly determined to sort things out. Obviously Britain has an obligation to do this, having been largely responsible for the problems that exist there, but unfortunately the nationalists don't trust Britain and the Unionists are deeply suspicious of the Republic, so it has not been easy (sorry - I got this the wrong way round when I first posted this, and I've corrected it).

Five years ago, the so-called 'Good Friday agreement' proposed the devolution of power from Britain to a a Northern Ireland assembly, and terrorist groups giving up their weapons and participating in the democratic process. The agreement was endorsed by the electorate in both Northern Ireland and the Republic of Ireland, and most terrorist activity was halted.

The hope has always been that ordinary people really want peace, and that they would express that feeling through the ballot box and put pressure on their representatives. Unfortunately, this week's elections have not done much to encourage optimism. The SDLP lost ground to Sinn Fein (the political wing of the IRA), and on the nationalist side, Ian Paisley's DUP (which is against the Good Friday agreement) gained seats from the Ulster Unionists (who are in favour).

Perhaps this is just a minor setback and the parties will carry on talking. The British government still seems very committed to the peace process, and there doesn't seem to be any enthusiasm for a return to how things were prior to 1998, but it's easy to see how things could take a turn for the worse.

Have we turned the corner?

From the BBC:

Hong Kong economy's record rise

Hong Kong's towering skyline is testament to its economic might

The Hong Kong economy has rebounded at a record pace since the Sars outbreak.

Aided by a surge in returning tourists, gross domestic product (GDP) rose by 6.4% in the third quarter of 2003.

This is the biggest rise Hong Kong has seen since the Special Administrative Region first began official economic growth records in 1990.

The GDP increase, which followed after a 3.7% post-Sars second quarter fall, was greatly assisted by China relaxing border restrictions with the mainland.

Since records began in 1990? What's that all about? Anyway, the BBC goes on to say that Hong Kong is increasingly reliant on tourism. I rather doubt that. The SCMP has a chart showing that exports and re-exports of goods had grown strongly (though not quite as much as a year earlier), and Hong Kong continues to benefit from the strength of the PRC economy. What has changed recently is that domestic consumption has increased, and although tourism also helps in that regard it can't be what is driving the economy.

It's now clear that the effect of SARS was more short-term and less dramatic than it may have seemed at the time, which makes it all the more ridiculous that the government poured so much money into Harbour Fest etc. People who stayed away from Hong Kong earlier this year were always likely to come back as soon as the situation changed, and didn't need any prompting from the government.

Property prices have strengthened in the last few weeks, and the number of new mortgages approved last month increased 40% compared to a year earlier. That will be from a low base, but property prices are important as far as confidence is concerned and if the trend continues then it will undoubtedly boost domestic consumption.

It's looking good!

It's a serious business

A certain Hong Kong blogger seems to be taking it all very seriously. He's off on holiday soon, but doesn't want his blog to come to a halt whilst he's away.

He's therefore looking for someone to take over for a few weeks. His ideal candidate is someone who already has a blog, but who will give priority to this much more important blog. In return they can promote their own humble site as much as they like.

I now realise that I have misunderstood this blogging thing. It's not one person writing about what interests them, it's about maintaining a corporate presence and boosting your image.

I have therefore decided that in order to keep up with the competition, I will be outsourcing and operating 24 x 7. Hey, we might be losing the personal touch, but what matters is that you the reader should not be inconvenienced just because I happen to be sick, working too hard, or on holiday.

If you wish to apply for the outsourcing contract, please send me 2 copies of your sealed tender together with a cashier's cheque for US$100 by 11 a.m. on Monday December 1st. You should state the hours you would plan to operate, how many posts you will make each day, and the number of staff you plan to employ. If you already operate a blog, you will need to sign our standard "non-compete" contract. Good luck!

Only in Hong Kong

One of the best things about Hong Kong is the wide choice of public transport that is available. Taxis are cheap and easy to find (unlike, say, Singapore, where there always seem to be queues of people waiting for taxis), the MTR and KCR are fast and very frequent (much better than London), and we have also have a vast number of buses and minibuses.

We also have frequent complaints from one set of transport operators or another. Earlier this year the government reduced taxi fares (as an experiment, and on a temporary basis) only to withdraw it when the taxi drivers protested against it. As usual, a government minister (this time Sarah Liao) was made to look stupid, though in this case she had apparently got agreement from the taxi owners assocaitions before introducing the change.

Now we have taxi drivers and minibus operators complaining about the growth of so-called "non-franchised bus services". These are what are often called "shuttle buses" that run from housing estates to stations or shopping centres, and also (I think) from shopping centres to pick up customers from nearby residential or commercial areas. The complaint is that there are now more of these services and that they are taking business away from taxis and minibuses.

So, on Thursday, taxi drivers gathered at Sha Tin racecourse, painted slogans on a taxi, attacked it with a hammer (!!) and then drove in convoy to the Tamar car park in Central.

Thursday's protest was aimed at non-franchised buses operating so-called "estate services" - running from housing estates to downtown areas.

Opponents argue that such services twist regulations that allow temporary services from new estates not yet fully served by buses and minibuses.

Mr Lam said the operators were supposed to continually move to new estates in order to provide services for residents.

"But the government keeps increasing their numbers, so there's no chance for these operators to move on to new projects. As a result, they're using the `grey areas' in the law to keep their operations commercially viable," he said.

"Their services are meant as residents' bus services to take people to the nearest rail station or bus interchange. But once they start picking up passengers along their routes, and accepting fares or installing Octopus machines, they're masquerading as buses and breaking the law."

But while the non-franchised operators say the government should better regulate their numbers, they disagreed with the need for more control. Mr Yeung said: "We need flexibility to survive."

"How can the minibuses prove that we are stealing their passengers? Our operators drive from places like Tin Shui Wai straight into Central. No minibuses operate these kinds of routes."

Then later the same day, bus operators organized their own protest by also driving to the Tamar site, hoping to persuade the Transport department not to introduce regulations preventing them operating these services.

The odd thing here is that given Hong Kong's reputation as a "free" economy, you wouldn't expect there to be any restrictions. If someone wanted to operate a "shuttle bus" from a private estate to Central or Tsim Sha Tsui then you would expect that they would be allowed to do so. In fact this is not the case, and we have a huge bureaucracy processing these applications and deciding what is permitted.

Where I live, we have a good shuttle bus service with a very frequent service, except that when they were granted the licence they were not allowed to operate from 12 noon to 2 pm. Naturally they ignored this and carried on operating throughout the day. After a few years the Transport Department discovered that this was happening, and the operator was told to adhere to the licence conditions. So now between 12 and 2 we have a free service that follows a slightly different route. Sometimes they even use different buses, or the same buses but with the name of the estate covered over! What a farce!!

I have very little sympathy for taxi drivers, I'm afraid. One of the minor irritations of life in Hong Kong is that taxi drivers are sometimes very unhappy to take you relatively short distances because they were hoping for a longer journey. If you are a non-Cantonese speaker they affect not to know where you want to go, whereas for everyone else they "show you bad face" (as my wife puts it).

Open skies?

Hong Kong and Britain have agreed to end all restrictions on passenger and cargo services between the two destinations in the most liberal air services agreement ever signed by the SAR.

Not quite as liberal as it may sound, because it doesn't actually open up the route to all-comers. Oh, no! Instead we are promised some extra 'code-sharing':

The pact also grants Hong Kong and British airlines codeshare rights that could see British Airways codesharing on Cathay flights to Asia and elsewhere. It would also allow Virgin to codeshare with Dragonair once Hong Kong's No2 airline secures rights to Sydney. Virgin has an interlining* agreement with Dragonair.

Code-sharing is a nasty trick played by airlines on unsuspecting customers. You book a flight on Cathay Pacific and then when you turn up at the airport you find that the flight is being operated by Air Bangladesh, and, I'm sorry sir, but unfortunately that means you won't be getting any Asia Miles.

* I thought interlining was something you used to make a shirt? What is an interlining agreement?

I am not aware of any benefit to customers from code-sharing, but I guess it sounds good to the accountants. Airline "alliances" are almost equally worthless - yes, I know that you can theoretically earn more miles and have a wider choice of lounges if you qualify for that sort of thing, but real competition between the airlines would be much better for passengers.

Yes, there is some benefit to customers from increased competion on the Hong Kong to Sydney route, especially as Virgin isn't part of either of the large alliances, but I don't suppose it'll make that much difference.

I'm not quite sure why, but I still choose to fly Virgin from Hong Kong to London even though the quality of service is very variable. I suppose the reason is that I see BA and Cathay as monolithic corporations whereas Virgin is relatively small and does seem to care about its customers.

Perhaps one reason is that my very first trip to Hong Kong was in Virgin's Upper Class, which was quite an experience for me at the time (limousines to take you to and from the airport at both ends, decent food, etc.) whereas a later trip in Cathay's business class was quite disappointing. Since then Cathay and BA have probably moved ahead of Virgin as far as seats are concerned, though I don't think they offer the full limousine service at both ends. Sadly, after those two trips several years ago I haven't been able to persuade anyone to pay for me to travel business class again!

I have to admit that I still admire Richard Branson - I know he's done some dodgy things in his time, but he seems to be a real entrepreneur who is willing to have a go. The amazing thing is that after all these years he can still get publicity for his new ventures (even if he does have to take his clothes off or put on a wedding dress). His autobiography and the companion volume by Tom Bower are both worth reading, and taken together they give a fairly balanced account of his life and career.

More on the new agreement here.

Is he serious?

The chairman of Hopewell Holdings said students and residents may be prevented from using the lifts at his firm's headquarters, apparently in response to a protest against a plan to build two hotels in Wan Chai. Sir Gordon Wu Ying-sheung said, however, that he was not threatening anyone.

The lifts have been used as a shortcut to get from Kennedy Road to Queen's Road East since the 66-storey Hopewell Centre opened in 1980. Without access to the lifts people would have to negotiate several steep flights of stairs.

Sir Gordon said he was thinking of prohibiting access to the lifts after residents formed a group to oppose a $4 billion project to build two hotels next door to the Hopewell Centre.

More on bras

From Bloomberg (via the SCMP):

I thought this was interesting but rather confusingly written, so I have paraphrased it. Then I concluded that perhaps it wasn't so interesting...

Before China joined the World Trade Organisation in December 2001, how many brassieres sold in the United States did the mainland make - three out of five? Two? One? Actually, the number was only 4%. Meanwhile American manufacturers share was 40%, down from 50% in 1998.

After import quotas were lifted at the start of last year, the mainland's share increased to 17% and domestic manufacturers share fell again to 43%. So the administration of George W. Bush has come to the aid of "America's workers", as Commerce Secretary Donald Evans put it. The argument is that Chinese exporters are using unjust state subsidies and an undervalued yuan to drive US brassiere makers out of business.

The American Textile Manufacturing Institute says China is stealing brassieres from other manufacturers by keeping an undervalued yuan pegged against a falling dollar.

But how does this complaint square against the loss of market share of Mexican manufacturers? The Mexican peso has weakened 7 per cent against the dollar this year, on top of a 12 per cent decline last year. Similarly, how is the dollar-linked yuan a threat to brassiere exporters in Haiti, whose own currency has fallen almost 10 per cent against the dollar this year? It declined 40 per cent last year.

In other words, the share of the market held by American manufacturers is in long-term decline, but in recent years China has replaced imports from Mexico and Haiti even though their currencies are weaker against the US Dollar. Basically China gets the blame for everything these days!

Today's news (is very boring)

For the second day in a row, the SCMP thinks that a story about Antony Leung Kam-chung's purchase of a motor car in January is worthy of a place on their front page. Does anyone care? Obviously it was crass and stupid of the Financial Secretary to buy a car just before proposed increases in car tax were to be intoduced, but how can it serve the public interest for him to be prosecuted?

The SCMP claims that the government had received legal opinion that there are grounds to prosecute Leung, whilst the government denies this.

I am sure the ICAC is a good thing, but sometimes they do seem to get a bit carried away.


The SCMP also has the results of a poll about whether people would welcome a Goods and Services Tax. The shock answer is that no, they wouldn't approve of higher taxes. Hong Kong has a fairly low rate of Income Tax, and people on low incomes don't pay very much tax. If GST were introduced it would apply to everyone, whereas higher income tax (which is what people apparently prefer) would affect only part of the population.

According to the survey, if given a choice, 45 per cent of respondents would choose an increase in income tax, while 34 per cent said they would opt for a GST. Twenty-one per cent were undecided.


Regarding the levying of a GST paired with a cut in direct taxes, 46.2 per cent of respondents said they were either in favour or "very much" in favour of it, compared with 38.8 per cent who said they were opposed.

So what conclusion can we draw from that? Basically that if you go out into the street and ask 1,000 people for their opinions on fiscal policy you won't learn very much.