6 February 2005

If you repeat something often enough, people start believing it. So by now, it ’ s no surprise that many in Hong Kong are worried about “ collusion between business and government. ” For a number of reasons – especially the impression it leaves foreign businesses considering coming to our city -- we need to end this debate. We must do this not because we want to stifle discussions, but because the accusation is untrue.

The fact is simply that there is no systematic evidence of collusion between business and government. It is astounding that anyone should assert that such a thing exists in our city. Just compare Hong Kong with other parts of Asia. After you do that, can you honestly believe that our government colludes? That certain businesses unfairly benefit?

I think not.

And if you want a more scientific answer, take your pick of any number of annual surveys by international organizations.

The Heritage Foundation, a Washington think-tank, continues to rank us as the freest economy in Asia and the world. According to its latest Index of Economic Freedom, we remain, I quote, “ the poster child for economic freedom around the world. ” Unquote. We achieved this status for, among other things, our low level of government intervention in the economy.

And then there is the Economic Freedom of the World Report, published by the free-market American think-tank, the Cato Institute, Canada ’ s Fraser Institute and public-policy institutions from 50 other countries. Again we are Number One, and have been for many years. Perhaps even more pertinently, Transparency International ’ s latest Corruption Perception Index lists us as the second-cleanest economy in Asia.

Such consistency -- from survey to survey done by international professional organisations, from year to year -- is no accident. In fact, the governmental values that allow us to score so well – for example, our high level of transparency and our dedication to the rule of law – are the very things that make collusion hard to imagine.

Yet, last Wednesday, pro-democracy legislators continue to beat the drum, suggesting that an unhealthy nexus exists between government and big business. They say the answer to addressing this perceived problem is to have direct elections in 2007 and 2008. A directly elected government accountability. Democracy equates direct election equates no collusion between government and business.

I am curious to hear what the democrats think of the United States, the most developed democracy in the world today, and arguably the most sophisticated democracy in history. America does not even rank in the top 10 in the Heritage survey. It is instead in 12th place. Closer to home, the Philippines, lately lauded for its robust democracy, comes in at number 90. Thailand? -- 71. And recently democratizing Indonesia? -- 121.

Clearly, there is no hard and fast rule that ties virtue in business to the degree of democracy an economy enjoys. The crucial ingredient is the rule of law, which remains healthy and robust in Hong Kong. To be sure, democracy is a worthy matter to discuss further. We must and we will achieve this. But in the case of Hong Kong it should not be tied to discussions about collusion with business.

But of course, when business is dragged into politics, the economy can get hurt. I worry, for example, that all the debate about collusion will put off foreign investors. Some will think that if they refuse to play games they will be disadvantaged in Hong Kong, and so choose not to come. We must quickly get the message out that Hong Kong ’ s economic playing field is very level. It has been so, and will remain that way. And the first step in restoring our falsely damaged reputation – is to end making spurious charges about having to collude with government.

Now, to be sure, the government has made mistakes. No government can hope to never stumble.

We ’ ve heard much talk about Cyberport in the past several weeks, how it is “ Exhibit A ” in the case of government and business collusion.

However, what has been forgotten is the climate in which Disneyland and the Cyberport project developed. Back in the late 1990s, we were faced after the Asian Financial Crisis with grave economic conditions and the government had to consider how to boost confidence. And crucially, how to do this quickly.

So in the interest of providing a sharp boost to confidence and the economy, the government went forward with both projects without tendering it out to competing bids. Cyberport has not turned out to be as successful as hoped, but that needs to be understood against the bursting of the dotcom bubble. However, I should note that the Disneyland project is doing just fine.

In hindsight, the decision on Cyberport was probably a mistake. But this mistake does not rise to the level of accusations recently made. There was no intent to collude. If the government is to be accused of anything, it is only that it was over-eager and over-zealous in the late 90s of economic recovery. It should have exercised more caution in its approach. But such a mistake does not equal to a suggestion of vice.

And we learn from mistakes. And one of the lessons we in the Liberal Party take with us when we consider the West Kowloon cultural hub project – another issue linked by critics of the government to the charge of collusion.

The decision to award the whole project to just one single company of several competing bids is a mistake. We believe that the government and Hong Kong will be better served if the real estate side of the project were to be auctioned to several companies. The revenue the government would gain would be far greater if land in the West Kowloon project area were split up into several plots for auction. This is the direction debate should be directed, not around unfounded charges of collusion.

Recently, Sir Gordon Wu ’ s problem with his mega hotel in Wanchai is solid proof that collusion does not exist between government and business. If it does, Sir Gordon, one of our tycoons, should have his project approved. Government is still evaluating his proposal versus public interest that has been expressed.

For the sake of Hong Kong, its business climate and the job future of its people, I hope we can quickly end the debate over something that is untrue.

Last Wednesday, legislators made a start by rejecting a motion suggesting collusion exists between government and business.

Now, what we need to do is to defend the institutions and systems that make us a strong economy. And we have learned that we need to insist on public tendering for all government projects. I concede, however, that this might see some businesses take their ideas to other cities. Why would they want to bring to Hong Kong creative business ideas only to stand to lose the project to some bidder later? But this is a justifiable price we have to pay for insisting on transparency.

In addition, against the current controversy, we need to remind ourselves that Hong Kong does not offer extravagant tax holidays and other concessions such as free land for the promise of doing business here. Because of this, we have already lost some investors who believe that they stand to gain more from generous concessions provided by other places. We have seen companies going instead to Shanghai or Guangzhou, or elsewhere in Asia. This will continue.

We have to strike a right balance between transparency, public interest and economic development. Finally, I would like to wish you all a prosperous and happy Chinese New Year.