Clear The Air News Blog Rotating Header Image

March 10th, 2013:

Hong Kong’s hollow leadership

Sunday, 10 March, 2013, 2:43pm

Comment›Insight & Opinion


Sin-ming Shaw

Hong Kong’s Chief Executive Leung Chun-ying has been dogged by scandal from his first days in office, and his personal integrity is routinely impugned by much of the public. So it is no surprise that his popularity is plummeting.

Leung has only himself to blame. He seems incapable of connecting with ordinary Hong Kong citizens, instead coming across as a shifty politician who often dodges direct questions, offers vague answers, and evades responsibility for major failings by apologising for minor shortcomings.

Leung staked his reputation on being able to tame Hong Kong’s absurdly inflated property market, and has failed miserably. Indeed, Hong Kong is now the most expensive city on the planet. It takes at least 13.5 years of mean household income to buy an average flat, according to one recent international survey. The comparable figure for London and New York is 7.8 years and 6.2 years, respectively.

Treating the civil service as a potential enemy was clearly stupid, as only the civil servants know how the government actually works

Rising property prices are making middle-class flat owners multi-millionaires, while their children – even with a good university degree – can hardly afford private housing without parental help. Leung has advocated that young people leave Hong Kong to work in less expensive countries.

Leung came into his job with a self-destructive attitude. Like his mentor, Tung Chee-hwa, Hong Kong’s first chief executive after its return to China, Leung harbours a deep antipathy toward the British and the professional civil service, a legacy of colonialism. He adheres to the Maoist idea that a country consists of “the people” and “enemies” (never mind that he was the youngest and first Chinese partner in a British property-surveyor firm in Hong Kong, and that Tung studied nautical engineering in the United Kingdom).

But treating the civil service as a potential enemy was clearly stupid, as only the civil servants know how the government actually works. Neither Tung nor Leung had any operational government experience, which was most clearly demonstrated in their indifferent attitude toward public appointments. The anti-corruption police arrested Mak Chai-kwong, Leung’s first Secretary of Development, only 12 days after he was appointed. His successor, Paul Chan Mo-po, was soon exposed as a one-time owner of slum housing.

The information that undermined both officials had been buried deep in official documents, and could have surfaced only because someone, or some group, in the civil service with access decided that it would be best to leak it. In Tung’s administration, two cabinet secretaries also had to quit following damaging disclosures. With a couple of notable exceptions, the mediocrity of most of Leung’s appointees elicited sighs even from his political allies.

The same incompetence is at the root of his failure to deflate the property bubble. While he has announced grandiose plans to increase the future supply of land for development, and has hiked the stamp duty twice, the market has figured out that he does not understand that he needs to manage expectations by removing obstacles in the current development pipeline. His measures have increased prices while shrinking the number of transactions – precisely the opposite of what is needed.

One major roadblock that Leung fails to appreciate is caused by an obscure 1981 UK Privy Council ruling, Hang Wah Chong Investment Co. Ltd v. Attorney General of Hong Kong, which gave the government unlimited authority to behave as a revenue-maximising private monopolist. Thus empowered, the civil service has been behaving without regard to the public interest, as delays shrink supply while boosting prices. A substantial amount of floor space would have been available already if government authority were exercised responsibly.

Yet the same law could allow the Chief Executive to instruct the civil service to act to minimise social damage. Maximising public revenue is not always consistent with the goal of social and economic stability. After all, Hong Kong is facing a clear and present danger that the property bubble will end in tears for many.

Dissatisfaction with this state of affairs is not confined to the powerless. Victor Li Tzar-kuoi, the son of Hong Kong’s most powerful property baron, Li Ka-shing, astonished the public recently, saying in court testimony that it was a “painful experience” to deal with the government’s imperious Urban Renewal Authority.

Another roadblock is the Hong Kong dollar’s exchange-rate peg to the US dollar under the antiquated currency-board arrangement, a colonial relic still used by Gibraltar, the Falkland Islands, and St Helena (territories with a combined population of roughly 40,000). Under this system, the Federal Reserve in Washington, DC, sets Hong Kong’s interest rates and money supply.

The mantra since the handover to China in 1997 has been that this system has served Hong Kong well. But the high rate of asset inflation in Hong Kong is due partly to an undervalued currency, set at HK$7.8 to US$1 since 1983 (though allowed to trade within a narrow band between 7.75 and 7.85 since 2005). Market forces have set the real effective exchange rate by jacking up asset prices.

Hong Kong, a trading economy par excellence, thrives on market forces. Yet its policymakers remain frozen on the issue of the exchange rate. The betting in Hong Kong today is that, unless Leung can somehow reboot his administration, he is likely to follow Tung in leaving office before his term expires.

Sin-ming Shaw, a former fellow at Oxford University, is an investor based in Asia and Argentina. Copyright: Project Syndicate


Leung Chun-ying

Hong Kong Politics

Source URL (retrieved on Mar 10th 2013, 7:02pm):

Chance to host Formula E electric car race missed as pollution soars

Sunday, 10 March, 2013, 12:00am

News›Hong Kong


John Carney

Chance to host prestigious Formula E event for electric vehicles is missed on same weekend that near-record levels of smog are recorded

As pollution levels approached the worst ever recorded in Hong Kong, the government has snubbed a bid to bring one of the world’s most environmentally friendly and high-profile sporting events to the city.

The air pollution index at the roadside station in Causeway Bay peaked at 202 yesterday, the second highest level since recordings began 18 years ago.

Readings taken in Central and Mong Kok reached highs of 182 and 146 respectively.

Other stations in Hong Kong also recorded very high levels, and the Environmental Protection Department told people to limit their activities on busy streets as roadside air pollution was severe.

But the bad news did not end there. Formula E Holdings, promoter of the Formula E Championship, also made public its preliminary list of eight cities selected to host races next year – omitting Hong Kong.

The races will feature cars powered exclusively by electric energy. Hong Kong had been regarded by organisers as an ideal venue, but the government was not interested.

“Hong Kong will not be hosting a race next year. We can only hope the government will be more motivated in the future,” said Alejandro Agag, chief executive of Formula E.

“We were just left waiting and had to make a decision.”

Agag said his organisation provided government consultants with all the relevant details – such as the cost and how long streets would need to be closed – but heard nothing back. “It’s hard to consider Hong Kong as a venue when they don’t express their interest or contact us,” he said.

The lawmaker for the tourism sector, Paul Tse Wai-chun, said the government had missed out on an opportunity to improve the city’s image internationally.

“It would have been perfect to announce we were hosting a Formula E race here after the recent pollution problems. But all we have is even more bad publicity.”

Cities included in the Formula E preliminary calendar are London, Rome, Los Angeles, Miami, Beijing, Putrajaya (in Malaysia), Buenos Aires and Rio de Janeiro.

A spokesman for the Tourism Commission said that at this stage it was premature for them to comment on whether it was feasible for an event like Formula E to be staged in Hong Kong and whether it would receive government support.

“We work to attract mega events and activities to Hong Kong to enrich our overall tourism appeal and reinforce our status as the event capital in Asia,” he said.

Meanwhile pollution levels here are destined to remain high. Light winds mean the smog will not subside for a few days.

An Environmental Protection Department spokesman advised people with heart or respiratory illnesses to avoid staying in areas with heavy traffic.

“Everyone is advised to avoid prolonged stays in these areas and to reduce physical exertion in such areas,” he said.


Air Pollution

Electric Car

Formula E


More on this:

Dust storms and smog revisit the streets of Beijing [1]

Source URL (retrieved on Mar 10th 2013, 7:07am):