Examine ties between gov't and business
Liang Hongfu China Daily  Updated: 2006-02-14 06:20

One of Hong Kong's most cherished traditions, the close working relationship between government and big business, is coming under increased public scrutiny.

The dominance by big business in various key economic sectors, particularly property, banking, transportation, telecommunications, energy and utilities, has long been criticized by some politicians and economists for thwarting competition in what is supposed to be one of the freest economies in the world.

The issue was thrust into the limelight again in a recent business conference where Bernard Charnwut Chan, a member of the policy-making executive council, said in a speech that "collusion" between businesses and (government) officials would remain an "unsolved, deep-rooted contradiction in Hong Kong" for most people would object to the alternative of paying higher taxes.

He was apparently referring to the government's long-standing policy of financing its capital expenditure with proceeds from land sales. This policy has required the government to work closely with the large property developers who buy and develop the government lands for sale to the public.

In reply, Chief Secretary Rafael Hui Si-yan said that if the partnership between government and business was considered "collusion," and sharing resources "a transfer of interest," it would be difficult for all to build a "harmonious" society together.

Indeed, the majority of people in Hong Kong have come to accept the "partnership" between government and business as a necessary evil that played a key role within the peculiar social, economic and political context of the territory's colonial past. After 1997, this partnership, together with other elements that have made Hong Kong such a success, has been largely retained under the "one country, two systems" guiding principle.

But some economists have noted that such a "partnership" can lead to abuse of collusion if it is not prescribed and constrained by a specific legal framework, except for the various schemes of control that apply to the utilities companies and the public transport operators. These "schemes" indirectly set a limit on charges and empower the government to supervise the operations of the franchised operators.

But there are no such provisions that allow the government, or the public, to seek redress against unfair competition or collusive price fixing by the dominant players in other economic sectors. Such an omission seems particularly galling to the public when some of these dominant players are seen to be working closely in co-operation with the government.

Many of the public complaints about what is perceived as "collusion" have been sparked by the high property prices in Hong Kong. This is the area where alleged "collusion" is seen to have done the greatest harm to public interests.

The government has reiterated time and again that it has never pursued a so-called "high land price" policy. But the perceived arrogance of some major property developers hasn't helped dispel the public's suspicion of impropriety.

Property developers made the shrillest noise in blaming the government for contributing to the massive correction of property prices that was widely known to be triggered by the Asian financial crisis of 1997.

To ensure the widest public support for such a partnership, perhaps the government should try harder in convincing businesses and the general public of the urgency of introducing laws that can provide a legal framework for independent review of transactions that are alleged to be collusive.

Email:jamesleung@chinadaily.com.cn

(China Daily 02/14/2006 page4)