Think-tank sees risks for 'world's freest economy'
Wednesday, November 13, 2002
hongkong.scmp.com
KELVIN CHAN and JIMMY CHEUNG
The Heritage Foundation has named Hong Kong the world's freest economy for the ninth consecutive year - but warned it could lose its top spot if proposed anti-subversion laws restrict the flow of information and the government fails to cut spending.
The SAR barely held on to first position in the conservative Washington-based think-tank's annual survey, with Singapore closing in. Hong Kong scored 1.45 on the so-called index of economic freedom, deteriorating from 1.35 last year, while Singapore improved to 1.5 from 1.55. The lower a country's score on the index, the freer its economy.
The rule of law, lack of trade barriers and low taxes helped the SAR cling to first place. But its rating dipped because government spending as a percentage of gross domestic product (GDP) rose. Singapore improved by cutting taxes.
A statement issued by the government said it was pleased by the ranking. To stay atop the list, Hong Kong needed to make good on its vow to cut government spending as a percentage of GDP, the survey's authors said.
"If [Financial Secretary] Antony Leung carries out his promise to reduce government spending from 23 per cent of GDP down to 20 per cent in 2006-07, that would be the most obvious thing they could do to improve their score," said Hugo Restall, editorial page editor of the Asian Wall Street Journal, which compiled the list with the foundation.
The authors also worried about whether plans to introduce anti-subversion legislation to satisfy Article 23 of the Basic Law would include limits on information dissemination.
"If the implementing details include restrictions on the free flow of economic information then that could adversely impact on Hong Kong's score in the future," said Edwin Feulner, president of the Heritage Foundation, which advocates small government and low taxes. He called Article 23 "one of the most important questions" for SAR leaders.
Responding to the report, Secretary for Security Regina Ip Lau Suk-yee said the government appreciated the concerns but the proposed restrictions were limited. "I hope people who have worries could point out how exactly would they be affected. I myself don't see any effect," she said.
The index measures 50 factors, including capital flows and foreign investment, monetary and trade policy, wages and prices, government intervention, property rights, regulation and black market activity.
Singapore maintained its No 2 ranking from last year. But Mr Feulner said: "The difference between No 1, Hong Kong, and No 2, Singapore, is closer than it has ever been."
The government should take Hong Kong's slipping score as an alert, said Professor Stephen Cheung Yan-leung, chair professor of economics and finance at City University. "Other competitors - such as Singapore, New Zealand, Australia - they are catching up to Hong Kong in terms of competitiveness, in terms of economic freedom," he said.
China scored 3.55 on the index, the same as the last two years, giving it a "mostly unfree" rating.
Meanwhile, Hong Kong slipped to 17th in the World Economic Forum's 2002 rankings for global competitiveness. The SAR ranked 13 last year in the Growth Competitive Index.
The United States topped the list released yesterday, rising from second place last year. Taiwan jumped from a ranking of seven last year to third place, while China rose from 39 to 33. |
