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The study is by Sin Ying Wong, a Hong Kong native who currently [December 2012] lives in San Francisco; this study presents the Hong Kong government's economic policies as compared to the MIEPA list of policies as outlined above. The ratings herein are based on the following rating scale:
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2011. Used herein with permission]
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HONG KONG - SIN YING WONG
RATING SUMMARY POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE 1 5.0 15.0 15.0 100 % 2 3.5 13.5 15.0 90 3 4.5 13.5 15.0 90 4 5.0 15.0 15.0 100 5 5.0 15.0 15.0 100 6 4.0 12.0 15.0 80 7 5.0 15.0 15.0 100 8 4.5 13.5 15.0 90 9 4.0 12.0 15.0 80 10 4.0 12.0 15.0 80 11 2.5 7.5 15.0 50 12 5.0 10.0 10.0 100 13 5.0 10.0 10.0 100 14 4.5 9.0 10.0 90 15 5.0 10.0 10.0 100 16 4.0 8.0 10.0 80 17 4.0 8.0 10.0 80 18 5.0 10.0 10.0 100 19 5.0 10.0 10.0 100 20 4.5 9.0 10.0 90 21 5.0 10.0 10.0 100 22 5.0 10.0 10.0 100 23 5.0 10.0 10.0 100 24 4.5 9.0 10.0 90 25 3.0 6.0 10.0 60 26 4.5 9.0 10.0 90 27 4.5 9.0 10.0 90 28 3.0 6.0 10.0 60 29 5.0 5.0 5.0 100 30 4.0 4.0 5.0 80 31 5.0 5.0 5.0 100 32 5.0 5.0 5.0 100 33 4.5 4.5 5.0 90 34 5.0 5.0 5.0 100 TOTAL 152.0 325.5 365.0 89.2% ===== ====== ===== =====HONG KONG - SIN YING WONG - INDIVIDUAL POLICIES
1. Freedom from internal control 5.0
The freedom of Hong Kong people is protected by the Basic Laws. People are free to express their feeling and do activities which they want to. This facilitates merchants doing business in Hong Kong as they can do their business freely and the government does not interfere their ways of doing it, there isn’t much restriction on their wealth creating activities. Hong Kong provides great flexibility for people to do business and create wealth.
2. Freedom of speech 3.5
Under the Hong Kong Basic Law, Hong Kong people should have the freedom of speech, the freedom and privacy of communication of Hong Kong residents should be protected by law. Each year, there are several protests hold in Hong Kong every year, Hong Kong people gather and express their ideas. In forum, TV shows or online chat room, people express their ideas. However, under the stress from the central government, many Hong Kong people, especially writers, say that their freedom of speech is being threatened.
3. Effective, fair police force 4.5
The Hong Kong Police Force is the government organization responsible for maintaining the discipline of Hong Kong. It is effective in fight with crime and making Hong Kong a safe and stable place to live. It has good performance when dealing with both local issues and issues happen during international conferences. As one of the world lowest crime rate cities, Hong Kong is also ranked as one of the safest cities to live.
4. Private Property 5.0
In Hong Kong Basic Law, it states in the first Chapter, Article six that the right of private property is protected by law. It ensures people to use, dispose or inherit private property. In the 2012 Property Right Index, Hong Kong ranks 12 out of the other 130 places which is the second highest ranking place in Asia. Hong Kong has well developed laws that protect the right of owning private properties. Although this may causes great income disparity in Hong Kong, it ensures the wealth created is owned by people themselves. It gives Hong Kong people high incentive to work and create wealth.
5. Commercial Banks 5.0
Hong Kong has one of the highest banking institutions in the world. As a major financial center in Asia, it is a strong banking system. There are 153 licensed banks in Hong Kong, which is strictly supervised by the Hong Kong Monetary Authority. The government has lots of regulations and controls over the start of a new bank in order to make sure the bank will be able to function well and protect the wealth of its people. With the sound banking system, people in Hong Kong need not to worry about depositing their money in banks and all the other business activities can go on well.
6. Communication System 4.0
Hong Kong is one of the world most connected cities, people can communicate to people from any parts of the world through the communication network including TV, Newspaper, magazine, telephone, radio, internet and other services. Both the government and many companies offer free Wi-Fi service in many places, it enables people to reach the most current news and make contact immediately.
7. Transportation 5.0
Hong Kong is famous for its well-developed transportation system. Being as one of the world busiest city, Hong Kong transportation system is functioning well and able to cope up with the need of its people. The public transport covers all part of Hong Kong and makes it easy for people to reach their destination. Hong Kong public transport has a rate of 90% people using it daily, it has been ranked number four since it is able to absorb the need of its resident. Besides, with the Octopus card, people can transfer from one place to another it is accepted as a kind of payment by nearly all of the public transport. Transportation is easy and convenient in Hong Kong.
8. Education 4.5
Hong Kong has a twelve years compulsory education system which offers Hong Kong people an equal chance of receiving education and ensures people to have certain extent of education. According to the Social Indicator of Hong Kong, the percentage of Hong Kong teenagers receiving upper secondary is 85%, people receiving tertiary education within the population is 26%, and the literacy rate is 94%. Among the eight universities in Hong Kong, three of them rank top 100 in the world. The quality of Hong Kong education is fairly good.
9. Social Mobility 4.0
Although the income disparity of Hong Kong is wide, people in Hong Kong can improve living through hard work. With higher education, people tend to get higher paying job generally. With the accompany of the twelve years compulsory education launched by the government, Hong Kong people have a higher chance of receiving education and through that have a higher chance of creating more wealth.
10. Freedom from outside control 4.0
Under the policy of “one country, two systems,” Hong Kong can have its social and economic systems remain unchanged after China resumes the exercise of sovereignty. Hong Kong enjoys high degree of autonomy and the Central government should not interfere the affairs of Hong Kong. Hong Kong administers itself according to the Basic Law, Hong Kong citizens are subject to the Basic Law only. However, China also has its influences in Hong Kong. In the Basic Law, it states that, the Chief Executive of Hong Kong has to be appointed by the Central government.
11. Protection of Domestic Enterprises 2.5
According to the data from the Census and Statistic Department, the total exports of September 2012 is $313,161 million, and the total imports is $358,312 million. The import of Hong Kong is greater than its export; it is having a deficit in its external trade.
12. Foreign Currency Transactions 5.0
The legal tender of Hong Kong is Hong Kong dollars; it has a fixed exchange rate against US dollar which is $7.8 Hong Kong dollar to $1 US dollar. People can exchange money at authorized money exchanger for Hong Kong dollar in order to do transactions in Hong Kong. Also, transactions can be paid by international bank credit card, or people can withdraw money from ATM that takes international cards.
13. Border Control 5.0
The Hong Kong Immigration Department is responsible for immigration control of Hong Kong, it controls all entrances and exits of Hong Kong and examines every passengers arriving or leaving Hong Kong by land, sea and air. There are 11 control points which people can enter or exit Hong Kong from, each control point has strict regulations on people or goods entering and leaving Hong Kong. Besides, the Customs and Excise Department is another government department fighting against smuggling. Hong Kong has strict border control that encourages businesses and investments.
14. Currency 4.5
The legal currency of Hong Kong is Hong Kong dollar. The Hong Kong Monetary Authority is responsible for governing the issue of Hong Kong notes. Hong Kong has a fixed exchange rate of $1 to $7.8 with US. Currency in Hong Kong is very stable.
15. Cultural, language homogeneity 5.0
According to the Basic Law, the official languages of Hong Kong are Cantonese and English. The government adopts a policy of “biliterate and trilingual,” many Hong Kong people understand the three languages, English, Cantonese and Mandarin, and able to code switch among these languages. Although as an international city, there are many people from different countries and cultures gather in Hong Kong, the majority of Hong Kong population is Chinese and 97% of the Hong Kong population speaks Cantonese. People with different backgrounds and cultures can co-exist in Hong Kong, which makes Hong Kong a peaceful city that doesn’t have much conflict between minorities. This facilitates economy growth and doing business in Hong Kong.
16. Political Effectiveness 4.0
According to the Worldwide Governance Indicator, Hong Kong has a ranking of 94.3 in 2011 and scores 1.7 out of 2.5. The number shows that Hong Kong government has been functioning well and is effective in leading Hong Kong.
In 2003, when there was an outbreak of severe acute respiratory syndrome (SARS), Hong Kong government was able to react quickly and stop the spread of the disease. After the disaster, the government helps the society and economy recover in a short period of time.
17. Institutional Stability 4.0
Under the principle of “one country, two systems,” it states in the Hong Kong Basic Law that the socialist system and policies practice in Hong Kong, the capitalist system and the way of life will remain unchanged for 50 years. After being a colony of Britain for many years and returned to China in 1997, Hong Kong is ruled by the Hong Kong government under a high degree of autonomy. This gives Hong Kong a stable society and has its institutions being stable, remain unchanged.
18. Honest Government 5.0
In 1974, the Independent Commission Against Corruption (ICAC) is set up in Hong Kong to fight against and clean up corruption through effective law enforcement, education and prevention, it helps to keep Hong Kong fair, just and stable. In order to investigate and eliminate corruption, ICAC is an independent department that is given legal powers to execute its duties.
19. Common Laws 5.0
The Basic Law of Hong Kong is the constitutional document of Hong Kong. All systems and policies practice in Hong Kong must be based on the provisions of the Basic Law, including the social and economic system, the system for safeguarding the fundamental rights and freedoms of its residents, the executive, legislative and judicial systems, and the relevant policies. Under the Basic Law, all laws should be maintained unless it contravenes the Basic Law and subjects to any amendment by the Hong Kong legislature. Two fundamental facets of the rule of law are legality and equality before the law. No matter you are rich or poor, people are treated equally before law.
20. Central Bank 4.5
The Hong Kong Monetary Authority is the Hong Kong central banking. The HKMA helps to ensure the stability of the Hong Kong currency and the banking system. Besides, it prompts the efficiency, integrity and development of Hong Kong financial system. The HKMA controls the stability of Hong Kong currency by launching a stable exchange rate in foreign exchange market. The HKMA also maintains the banking stability by regulating and supervising the banking business in Hong Kong. HKMA is an independent department that is not subject to government control, it makes decision on its own.
21. Domestic Budget Management 5.0
Hong Kong government is doing well in its budget management, for the past few years, Hong Kong has been having a surplus in its total government revenue; the revenue is greater than its expenditure. Having a surplus in revenue for consecutively seven years, in 2011, there is a program “Scheme $6000,” which the government gives out $6000 to every adult holder of Hong Kong permanent identity card.
22. Government Debt 5.0
Hong Kong Government has no internal debt to the public, and according to the data from the Census and Statistic Department, the government external debt for the second quarter of 2012 is $10,938 million while the GDP is $474,690 million. The external debt is around 2.3% of the GDP, the external debt of Hong Kong government to the GDP is low.
23. Economic Statistics 5.0
The Census and Statistic Department is the government department responsible for providing adequate and reliable statistics of the Hong Kong economy. Its statistics are based on the population, labor, price, GDP etc. Statistics from CSD is accurate and cover a wide range of topics. It provides people good data to do research and to observe the economy of Hong Kong.
24. Protection of public health and safety 4.5
The Center for Food Safety and Food and Environmental Hygiene Department is the two government department responsible for the public health in Hong Kong. The mission of these two departments is to ensure food sold in Hong Kong is safe for human consumption and environment in Hong Kong is clean and hygiene. There are laws and guidelines for the public to follow. Also, strict regulations are imposed on the import and export of live stocks in Hong Kong.
25. High Wage Policy 3.0
After a long debate over years, the Legislative Council of Hong Kong passed the proposal of minimum wage in January 2011. In 1 May 2011, the Statutory Minimum Wage (SMW) comes to be effective and the minimum wage rate in Hong Kong is $28 per hour. Although the SMW ensures workers in getting a minimum wage, it also brings negative impacts like cutting off in working hours or even unemployment.
26. Environment Protection 4.5
Both the government and voluntary organization have been working to protect and reserve the environment. The Environmental Protection Department is the government organization that concerns the issue of environment protection. Having different divisions like the Air Policy Division, the Water Policy Division and the Waste Management Division, the EPD set up regulations that conserve and protect the environment. Besides, there are some other environmental groups, like Hong Kong Green Nature Union and Green Power, helps to protect the environment of Hong Kong.
27. Strong Army 4.5
Although Hong Kong doesn't have its own army, the defense of Hong Kong territory is done by its sovereign power, the People's Republic of China. The PRC stationed a garrison, the People's Liberation Army Hong Kong Garrison, in Hong Kong to manage its defense affairs. According to the Basic Law, the garrison should not interfere with local affairs and the Hong Kong government is still responsible for the public order.
28. Foreign Trade Impact 3.0
According to the Census Statistic Department, the GDP of Hong King in 2012 Quarter 2 is $474,690 million. In September 2012, the total exports of goods is $313,161 million and the imports is $358,312 million, it is 141% of the GDP. Hong Kong is heavily dependent on foreign trades, it is over relying on the foreign market.
29. Management of foreign currency budget 5.0
According to the Hong Kong Monetary Authority, the official foreign currency reserve asset of Hong Kong is US$298.2 billion by the end of August 2012. It is over eight times the currency in circulation or about 55 % of Hong Kong dollar M3. This represents that Hong Kong has a great amount of foreign currency reserve assets.
30. Layers of collective action 4.0
Hong Kong has a multi-party system, every four years, half of the unicameral Legislative Council of Hong Kong's representing the geographical constituencies elected by citizens. The remaining seats representing the functional constituencies are elected within business sectors.
31. Pro-business climate 5.0
Businessman in Hong Kong enjoys high social status. According to the Economic Freedom of the World: 2012 Annual Report, Hong Kong ranked number 1 out of 144 countries. Also, Hong Kong ranked number 2 for the ease of doing business based on the Rank of economic- Doing Business by the World Rank Group Successful Hong Kong businessman like Run Run Shaw and Ka-shing Li are given the honor of Sir and are prized with the Grand Bauhinia Medal by the Hong Kong Government for their contribution to society.
32. Government enterprises 5.0
The growth rate of Hong Kong GDP is at 1.2% at 2012. Hong Kong government owns only a few enterprises like the Water Supplies Department and Hong Kong Housing Department. Those government enterprises are not running in the purpose of earning money, they serve the purpose of providing the basic necessities to citizens. It is difficult for new comer to enter the field of these government enterprises as the cost for operating in those fields is relatively high. Therefore, the Hong Kong government owning enterprises doesn’t interfere with the creation of business for other people.
33. International security agreements 4.5
Hong Kong doesn’t have its own army; the Hong Kong Police Force is responsible for protecting the safety of Hong Kong citizens. However, the People’s Republic of China Central People’s Government has stationed a garrison of the People’s Liberation Army to manage the defense affairs of Hong Kong. The station of garrison symbol for the PRC assumption of sovereignty over Hong Kong
According to Hong Kong’s Basic Law, the garrison cannot interfere with local civil affairs of Hong Kong and the Hong Kong government can still remain responsible of maintaining social order.
34. Protection of domestic enterprises from government mandated costs 5.0
Hong Kong government has been encouraging people to start their own business in Hong Kong and has been providing support to people who have an ambition in doing so. Working in partnership with local companies, the plan of Youth Business Hong Kong provide financial access for business start-ups and support young people through an intensive and extensive programs of business mentoring. Together with other companies, the government provides financial help and knowledge to assist young people setting up their own business.
Besides, according to “2011 Paying Taxes”, Hong Kong ranked number for in the world for ease of paying tax. Hong Kong has a tax system that is characterized by low tax cost, low administrative burden, low compliance time for paying tax, and reduced tax payments. Also, Hong Kong imposes only one tax per base. The tax system of Hong Kong favors people doing business in Hong Kong and thus encourages many people setting up their own business in Hong Kong.
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