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Below is the study by Ho W. Lee, a Hong Kong native who currently [May 2009] 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:
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, 2009. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
Hong Kong - Ho W. Lee
Comparison of Hong Kong's economic policies to MIEPA criteria as prepared by native student of Hong Kong, Ho W. Lee, studying in the US in May of 2009.
RATING SUMMARY
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 5.0 15.0 15.0 100 %
2 4.0 12.0 15.0 80
3 5.0 15.0 15.0 100
4 5.0 15.0 15.0 100
5 5.0 15.0 15.0 100
6 5.0 15.0 15.0 100
7 5.0 15.0 15.0 100
8 5.0 15.0 15.0 100
9 5.0 15.0 15.0 100
10 3.0 9.0 15.0 60
11 5.0 15.0 15.0 100
12 4.0 8.0 10.0 80
13 5.0 10.0 10.0 100
14 5.0 10.0 10.0 100
15 2.0 4.0 10.0 40
16 5.0 10.0 10.0 100
17 5.0 10.0 10.0 100
18 5.0 10.0 10.0 100
19 5.0 10.0 10.0 100
20 4.0 8.0 10.0 80
21 4.0 8.0 10.0 80
22 5.0 10.0 10.0 100
23 3.0 6.0 10.0 60
24 5.0 10.0 10.0 100
25 3.5 7.0 10.0 70
26 5.0 10.0 10.0 100
27 1.5 3.0 10.0 30
28 4.0 8.0 10.0 80
29 5.0 5.0 5.0 100
30 3.0 3.0 5.0 60
31 5.0 5.0 5.0 100
32 5.0 5.0 5.0 100
33 5.0 5.0 5.0 100
34 1.0 1.0 5.0 20
TOTAL 147.0 322.5 375.0 85.9%
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INDIVIDUAL POLICIES
1. Freedom from Internal Control: 5.0
“The freedom of the person of Hong Kong residents shall be inviolable” (Chapter 28, Basic Law). Hong Kong residents enjoy high degree of freedom. Local residents are free to move, marry, associate, travel, etc.
Source:
http://www.basiclaw.gov.hk/en/index.html
Personal Knowledge
2. Freedom of Speech: 4.0
Chapter 27 of the Basic Law guarantees the freedom of speech, press and association. However this chapter is superseded by national security. Overall Hong Kong residents enjoy almost complete freedom of speech from its legal system. The legal system cannot discriminate or prosecute any individuals solely base on political views and speeches. However, when the speech is deemed to be disruptive to national security, government can take action against the individual. Additionally, there is a growing trend of self censorship of the media in regard to indecent contents.
Source:
http://www.basiclaw.gov.hk/en/basiclawtext/chapter_3.html
Personal knowledge
3. Effective, Fair Police Force: 5.0
Hong Kong Police force is a well trained, well equipped and well funded police force. It has reported 90% confidence and satisfaction rate by the local residents. There are also two external agencies, Independent Police Compliant Council and Independent Commission Against Corruption. Independent Police Compliant Council focuses on general misconduct and disciplinary complaints and Independent Commission Against Corruption focuses on corruption complaints. Hong Kong has been consistently ranked among the top five safest cities in the world.
Source:
http://www.police.gov.hk/hkp-home/english/aboutus/welcome_msg.htm
http://www.ipcc.gov.hk/
http://www.safestcities.net/ous.html
4. Private Property Rights: 5.0
The right of private ownership of property is guaranteed by the Basic Law which is the superior law of the city. There is also an effective and object legal system that settle disputes over property right. Individuals (local or foreign) and legal entities (domestic or foreign) are legally protected for legal acquisition, use, disposal and inheritance of the property and right and guaranteed reasonable compensation for lawful deprivation of the property and right.
Source:
http://www.cmab.gov.hk/en/issues/basic2.htm
Personal Knowledge
5. Commercial Banks: 5.0
There are many commercial banks in Hong Kong which are well regulated by Hong Kong Monetary Authority. There are local small banks, mid size regional banks and large size international banks. The Basic Law also guarantees the private ownership of the banks. Commercial banks have an array of business and consumer lending. They are the largest financier to start up and small business. They also issue credit cards and residential mortgages. In another word, commercial banks become an integral part of Hong Kong economy and all Hong Kong residents have access to a commercial bank.
Sources:
http://www.basiclaw.gov.hk/en/basiclawtext/chapter_5.html#section_1
http://www.info.gov.hk/hkma/
6. Communication Systems: 5.0
Hong Kong has some of the most advanced and complete communication infrastructures in the world. 3G and Wi-Fi access is available city wide. Broadband internet access is available to all residents at a reasonable price. There are many mobile phone service companies that offer mobile phone services at very competitive price.
Source:
http://www.gov.hk/en/residents/communication/mobilecomm/index.htm
http://www.gov.hk/en/residents/communication/publicit/index.htm
7. Transportation: 5.0
Hong Kong has one of the most complete and well designed railroad and highway networks that connect local districts as well as other cities. The mass transit system (one unified railway company, 5 bus companies, mini buses system, taxis and ferries) is efficient and reaches every corners of the city.
Source:
http://www.gov.hk/en/residents/transport/publictransport/index.htm
http://www.gov.hk/en/residents/transport/roadnetwork/index.htm
8. Education: 5.0
Residents of Hong Kong are provided with 9 years of free mandatory education (primary school to junior secondary school). However the government provides another 4 years of free education that lead to college level. There are ten universities, two colleges, two post-secondary colleges and two vocational training institutes. Local residents are provided easy access to the education system. According to the performance assessment tests conducted by the Organization for Economic Co-operation and Development (OECD), Hong Kong has been ranked consistently among the highest scores in 2003 and 2006.
Source:
http://www.gov.hk/en/residents/education/index.htm
http://www.basiclaw.gov.hk/en/basiclawtext/chapter_6.html
http://en.wikipedia.org/wiki/Education_in_Hong_Kong
9. Social Mobility: 5.0
Social mobility is extremely high in Hong Kong. There is a quality education system that prepares local residents to compete globally for jobs. In addition to conventional education institutes, there are many vocational training institutes that provide vocation training to local residents and equip them with demanded skill sets. The low tax rates translate to the accumulation of wealth by the local residents. There is no strict social hierarchy system exists in Hong Kong. The social status is mainly determined by the ability and wealth of an individual. Being famous or well connected is not a prerequisite to be successful.
Source:
http://www.edb.gov.hk/index.aspx?nodeID=2&langno=1
http://en.wikipedia.org/wiki/Economy_of_Hong_Kong
10. Freedom from Outside Control: 3.0
Under the Basic Law, Hong Kong enjoys full economic and extensive political autonomy. It legally shields Hong Kong from outside influence except for Central Chinese government. Even for Central Chinese government, its legal interference is explicitly limited by the Basic Law. Therefore, Hong Kong legally enjoys a great deal of autonomy. However, the Central Chinese government increasingly extends its political influence in Hong Kong through non political means. Besides from Central Chinese government influence, Hong Kong is a very autonomous and independent city.
Source:
http://en.wikipedia.org/wiki/Hong_Kong_Basic_Law
http://www.basiclaw.gov.hk/en/index/
Personal Knowledge
11. Foreign Currency Transactions: 5.0
A foreign currency transaction is a well regulated and monitored activity in Hong Kong by the Hong Kong Monetary Authority. Though well regulated and monitored, there is no restriction or government interference on foreign currency transaction except for extraordinary circumstances. Transaction service is ready available in many of the local and international banks.
Source:
http://en.wikipedia.org/wiki/Economy_of_hong_kong
http://www.info.gov.hk/hkma/
12. Border Control: 4.0
The Hong Kong Customs and Excise Department is the principle government agency that is responsible for border control. Generally speaking the border is well patrolled and human and merchandizes smuggling is at a minimal. However there were a few waves illegal immigration in the 1990s from Vietnam and mainland China. The flow of people and goods are well monitored in Hong Kong.
Source:
http://en.wikipedia.org/wiki/Customs_and_Excise_Department_(Hong_Kong)
Personal Knowledge
13. Currency: 5.0
The Basic Law of Hong Kong and the Sino-British Joint Declaration guarantee that Hong Kong retains full autonomy with respect to currency issuance. There is one uniform local currency well circulated in Hong Kong. It is the Hong Kong Dollar. Hong Kong Monetary Authority (HKMA) is the principle government agency that determines currency supply. There banks, Hong Kong and Shanghai Banking Corporation Ltd., the Standard Chartered Bank and the Bank of China ( Hong Kong) are authorized by the HKMA to issue currency. The quantity is strictly controlled by HKMA. There is stiff penalty for member banks for any deviation from predetermined quantity. Hong Kong Police Department has been doing a very good job in catching and stopping counterfeiting the currency. Hong Kong uses US dollar as the standard currency reserve and enjoy a relatively stable currency value.
Hong Kong currency is linked to US dollar with a target range of 1 USD : 7.78 HKD.
Source:
http://en.wikipedia.org/wiki/Hong_Kong_dollar
http://www.info.gov.hk/hkma/
14. Culture, Language Homogeneity: 5.0
In Hong Kong more than 95% people are Chinese so there is a high degree of culture, language homogeneity. Cantonese is the dominant spoken language while Chinese traditional is the dominant written language. However due the ex British colony status, English is also a widely accepted language in the government and business community. Hong Kong people are generally very open minded about other cultures. Because of the international financial hub status, there is a great degree of cultural exchanges.
Source:
http://www.gov.hk/en/about/abouthk/facts.htm
Personal knowledge
15. Political Effectiveness: 2.0
The low political effectiveness score is related to the political structure in Hong Kong. The chief executive is elected by the Election Committee who commonly recognized to have strong tie with the Chinese Central government. Because the chief executive is not elected by the general public, the general public lacks direct mechanism to hold him accountable. Overall, Hong Kong lacks political talent as a result of colonial style education and political system. Therefore it is a learning process for Hong Kong people to achieve political effectiveness while making many political mistakes. The first ever chief executive Mr. Tung angered the Hong Kong people by failing to take decisive action on the “Article 23” issue which led to a 500,000 people rally. Although there is an increasing demand for accountability and effectiveness, Hong Kong is moving very slowly toward that direction.
Source:
Personal knowledge
http://en.wikipedia.org/wiki/Politics_of_Hong_Kong
16. Institutional Stability: 5.0
Hong Kong enjoys a great degree of institutional stability because of the strong backing of the Chinese Central government and the overall positive record of the government. The current government structure closely mirrors the one used during the British colonial era which has shown to be very successful and stable. The institution is a well oiled machine. Due to the moderate nature of most Hong Kong residents, I do not foresee any great degree of instability.
Source:
http://en.wikipedia.org/wiki/Politics_of_Hong_Kong
Personal knowledge
17. Honest Government: 5.0
The Independent Commission Against Corruption (ICAC) is the principle independent civil agency that is responsible to monitor corruptions in Hong Kong. ICAC constitutionally serves only the chief of executive which shields it from another other governmental influence and ensures its independence. ICAC is consistently rated among the most effective law enforcement and anti corruption agencies around the world.
Although lacking general accountability and political effectiveness, there is a great degree of transparency in the Hong Kong government. The transparency helps to keep the government honest.
Source:
www.icac.org.hk
Personal knowledge
18. Common Laws: 5.0
The constitution of the land is the Basic Law. It outlines “one country, two systems” principle and mandates an independent and fair judiciary system. Basic Laws along with other penal and civil codes forms the common law. Hong Kong resident enjoy equality, fairness and justice. All Hong Kong residents including top government officials are subjected to the common laws
Source:
http://www.basiclaw.gov.hk/en/index/
http://en.wikipedia.org/wiki/Legal_system_of_Hong_Kong
19. Central Bank: 5.0
Hong Kong does not have a central bank but a central banking system which is the Hong Kong Monetary Authority (HKMA). It is responsible for the stability of Hong Kong currency and its banking and financial system. Hong Kong’s monetary system is not base on fiat money but a linked exchange rate with the US dollar. Therefore it’s the world’s 8th largest foreign reserve plays a significant role in the stability of monetary system. The other component of the HKMA is a supervisory board that regulates the banks in Hong Kong. Source:
http://en.wikipedia.org/wiki/HKMA
http://www.info.gov.hk/hkma/eng/press/2009/20090209e3.htm
20. Domestic Budget Management: 4.0
According to the projection of the International Monetary Fund (IMF), Hong Kong will have a budget deficit of ¾% of GDP in FY09. The deficit is contributed by global recession and reduced activities and values in local housing market and stock market. However, given the projected global recession, Hong Kong’s deficit is lower and outperforms many industrialized countries. Since FY04, Hong Kong has been registering positive surplus which is indicative of the government’s ability to manage its domestic budget.
Source:
http://www.imf.org/external/country/index.htm#H
Personal Knowledge
21. Government Debt: 4.0
As of fiscal year of 2006 - 2007, Hon Kong has about US $2.6 billion of government debt. It was about 1.2% of the corresponding year GDP. According to International Monetary Fund, Hong Kong government has been servicing the debt in a regular basis which meets the international standard.
Source:
http://www.imf.org/external/np/sec/pn/2008/pn08145.htm
http://www.censtatd.gov.hk/hong_kong_statistics/statistical_tables/index.jsp?charsetID=1&tableID=044
http://www.censtatd.gov.hk/FileManager/EN/Content_805/pub_account.pdf
22. Economic Statistics: 5.0
Hong Kong government has recently consolidated all information flow into a one-stop government web portal that provides the links to all official information. The census department also maintains its individual website which contains all economic statistics considered significant by the western industrialized countries and United Nation Economic and Social Council. The census department has an independent and objective outsider verification mechanism. Therefore the statistics are regarded as highly reliable.
Source:
http://www.censtatd.gov.hk/hong_kong_statistics/index.jsp
Personal Knowledge
23. Protection of Public Health and Safety: 3.0
The infant mortality rate (IMR) continues to trend down to about 0.5% of registered live births. Maternal mortality rate (MMR) fluctuates under 0.5% of registered live births. It is indicative of a comprehensive public health policy and medical system. However there were multiple epidemics such as the SARS epidemics of 2003 and reoccurring avian flu which significantly affected the overall remark of the public health and safety score.
Source:
http://www.chp.gov.hk/data.asp?lang=en&cat=4&dns_sumID=113&id=27&pid=10&ppid
http://www.who.int/csr/disease/avian_influenza/avianinfluenza_factsheetJan2006/en/index.html#countries
24. High Wage Policy: 5.0
As of the 3rd quarter of 2008, the average monthly salary for supervisory, technical, clerical and miscellaneous non-production workers in all selected industry sectors is $11,551 (US$1485). The average daily Salary for Craftsmen and Operatives is $457 (US$58.7). Currently there is no regulation and cap on high wages, but a minimum wage policy is under consideration. Hong Kong practice free market capitalism which the market is free to determine the high wages for talents.
Source:
http://www.censtatd.gov.hk/hong_kong_statistics/statistical_tables/index.jsp?charsetID=1&tableID=021
Personal Knowledge
25. Environmental Protection: 3.5
Hong Kong has a comprehensive set of environmental protection regulation. The regulations are considerably tough in the region trailing only Japan. The Environmental Protection Department is the principle department that enforces these regulations. Hong Kong has been very successful in water conservation, sewage and waste treatment. It has strict regulations on air pollution and imposes tight emission caps. However, there is still room for improvement in the aspect of air pollution. Air quality in Hong Kong has been consistently ranked to be poor due the emission from vehicles.
Source:
http://www.gov.hk/en/about/abouthk/factsheets/docs/environmental_protection.pdf
http://www.epd.gov.hk/epd/eindex.html
26. Strong Army: 5.0
Article 14 of the Basic Law states that the Central People’s Government is fully responsible for the defense of Hong Kong. There are garrisons staffed by the People Liberation Army (PLA) in Hong Kong. With “PLA being the world's largest military force, with approximately 3 million members and has the world's largest (active) standing army, with approximately 2.25 million members” (Wikipedia), China is the superior military power in the region. In case of external attack, PLA will automatically assume full responsibility and command to mobilize resource to defend Hong Kong.
Source:
http://www.basiclaw.gov.hk/en/basiclawtext/chapter_2.html
http://en.wikipedia.org/wiki/People%27s_Liberation_Army
27. Foreign Trade Impact: 1.5
As of 2007 total foreign trade including import and export accounted for 21.4% of 2007 GDP. Given the strategic geographical location, natural harbors and efficient mass goods transportation network, Hong Kong has not been realizing its potential for foreign trade. The ideal composite of foreign trade in relation to GDP should be around 33% of total GDP. 21.4% is far away from the desired 33%. Therefore Hong Kong has received such a low score.
Source:
http://www.censtatd.gov.hk/hong_kong_statistics/statistical_tables/index.jsp?charsetID=1&tableID=036
Personal knowledge
28. Protection of Foreign Currency Earning Enterprises: 4.0
Taking financial service sector as an example, Hong Kong has a transparency and well regulated financial sector. The principle government affiliated but independent agency that regulates security exchange is Security and Futures Commission. Hong Kong government has streamlined the licensing process of foreign business. According to its official website, the application will take about 4 days and a few hundred US dollars. However, Hong Kong government does not have particular protective regulation for foreign investment but a unified standard for both domestic and foreign investments. Along with the low tax rate and the large foreign reserve of the Hong Kong Monetary Authority, it is a fair competition environment with strong and stable foreign currency backing.
Source:
http://www.investhk.gov.hk/pages/1/179.html
http://www.investhk.gov.hk/pages/1/72.html
29. Management of Foreign Currency Budget: 5.0
The Hong Kong Monetary Authority (HKMA) is in charge of foreign exchange reserve. According to the press release, as of 31 Dec 2008, HKMA has reserve assets of US $182.5 billion. This puts Hong Kong as the world’s eighth largest foreign currency reserve holder. HKMA demonstrated its commitment to defend the stability of the monetary system in the Asian Financial Crisis of 1999. It is a comforting signal toward investing to be confident in the stability of Hong Kong’s monetary system.
Source:
http://www.info.gov.hk/hkma/eng/press/2009/20090107e3.htm
Personal Knowledge
30. Layers of Collective Action: 3.0
According to Basic Law, Hong Kong permanent residents of age of 18 or above can vote. The Basic Law lays out a succession of gradual step toward full and direct election of the legislative branch and the chief executive. As of now, Hong Kong residents vote for 2/3 of its legislators in the legislative council. These legislators can be hold fully accountable for their actions.
However the development toward full and direct election of the chief executive has stalled. Currently, the chief executive is elected by a representative Election Committee that has 800 members from different arrays of the society appointed by Central People’s Government. Therefore common Hong Kong residents cannot affect the election result nor hold the Chief Executive accountable for his actions.
In the recent year, there is an increased accountability movement of top government officials. The legislative branch is empowered with authority to impeach and remove an appointed official. This dramatically increases the accountability of the executive branch to the residents.
Even though there is still much room for improvement, Hong Kong has made great improvement to hold its government officials accountable.
Source:
http://www.basiclaw.gov.hk/en/index/
Personal Knowledge
31. Pro-Business Climate: 5.0
The Basic Law guarantees the continuation of free market capitalism system in Hong Kong. There is a 17.5% corporate and 16% unincorporated profit tax which makes Hong Kong to be one of the lowest taxed cities in the world which is extremely conducive to business growth. Additionally, with its close proximity to China mainland and Mainland-Hong Kong Closer Partnership Arrangement, Hong Kong presents unique business opportunities.
There is a shifting cultural trend that favors the entrepreneurship. Most residents of Hong Kong consider entrepreneurship as risky. The overall culture is still geared toward being employed by a big corporation till retirement.
Source:
http://www.gov.hk/en/business/taxes/index.htm
http://www.basiclaw.gov.hk/en/index/
Personal knowledge 32. Government Enterprises: 5.0
Hong Kong government has been privatizing most of the government enterprises such as Hong Kong Mass Transit Railway. On October 2000, MTR Corporation Limited was created and listed in Hong Kong Stock Exchange as part of Hong Kong government’s initiative to privatize its public utilities service. In the last few years, Hong Kong government has gradually reduced the number, the sizes and operation scopes of many of its enterprises. Hong Kong Postal Service is one of the few government owned enterprises that is still in operation.
After the privatization of many of the previously government owned enterprises, Hong Kong government posts minimal to no competition in almost all the potential business sectors. Government enterprises concentrated on high capital investment and infrastructure sectors which are not suitable for small to midsize or first time business owners. Therefore, it is unusual to find investors or business owners to be competing directly with government owned or sponsored enterprises.
Source:
http://www.gov.hk/en/about/govdirectory/govchart/index.htm
http://en.wikipedia.org/wiki/MTR_Corporation_Limited#Privatisation
33. International Security Agreement: 5.0
Under the Basic Law, the constitution that established the special political, social and economic status of Hong Kong Special Administration, People’s Republic of China will unconditionally provide national defense to HKSAR. “The People Liberation Army (PLA) is the world's largest military force, with approximately 3 million members and has the world's largest (active) standing army, with approximately 2.25 million members.” (Wikipedia) Even though, PLA might not be the most technologically advanced, however its military superiority is undoubted in the region. Therefore, Hong Kong is very well protected from foreign aggression.
Source:
http://en.wikipedia.org/wiki/People%27s_Liberation_Army
Personal Knowledge
34. Protection for Domestic Enterprises from Government Mandated Costs: 1.0
Hong Kong has adopted a non-interfering philosophy toward business competition. While there are many incentives such as lower tax rate or government backed loans for domestic enterprises, there is minimal government mandated cost toward foreign competitions.
Source:
http://www.gov.hk/en/residents/taxes/index.htm
Personal Knowledge
DISCLAIMER
All the information and conclusions in each country analysis are solely the responsibility of the individual student and have not been verified, corrected, checked for copyright infringement or evaluated in any way by MIEPA or Mike P. McKeever. You are solely responsible for the results of any use you make of the information and conclusions in these studies. Use them at your own risk as interesting supplemental information only instead of seasoned judgements about the policy factors contained herein. Each student has granted permission for his or her work to be displayed here under his or her own name or wishes to remain anonymous and have either created a pen name or used no name at all; if you wish to contact them for any reason, forward your request to MIEPA and the student will be notified of your interest.To learn more about other countries, click to other files here:
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