Examine ties between gov't and business

Opinion / Liang Hongfu

 Examine ties between gov't and business
By 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@chindaily.com.cn

(China Daily 02/14/2006 page4)

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