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COVER STORY June 2003 Issue
 Meet the New Chairman
For a man who spent a number of his childhood years in France and Germany, laid the foundations of his career in Japan and Saudi Arabia, and visits Singapore, Malaysia and Indonesia almost monthly, the Chamber's newly elected Chairman, Anthony Nightingale, says there is no place like Hong Kong. The Bulletin Editor Malcolm Ainsworth spoke with the new Chairman about his career, Hong Kong's economic prospects and the current challenges the territory faces. Following are excerpts from that interview. THE BULLETIN: You are a bit of an international nomad, having lived and worked around the world. When did you first come to Hong Kong? And where do you call home? ANTHONY NIGHTINGALE: I first came to Hong Kong in 1969, straight out of university at the age of 21, to start work at Jardine Matheson. I worked in Japan for most of the 1970s, and for five years in Saudi Arabia in the mid-1980s. As a child, I also lived in France and Germany as well as the U.K., but Hong Kong is the place that I call home. I've now lived here longer than I have lived anywhere in my life. I'm very happy here. Has living in so many countries been a challenge? I think I have been very lucky in my life and my career in that I have had the opportunity to live in and travel to many places. I do think, because of my experience, I am fortunate to have a very broad international perspective and I am exposed to and see how a lot of people internationally view Hong Kong. And I also have the opportunity through my international connections to try to promote a more balanced view of Hong Kong than sometimes is portrayed in the world media. Obviously, the biggest challenge facing Hong Kong today is SARS. What do you think of the government's recently announced measures to help companies get through this SARS crisis? The government's recently announced economic relief measures for companies being badly affected by the SARS crisis, many of which were submitted to government by the Chamber, have been welcomed by business. But if there is one area where I think Hong Kong could have been a bit more generous is to airlines and the operators at Chek Lap Kok, and my understanding -- from the Chamber's Economist -- is that certain countries have been more generous in that respect. But that is a small, as it were, complaint against the background of generally being satisfied with the government's economic relief measures. The government has not done much on crisis management and PR work internationally. Is this something that should be left until later? At the moment, it is quite good news the way that Hong Kong has got its arms around this problem and the number of new cases have fallen dramatically. But instead of the focus on that, you quite often see in the international media the fact that the number of deaths have risen, or that there is a fear that people who have had SARS will have their lungs permanently damaged, and that sort of thing. So if one is not careful the bad news tends to get emphasised rather than the success stories. So I think more work should be put on promoting the positive side of what Hong Kong has been achieving. The third point that the Chamber is calling for is a proper re-launch of Hong Kong, involving short-, medium- and long-term strategies. The Chamber on May 12 prepared a paper for government [see page 24] to get the ball rolling with ideas on how this should be carried forward. Do you think the SARS relief measures may over the short-term exacerbate the budget deficit? The Chamber is totally in favour of the government's initiatives. When you have a crisis, you have to turn to it and manage that as best you can. There is a time to save and a time to spend, but that doesn't take away the fact that over the medium-term we have a serious problem with the budget deficit. The whole community has been calling for the government to focus its efforts on trying to bring its expenditure -- particularly recurrent, as opposed to public works expenditure -- into line to improve the budget deficit. But I would add two more things. One is Hong Kong does need to broaden its tax base, because it is reliant now on too narrow sources of taxation -- I think everyone generally would agree with that. So although target one is to reduce government expenditure, target two is to look for the right ways to broaden the tax base. I think Hong Kong could be more creative than it has been in pursuing private finance initiatives (PFI), which should not be confused with privatisation. Although privatisation is another way of managing the deficit, PFI involves getting the private sector to fund projects which, historically in Hong Kong, have been paid for by the government. PFI has been used to great effect in the United Kingdom and I think Hong Kong could look more actively at PFI as a way of reducing government expenditure. Why do you think the government has not aggressively pursued these options? Changing government policies is never an easy or quick thing, because there are a lot of different voices and entrenched thinking in any civil service, not just in Hong Kong. Community views also have to be considered. The community is very divided on bringing in a sales tax, because nobody likes to pay extra taxes, and everybody realises that a sales tax should not be introduced at a time of economic downturn. But at the end of the day, the community understands that Hong Kong must find some way to broaden its tax base. The Chamber's view, regarding the sales tax, is the government should study and set up the mechanism to get into place a sales tax, because our understanding is it takes two or three years to set up. But it should not be implemented at a time when the economy is weak, and government should not implement a sales tax until it is convinced that it has done everything that it can on the cost reduction side. Hong Kong seems to have been pummelled by crisis after crisis over the last few years -- deflation, recession, falling property prices and now SARS. Do you think we are getting to the end of the tunnel? One reason, not the only reason, for some of the difficulties Hong Kong has been going through was the over exuberant property market in the run up to 1997, which helped drive up inflation, including very high wage inflation. As a result, property prices and wages in Hong Kong were out of line with much of the region, and therefore the territory was becoming increasingly expensive and un-competitive as a place for businesses to operate. The flip side of that was, because land prices were so high, the government was able to collect huge amounts of money from land sales, which made its fiscal position look very good, even though that revenue was not recurring and constant in nature. I think the hangover that came from that is where property prices have gone down, and wages have stayed fairly constant, or in many cases take home pay has actually decreased over the last few years. The plus side of that is it gradually does make Hong Kong a more competitive place to operate. The minus side to that, of course, is the feel-bad factor in people's thinking when they are considering whether to go out and consume or not. So Hong Kong needs to reach equilibrium where residential property prices and wage levels are relatively stable. At that point, providing Hong Kong is functioning well, apart from consumer spending, there should be a significant improvement in mood. Do you think we'll see a return to the boom years of the 1990s? Over the medium term, I think Hong Kong will continue to enjoy good growth, albeit not the growth of the boom years of the late '80s and early '90s, because the economy has moved onto a more mature phase. Moreover, although the property market is an important sector of the economy, we need to ensure that it is not a dominant sector, which in some senses in the past it became. Some businesses feel Hong Kong is finished and they are moving shop to Mainland China. Do you think Hong Kong's importance will diminish as cities such as Shanghai continue their rapid grow? Concerns that cities on the Mainland will retard Hong Kong's prospects are an over reaction. Hong Kong derived investment in China is immense and provides huge opportunities for Hong Kong businesses. Manufactured goods in China passing through Hong Kong attract services and contribute substantially to Hong Kong's economic output. At the same time, certain Chinese cities and regions want now, very reasonably, to do the sort of things that Hong Kong traditionally did in the past and therefore compete with Hong Kong. That is both natural and not wholly a bad thing, because it does force Hong Kong to keep on its toes and become more competitive in those sort of activities. And what about the concern that Shanghai will surpass Hong Kong as the main gateway to China? I think that is not true. When you look at a city like Shanghai, and you see the huge growth there, in some ways that does remind one how Hong Kong was in the '70s and part of the '80s. But the fact remains that Hong Kong has today a relatively high standard of living, excellent professional skills and a great infrastructure. It still maintains tremendous advantages over other cities around the world, not just in the Mainland. Do you think the SARS outbreak will cause society to put more emphasis not just on high economic growth, but also on a clean environment, and the quality of life here? In some regards, this already started to happen, as the whole community has shown how it can unite, not just behind the medical sector, but also in cleaning up the city and in the number of organisations that have sprung up with a charitable purpose. More should be done to get news of these moves across internationally, and what the real situation here is like. Then the sooner we can all get back to business as usual. |
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