Amid a sluggish external environment, Hong Kong’s goods exports remain under immense pressure, resulting in weaker-than-expected economic recovery. Adjustments to the “harsh measures” for the property market in an orderly manner will help stimulate property transactions.
HKSAR Government data in August showed that the total volume of goods exported decreased by 14.7% year-on-year in June. Comparing the first half of 2023 with the same period in 2022, the plunge was even steeper at 18.7%. Exports constitute one of the “three locomotives” that drive the city’s economic growth. With the external economy weak, a radical turnaround is not in the cards soon.
On top of that, factors such as the raft of investment restrictions imposed by the United States on China as well as global geopolitical tensions are hindering Hong Kong’s return to economic normalcy.
The Government submitted its application for accession to the Regional Comprehensive Economic Partnership (RCEP) last year. As the world’s largest free trade agreement, RCEP serves to gradually reduce tariffs on goods as well as facilitate the flow of trade, investment and people within the region, while alleviating geopolitical risks.
Chief Executive John Lee recently went on a mission to three ASEAN member nations – Singapore, Indonesia and Malaysia – to bolster support for Hong Kong’s inclusion in the RCEP, which we should successfully join. If realized, membership will help bring in businesses and investment.
Attracting enterprises and talent is a necessary step for Hong Kong to sustain long-term economic growth. While Financial Secretary Paul Chan recently announced that more than 25 tech firms will set up or expand their operations in Hong Kong, a slow remedy does not address immediate needs. As such, quick-win measures should be introduced to offer emergency relief to the economy.
The property market in Hong Kong also took a hard hit during the pandemic, with transactions remaining low. Indeed, a robust property sector is conducive to the flourishing of various sectors, thereby boosting economic growth. Harsh measures, such as the Buyer’s Stamp Duty and Double Stamp Duty, have been in place for some years to curb the demand for properties. As market conditions have changed considerably since they were introduced, it is time to review their implementation.
Given that Hong Kong’s economic recovery is not as strong as originally projected, the property sector needs to be stimulated by making orderly adjustments to harsh measures to release purchasing power. Otherwise, a prolonged downturn in property prices will only cause buyers to take a wait-and-see approach and discourage them from entering the market, resulting in a vicious cycle.