Hong Kong’s economic freedom is one of the key factors in our tremendous success as a global business hub, and this is a fact that has been widely recognised around the world. So we were somewhat perplexed when the city was removed from the latest ranking by an American organization recently.
Hong Kong had held the top spot in the Heritage Foundation’s Index of Economic Freedom for more than two decades until 2019. In 2020 we slipped to second, just behind our friendly rival, Singapore.
But for this year’s index, the Heritage Foundation stopped treating Hong Kong as a separate economy, and bundled us with Mainland China. This seems to be illogical, as under the One Country, Two Systems framework Hong Kong and the Mainland are two different economies. This is reflected in our separate membership of the World Trade Organization and many international organizations, as well as different currencies, legal systems and tax frameworks.
Hong Kong has not changed in this regard, and we also continue to enjoy free movement of capital, talent, goods and information – surely the very definition of economic freedom. There are also no restrictions on foreign ownership, which makes Hong Kong an extremely welcoming environment for businesses and entrepreneurs from all over the world. Our low and simple tax system includes a competitive corporate tax rate as well as an attractive salaries tax. We also don’t have sales tax, capital gains tax or estate tax, for example, unlike many other economies.
More broadly speaking, our attractions as a global home for businesses remain undimmed. Hong Kong’s legal and regulatory framework, financial infrastructure and intellectual property protection are all world-class.
One Country, Two Systems has been a great success for Hong Kong businesses, enabling us to access investment opportunities in the Mainland as well as its huge consumer market. And right now – with the Mainland already having returned to growth after recovering from Covid-19 – Hong Kong businesses are in a perfect position to capitalise on a new cycle of growth. At the same time, the Greater Bay Area initiative is enabling Hong Kong companies to explore this rapidly growing region just across the border.
Over the past year, our success in preventing a major Covid-19 outbreak has also demonstrated the city’s capacity to deal with a pandemic threat, while avoiding the large-scale lockdowns seen in many other economies.
In short, Hong Kong remains a superb place to do business, with our economic freedoms being a key part of this. Of course, all of our members – and indeed businesspeople around the world – understand that this is the case, and we are disappointed that such facts are being ignored to further geopolitical ambitions. With a brighter future ahead as the Covid-19 threat recedes, we have plenty of reasons to be optimistic about our continued status as a global business hub.