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Prepared by Murtaza Syed.
Hong Kong SAR’s ranking fell from 9 to 23 on the public institutions index, reflecting a deterioration on all its components—falling from 14 to 25 in terms of judicial independence, 3 to 15 on property rights and 15 to 32 on government impartiality. In addition, scores on irregular payments (corruption) also fell below Hong Kong SAR’s previous high performance. In a similar vein, the EIU has recently raised concerns about the business environment deteriorating “due to regulatory and political changes after the handover.”
At just over 30 percent, tertiary enrolment rates are well below those in Japan and the other NIEs.
These concerns are echoed in investor perceptions. According to the WEF, for example, nearly a quarter of respondents to their Executive Opinion Survey identify an “inadequately educated workforce” as the most problematic factor for doing business in Hong Kong SAR, compared to less than 5 percent in Japan and the other NIEs. Similarly, the business community has expressed some concerns about the reduced use of English in secondary schools over the last decade.
According to the Civic Exchange (a local think tank), Hong Kong SAR is one of the most polluted cities in the world, with health damaging particulate levels worse than those in Paris, London and New York and more than 200 percent higher than WHO guidelines.
Hong Kong SAR’s ranking in the ECA International Location Ranking Survey for expatriate living conditions plummeted from 20 in 2005 to 32 in 2006, with worsening air quality blamed for the decline.
The WTO (2002) cautioned that “the absence of a comprehensive policy to address anti-competitive practices, and the entrenchment of a few dominant conglomerates in the domestic market, could constitute an obstacle to greater competition from foreign and domestic firms, especially in the provision of services, thereby possibly discouraging FDI.”
Critics argue that since the current competition policy focuses only on business conduct, such as anti-competitive practices and abuse of market power, it cannot deal effectively with structural issues, such as mergers and acquisitions.