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Hong Kong gears for a comeback

ALTHOUGH in its worst recession for decades, Hong Kong is fighting to keep the crown as East Asia’s premier international business and finance centre.

It still has Asia’s second largest stock exchange after Japan. It is one of the world’s top four gold markets, the eighth largest banking centre, seventh largest foreign exchange market and ninth largest goods trading entity.

Hong Kong still has a well developed private sector debt market and is Asia’s second largest fund management centre.

Hong Kong Economic & Trade Office director Jenny Wallis told a recent Chamber of Commerce and Industry breakfast that the Asian financial crisis had caught the country unawares.

“In 1998 our economy shrank by 5.1 per cent – a dramatic turnaround from 5.3 per cent growth in 1997,” Mrs Wallis said.

Unemployment has more than doubled to 6.1 per cent, wages have been frozen or cut, property prices for residential units and offices have fallen up to 50 per cent and rents are down by the same amount or more.

“While a number of econo-mies have recently shown signs of economic recovery, our GDP in the first quarter of 1999 contracted by another 3.4 per cent. However, modest growth of 0.5 per cent has been predicted for this year,” Mrs Wallis said.

She said the correction allowed the Hong Kong Govern-ment to prime the economy to make the most of the eventual recovery.

“We set out to reform our financial services markets and promote high-tech, high value-added industries,” she said.

“On the financial services side, we are undertaking a major reform of our securities and futures markets including upgrading market infrastructure, modernising the regulatory framework and demutualising and merging the exchanges and clearing houses.

Hong Kong has opened its telecommunications system to foreign players. Mobile phone penetration in Hong Kong is the highest in the world after Scandinavia.

“We are pushing to lead in information technology,” Mrs Wallis said.

“We’ve developed a cyber port, a $2.6 billion facility housing companies developing IT and telecommunications and multimedia.”

Companies such as Hewlett Packard, IBM and Intel have already signed up.

Hong Kong is setting up a science and research institute, a research and development fund and building a science park with incubators for science-based businesses.

Mrs Wallis said Hong Kong was building a theme park near its new airport to further boost tourism. The Disney company has shown interest in running it.

“We’ve had massive infrastructure development; a new port and rail system,” she said.

According to ERG new business development manager Glyn Denison, Australians are well accepted and understood in Hong Kong.

ERG recently installed an automated fare system in Hong Kong’s public transport network using its smart card technology. However, Mr Denison said Australians still had to understand entrenched local customs.

“When we set up our office we had to have a Feng Shui man,” he said. “And in Hong Kong profit is discussed openly.

“Even so, the way business is done in other Asian countries is not the way it is done in Hong Kong.

“Carrying those practices into Hong Kong is not going to work,” he said.

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