During a visit to Hong Kong in September, Singaporean Prime Minister Lee Hsien Loong lost no time comparing notes with Chief Executive Leung Chun-ying on a range of issues such as education, housing and public transport.
While being subtle about the long-running rivalry between their powerhouse economies, Lee later said in a Facebook post that Hong Kong is a thriving business and financial hub in southern China while Singapore is doing well in Southeast Asia.
Was he suggesting that Hong Kong’s economic might is now largely confined to China’s backyard?
If so, how does his comment square with Hong Kong’s efforts to project itself as “Asia’s World City”?
Hong Kong and Singapore are both highly competitive.
That is one thing they have in common but that is also where their similarities end.
While Singapore has advanced by leaps and bounds, Hong Kong has largely stalled in the 17 years since the handover. (See chart).
Keeping abreast of our current position is the first step in catching up with our arch rival.
Despite a smaller population, Singapore has surpassed Hong Kong in economic output. Hong Kong officials like to say that the labor market is almost at full employment. Singapore’s unemployment rate is even lower.
Once a predominant shipping hub, Hong Kong lags Singapore in cargo and container throughput.
And while Hong Kong is debating a third airport runway, Singapore is pressing ahead with a fourth terminal in Changi airport.
Standard of living
The chart shows Singaporeans enjoy a higher standard of living than Hongkongers. Their gross monthly income is roughly one-third higher and they live in more spacious homes.
In higher education, our flagship University of Hong Kong has been toppled by the National University of Singapore from Asia’s top spot, according to a ranking by Quacquarelli Symonds.
The Singaporeans’ living standard has much to do with the fact their currency buys more, having risen 30 percent against the US dollar in the past 10 years.
By contrast, the Hong Kong unit has been pegged to the greenback at HK$7.80 since the 1980s.
On a brighter note, Hong Kong’s GDP will overtake that of Singapore in two years, according to the International Monetary Fund.
Experts say Hong Kong’s diminishing economic preeminence is due to some fundamental limitations such as land scarcity and soaring rent but there are other factors, too.
Pang Yiu-kai, chairman of the Hong Kong General Chamber of Commerce, said a string of initiatives in recent years, including a statutory minimum wage (Singapore has no minimum wage) and a competition law, has hurt businesses.
Some complain about having to deal with regulatory barriers which have eroded a Hong Kong advantage — ease of doing business.
Labor shortage is another concern.
Ongoing key projects such as new MTR lines, the Hong Kong-Macau-Zhuhai Bridge, public housing developments, reclamations and other infrastructure programs are exacerbating the problem.
Hong Kong had no more than 2,500 non-local, low-skilled workers as of 2012, a fraction of Macau’s 87,000 during the same period.
The government has been reluctant to relax labor imports due to continued resistance by local labor and social welfare groups.
On the other hand, Singapore has turned its labor policy into something of a winner.
For instance, imported labor helped bring down construction costs, in turn curbing housing prices.
In addition, local workers who are laid off can benefit from a tax on labor importers — about S$750 (HK$4,600) per worker per month.
Hong Kong construction costs have risen fourfold to HK$4,000 per square foot during the past six years, according to the Development Bureau, showing Hong Kong has much to learn from its rival.
Lee’s father, Lee Kuan Yew, first visited Hong Kong in 1958 and since then, the elder Lee has called nearly every year, most recently in 2012.
An article in Singapore’s Straits Times once said Lee has a “lifelong personal attachment to Hong Kong”.
Lee Kuan Yew considers Hong Kong a source of inspiration for Singapore and that his country is indebted to Hong Kong for helping it prosper by its example.
Wistful words but also a powerful challenge from a grateful rival. Hong Kong should take it.
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