Hong Kong people mostly haven’t had good feelings about Leung Chun-ying, as they see him as a Beijing puppet and a roadblock to political reforms. One solace for the embattled chief executive, however, had been applause from mainland citizens. Now, even that may have been lost.
The reason: Leung’s surprise move to shut the door on immigrants, at least for now, under a special capital investment scheme.
The Hong Kong government announced this week that it was suspending the Capital Investment Entrant Scheme, under which overseas citizens were able to gain residency in the territory by investing a certain amount of money.
The suspension, which took effect a day after Leung delivered his third policy address on Wednesday, sparked intense feelings among mainlanders, who had been the main beneficiaries of the program.
In online forums, Chinese citizens railed that the move marks fresh evidence of prejudice against people from the mainland. They commented that Hongkongers, and Leung himself, are ungrateful after all the support the special administrative region has received from China.
For wealthy people who were considering migrating to Hong Kong, the sudden policy reversal especially came as a big shock.
The scheme to grant residency to investors was first introduced in October 2003 as part of efforts to boost the economy in the wake of the SARS crisis.
The investment threshold was initially HK$6.5 million (US$840,000), before the bar was raised to HK$10 million in 2010 as authorities sought to curb runaway real estate prices.
Mainlanders had been seen as one of the main drivers of property values in Hong Kong in recent years.
The hike in minimum required investment, however, failed to deter applicants under the capital entrant scheme.
One reason is the substantial appreciation of the renminbi against major foreign currencies, which boosted the overseas investment power of the Chinese.
It must be pointed out that the scheme was only applicable to foreign nationals, Taiwanese and mainlanders with the right of abode in a third country. Thus, a mainland applicant must first obtain permanent resident status in another country to qualify for the program.
Figures from the Immigration Department show that within the past ten-odd years to the end of September 2014, a total of 36,344 mainlanders lodged applications and 24,137 of them were granted formal approvals or approvals-in-principle, accounting for almost 90 percent of all approved cases. The scheme has brought in HK$205.8 billion over the same period.
On top of some obvious virtues like Hong Kong’s status as a world city, unrestricted capital flow, safer food, quality education as well as the ease of travel, other factors that make the territory a big draw include easier procedures for people to re-emigrate to North America or Western European countries using their Hong Kong resident status.
Also, since the imposition of “zero delivery quota” for expecting mainland mothers whose husbands are not Hong Kong residents, the scheme has been a workaround for some rich families to give birth to kids in the territory.
Meanwhile, Hong Kong courts’ independent jurisdiction means that a person considered a criminal or suspect in the mainland has a clean slate in Hong Kong. The Four Seasons Hotel in Central is known for being a hub to many of these wealthy mainland businessmen, who use their Hong Kong resident status to stay in the city and avoid being snared by Chinese corruption investigators.
A couple in their 50s from Ningbo, a rich port city near Shanghai, who have poured HK$15 million to emigrate to Hong Kong, told EJ Insight that the mainland is getting increasingly entrepreneur-unfriendly with mounting political uncertainties.
Many of their partners are also considering going abroad and to them, “Hong Kong is the first choice”.
They said that their son is working toward a PhD degree in Canada. With their Hong Kong residency, they plan to move later to Vancouver to enjoy retirement life there.
Now the couple must feel lucky as they just obtained their Hong Kong ID cards at the end of last month. Others, especially those that were still humming and hawing over the decision, have been caught off guard.
People queued up at the Immigration Department in Wan Chai Wednesday afternoon to submit applications before the capital entrant program was suspended.
An immigration consultant told the Hong Kong Economic Journal that around 600 applicants seized the last chance yesterday.
The government has given a grace period for those who have invested no less than HK$10 million half year prior to the suspension so that they can file applications within the coming six months.
Security Minister Lai Tung-kwok noted Thursday that over 12,000 such applications are piling up at the Immigration Department and that it will take more than 36 months to process all the files. In other words, the scheme won’t be re-launched at least in the next three years.
One of the likely outcomes of the policy change is that more mainlanders who graduate from Hong Kong universities will choose to stay in the city after their studies, as otherwise they will find it harder to re-enter the territory.
Some say in this regard that the mainland graduates — who may have already spent two to four years studying in Hong Kong — will gain intangible value as they will only need a few years more to obtain Hong Kong permanent residency.
Meanwhile, there is no denying that the policy U-turn will affect some sectors.
Wen Wei Po estimates there will be an annual economic loss of HK$30 billion as a result of the policy change, with emigration agencies and related financial sectors bearing the brunt.
The local bourse may also see less capital inflow, and high-yield corporate bonds, funds and insurance products could also take some hit.
Banks which had offered tailor-made financial services and packages for prospective mainland immigrants now have to look for other businesses as replacement.
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