The Hong Kong government has decided to suspend the controversial extradition bill following massive demonstrations and clashes between protesters and police.
But the issue’s negative impact on the local economy will not simply go away. First of all, more mainland billionaires may decide to move their money out of the city.
To some extent, the former British colony has become a safe haven for fugitives, which is one of the main reasons why Chief Executive Carrie Lam Cheng Yuet-ngor had tried to push her legislative initiative. But that’s one of the main attractions of Hong Kong.
Mainland China’s legal system remains immature, while there are many gray areas in the economic sector. Businessmen may find themselves in trouble as a result.
That’s why not a few mainland billionaires have obtained citizenship in Hong Kong and moved part of their assets here to diversify the risk.
However, their assets in Hong Kong could be frozen or confiscated under the proposed Mutual Legal Assistance in Criminal Matters Ordinance that forms part of the extradition bill.
That means that upon the request of the central government, the Department of Justice could ask the court to grant an injunction to freeze or confiscate certain assets.
Local tycoons and those from other Asian countries who have assets here are also spooked.
Many billionaires have set up family offices in the city for worldwide allocation of their assets. But they might feel Hong Kong is no longer an ideal destination for such offices and consider moving elsewhere.
Singapore, which also boasts low tax rates, a common law system and a complete wealth management industry chain, is likely to be the biggest winner.
The Hong Kong SAR government pledges that there is no timetable to relaunch the suspended legislation, but Chief Executive Lam insists that she is doing “the right thing” and plans to relaunch the bill after proper consultation.
That is hardly reassuring for anybody.
This article appeared in the Hong Kong Economic Journal on June 17
Translation by Julie Zhu
[Chinese version 中文版]
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