Quarantine rules threaten Hong Kong’s competitiveness

Mark O'Neill October 11, 2021 08:57

The severity of Hong Kong’s quarantine restrictions and the lack of a timetable to phase them out is threatening the city’s role as a centre of Asia-Pacific operations of foreign companies, the European Chamber of Commerce (ECC) warned.

Under current rules, visitors arriving here, including those fully vaccinated, must quarantine in a hotel at their own expense for two-three weeks, depending on their country of origin.

Frederik Gollob, chairman of ECC, said that those who worked for the chamber’s companies needed to meet clients and visit the supply chain of the companies producing their goods.

“The companies and their staff have reached boiling point. They are considering whether to reduce their presence in Hong Kong. The Chamber hopes that the government will publish clear regulations, then relax the quarantine restrictions,” he said.

The firms are unlikely to leave Hong Kong completely but are considering whether to move functions elsewhere, he said. Hong Kong and China operations must remain here, but there are many choices for Asia-Pacific operations, like Singapore and Seoul, where business travellers can stay for a short time without quarantine.

Gollob said that the Hong Kong government should give a schedule for reducing the quarantine, so that companies can make clear plans.

Earlier this month, after the government had held talks with the mainland on the issue, an official said that it may take four-five more months of negotiations to secure quarantine-free reopening.

Last Thursday Gao Fu, chief of the Chinese Centre for Disease Control and Prevention, said that moving to consider Covid-19 as an “endemic disease” – as Europe has done – would take a major switch.

“We are not ready yet to claim Covid-19 as endemic, because at the moment it is still pandemic. It still causes very high fatalities and, psychologically, our public are not ready,” he said.

This means that Hong Kong’s regulations depend on those made in Beijing and no relaxation is likely in the months ahead.

Foreign companies argue that the situation in Hong Kong is not comparable to that of the mainland. This is a city of only seven million which is able to close its borders, not the world’s most populous country whose citizens have the right to travel where they wish.

Singapore, the main rival of Hong Kong as an Asia/Pacific centre for foreign firms, has chosen a different path. It has negotiated quarantine-free travel lanes with 11 countries, including the U.S., Britain, Germany, France and South Korea. Visitors from these countries who have been vaccinated only need two tests, on arrival and departure. This is the kind of access which foreign chambers of commerce in Hong Kong would like.

For the thousands of foreign companies here, the epidemic is, with the National Security Law, the most difficult problem they face.

It is both a business and a personal issue. Their staff want to go home to see their families, visit the schools of their children, attend marriages and funerals and maintain their personal networks at home. They must also report to head office. The quarantine rules also deter new staff from wanting to come here.

Last Thursday, InvestHK said that, as of June 1 this year, there were 9.049 overseas companies with a presence in the city, 24 more than a year earlier. The number of mainland entities increased by 94, up nearly five per cent, to 2,080. In total, they employ 473,000 people.

The city lost 10 companies from Japan, 16 from the U.S, four from Singapore and 42 from other jurisdictions.

Of outside firms, those from the mainland rank first. Then Japan with 1,388: U.S. with 1,267: UK with 667 and Singapore with 449.

On Thursday, Edward Yau, Secretary for Commerce and Economic Development, said that, in the same period, the number of start-ups here reached a record 3,755, an increase of 12 per cent over a year earlier.

“These two figures show that Hong Kong remains a very attractive place for many foreign firms to develop their trade and commerce,” he said.

A European lawyer said the red lines for foreign firms were financial security, the ability to move money freely to and from Hong Kong, no exchange controls and retaining the freedom to access the Internet they enjoy now.

“The government has the power to freeze the assets of companies. Foreign firms are also afraid of being caught between financial sanctions imposed by both Washington and Beijing. It may be impossible to comply with the requirements of both governments. This would put the companies in an extremely difficult position,” he said.

Earlier this month, Financial Secretary Paul Chan Mo-po said that there was no schedule to incorporate the mainland’s anti-sanctions law into Hong Kong’s legislative framework.

“There is no definite timetable for this,” he said. In June this year, the NPC passed the law which allows the authorities to seize assets from entities that implement sanctions against China and hold businesses liable if they refuse to help Beijing carry out countermeasures.

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Mark O'Neill

A Hong Kong-based writer, teacher and speaker.