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Hong Kong economy updates
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A senior Hong Kong official has admitted that the city’s stringent travel quarantine regime had caused “suffering” for international businesses as executives warned that its reputation as a global financial hub was under threat.
Edward Yau, Hong Kong’s secretary for commerce and economic development, has held talks with representatives from the territory’s business community after the government abruptly revised plans to relax travel restrictions this month.
After indicating that it would significantly ease the bulk of its travel curbs in June, Hong Kong reversed its decision last week, increasing the time that travellers must spend in quarantine from one to three weeks in most cases. The U-turn caused chaos for travellers and a shortage of designated quarantine hotel rooms for people entering the city.
Business groups claimed the reversal, combined with growing uncertainty about when quarantine rules would be relaxed, had prompted some companies to consider relocating.
“There’s no secret or surprise that firms are suffering from Covid travel restrictions both locally and regionally,” Yau told the Financial Times. The Hong Kong government has received “constant concerns [from companies] and very candid requests to reconsider”.
In one meeting, the Asia-Pacific head of a large European company that has its regional headquarters in Hong Kong warned Yau it would shift a substantial part of its business to Singapore, according to one person involved.
The European Chamber of Commerce (EuroCham), one of the largest business lobby groups in the territory, issued an unprecedented letter last week warning Hong Kong leader Carrie Lam that the territory’s strict quarantine rules put its status as an international finance centre at risk.
EuroCham said the city’s newly tightened quarantine regulations could “lead many in the international community to question if they want to remain indefinitely trapped in Hong Kong when the rest of the world is moving on”.
The open letter marked an escalation of tensions between the government and businesses in Hong Kong, where frequent travel has virtually ground to a halt for more than a year.
The anger was stoked when it emerged that actress Nicole Kidman had been granted an exemption from quarantine.
Frederik Gollob, chair of EuroCham, said: “We have been dealing with this status where we can’t freely operate our businesses in Hong Kong for several disturbances and this has gone on for two years now. Now we are at a point where quite some companies are either considering or actually relocating functions.”
Yau said Hong Kong took the complaints “very seriously”. However, he defended the policies, saying the city’s “prime objective” was to balance protecting health with reopening to foreign travel. “We are a very safe city in terms of Covid containment,” he said.
Hong Kong has recorded about 12,000 coronavirus cases since the start of the pandemic and just 212 deaths in a population of about 7.5m. However low vaccine uptake among the elderly and a “zero-Covid” strategy that aims to open the border with mainland China have heightened concerns that a broader reopening would be delayed.
Rival Asian finance hub Singapore, on the other hand, has laid out plans to start a cautious reopening to foreign travel from next month, including a quarantine-free corridor with Germany.
A senior banking industry official, speaking anonymously, said: “It’s going to be very difficult for Hong Kong as an international financial centre if [other] borders remain closed for six to nine months.”
There has been a net outflow of almost 90,000 people from Hong Kong in the past year, the fastest rate since the Sars outbreak in 2003. Private members’ clubs that are popular with expatriates, such as the American Club, have seen a reduction in their waiting lists from about two years to less than a month amid turbulence in the city that stretches back to the 2019 pro-democracy protests.
The American Club, which costs about $60,000 to join, is preparing to shorten waiting lists again if there is an exodus of members, according to people familiar with the matter.
An American executive who spoke anonymously from quarantine after a trip abroad said: “I’ve seen how the rest of the world is operating and now my feelings on Hong Kong’s approach have sharpened. As the rest of the world is getting on with it, you realise this isn’t sustainable.”
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https://www.ft.com/content/3c6bf58a-3291-4760-84a5-d9eb2cb5fd30Tags: businesses, Foreign, Hong, Kong, quarantine, quit, rules, strict, threaten