Brain drain solution is staring Hong Kong in face

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The Chinese national flag is seen in front of the financial district Central on the Chinese National Day in Hong Kong
The Chinese national flag is seen in front of the financial district Central on the Chinese National Day in Hong Kong, China October 1, 2022. REUTERS/Tyrone Siu

HONG KONG, Oct 19 (Reuters Breakingviews) - Solving Hong Kong's brain drain problem need not be complicated. Leader John Lee hopes lower property taxes and a new visa scheme will persuade foreign talent not to move to destinations like Singapore. But it's piecemeal stuff and ignores what's easily the biggest cause of foreigners fleeing: the city's increasingly nonsensical Covid policy.

The net outflow from the financial hub since the start of the pandemic stands at more than 200,000 local and foreign residents; more than half of that exodus occurred during the 12 months to the end of June. As a result, Hong Kong's mid-year population dipped 1.6% to 7.29 million - the steepest year-on-year drop on record. In contrast, rival banking and investment centre Singapore notched up a 3.4% increase over the same period.

Officials are understandably worried. An August survey conducted by the Hong Kong Investment Funds Association, which counts fund managers abrdn (ABDN.L) and BlackRock (BLK.N) as members, showed that two-thirds of respondents found it "difficult" and "extremely difficult" to attract and retain talent for global and regional roles while over half said that they had been adding head count elsewhere. The city's labour force is shrinking, with the 20- to 24-year-old cohort plunging an alarming 15% in the second quarter from a year earlier.

As part of a raft of new policies announced on Wednesday, Lee unveiled a new two-year visa scheme targeting highly paid workers and graduates from the world's top 100 universities. Non-residents are also eligible to apply for a refund of the extra stamp duty paid for buying property in Hong Kong once they become a permanent resident. Certain sectors will have more flexibility to hire overseas, and bureaucratic processes like visa renewals will be streamlined.

Those are all nice to have but are just tinkering at the edges. Even as daily life and travel return to normal from Singapore to London, Hong Kongers are still subject to a myriad of rules that even health experts deem to be ineffective. That includes having to “self-monitor” for three days on arrival - the so-called "O+3" inbound travel arrangement - arbitrary caps of 12 people per table in a restaurant, six in a bar, 240 attendees in a banquet, and 30 in a tour group; indoor and outdoor mask mandates; enforced isolation for positive cases; and mandatory testing to go to schools, bars and other places. Lee may be ignoring them, but the main policy solutions are staring him in the face.

The territory's decline in population is picking up pace

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

Hong Kong Chief Executive John Lee on Oct. 19 delivered his inaugural policy address.

Editing by Antony Currie and Thomas Shum

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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Robyn Mak joined Reuters Breakingviews in 2013. Previously, she was a Research Associate for the Global Policy Programs at the Asia Society in New York where she focused on US-Iran relations, US-Myanmar relations and sustainability issues in Asia. She has also worked as a researcher at the Carnegie Endowment for International Peace in Washington DC and interned at several consulting firms, including the Albright Stonebridge Group. She holds a masters degree in international economics and international relations from the Johns Hopkins School of Advanced International Studies and is a magna cum laude graduate of New York University.

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