My Take | The industries that have set Hong Kong on fire

‘Regulatory capture’ of government by finance, insurance and real estate sectors has plunged city into chaos and misery

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Fires burn during a protest in the Causeway Bay district in Hong Kong. Photo: Bloomberg

Published: 9:00pm, 20 Sep 2019Updated: 10:26pm, 20 Sep 2019

You learn something new every day. FIRE, which stands for finance, insurance and real estate, is a useful acronym for the devil hiding in plain sight!

If you ask me what has plunged Hong Kong into such chaos and misery, I would say it has less to do with the lack of democracy and Beijing’s interference. Rather, it’s the “regulatory capture” exercised by FIRE over the government.

Our top officials are brought up in a neo-liberal free-market ideology. By training and inclination, they lack the knowledge and skills needed to develop proper regulatory regimes to protect the public. FIRE may underpin our financial hub status, but at what an extraordinary high cost! Belatedly, perhaps looking for others to blame, Beijing is finally targeting our property tycoons and their family businesses.

No less than three state-owned news organs, Xinhua, People’s Daily, and Global Times, have recently singled out unaffordable housing as a “root cause” behind the city’s crippling political crisis. They openly call on the Hong Kong government to boost housing by seizing land being hoarded by developers.

That’s a start. But it’s not just the property honchos. Consider some recent examples. Last year, the semi-official Hong Kong Mortgage Corporation introduced an annuity scheme for old people.

The initial lump sum starts at age 65 and ends at 80, if no additional payments or income are added. Hong Kong people live to an average age of 84. It has been calculated that to cover those four years, the industry only needs to generate no more than an annualised 3 per cent earning on capital to cover the cost; the rest is pure profit! However, for elderly customers, it offers low returns and payments relative to other investments, say, government bonds, as well as being unprotected against inflation.