Asia Finanical Crisis and Economic Change

Asia Financial Crisis gave a terribly blow to Hong Kong economy. Hang Sang Index has fell down by half. And property market was dampened with the result that the amount of bad debt for banks was increasing. Unemployment started to rise up since 1998. It was seen that some big stores were gone bankrupt. The whole economic prospect was distressing.

From then on, Hong Kong government tries to put out different projects to boost up the economy. Two flagship projects are very familiar to Hong Kong People. That is, Disneyland theme park and Cyberport. Disneyland theme park is aimed at strengthening Hong Kong tourism sector while Cyberport establishing an information center for attracting business leaders over the world. This sort of strategic development is expected to widen the source of Hong Kong wealth and subsequently increase the number of employment.

Both projects are created through the cooperation of public and private partnership. In general, the government is responsible for building up sufficient and advanced infrastructure and allocating well-posited lands without charging land premium to multinational companies. The counterpart is responsible for investing, managing and constructing the project.  Both are only concerned about what and how makes the project feasible and financially viable.

The project of Cyberport is taken up by the Pacific Century Cyberwork Corporation, the company which is branched out from Li's family enterprise. The success of this project highly depends on the willingness of foreign companies to set up their regional offices in Hong Kong. Besides, even if foreign companies would set up their bases in Hong Kong, it is doubtful that Hong Kong can become an informational technology center that provides “unique” products or services for the world. Similar to Cyberport, the project of Disneyland is also invested by a multinational enterprise. It is claimed that the new theme park will attract a lot of Asian tourists and thus benefit other small companies and stores attached to Disneyland. The success of this project highly depends on the number of tourists coming to Hong Kong and the amount of money they spent in Hong Kong.

No matter how large a project is, the most important factors to be considered in a project are market demand and market share. Private companies only think about how to satisfy market demands with the lowest expenditure and enlarge its market share as much as possible. No doubt that if the project can achieve the expected result, the government would get the benefits in term of tax and other monetary benefits. Indirectly, it would create a prosperous atmosphere which may encourage consumption and investment.

Nevertheless, the aims of the flagship projects for the government should have different meanings. Apart from generating revenue for the government, the flagship projects are also expected to create a sort of economic development which can stabilize the domestic economic environment and counter against the external influence.

More importantly, they are anticipated to create employment for unemployed or underemployed labor. At least the revenue from the project can be used to finance the retraining programme or create a “self-employment fund”. To achieve those objectives, the most crucial thing is that the government and private companies have to demonstrate the linkage between the project and other non-purely economic goals. Possibly the government could impose planning conditions on development proposals to facilitate linked projects. Of course, in the beginning, the government has to design a local economic strategy which can provide directions for the officials in  creating a diversified and stable local economy, high employment and fair working environment.