CPA Australia, one of the world’s largest professional accounting bodies, has released a report which reveals that Hong Kong-based members are concerned about the region’s competitiveness with 56 per cent of respondents expecting it will decline in 2017. Respondents believe that Mainland China and Singapore are the markets that are challenging Hong Kong’s competitiveness the most.
Thus, members of CPA Australia encourages the SAR government to provide even greater support to spur businesses and entrepreneurs to undertake innovation in Hong Kong.
The recommendation follows the release of economic sentiment survey data from CPA Australia that reveals strong support for the government to take further action to ensure Hong Kong’s position as one of the world’s best places to do business is maintained.
Alex Malley, chief executive of CPA Australia, says the results from the annual Hong Kong economic sentiment survey show there is a real appetite for reforms to improve Hong Kong’s impressive international competitiveness.
“The Hong Kong government showed in this year’s Budget that it has a real commitment to generating long-term growth through strategic investments in innovation, research and development, education, airport development and the logistics industry.
“With its increasing integration into the Mainland’s economy, business-friendly environment, low taxes, well- developed capital markets and a large pool of professional talent, Hong Kong is very well placed to build on its reform agenda,” Malley said.
Low growth expectations
Jeffrey Chan, Divisional President 2016 Greater China CPA Australia said the survey results also show that low growth expectations for the Hong Kong economy in 2017 are another reason the government should take action to improve Hong Kong’s competitiveness.
“With 58 per cent of respondents forecasting that Hong Kong’s economy will remain the same or will grow less than 2 per cent in 2017, actions to improve Hong Kong’s competitiveness are needed to provide an important boost to the economy.
“In the context of the global economy underperforming, it is not surprising that confidence in the Hong Kong economic outlook is not high. However, Hong Kong’s economy has proven to be very resilient in the past and we don’t expect this low level of confidence to last."
The main drivers of Hong Kong’s growth in 2017 are expected to be growth in the Mainland’s economy, low interest rates and major infrastructure projects like the Hong Kong-Zhuhai-Macao Bridge and the Western Kowloon Cultural District.
Meanwhile, respondents identified the political environment as most likely to have a negative impact on the economy. E-commerce, healthcare and IT/technology are the industries that are viewed as having the highest growth potential.
The low growth expectation is also expected to impact employment with 61 per cent of respondents expecting their employer to either keep their headcount the same, or make cuts.
The low growth environment is also expected to hit salaries with 70 per cent of respondents either expecting their salary to remain the same or increase by less than 3.5 per cent.
Respondents are also worried that the current environment will impact their chances of finding a new job with respondents being significantly less likely to believe they will actively seek to change employers in the next 12 months than not.
“Taking further action to make the Hong Kong economy more competitive will not only boost growth, it will have positive influence on employment, salaries and career advancement opportunities,” Chan adds.
Other recommendations to improve Hong Kong’s international competitiveness include:
- Take further action to attract more multinational corporations to set up regional headquarters in Hong Kong
- Provide greater support for businesses to undertake Fintech activity in Hong Kong
- Provide greater support for Hong Kong businesses to undertake research and foster innovation
- Provide more information to SMEs to improve their understanding of the Belt and Road initiative and the opportunities it will create.