HK keeps `freest economy’ title

The Hong Kong government will invest HK $22.45 billion (US $2.9 billion) to Disney’s mere HK $2.45 billion to develop and build the new theme park, aimed at creating a tourism magnet.

Hong Kong was also marked down for its decision to allow the Pacific Century CyberWorks development rights to a high-tech project without opening it to the usual competitive process, the foundation said. Pacific Century is controlled by Richard Li, the son of powerful property tycoon Li Ka-shing.

"These things are viewed with concern" Gerald O’Driscoll, senior fellow in economic policy at the foundation, told a news conference. Whilesuch incidents of "industrial targeting" could not yet be regarded as systematic, he warned that they would affect Hong Kong’s ranking if they became more frequent.

"When you start doing this kind of thing, more often than not, you start having issues of corruption move in. You show favouritism and they start showing up in corruption measures."

Hong Kong’s number one title came as a surprise as the foundation had warned last year that the government’s massive intervention in the stock and futures markets in 1998 could knock the city off the top spot. But Edwin Feulner, president of the foundation, said the government’s efforts to dispose of its stock holdings had helped it retain the top ranking.

"We are very pleased that the Financial Secretary (Donald Tsang) and the government have begun the sell-off of these shares…and the sales are being conducted in an orderly fashion," Feulner told a news conference.

Welcoming the title, Tsang told reporters the government was committed to disposing of asignificant portion of its stockholding over time, but denied suggestions of favouritism. "There is no question that the government would favour one section of the economy over another," Tsang said.

"We are, however, conscious of our responsibility to provide the necessary infrastructure in response to market demands, especially those arising from the ongoing shift to a knowledge-based economy," he added.

Singapore, while keeping its number two slot, had fallen slightly because of its increase in income tax and large public-sector investments, it said.