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DECEMBER 1 , 2000 VOL. 26 NO. 47 | SEARCH ASIAWEEK

Curb Hong Kong's Cartels
Both consumers and investors would benefit

ALSO:
APEC
A growing digital divide is threatening the region's prosperity. Bridging it requires some basic investments

When is a monopoly not a monopoly? When it operates in the world's freest economy. This Hong Kong paradox is overdue for a rethink. According to the latest ranking by the Heritage Foundation think-tank, the SAR tops the world in economic freedom — ahead of Singapore, Australia and the U.S. Yet the International Monetary Fund recommended last week that Hong Kong draft laws to curb anti-competitive behavior. "We continue to hear concerns about the limited degree of domestic competition, particularly in the non-tradables sector," said the Fund. That follows a European Union report citing the dominance of companies owned by tycoon Li Ka-shing and his family.

The IMF has a point. The Hong Kong government says that it has long promoted competition in local markets. It points to the recent opening of the telecoms and broadcasting sectors. But in other areas, monopolies are blatantly obvious. Petrol, diesel and gas are controlled by a handful of suppliers. Two big chains dominate the local supermarket scene. In the legal sector, fees are set by the Law Society. And a single company controls the distribution of 82% of the live pigs consumed locally.

Hong Kong is already a high-cost center, and monopolies help keep prices up. Result: unhappy consumers and investors. Unless anti-competitive behavior is addressed within a legal framework, the SAR will become a less attractive place in which to do business and to live.

Write to Asiaweek at mail@web.asiaweek.com

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