Finance industry group ups pressure on Hong Kong to abandon Covid-zero policy, ease restrictions

Hong Kong has some of the most stringent travel measures and has no public plan for opening up to international travellers. PHOTO: REUTERS

HONG KONG (REUTERS, BLOOMBERG) - A financial industry group is ratcheting up pressure on Hong Kong to ease its strict quarantine rules and abandon its Covid-zero policy, warning on Monday (Oct 25) that strict quarantine requirements for international travellers threaten to undermine the city's status as a financial hub.

The Asia Securities Industry and Financial Markets Association (Asifma) said a survey of members, including some of the world's largest banks and asset managers, showed 48 per cent were contemplating moving staff or functions away from Hong Kong due to operational challenges, which included uncertainty regarding when and how travel and quarantine restrictions will be lifted.

Hong Kong has some of the most stringent travel restrictions in the world and is virtually Covid-19 free, however unlike regional rival Singapore, which is slowly reopening its borders, the Chinese-ruled city has no public plan for opening up to international travellers.

Local leaders say their focus is removing restrictions on travel from Hong Kong to mainland China, which also has strict entry restrictions. At present travellers from Hong Kong to the mainland must still undergo quarantine.

"The rest of the world is moving on, and Hong Kong isn't articulating a plan that gives individuals the certainty they need," said Mr Mark Austen, the chief executive officer of Asifma, in an open letter to Hong Kong's financial secretary Paul Chan.

"Some firms are moving operations, it's not a huge amount right now. The longer this goes on, the more difficult it is for firms to keep those positions in Hong Kong."

"Hong Kong's status as an (international financial centre) is increasingly at risk along with its long-term economic recovery and competitiveness as a premier place to do business," he added.

In responses from 30 of its members, Asifma found that some 90 per cent said that operating in Hong Kong has been "moderately" or "significantly" impacted. Almost three quarters of the mostly international firms are experiencing difficulties in attracting and retaining talent, with a third dealing with "significant" challenges.

The letter made a series of recommendations including publishing "a road map for exiting Hong Kong's 'zero-case' based Covid-19 strategy beyond solely the immediate goal of opening borders with China", as well as prioritising vaccinations.

While acknowledging the challenges faced by businesses, Hong Kong Chief Executive Carrie Lam said in an interview earlier this month that even a single death would be a "major concern" and that opening to broader China would also benefit businesses in the city since most are in Hong Kong to access the mainland.

Mrs Lam also said that Hong Kong was doing "very well" as a financial centre while also calling the mainland "more important" than international business.

Hong Kong has reported just more than 12,300 cases since the start of the pandemic, mostly imported, and 213 deaths.

In the letter, Asifma lauded the city's success in suppressing the virus and welcomed an economic recovery that is expected to see gross domestic product expand by 6.5 per cent this year, but expressed concern over its long-term economic standing.

The international financial services sector contributes about 21 per cent of the city's economic output, according to the group. A deterioration of Hong Kong's international status would also undermine China's long-term interests and its push to open its capital markets, Mr Austen said in the letter.

The association called for easing restrictions on travel along key corridors to the US, Europe and UK, where many multinational headquarters are located. It urged the city to set a clear timeline for opening and to detail interim goals and objectives.

The city should phase out restrictions, including the 21-day quarantine, the group said. Other recommendations included limiting the definition of close contacts for imported cases, a sustained emphasis on prioritising vaccination of Hong Kong's most vulnerable and an acceptance that "living with Covid" will eventually be required.

Global lenders are speeding up a relocation of bankers from Hong Kong to China, partly spurred by the tight quarantine strategy, bankers have said earlier.

The strict rules are forcing Hong Kong-based bankers to set aside two to three months on a single trip to the mainland, and limit themselves to three China trips a year to avoid breaching a 183-day stay rule that would make them a resident and get hit by a higher tax rate than what they pay in Hong Kong, they said.

China is now warning that new infections will increase in the coming days after a recent outbreak. The Delta-variant spread has expanded to 11 provinces, further dimming prospects of a border reopening with Hong Kong in the near-term.

Regional rival Singapore is expanding quarantine-free travel to nearly a dozen countries, but the authorities are grappling with how to do so while averting a surge of Covid-19 cases among older people and those with weak immune systems.

Hong Kong has struggled with a reluctance of particularly its elderly residents to get vaccinated. Just below 60 per cent of Hong Kong's population has been fully vaccinated against Covid-19, compared with more than 80 per cent for Singapore.

"The Government must do its utmost to foster informed dialogue and full consideration of the long-term risks to livelihoods if its borders remain effectively closed, in contrast to competing international financial and business centres," Mr Austen said.

"A clear and well communicated timeline for opening may in itself serve as a catalyst for the unvaccinated to get vaccinated."

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