American think tank Heritage Foundation released last week the 2012 Index of Economic Freedom with Hong Kong on top of the list. The report is a measure of economic freedom or the ease of doing business in 179 countries based on a 10-point criteria.

Hong Kong was number one on the report based on its overall score of 89.9. It is the 15th consecutive year that the former British colony topped the Index of Economic Freedom that economist Milton Friedman called it the world's greatest experiment in laissez-faire capitalism.

Among the 10 criteria used by the foundation, the Special Administrative Region scored 90 or above in seven, with its highest score of 98.9 for business freedom.

Business freedom was under the subcategory of Regulatory Efficiency. In the areas of labour freedom, Hong Kong registered an improvement with a score of 86.5 while it declined in the area of monetary freedom with its score of 85.8.

Hong Kong logged a flat score of 90, which was constant compared to previous years, for the subcategory of Open Markets, particularly in the areas of trade freedom, investment freedom and financial freedom.

The former Crown Colony also scored 90 in property rights, which is under the subcategory Rule of Law. Hong Kong's lowest score was 84 for freedom from corruption, which is still under the same subcategory, although it was an improvement from previous year's performance.

On the subcategory of Limited Government, the area scored 91 for government spending and an even higher 93.1 for fiscal freedom.

The 2012 overall score of Hong Kong is 0.2 point higher than its 2011 score, making it also the highest ranked Asian economy among 41 nations from the Asia-Pacific region.

"Hong Kong has demonstrated a high degree of resilience during the ongoing global turmoil and remains one of the world's most competitive financial and business centres," the report pointed out.

It cited the SAR's high-quality legal framework to which the report attributed the effective protection of property rights and its strong support for the rule of law as the basis of the strength of the place's dynamic economy.

As a special administrative region of China, the world's second largest economy, the report took note that Hong Kong's economic interaction with the mainland has become more intense and sophisticated, mainly through stronger financial linkages and well capitalised financial markets.

Hong Kong is one of the world's leading international financial centres due to its low taxation and free trade. Air carriers consider Hong Kong a major stopover, while shoppers come in droves because of the wide array of consumer goods available in the city, as well as its being a showcase of Chinese culture and culinary delights.

As a result, the Hong Kong dollar is the eighth most traded currency in the world. Its stock exchange is the seventh largest in the world with a market capitalisation of $2.3 trillion as of December 2009. It also enjoys the title of being the largest centre of initial public offerings (IPOs) in the world after it raised 22 per cent of global IPOs in the same year.

On more specific terms, other groups confirm the continuous high ranking of Hong Kong as a business haven.

The World Bank's International Finance Corporation (IFC), which recently released its Doing Business 2012 data, ranked Hong Kong 5th out of 183 economies for starting a business, 1st for dealing with construction permits and top 5 places for getting electricity and credit, protecting investors, paying taxes, trading across borders and enforcing contracts. The only area where the SAR ranked relatively low is registering property at 57th spot.

Just to give businesses a snapshot of the ease in opening a business in Hong Kong, the IFC report said that it only takes 3 days and 3 procedures at a 1.9 per cent cost of income per capita. In contrast, to open an enterprise in the other Organisation for Economic Co-operation and Development nations, the average is 13 days, 5 procedures and 4.7 per cent cost, and 38 days, 7 procedures and 22.7 per cent in East Asia and Pacific.

Enterprises interested in getting more details about doing business could visit several Web sites that provide comprehensive information. These include Deacon (http://www.deacons.com.hk/eng/knowledge/knowledge_207.htm), IFC (http://www.doingbusiness.org/data/exploreeconomies/hong-kong,-china/starting-a-business), the Hong Kong government portal (http://www.gov.hk/en/business/) and Worldroom (http://www.worldroom.com/pages/wrnhk/business/hk_bus.phtml).

The Australian government similarly has a dedicated section in its Austrade portal for companies and individuals that want to foray into Hong Kong (http://www.austrade.gov.au/Hong-Kong-Doing-business/default.aspx).

One of the global companies that had been doing business in the former British colony is the Hong Kong and Shanghai Banking Corporation (HSBC), which has been operating in the city since 1865.

Experts attribute HSBC's success in Hong Kong to its long-term corporate ties which helped the bank, now headquartered in London, to win IPO work. In 2011, HSBC share of the IPO market in Hong Kong was 7.7 per cent, second to Goldman Sach's 9.9 per cent.

"We focused on consumer retail as it's a sector ripe for growth and investors love it.... When we pitch for deals, we offer a one-stop shop covering advisory, financing, commercial banking, global markets and retail banking," Bloomberg quoted Alexis Adamczyk, co-head of HSBC's Asia Equity Capital Markets.

Emphasis on consumer companies was the reason why HSBC increased its share of Hong Kong's IPO market despite the 60 per cent contraction in 2011 of that market as a result of the slowdown in China's economy that dragged down share prices.

Amid forecasts of declines in IPOs in 2012 as a result of the ongoing European debt crisis, David Paine, head of HSBC's equity syndication for Asia, said it has to take advantage of small windows of opportunity through perfect timing.

However, among many Chinese businesses besides perfect timing, there is also the Chinese system of improving their luck through feng shui which involves the positioning of objects and predicting fortunes using dates and traditional Chinese text.

The role of feng shui would be highlighted as Hong Kong and many part of the world observe and celebrate the Chinese New Year on Jan 23.

RELATED STORIES