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Hong Kong has maintained its position as the world’s most globalized economy for the second consecutive year, but the city faces challenges in protecting its environment and improving its education system and housing policies, according to the Globalization Index 2011.
The Index’s latest report, jointly conducted by Ernst & Young and the Economist Intelligence Unit based on a survey of 1,000 senior business executives worldwide, shows that Hong Kong finished first in cultural integration and second in openness to trade and capital movements, but comes in 12th place in labor movement.
Agnes Chan, Regional Managing Partner for Hong Kong and Macao of Ernst & Young, noted Hong Kong has benefited from its role as a global financial center and the primary offshore yuan business center, which enables the city to score high in capital movements.
And the fact that the city has been a hot fundraising hub and is home to one of the world’s most active stock markets also helps.
Ireland ranks second in the latest index, followed by Hong Kong’s arch rival Singapore in third place.
Chan predicted that Hong Kong may very well stay in first place over the next several years given its obvious advantages over the other candidates. But only if the government solves some of the most pressing problems that have effectively deterred talents from coming to the city and also discouraged companies from moving their headquarters here such as environmental pollution, lack of school places and housing problems, to name a few.
“Hong Kong should enhance qualitative measures to improve the quality of life to attract talent and professionals as well as facilitate labor and talent immigration. We have to tackle the issues in terms of environmental pollution, the education system and housing policies,” said Chan.
Air quality is a shared concern among the city’s residents. Street-level pollution, which is mainly caused by motor vehicles, has soared in recent years. And power plant pollution keeps the smog around.
But probably more detrimental to Hong Kong’s competitiveness is the lack of international school places that seem to be the most worrying factor for expatriate parents. Chan noted that insufficient school places could undermine Hong Kong’s status as a regional business center, and the government can at least help by allocating land for the development of new schools.
Moreover, Hong Kong is the world’s most expensive place to buy a home due to a short supply of properties, according to Savills Plc. Home prices in the city soared 70 percent from the beginning of 2009 to June last year.