Presents, Hong Kong Government advocates “ large market, little authorities ” policy in order to run into the demand of market with minimal intercession and to back up and advance economic development. ( HKSAR Press Release ) However, many people argue that by making so, authorities non merely switch its duty to public, but besides promote private sector to barbarous competition, eventually lead to increase in unemployment.
One of the unfavorable judgment of authorities ownership is based on the fact that the authorities ‘s aims are multiple and fuzzed and can alter over clip. ( Roland 2008 ) On the other manus, the aim of authorities ownership may non be net income maximization. For illustration, if the society has the demand on recreational installations, no affair the installations can make benefit for authorities or non. The authorities will besides supply those services. Harmonizing to this point, it is good for the society, but the authorities needs to bear in public personal businesss for a long clip.
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Harmonizing to Donald Tsang, Chief Executive, HKSAR ( 2006 ) states that Positive non-intervention was a term used in the yesteryear. In the recent old ages, in order to accommodate the rapid alteration of economic environment and advance economic development, the Hong Kong authorities prefers to utilize “ Large Market, Small Government ” policy, because it is chiefly market control with lower limit or no authorities intercession. Furthermore, Financial Secretary Sir Philip Haddon-Cave said in his 1981 Budget, “ the comparative size of the populace sector in Hong Kong has increased from 16.2 % in 1975 to 21.2 % in 1980 ” ( HKSAR Press Release ) The public sector can non increase the community ‘s resources indefinitely. If the size is continued addition, it will impact the private sector less able to accommodate the rapid alterations in the universe economic environment. Further, several old Financial Secretaries support the free market economic system with maximal support and minimal intercession. ( HKSAR Press Release )
Ho Man-kit, Lion Rock Institute Policy Fellow had written an article knocking the authorities on 13 October, 2006 about 2006-07 Policy Address. He said that policy of “ large market, little authorities ” is more vague than “ Positive non-intervention ” , because usage big and little to compare the relationship between authorities and the market, will misdirect people about the authorities size and readying. He besides pointed out that when formulate or revision policies, little authorities is worse than limited authorities. It can non execute policy straight as the aim of it is little intercession.
Michael DeGolyer ( 2006 ) pointed out that “ The motto of ‘big market, little authorities ‘ is meaningless, because little authorities does non ever compare to good or effectual authorities. ” To develop the economic system, he suggested that suited intercession should be used, because it can guarantee that market kineticss interact without one or the other holding a government-conferred unreal advantage or disadvantage. Some market map can non accomplish a socially coveted aim, positive non-intervention may be required. For illustration, the Mandatory Provident Fund was pay-for-itself intercession to prevent demands by retires on the public bag. ( The Standard 2006 )
Although authorities implements “ Large Market, Small Government ” policy to promote the free market economic system, it still uses intercession if necessary when the market economic system is over active. For illustration, the authorities implemented “ The Capital Investment Entrant Scheme ” on 11 March 2003. Under the Scheme, the foreign investors are required to put at least HK $ 6.5 million in allowable investing assets. Permissible investing assets include investings in existent estate in Hong Kong and specified fiscal assets such as Hong Kong equities. ( PWC ) As the rapid growing of economic system in Mainland China, many people use this strategy to immigrate to Hong Kong. Most of them invest in belongings, therefore they bring the belongings market booming. However, by utilizing the “ Large Market, Small Government ” construct, the market depands on supply and demand, so the higher an point ‘s monetary value, the less demand there will be among clients. ( Exforsys ) Market will set the balance automatically.
As people in Mainland China have a big demand on belongings investing, in order to set the balance in the market, the monetary value of belongings rises repidly. However, the demand of people in Mainland China on belongings market has non decline leads to go on increase in belongings monetary value. Thus Hong Kong citizens are hard to purchase house. To get the better of the job, Financial Secretary John Tsang increases the extra cast responsibility in order to diminish the sum of people speculate in belongings market. To further battle the belongings market, the authorities in 2010-2011 Policy Address has decided to temporarily take existent estate from the investing plus categories under the “ Review of the Capital Investment Entrant Scheme ” with consequence from 14 October, 2010. Furthermore, it increases the threshold of investing for entry to Hong Kong from HK $ 6.5 million up to HK $ 10 million. Harmonizing to revise the strategy from 2010, the figure of people participates in Capital Investment Entrant Scheme bead quickly. ( ??Za ± ) Although, authorities advocators “ large market, little authorities ” policy, intercession is needed when the market economic system is out of control.
Before 1997, Hong Kong authorities uses “ Positive non-intervention ” policy as an aim, because it has an advantage to back up free economic market. In the general state of affairs through this policy, Hong Kong authorities would non seek to be after the allotment of resources in the private sector, and to blockade the operation of market forces. When it had adequate grounds to step in, the authorities would cover with it actively. Although the existent decision was it would be more good if authorities did non step in. ( The Standard 2006 )
In decision, harmonizing to the “ The Capital Investment Entrant Scheme ” , we can see that the market can utilize the monetary value to set the balance automatically, but it still leads to organizing a bubble in the belongings market. If a market without any intercession, it will be out of control. Of class, different state of affairs will take differernt degree of intercession. Although there are many advantage in denationalization, with regulation to command the market is necessary, therefore denationalization with suited intercession is possible manner to back up the free economic system market. And this may be the best manner to get the better of the job of denationalization and authorities ownership.