Ranking Hong Kong as the world's freest economy for the 22nd year in a row, Heritage Foundation of the United States has greatly boosted confidence in this city that is facing what could be the greatest economic challenge since the outbreak of the Asian financial crisis in 1997.

This affirmation from one of the most influential think tanks in the US shows that "the determination of the Hong Kong SAR government to safeguard economic freedom is beyond doubt", according to Chief Secretary Carrie Lam Cheng Yuet-ngor. She said the government recognized "the free market principle is the cornerstone of our sustained economic development and prosperity".

That principle has been called into question in recent years by some politicians and many social activists. They have been pressuring the government to take a more active role in addressing the issue of income inequality, which has become a major source of public discontent. These lobbyists have argued that the majority of Hong Kong people have been let down by the free market which works only for the minority rich.

The government responded by mounting a massive housing program to increase the supply of affordable homes, and openly declared it was abandoning the traditional economic guiding principle in favor of one it described as "judicial pro-activism".

Meanwhile, the debate on the government's role in wealth distribution was brought to the forefront of public attention by the government-initiated consultation on the proposed universal pension scheme. In the consultation paper, the government emphasized that the proposed scheme would be financially unsustainable without raising taxes. The alternative is to include a means test that would limit the beneficiaries to those most in need.

The business sector has always maintained that any encroachment, such as higher taxes or government intervention, would distort the functioning of the free market. This, they argue, would be damaging to the economy by undermining Hong Kong's unique advantages and investor confidence - of particular significance at a time when the Hong Kong economy is facing such challenging economic times.

The affirmation from the Heritage Foundation is, therefore, a timely reassurance to potential investors around the world that Hong Kong is still one of the best places to do business.

(HK Edition 02/03/2016 page7)