It's hard for Hong Kong people not to be envious of a Singapore-based startup that was reported to have successfully taken on Uber to become the dominant player in ride-hailing services in the Southeast Asian market of more than 600 million people.

The company, Grab, started out in the Lion City and gradually expanded in the region with a 95-percent share in third-party taxi hailing and 71 percent in private-vehicle hailing, according to a Hong Kong media report. Its investors include Chinese mainland ride-hailing service provider Didi Chuxing and Japan's SoftBank.

The report said Grab plans to raise up to $2.5 billion in additional capital to help secure its lead in the Southeast Asian ride-hailing market and expand into other e-commerce businesses.

Think about this. If Grab were a Hong Kong enterprise, it would have been bogged down, like in Uber's case, by bureaucratic meddling that's serious enough to put off potential investors.

Uber has proved there's growing demand in Hong Kong for its service. But, the US company has been accused of failing to comply with the city's rules that effectively allow only licensed taxis to carry fare paying passengers.

The question is why is it that such a service can thrive in many other cities, including Singapore and Shanghai, and not in the SAR? This has led many people to suspect that the Hong Kong government is trying to protect the vested interests of taxi owners despite widespread complaints about their substandard services.

In so doing, the government is seen to have contradicted its stated policy of nurturing tech startups to catch up with regional rivals, including Singapore. Huge public investments and other resources poured into startups have produced little significant results so far.

Hong Kong has remained a backwater in e-commerce in the region. Online retail, for instance, has failed to catch on in this market. Amazon is almost everywhere. But the US online retail giant has given Hong Kong a pass.

It has always been said the local market is too small to serve as a testing ground for startups. But, Singapore is even smaller and yet it's hosting the likes of Grab. Perhaps, the Hong Kong government should look beyond financial resources and examine if changes in the regulatory framework and tax system are needed to create an environment for startups to thrive.

(HK Edition 07/28/2017 page14)