The property market is a case in point. As part of its social welfare programme, the Hong Kong government has control of housing policy and has generally sought to subsidize housing so that most citizens enjoy a minimal level of acceptable housing.
Not everybody favors this situation however. Some believe that it has resulted in a depressed housing market, with market forces better serving the needs of the population.
One man who would like the government to loosen its grip on the property market is Franklin Lam, UBS Warburg's respected head of Hong Kong equities and regional property research.
Lam believes government policy is singularly responsible for keeping property prices down since the Asian financial crisis. "Hong Kong does not need a housing referee because demand and supply mechanisms get round planning problems," he says. "The government has set a target of 70% home ownership which could be achieved a lot earlier without guidance. You do not need to tell people what to – this creates uncertainties because people have to second guess what the government is trying to do."
Although there is clearly an upside to lower prices in that more people should have access to buying homes, Lam sees property as one of the key components of an individual's personal wealth. In accordance with that view, low house prices have not been beneficial to adding to the wealth of Hong Kong people.
Lam also believes that removing the restrictive housing policy will make the market buoyant once more. "If you look at the only other factors that can affect the market, they would be positive in aiding the recovery," he asserts. "GDP is growing, job security is stable, and incomes are rising so people should have more money to spend on houses. Why aren't they doing that? They are not doing that because of government policy."
As for the argument that relaxing controls will lead to the 'Brooklynisation' of Hong Kong – the belief that, left to their own devices, property developers will build lower quality homes than what has been created by public sector policy – Lam finds that almost laughable.
"They [the government] talk about turning Hong Kong into Brooklyn. Look at the area from mid-Kowloon to East Kowloon – that isn't a nice area and it is all public housing so they shouldn't take the moral high ground. If they want Manhattan, they should give it back to the people and the developers to decide."
