Crisis in Hong Kong could be to our benefit
TLDR; build a second pillar of international business in Bermuda by providing economic refugee status to Hong Kong business owners in finance, insurance, trading and logistics who relocate their headquarters to Bermuda to escape the ongoing constitutional crisis with Beijing
The year 1997 was a turning point: Britain finally decided to relinquish control of Hong Kong to China, but only under a specific set of rules and a 50-year timeline. Until 2047, Hong Kong was to be self-determined with its own systems of capitalism, currency, legal, legislative, human rights and other freedoms experienced in the Western democracies.
This is all about to change.
For more than a year, news from around the world has picked up a constant stream of protests and sometimes violent incidents between protesters and Beijing-backed police forces. More recently we’ve also seen pro-Beijing politicians use physical force to successfully take over democratic committees in the legislative council.
The Chinese Communist Party’s intent is clear: Hong Kong is being forced to convert to communist state control nearly three decades early.
Whether you agree or disagree with the Chinese economic model, it is clear the “one country, two systems” solution is on its way out, and not in the favour of Hong Kong’s free market or its citizens, who are used to the freedoms, trading status and wealth that came with it.
Follow any media outlet and you will also see political and trade tensions rising between the Western world, particularly the United States, and China on a weekly basis — this is likely to get worse before it gets better and I believe Hong Kong will become a proxy.
“The US has certified that Hong Kong is no longer politically autonomous from China, a move that could have far-reaching consequences on the special trading status the former British colony has with the US.” — Secretary of State Michael Pompeo (May 27, 2020)
What we do know is that Hong Kong pre-2019 had the second-highest economic freedom score after Singapore — another city-state Bermuda has considered modelling after — along with one of the most prosperous international business sectors in the world, with total gross domestic product in the range of $400 billion.
Bermuda, in contrast, is in a dire economic state with an even worse outlook, thanks to a decade of decline and now the Covid-19 situation. Total public and private debt of $4 billion-plus is starting to hurt.
What we need is an injection of outside capital not just in the short term, but in the medium and long term to improve economic sustainability. We need another pillar of international business.
Why is Hong Kong such a great option and what are the similarities?
• A few of the main industries that support Hong Kong’s economy are: finance, insurance, and trading and logistics, which extremely complimentary to Bermuda’s existing international business infrastructure
• Many of Bermuda’s (re)insurers and law firms already have branches in Hong Kong, making the outreach and transition much more effective. This would also be a great way to grow our existing access to the massive East Asian markets and funds, where we are only now scratching the surface
• Those businesses who cannot operate under the future state-controlled Chinese Communist Party model will need to make contingency plans: many will be seeking options with a one-foot-out-the-door strategy in the short term. Bermuda is a perfect place for this headquarters reorganisation, or simply a second office close to North America and Europe
• The businesses being attracted will be exempt and, as with other exempt industries, can be mandated to have at least a 20 per cent Bermudian workforce. They will also be renting offices and apartments, buying houses, groceries, air conditioning, etc
• Hong Kong operates primarily under English common law — Bermuda does as well
• Citizens of Hong Kong speak English — 46 per cent overall, but most in the international business arena — and the majority have been through some of the world’s best educations systems. Bermuda could use a more diverse personal connection to Asian economies, and this would certainly help
• Cayman has already taken so much of our Asian legal business, the majority of which used to be ours, and have laid a foundation to increase their share — Bermuda needs to do the same
• 315,000 Hong Kong citizens are already British National (Overseas) passport holders, and all of them were British citizens as early as 1997
• Britain is rumoured to be planning a similar offer
• This is a great way to offer a moral and human rights-positive option for people who are entering arguably a time of personal and economic oppression. They will need the world’s support to continue their lives in a self-directed, pro-freedom and democratic system
Finally: it’s a way out of our downward spiral. We don’t have to give up full citizenship. It will increase our foreign capital trade, it will bring more jobs to Bermudians and it will vastly increase the tax revenue, local spend and transactions within Bermuda by having these people and companies here.
If this sounds like a good idea, we should also provide similar opportunities to the people who already live and work here, along with their overseas colleagues who will grow our existing international business industry at the same time.
• Connor Burns is a Bermudian mechanical engineer with almost ten years of business development and engineering experience in the construction industry, drone operations, and software and start-up companies
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