Inside Asian Gaming

inside asian gaming November 2014 18 land premiums, property rates and taxes on property developers’ profits. “The government has a vested interest in keeping the prices high,” says Marc Faber, director of Marc Faber Ltd, an investment advisor and fund. “There’s been a very cozy relationship between the government and the big property developers.” Hemlock, the nom de plume of a business writer with close connections to Hong Kong’s tycoons, compares the property cartel that benefits from this arrangement to “feudal lords granted the right to gather tax from the peasants”. Not only do the market imperfections generating tremendous wealth for the property developers punish homebuyers, who can often feel like “peasants” under the burden of their mortgages, but it also hinders the development of other more productive sectors of the economy. In the US, the wealthiest business people focus on creating advanced technology that excels in international markets, while Hong Kong’s wealthiest build overpriced houses in an uncompetitive environment. The 1,200-member nominating committee charged with picking candidates to stand for the 2017 chief executive election will be dominated by these tycoons, their cronies, other business leaders The only other Asian to make the top 30 is also a Hong Kong property developer, Lee Shau Kee. But on Forbes ’ ranking of the world’s 20 richest real estate tycoons, seven hail from Hong Kong—though that list omits Li Ka Shing because his business is technically classified as “diversified”. But discounting all his other interests, his real estate holdings alone would put him at the top of that list. Thus, 40% of the world’s 20 wealthiest real estate developers are from Hong Kong, a city of just over 7 million—equivalent to 0.1% of the world’s population. It might seem as though there’s an elaborate, exploitative conspiracy among the developers to enrich themselves, but there is some historical background to it, and the government is in on it as well. Hong Kong’s land system is a legacy of the era of British rule. In a bid to make the city financially self-reliant, the colonial authorities raised money by leasing land, and to keep things manageable, parceled it off in large plots that only the biggest developers were able to bid for. The government also derives premiums for granting permission to convert the usage rights of given plots, for example from agricultural to commercial use. By some estimates, some 45% of government revenue is derived from land, with up to 15% from the sales themselves and the rest from In a recent interview with foreign media, Hong Kong Chief Executive Leung Cheung Ying made no bones about the government’s wish to limit the political representation of the poor and working class: “If it’s entirely a numbers game and numeric representation,” he said, “then obviously you’d be talking to the half of the people in Hong Kong who earn less than US$1,800 a month.” 1999 handover, with citizens taking to the streets to voice their opposition to a lavish perks bill for outgoing government officials. Macau has also recently witnessed a spate of protests by casino workers demanding better pay and working conditions. In August, pro-democracy activists attempted to conduct an unofficial public referendum on the performance of Chief Executive Chui Sai On. The well-connected son of a construction and property magnate whose family goes back six generations in Macau, Mr Chui was about to be granted a second term by an elite committee of 400 similarly connected electors. Police quickly swept in to shut down the polling stations. Four organizers were arrested. Many of the frustrations voiced by the massive Occupy Central movement in Hong Kong seem to resonate in Macau. The Hong Kong protestors were demanding full universal suffrage for the 2017 chief executive election. But their deeper grievances stem from problems created by the city’s widening wealth gap and the absence of legitimate political avenues to seek redress. For instance, many young married couples in Hong Kong are having to live separately because housing has become unaffordable—allegedly the result of collusion among the city’s powerful property cartel, made up of a small group of extraordinarily wealthy and politically connected developers intent on boosting their net worth by keeping house prices sky high. The protesters simply don’t believe their concerns will be addressed if they continue to be represented by a Beijing-anointed guardian of the status quo. A recent article in The Economist succinctly detailed the average Hong Konger’s mindset: “They [the student protesters] share grievances with many others in Hong Kong, including their worried EVOLVING MACAU America’s wealthiest made their fortunes with world-leading technology and innovation. Asia’s richest man, Li Ka Shing , generated the bulk of his US$31 billion net worth building property in a city of just over 7 million people.