Sure, some businesses profit from HK’s hordes of visitors, but overall gain to economy is a mirage
| JAKE’S VIEW
Jake van der Kamp
Jun 21, 2012
I looked and I looked and I just could not find this official figure. I found one very close to it, however. The figure I found was 5.8 per cent as the ratio of net visitor spending to the size of our economy for the 12 months to March.
There was a difficulty, however, with the figure I found. It was negative. According to the official figures, tourism detracted from the size of our economy.
Here is how it happened. When totting up the contribution of tourism to gross domestic product, you take what the residents of your country spend abroad less what non-residents spend in your domestic market. Make sure you have this the right way around. It’s what you spend abroad minus what the visitor spends here.
Our story is visitors stayed away immediately after the handover of sovereignty in 1997, but the adoption in 2003 of the mainland individual visitor scheme brought a dramatic change in the tide.
For the year to March, Hong Kong residents spent HK$117 billion abroad, from which we deduct the HK$228 billion visitors spent here. The result is a minus figure and the chart shows it has plummeted steadily to 5.8 per cent of GDP.
Now, I know what you will say to this. You will say it’s the wrong way round. We should actually calculate the contribution to GDP as what visitors spend here less what we spend abroad.
No, we shouldn’t. What counts is not the geographical territory but the people who live there. We benefit from things we buy abroad. We do not benefit from things that visitors buy here and take home.
Remember also that what visitors spend here is already included in the turnover reported by shops, restaurants and hotels. We would double count this spending if we added it in again.
But I hear you. Visitors create jobs in Hong Kong. We have many thousands of chambermaids, burger slingers and shop clerks employed because of tourism.
Yes, tourism does indeed create lots of menial jobs. Unfortunately, it creates few jobs with real career upside. It’s a low-end industry.
Bear in mind also that the choice is not between tourism and nothing in jobs. These chambermaids and shop clerks would hold other jobs, probably better ones, if we had no visitors. An economy is a flexible thing that adapts to changes in demand. It is not written in stone that we only prosper if a fixed proportion of Hong Kong’s labour force is employed in tourism.
Bear in mind, furthermore, that tourist purchases do not contribute much to GDP. What tourists buy is almost all imported, and the cost of imports is deducted from GDP.
Tourism is very good for a handful of airline operators, hotelkeepers and shop owners, who all lobby hard to have the Tourism Board tell you that tourism is also very good for you. Don’t lap it up too quickly. In economic terms, tourism is not necessarily either big or good.
But here is the real gem for today. Chief executive-elect Leung Chun-ying says the influx of tourists contributes to inflation.
There is only so much that any shop can hold, you know, and when tourists are bidding for these wares along with residents, well, then supply starts to run tight and the price goes up. Stands to reason. Any fool can see that.
Hmmm … yes, and then along comes the big ship from overseas to deliver more wares to our docks, which the goods vehicle then delivers to the shop. Here’s an idea. Let’s tell the shop to over-order, and then prices would fall and tourism could help bring inflation down.
Here’s another idea. You’re an estate agent by trade, C.Y. Stick with it.