Monday, April 22, 2013

My Favourite Posting & The Relevance To This Election



During the BFM interview a couple of years back, there was this question on which was my favourite blog posting. Looking back now, The Missing Legacy  still is my favourite posting other than the other two more recent ones (My Life's Aphorisms and Let The Man Be The Man He Is).

What is more pertinent was this posting is very relevant to the current election. What we are all fighting for. 

How Can Just 2 Persons Change HK?


I am proudest with my piece on 2 HK gwailos who died within a couple of months in early 2006 of each other. More so when their passing were only mentioned in passing by all HK media. OMG, I am not from HK but at least I know "kacang mesti jangan lupakan kulit".

I love HK movies and there had been plenty made about corruption, the ICAC and the rocking 70s in HK. In the 60s and 70s, HK was probably many times more corrupt than Malaysia and Indonesia combined now. I was always fascinated about how HK came to be where it is now. Even as early as in my Economic History classes in UNSW, I picked the same topic for my second year essay submission.
When John Cowperthwaite died in February 2006... there was an eerie silence in HK papers. I was totally disgusted, I mean these HK people were reaping the benefits of a structured "free economy" without acknowledging the person behind it.

Then to my surprise Jack Cater also passed away two months later, again, no front page news, not even page 5 or 6 or 7... OMG, without these two gentlemen, well, HK would be like ... KL or Bangkok or a more robust Shenzhen, I guess.


The very essence and vitality of HK's business reputation today was largely due to these two gwailos ... I wonder if they teach that in HK schools?

The lesson here is plain and staring us in the face, if we wish for a 2020 vision or a 1Malaysia vision ... just hold true to the two pillars of sustained brilliant economic development: open market economy (no subsidised industries), and corruption free (transparency). The latter has the effect of attracting talent, capital, entrepreneurship and rewarding performance, without fear or favour.

We need the 2 Pillars ....

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The Missing Legacy

Recently, a gwailo passed away without much of a mention in HK papers. Now, I have to say that I am biased as I think the majority of the bunch of British expats being posted to HK basically had a holiday for the past 50 years. HK did become a financial center and its citizens benefited enormously for the last 30 years. It put HK on the map. Property prices went through the roof. HK became an international city. However, HK would NOT be where it is (economically) if it were not for a guy name John Cowperthwaite (JC). JC was HK's financial secretary from the crucial formative years of 1961-1971. He passed away on January 21, 2006 at the ripe old age of 90.

The sad thing is that HK media and HK people in general, failed to give due credit to this man. Sure, HK people worked hard to get to where they are, but as we all know, the structure and gameplan must be there to allow "good things" to happen in an economy.

In his first budget speech he said: "In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralised decisions of a government, and certainly the harm is likely to be counteracted faster."
JC, very much a disciple of Adam Smith and not a modern monetarist, put in the structure and rules to promote HK's now famous laissez-faire economics.

Britain at that time was moving towards a more socialist and welfare state, and it would have been very easy for JC to replicate that for HK. Can you imagine that - having a bunch of whinging "me,me", unionised, welfare dependent Chinese in Asia!? Instead, JC took it upon himself to do "less" by eliminating tariffs, lowered the tax rate to a maximum of 15%, cut the bureaucratic red tape that stifles business. He called his policies "positive non-intervention".

To have the courage and political will to do that for HK - that should mean the world to the people of HK. In 1960, the average per capita income in Hong Kong was 28 percent of that in Britain; by 1996, it had risen to 137 percent of that in Britain. Now the per capita income of HK almost mirrors that of the US.


From The Telegraph:
"From 1961 to 1971 Cowperthwaite exercised almost complete control of the colony's finances under successive governors, Sir Robert Black and Sir David Trench, who were sympathetic to his philosophy and content to give him his head. Among his peers in the Hong Kong government, it was said that only Claude Burgess, the colonial secretary, could keep him in line. "His brilliance and argumentation prevailed, and he thus made policy by ruling on all items of expenditure," said one colleague. But Cowperthwaite summed up his part in the colony's success over the decade with some modesty: "I did very little. All I did was to try to prevent some of the things that might undo it.

The measure of that success was a 50 per cent rise in real wages, and a two-thirds fall in the number of households in acute poverty. Exports rose by 14 per cent a year, as Hong Kong evolved from a trading post to a major regional hub and manufacturing base."

Sir John Cowperthwaite was knighted in 1968, and what he did for HK should be taught in schools and universities in HK. I wonder how many roads, libraries, scholarships or university halls are named after JC?

After the Asian financial implosion in 1997, HK suffered and stuttered particularly when compared to Singapore. It looks like Singapore has taken a leaf from the handiwork of JC - less is more. Instead, HK powers to be have put in more legislation and rules, which combined, have put HK on the backfoot. Two examples, the rise and rise of hedge funds in Asia - Singapore has managed to attract a lot more of them than HK, ask any fellow professionals why. The other is the rise and rise of REITs, and though HK has had a headstart, Singapore is putting in the right moves, making REITs dividends non-taxable. Again, we can expect more international REITs to come to list in Singapore in the months ahead.


HK has to learn from its mistakes but also gain lessons on things it did right before. A good way to start is to fully appreciate the things Sir John Cowperthwaite did for HK's economy, and replicate that. The fact that his passing was largely ignored in HK says a lot about where HK's economy is headed.
From First to First (525)


Sir Jack Cater's Legacy


The Missing Legacy was first written in a blog of mine dated 7 February 2006 - it was on the passing of Sir John Cowperthwaite, the person most responsible for HK's reputation as the freest economy/capitalism in the world. Cowperthwaite's passing did not get much press coverage at all in HK media, and that kinda pissed me off because a group of people who can forget so easily their "roots" and "how they got here" are doomed to lose the blueprint set by Cowperthwaite.

Now another old gwailo died, and his contribution to HK is no less than Cowperthwaite. Sir Jack Cater died on Guernsey on 14 April 2006 aged 84. He was the founding head of HK's infamous Independent Commission Against Corruption (ICAC), which took radical steps to combat graft in the police force in the 1970s. Cater went on to become HK's Chief Secretary, Acting Governor and Commissioner in London. Bribery had long been endemic in Hong Kong's police and civil service, but was thought of as being confined to the Chinese lower ranks, rather than expatriate officers. Calls to eradicate it were largely ignored by governors before Maclehose, who arrived in 1971. Maclehose lacked the political will to tackle the problem despite strong urgings by Cater .

If you were to do a net search, you will find Jack Cater's passing only being solemnly mentioned within the HK's government admin portal at www.news.gov.hk ... how soon we forget!


Cater even threatened to resigned in 1973 when trying to bring down Chief Superintendent Peter Godber. Godber fled HK while under investigation for amassing a fortune of several million pounds, much of it banked in Vancouver. Cater needed to strike at the top, even at one of his own, to further reinforce the dire need for eradication of corruption in HK. The developments forced the hand of Maclehose. Jack Cater was asked to form an independent anti-corruption unit with the support of a former Special Branch officer, John Prendergast.


The establishment and independence of ICAC is crucial to HK's economy. While Cowperthwaite had eradicated bureaucracy, you still needed "pure meritocracy" in the financial economic system to uphold its integrity and transparency. Only with those factors can HK gain an ever growing reputation as a true financial center - attracting professionals and companies to invest.


Cater's reputation for determined leadership had been established during the period of civil unrest in Hong Kong in 1967. He cared deeply about his work and about those closest to him, and he encouraged the careers of talented young officials - including women, who in earlier days had generally been denied promotion.

In the first year of its operation, 1974, the ICAC handled 1,798 complaints of police involvement in bribery and extortion. It was said that more than a third of all Chinese policemen were members of triad gangs which controlled prostitution, drug-running and gambling across the Territory - rackets which, as Cater pointed out, raked in more than three times the profits of the Hongkong & Shanghai Bank.


By October 1977 the Commission's uncompromising methods (it acted on anonymous tip-offs, and allowed no presumption of innocence) had caused such anger in the Police Force that 2,000 officers marched through the streets to present a protest petition, and a group of CID men stormed the ICAC's offices. Fearing a breakdown of order, Maclehose felt forced to declare an amnesty for all but the most heinous offences.

In spite of this setback, the ICAC's work continued with unflagging determination. Investigations proceeded into other government departments, notably public works, education (parents were often asked for bribes to enrol children in schools of their choice) and health (hospital patients were forced to pay up for bedpans). It was indeed a cradle-to-grave system, with bribes demanded even for burial sites. Among those most grateful for the clean-up were the drivers of Hong Kong's battered fleet of minibuses, whose fares had for many years been preyed upon by bent policemen.


The ICAC was often accused of heavy-handedness, but its intervention provoked a culture change which still stands Hong Kong in good stead while corruption remains rife in other parts of Asia. Though Cater moved on in 1978 to the top civil service post of Chief Secretary, it was at the ICAC that he made his most significant contribution. Cater was Chief Secretary from 1978 to 1981. With a rapidly growing economy, it was a golden era for HK. Cater was several times Acting Governor, and was in line to succeed Maclehose in 1982; but Margaret Thatcher was persuaded to appoint a senior diplomat, Sir Edward Youde, to commence negotiations for the eventual handover to China.

Instead Cater became HK's Commissioner in London until 1984. He then returned to Hong Kong to work in the private sector, joining China Light & Power Co - the electricity generator for Kowloon and the New Territories - and becoming head of Hong Kong Nuclear Investment Co, which was China Light's participation with Beijing in a nuclear power station venture at Daya Bay in Guangdong province. He was president of Hong Kong's Agency for Voluntary Service, a member of the Court of the University of Hong Kong and an international director of the United World Colleges, participating in the foundation of Hong Kong's own College at Shatin in the New Territories.


Again, another passing of an important gwailo being largely ignored by HK's media. Is it a gagging issue; were media companies trying not to agitate China's political HQ by not bringing up the "glory days" of British colonial influence? How many more "important gwailo septua/octo-generians" must die before HK people recognises its roots, and pay the according tributes and gratitude that are due.

One can just imagine the gulf between HK and Singapore as financial centers if "true meritocracy" did not prevail in HK. Will Cater and Cowperthwaite ever make the books of HK's recent history. The Chinese have an oft-quoted saying, "when drinking water, one must never forget its source", how they got here. Just because some of them involved people who are not Chinese does not matter, and should not matter.

10 comments:

ian said...

Dear Dali,

Malaysia and Singapore too owe our former colonial masters a debt of gratitude in laying the foundation of our system of government and battling the communists. Sir Gerald Templer was significant in turning the tide against the communists.

Perhaps had many African and a few Asian countries such as Zimbabwe and Burma remained under colonial rule, things would have been much better. This we can be quite certain.

Ian Y

solomon said...

A due credit must be given if one have contributed..don't be stingy, says my old dad.

Same alike no matter you are GwaiLoh (Vincent Corkery or Ultan Paul), you have contributed to the well being of Ipoh societies and the country at large, you should be recognised in the book too.

I guess we must have lost our mind when there is too much glorification on ourselves?

Au Yong Soon Kok said...

Hi Dali
Wow, this piece is indeed priceless. Enjoyed reading it.

It is indeed sad when great contributions are not recognised. What is even sadder is when such contributions were later viewed sinisterly by half baked, fully arrogant and fake leaders or politicians who would not and cannot understand the real things that matter.

Drawing a parallel, Malaysia in the sixties and seventies were miles ahead of many of our neighbours due mainly to the foundation laid by the British gentlemen. When misplaced nationalism/patriotism creeps in, we lose out and now languish amongst the 'outcasts'.

Keep writing SD.

AY

Khoo Beng Kiat said...

HI DALI,

Your article reminded me of Dr. Albert Winsemius, a Dutch economist, who, in his capacity as Singapore's economic advisor (1961-1984), contributed much to Singapore's modernization and of which Lee KY's administration much indebted to.

Mr Lee, at the end of his tribute to Dr. Albert Winsemius, wrote:

"It was Singapore's good fortune that he took a deep and personal interest in Singapore's development. Singapore, and I personally, are indebted to him for the time, energy and devotion he gave to Singapore."

More info on Dr Albert Winsemius is avlable @:
http://en.wikipedia.org/wiki/Albert_Winsemius

http://ourstory.asia1.com.sg/dream/lifeline/win4.html

Khoo BK

Papang said...

interesting. Thanks for posting

jonathan keung said...

good write up. still remember the old movie "Lee rock" about HK corruption in the 60"s

jonathan keung said...

good write up. still remember the old movie "lee rock" about HK corruption in the police force

panaceaasia said...

Many countries in Asia & Africa would have been better off had they remained colonies of European powers especially Great Britain.

bruno said...

And our MACC was suppose to be a copycat of the ICAC?A barking mongrel that cannot bite,or rather a barking mongrel always barking at the wrong tree.

Avatar said...

Hi Dali,

Any books on the ICAC and these 2 very interesting personalities?

Quite interested to learn more :)