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Skyscrapers stand beyond a residential construction site at Dubai Marina in Dubai, the United Arab Emirates. Photo: Bloomberg
Opinion
Opinion
by Franklin Koo
Opinion
by Franklin Koo

Lessons from the UAE: Hong Kong’s problems might go away when the government puts Hongkongers first

  • Why did the UAE emerge unscathed from the Arab spring? The country has a tax and welfare system that prioritises citizens. In Hong Kong, however, the common perception is that its policies benefit tycoons, immigrants – everyone but Hongkongers
Franklin Koo
Franklin Koo
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Hong Kong has failed to close its wealth gap. A 2018 report found that the fruits of economic growth were not being spread to the poor; rather, the rich were getting richer. Nearly 210,000 people live in subdivided flats, and despite almost full employment, 920,000 workers remain poor. Official figures this month revealed that more than 1.4 million people, or about one in five Hongkongers, lived below the poverty line in 2018, a 10-year high.

To improve the situation, perhaps we should look at policies implemented elsewhere. Take the United Arab Emirates for example. The towering skylines and wealth of the seven states that constitute the UAE, including Dubai, an international trade hub, hide an extreme inequality. A recent study has found that the top 1 per of the UAE population own 51 per cent of the wealth held in the country.

Yet, unlike Hong Kong, the UAE emerged unscathed when the Arab spring and social unrest erupted in the Middle East in 2011. Social cohesion was reinforced under the UAE’s taxation and welfare system, which saw the fortunes of the middle class grow. No income tax is levied on individuals. Instead, corporate taxes are levied on oil companies and foreign banks.

That being said, only Emirati citizens are entitled to the benefits of the welfare system. Citizenship is confined to about a million people whose ancestors had lived in the seven constituting emirates before 1925.

Even with that difference, figures suggest that both Emiratis and expatriates have benefited. According to figures published in 2016 by the government of Dubai, the average monthly income of an Emirati family was 72,241 dirham (US$19,600), while that of an non-Emirati family was 28,116 dirham (around US$7,600).

In Hong Kong, the median monthly household income was HK$28,000 (US$3,600) in 2018, less than half that of the non-Emirati family.

In the UAE, the retirement age is 49 for Emiratis and 60 for expatriate residents. Once an Emirati mother has worked for 15 years, she can retire, begin receiving benefits and spend more time with her family. Although there is no official retirement age in Hong Kong, it was recently projected to be well over 60.

As with every policy, however, nothing is perfect. Dubai ran into financial difficulties in 2009 following the global credit crisis, causing its real estate market to crash. It was Abu Dhabi, the oil-rich capital of the UAE, that bailed out Dubai. This loan has been extended.

Further, even though property prices have declined at the higher end of the market, Dubai – like Hong Kong – suffers a lack of affordable housing.

Much of the UAE's wealth is generated by migrant workers, who make up about 90 per cent of the population. They number around 8 million, a little more than the population of Hong Kong. The average monthly income of a migrant worker in the UAE is only about US$360.

A key difference is that the UAE government prioritises the welfare of the Emiratis at the expense of the poorly paid migrant workers who have arguably arrived in the UAE of their own free will, in search of better opportunities than what their home countries can provide.

On the other hand, the common perception in Hong Kong is that current policies benefit only elites, tycoons, immigrants and tourists – everyone but Hongkongers. Even when a policy is specifically targeted to benefit Hongkongers, it fails.

For instance, when the “Hong Kong property for Hong Kong people” policy was introduced in 2012 to increase affordable housing for Hongkongers, it accounted for just a fraction of the total housing supply, meaning non-locals would be allowed to buy the bulk of the housing stock on the secondary market. Property prices reached historic highs earlier this year.

Adopting effective policies that put Hongkongers first is what Hongkongers ultimately want. But different policies inevitably will come with different sets of problems: should we be careful what we wish for?

Franklin Koo is an accredited mediator, lawyer and author of Power to the People: Extending the Jury to the Hong Kong District Court

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