South China Morning Post
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Financial leader Cheah Cheng Hye says city needs to become a community to solve social ills like inequality and feelings of entitlement
Q: Is there any way we can improve relations between city residents and people on the mainland?
A: We could set up a volunteer corps that sends young Hongkongers to work on mainland community projects
All that glitters in the city is not what it seems, says a veteran investor and leading figure in Hong Kong’s financial sector.
Cheah Cheng Hye warns that unless they are tackled now, nascent problems lurking in the shadows will hurt Hong Kong in the long term.
As the chairman of Value Partners sees it, a confluence of combustible forces is at play. First, Hong Kong seems to have lost some of its earlier spirit of self-reliance. Instead, a sense of entitlement is spreading to the younger generation, part of a global phenomenon to which the city is not immune.
Second, growing income inequality is fuelling a sense of displacement among those born and bred in the housing estates of the city, as they see others benefit handsomely while they struggle to eke out a living and raise a family in a high-cost environment.
Third, the elite – with some prominent exceptions, Cheah says – do not feel that they have an obligation to reach out and help forge a sense of community.
On the ever-increasing demands placed on government and society, the 61-year-old investor says: “It is a global phenomenon of social and political and economic development. It will eventually come to mainland China as well. But Hong Kong hasn’t figured out a way to deal with this sense of entitlement.”
On the privileged class, he fears that many “really just want to cling on to their privileges and wealth and their very special positions in society, and are not very interested in sharing or giving”.
While the growing sense of entitlement may have stemmed from slowing social mobility in the city in recent years, the local elite’s sense of entrenchment is characterised by their refusal to adjust themselves to the new reality, Cheah believes. “They are in a state of denial.”
But they must recognise that society needs to cohere to tackle the looming challenges, including transforming the economy. In his view, the Hong Kong economy is now dominated only by the financial sector and the civil service, with the decline of the manufacturing industry and the fading lustre of the hospitality and retail sectors.
But even in the still robust financial industry, fewer local professionals are able to secure senior positions. Cheah says this is the sad reality for many locals even as he recognises that foreigners are a vital and welcome presence in the economy.
The seasoned journalist-turned-investor, who has made Hong Kong his home for more than 40 years, does not shy away from tackling these and other controversial issues candidly.
Speaking without any sense of acrimony or blame, he says that many socio-economic problems may not be resolved if the city is unable to break the current political deadlock.
“To be effective, we need in Hong Kong today a leader who can inspire and appeal directly to the Hong Kong people. We need a man or woman with charisma and a youthful image who emerges as a hero of the Hong Kong people, able to mobilise popular opinion directly to overcome vested interests and doubters from all sections of society, including the wealthy elite, the foreign elite, and parts of the media and the political establishment.
“He also needs to position himself as being useful to Beijing and the implementation of the Basic Law, as well as a genuine admirer of President Xi Jinping , but he cannot take the risk of being a yes man and a rubber stamp for whatever Beijing officials want,” Cheah adds.
He says the electoral reforms proposed for 2017, from a pragmatic perspective, are the best practical hope for allowing such an effective and inspirational leader to emerge. “Politics is about compromise and pragmatism, and making do with what comes to hand.”
Cheah gets to the heart of what he believes Hong Kong needs urgently: a sense of community so that everyone can feel they are what he calls a “Hong Kong belonger”.
“We badly need to build up in Hong Kong a sense of community and belonging. Give young people a feeling that they can participate fully in the success of Hong Kong and make them proud to be a Hong Kong belonger,” he says.
Cheah, who has witnessed over the past few decades the ups and downs of the city, thinks the widening income gap has left society deeply divided.
He calls on the Hong Kong government to introduce more preferential measures for the disadvantaged, pointing to the positive impact of affirmative action schemes in some Western and Asian societies. These policies vary from region to region, with some measures more symbolic than substantive, such as reserving places or jobs for certain disadvantaged groups.
Some of the reform measures Cheah proposes include making significant changes to the British education system that the city inherited.
Cheah had to leave school at 16 to help his family make ends meet, and knows what it’s like growing up poor. He says educators should put more emphasis on business and vocational training, because not every student wants to or can succeed in the liberal arts.
On further narrowing income inequalities, he says the government should provide targeted subsidies that in effect assist “Hong Kong belongers” in various ways, such as by nurturing new industries, innovation and training and employment opportunities and improving welfare for the genuinely helpless.
Cheah hails from Malaysia, where affirmative action was introduced to help the majority ethnic group. As a Chinese, he and many others in his community did not get help even though they were poor. He started work as a newspaper folder. Despite the hurdles he faced – or rather because of them – he firmly believes in the need for targeted help to those most in genuine need.
“I know how bad and painful it was. I am an exception that proves the rule. For every single me, there must have been hundreds of underprivileged kids in Malaysia who vanished into the night,” he says.
Cheah firmly believes that Hong Kong should preserve the concepts of a “free market” and a “level playing field”, but thinks it has to do everything possible to prepare people to be competitive on this level playing field when they first enter it.
“We need to nurture and provide opportunities to equip them to be competitive through better support, training and an affirmative action programme that gives them a head start to the extent possible,” he says.
To help make this happen, Cheah also says the richest few in Hong Kong should contribute “more meaningfully” towards this cause.
The investment guru proposes a redistribution of wealth: “Raise taxation either directly or indirectly on the wealthy elite of Hong Kong to help pay for an affirmative action programme to help Hong Kong belongers.
“Preferably, the wealth tax would be in a format that makes tax avoidance difficult – for example, a ‘mansion tax’ imposed on luxury housing.”
He stresses that the government should not shirk its responsibilities, and says drastic moves are sometimes necessary. “To the extent allowed by Basic Law, make use of Hong Kong’s huge reserve – ‘saved up for rainy days’ – to overhaul Hong Kong society. The rainy day is now,” he says.
He says immigration policies in Hong Kong must be overhauled to genuinely give preference to Hong Kong residents, especially in terms of employment opportunities and access to the facilities of the community.
“The alternative could be an ugly outbreak of anti-foreigner feelings and escalating anti-mainland Chinese sentiment in the medium-term future.”
He says the Hong Kong government needs to “let out the steam slowly”.
“We have to pre-empt such an outbreak for, in fact, foreign professionals and workers are an asset, not a liability, in many aspects of Hong Kong society.”
“I work in Hong Kong as a financial centre … [For] a financial centre to flourish, there must be social and political stability. These are the essential ingredients for going forward.”
Looking ahead, Cheah believes Hong Kong’s future hinges on the mainland. The city’s government should in the long run provide incentives to promote a closer relationship with the mainland, especially the Pearl River Delta, and closer integration of Hong Kong and Shenzhen when this idea becomes less sensitive.
He says Hong Kong businesses should be encouraged to set up on the mainland and provide services that increase the benefits to Hong Kong from mainland growth.
“It is very worrying that we have lost the support of public opinion on the Chinese mainland. We must make a major effort to win the hearts and minds of the Chinese public. An action plan is required,” Cheah says.
One of his suggestions is to form a Hong Kong volunteer corps – modelled after the US Peace Corps – to send young Hongkongers to the mainland for periods of one to two years or longer, to work on community projects financed by the Hong Kong government.
Cheah says the real objective of this programme would be to improve understanding between Hongkongers and people on the mainland.
“Hong Kong has almost no chance of a bright future in the medium term if it loses the support of Chinese public opinion, a process that has already started but can be reversed.
“We must not be afraid to spend our considerable resources and reserves on such a worthwhile battle.
“And we need to be patient, for in fact, Chinese society itself is changing gradually in a healthy direction, and over time, the gap between the values of mainland Chinese society and those of Hong Kong society will narrow.”
Even as he identifies the city’s ills, Cheah remains convinced it has within it a resilient spirit that will see it through, with the right guidance. Having lived more than half his life in the city he now calls home, Cheah says Hongkongers are open-hearted and self-reliant and some of the “best people I have come across in any society in the world”.
Value Partners investment guru Cheah Cheng Hye made a name for himself by never ceasing to ‘Learn’
Aged 20, Cheah Cheng Hye sold his Honda motorbike in his hometown in Penang state, Malaysia to buy a boat ticket to Hong Kong – the only form of transport he could afford.
It took him 14 days to arrive, and after doing so he headed straight for the gritty guesthouses of Chungking Mansions in Tsim Sha Tsui for the cheapest room he could find. He found a job at a newspaper, continuing the career he had made for himself back home.
By the time he left journalism to co-found Value Partners, he had worked for The Hong Kong Standard, the Far Eastern Economic Review and The Wall Street Journal.
Born poor and having lost his father at age nine, Cheah told himself learning was the key to improving his lot. As a permanent reminder to himself, he took to signing his name as “Learn”, a habit he still has today, despite presiding over a multibillion-dollar investment firm.
“When I was around 30, I changed my signature to ‘Learn’ because I realised it was essential to never stop learning, no matter how old I became.”
Despite having attained good grades in exams, Cheah left school at age 16 to earn money to help support his working class family. His first job was as a newspaper folder, working from 10pm to 5am on shifts that would leave “all our faces black from the ink”.
He was quickly promoted to trainee reporter at Malaysia’s The Star newspaper which would lead to his decision to head to Hong Kong to work as a journalist.
Now chairman of Value Partners, he attributes much of his success to staying humble and being respectful of others while being true to oneself.
He started the firm with a partner, V-Nee Yeh, in 1993, managing about US$4.5 million in assets. Cheah says he realised at the time that asset management had to move beyond investing in stocks. He was “aggressive” in expanding the firm and made a name as a pioneer in the region in asset management.
Today, with about US$15 billion in assets under the firm’s management and a market capitalisation of HK$24 billion, Value Partners is by far the largest Hong Kong-based fund-management company, and the only one of its kind listed on the Hong Kong stock exchange. The company has won more than 100 awards.
After witnessing the growth of Hong Kong into a major financial centre, Cheah now calls the city home, and has given up his Malaysian passport to take a Hong Kong one.
“I am proud of my roots as a Malaysian and as an overseas Chinese, but I see Hong Kong as my adopted home. I will always be grateful to Hong Kong and its people for all the opportunities they have given me,” he says.
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