The Lion City and the Fragrant Harbor: The Political Economy of Competition Policy in Singapore and Hong Kong Compared

• Author: Mark Williams
• Published date: 01 September 2009
• Date: 01 September 2009
• DOI: http://doi.org/10.1177/0003603X0905400302
• Subject Matter: Article

The Lion City and the Fragrant Harbor:

The political economy of competition policy

in Singapore and Hong Kong compared

BY MARK WILLIAMS*

I. INTRODUCTION

Hong Kong and Singapore are recent converts to the notion that an

antitrust regime is an important part of the necessary regulatory

structure underpinning a contemporary economy. Singapore enacted

a general competition law in 2004.1Although the Hong Kong govern-

ment was committed to legislate by the end of 2009, action has been

delayed ostensibly as a result of unexplained “technical issues.”2

THE ANTITRUST BULLETIN:Vol. 54, No. 3/Fall 2009 :517

ATB Fall 2009 article by: Williams 10-15-2009

* Professor of Law, Hong Kong Polytechnic University.

AUTHOR’S NOTE: “Fragrant Harbor” is the translation of the traditional Chinese

name—Heung Gong (Cantonese) or Xianggang (Mandarin)—for Hong Kong.

“Lion City’ is the translation of the original Sanskrit name for Singapore: “singa”—

lion and “pura”—city.

1Competition Act 2004 (Oct. 19, 2004), available at http://www.singa-

porelaw.sg/content/CompetitionLaw.html.

22007–08 Policy Address, A New Direction for Hong Kong ¶¶ 32–33

(Oct. 10, 2007), available at http://www.policyaddress.gov.hk

/07-08/eng/docs/policy.pdf. But see Technical Issues Put Competition Bill on

hold, SO. CHINA MORNING POST, Feb. 28, 2009, at 28, available at http://archive

.scmp.com/showarticles.php.

© 2009 by Federal Legal Publications, Inc.

These two Far Eastern enclaves of capitalism have much in common,

but they also display significant differences in terms of economic

and political structures, which have a profound effect on competi-

tive conditions in their domestic markets. I argue that the political

economy of Singapore and Hong Kong have been the cause of both

cities’ slow acceptance of the need for procompetition legislation.

This marked reluctance to introduce antitrust laws has also had

consequences for the design of the new Singapore regime and the

creation of the putative Hong Kong scheme. Political economy con-

siderations will also have a significant impact on the likely vigor of

implementation, especially when existing industrial structure is the

underlying cause of competition impediments. Inevitably, the

observations made in this article are tentative as the Singapore law

has been in force for only two years and the Hong Kong regime is

still being constructed; thus to an extent, this article could be char-

acterized as speculative, but I suggest that careful examination of

the nature of these two city-states supports the hypothesis I

advance.

This article will attempt to describe the similarities and differ-

ences between the two cities in terms of their respective histories,

political arrangements, and economic models. Once these issues

have been considered, the article will explain and analyze the

development of their respective competition policies. Implementa-

tion of these policies will then be assessed. Finally, an attempt will

be made to predict the future development of their new procompe-

tition regimes, given the political economy landscape within

which each system will operate. Some concluding thoughts will

then be offered on the likely impact of the adoption of procompeti-

tion policies on the domestic economies of Singapore and Hong

Kong. The significance of this article lies in the fact that these two

small jurisdictions have a substantially greater global economic

importance than their minuscule geographical extent would at

first suggest.

518 :THE ANTITRUST BULLETIN:Vol. 54, No. 3/Fall 2009

ATB Fall 2009 article by: Williams 10-15-2009

II. HISTORY, POLITICS AND ECONOMIC STRUCTURE

OF SINGAPORE

A. History

Singapore is an island of 271 square miles (about 20% smaller

than the land area of New York City).3The topography is benign with

the highest point only 300 feet above sea level. Singapore is just north

of the equator and is sandwiched between the Indonesian island of

Sumatra and the Malayan peninsula. The population is approxi-

mately 4.6 million of which 76% are ethnically Chinese, 14% Malay,

and 8% Indian.4

The modern history of Singapore began in 1819, when Sir Stam-

ford Raffles established a trading post on the island. Raffles was an

officer in the armed forces of the British East India Company and was

Lieutenant-Governor of Bencoolen (Sumatra), from which the Dutch

had been expelled by the British as the Netherlands was an ally of

France in the Napoleonic Wars. As part of the Congress of Vienna

peace settlement, the Dutch regained control of their East Indies

empire. Raffles appreciated that the tip of the Malayan Peninsula was

a focal point for multiple shipping routes between Europe, India, and

the Far East, as well as being a hub for regional trade. He was con-

vinced that occupation of this strategic site was vitally important to

British economic and imperial interests, especially to secure the route

taken by East India Company ships trading opium from Bengal to

China and returning with tea, silk, and porcelain. Furthermore, the

restrictive trade regime and high tax policy of the Dutch stifled trade,

and Raffles believed that Singapore would provide the ideal location

for the establishment of a new trading base that would prosper as a

free port. Formally annexed by the British and recognized by the

Dutch in 1824, Singapore became part of the British Straits Settle-

ments of Penang and Malacca in 1826. Later this entity was freed

SINGAPORE AND HONG KONG COMPARED :519

3New York City Dep’t of City Planning, New York City Land Use, avail-

able at http://nyc.gov/html/dcp/html/landusefacts/landusefactshome.shtml

(last visited Aug. 13, 2009).

4Singapore Dep’t of Statistics, Resident Population Profile 2008, avail-

able at http://www.singstat.gov.sg/stats/keyind.html#respop (last visited

Aug. 13, 2009).

ATB Fall 2009 article by: Williams 10-15-2009