US firms confident in HK rule of law, poll finds

More United States enterprises have expressed confidence in Hong Kong's rule of law and its role as an arbitration center, according to a survey released on Tuesday by the American Chamber of Commerce in Hong Kong.

The findings of the organization's 2024 Members Business Sentiment Survey, which was conducted online in November and December, were based on the views of 136 business decision makers of AmCham member companies. Thirty-five percent of those polled have global revenues exceeding $1 billion.

According to the survey, 79 percent of the respondents said they are confident about the rule of law in the Hong Kong Special Administrative Region, compared with 73 percent in 2023 and 25 percent in 2022. It also revealed that 78 percent of the companies do not plan to move their regional headquarters away from Hong Kong in the next three years.

A further 72 percent of the executives indicated that they expect the SAR would, to a great or moderate extent, retain its position as an arbitration center, especially for businesses with contractual relationships with their counterparts on the Chinese mainland.

Senior company executives cited Hong Kong's distinctive positioning in global banking, the city's judicial independence, the application of common law and legal practitioner professionalism, ease of enforcement and clean government as the SAR's advantages as an arbitration center.

In the survey, 69 percent of the enterprises' senior representatives said their operations had not been negatively affected by the National Security Law for Hong Kong. For those that have experienced negative effects, 65 percent said the impact has been indirect, such as declining staff morale, departure of Hong Kong employees, or diverting resources that are needed to seek guidance and/or compliance.

Seventy-six percent of the respondents viewed Hong Kong as highly competitive or competitive as an international business hub due to its international connectivity, free flow of capital, a low and simple tax regime, legal and regulatory system, free flow of information and data, the city's status as the gateway to the Chinese mainland, as well as its efficient infrastructure and transportation links.

However, the cost of living, including housing, the cost of doing business and talent availability are hurting Hong Kong's competitiveness.

Thirty-four percent of the surveyed enterprises said they are optimistic about Hong Kong's business conditions in 2024, but regard US-China tensions, overseas public perceptions of the city and the sluggish mainland economy as the top three business challenges this year.

The respondents said they are also worried about Hong Kong's competitiveness in financial services due to the slowdown in the city's capital market activities and a limited regulatory governance framework on virtual assets.