European expats and foreign companies may leave Hong Kong because of the stringent Covid-19 rules according to a draft report from the European Chamber of Commerce.
If Hong Kong continues to impose tight restrictions to avoid the spread of COVID-19, the city may face a massive exodus of foreign companies and expats at some point, the Hong Kong's European Chamber of Commerce said in a draft report.
The organization anticipates that Hong Kong will keep a strict Covid-19 policy until late 2023 or early 2024. With a zero-Covid policy, Hong Kong has succeeded in keeping the virus under control, but at the cost of travel restrictions and strict lockdowns.
As such, foreign businesses should assume that the city will be "semi-closed for international business in the coming 12-36 months".
If that is the case, "we anticipate an exodus of foreigners, probably the largest that Hong Kong have ever seen", the draft said. Hong Kong could face a "cascade effect" of firms leaving the city.
The European Union Chamber of Commerce in Hong Kong is a non-governmental business interest group representing over 2,400 European companies operating in Hong Kong. In 2019, Europe was Hong Kong’s second-largest export destination and third-largest import supplier.
While international business operations are disrupted and the population needs to stay at home, Hong Kong remains the most expensive place for overseas workers, according to ECA International.
The situation could jeopardize its position of a regional financial hub, in competition with Singapore or Seoul. Multinationals may also relocate local teams to mainland China.
The chamber recommended the government to accelerate vaccination, only 70% of the population has been double-vaccinated. The international business community would also like a shorter quarantine than 21 days of isolation.
The European Chamber of Commerce declined to comment on the report which has not been made public.