New travel permits for Hong Kong permanent residents harm the economy? Experts: Long-term approach

Kevin Tsui Ka-kin, chief economist at research firm Orientis, predicted some impact on consumption in the city, but stressed that it would only be short-lived.

He added that in the long run, this policy could attract more people from abroad to the city, which could also help expand the talent pool, which is mainly dominated by people from the mainland.

“Many expatriates left during the pandemic. This could be a new incentive for them to return to Hong Kong, which will also have a positive impact on local consumption and the overall business environment,” he said.

“But it would be great if the government could lower the hurdle and, for example, allow people who do not yet have permanent residency to apply for the visa to make it more attractive.”

Simon Lee Siu-po, honorary fellow of the Asia-Pacific Institute of Business at the Chinese University of Hong Kong, believes the move would hurt Hong Kong's hospitality and retail businesses, which are already losing customers due to the trend of shopping across the border.

He also doubted that an increased exchange of people would bring significant benefits to the Hong Kong economy.
Economist Simon Lee says a new mainland visa for residents with foreign passports could hit the city's fragile economy, but will also bring benefits. Photo: KY

However, Lee added that the new rule would save travellers time as they would no longer have to apply for visas separately and queue for manual checks at the border.

He said the policy also underlines the positive message that all permanent residents are treated equally.

Lee added that companies may also be more likely to send non-Chinese employees to the mainland under the relaxed regulations.

The two spoke after the National Immigration Administration announced the new visa policy on Monday. It will allow permanent residents of China with foreign passports to travel to and stay in mainland China for investment purposes, visiting relatives, tourism, business, seminars and exchanges. The stays are for up to 90 days.

In addition, they will be allowed to use self-check-in at checkpoints after completing procedures such as having their fingerprints taken.

The news came after it was revealed that retail sales in Hong Kong fell 11.5 percent year-on-year to HK$30.5 billion (US$3.9 billion) in May.

This was the second consecutive month of double-digit declines, which were attributed to the continued trend of increasing spending across the border.

Allan Zeman, chief executive of entertainment and real estate giant Lan Kwai Fong Group, said Beijing's new agreement would bring “groundbreaking changes” for business travelers.

“Chinese people have always been able to get through customs very quickly, but expats have had to queue with the tourists,” he added.

“They also had to have an invitation letter with them and hold it in their hands, because sometimes the immigration officials are really strict and that delays everything, and even when you get back to Hong Kong… it kind of leaves a bad taste in your mouth.”

Zeman said the agreement would encourage more companies to open offices in Hong Kong because it would be easier to do business on the mainland.

“It just helps Hong Kong attract new industries and new people, and that's exactly what we need,” he added.

However, he expressed the hope that the authorities would next lower the hurdle and allow people who live in the city but do not yet meet the seven-year residency requirement to apply for a visa.

“It would be very, very helpful if every foreigner who holds an identity card approved by the immigration authorities could also potentially apply for another visa that would allow them to travel on business without delaying the process.”

Zeman added that he was confident that Beijing's opening to more people from south of the border would not affect spending in Hong Kong.

He said many non-Chinese permanent residents would continue to stay in the city on weekends because China is a foreign country for many and they can get around more easily in Hong Kong.

Mer Singh, operations manager at Ebeneezer's Kebabs & Pizzeria, said he would apply for a multiple-entry visa so he could visit Shenzhen and Foshan to buy tableware and furniture for the chain's new restaurant and visit old friends.

Singh added that he used to work on the mainland but had not returned for over a decade due to strict visa regulations that required early application and a long processing time.

“Now our new restaurant is coming and I hope that I can get the visa very, very quickly and then go there,” he said.

“If we get the visa without any problems, we might be able to open a new branch there… because many Chinese people love our food.”

Patrick Yeung Wai-Tim, CEO of the Hong Kong Chamber of Commerce, said many of his members were pleased with the new policy.

He added that the change could further cement Hong Kong's status as a smart city.

“This is definitely a good thing because it saves travelers time when crossing the border and spares them bureaucratic hassle,” Yeung said.

Additional reporting by Denise Tsang