Hong Kong's outdated licence regime is a barrier to progress

South China Morning Post

3 days ago

Advertisement
From
taxi permits to hawker stalls and elderly care homes, the government's restrictive licensing policies betray a paternalistic approach that contradicts its proclaimed support for free-market principles.
By capping supply through burdensome licensing requirements, the government disrupts the very markets it claims to foster. Take, for example, Hong Kong's iconic street markets, like the Ladies' Market in Mong Kok and Temple Street in Yau Ma Tei. These popular tourist destinations have not seen any new hawker licences issued since 1972. A report by the Legco Secretariat highlights how strict transfer conditions and the ageing of the licensees is likely to lead to a decline in some hawking activities. Meanwhile, the issuance of taxi plates has been stagnant for more than a decade. When the same entity is responsible for both regulation and licensing, there is little motivation to increase supply, as more licences would simply add to its workload.
What began as a legitimate effort to mitigate safety risks and other negative impacts has devolved into bureaucratic inertia. Even if potential applicants meet all requirements, there is little incentive to issue new permits. This mindset leads to a 'better-safe-than-sorry' approach: why lift a decades-old freeze if maintaining the status quo incurs no immediate consequences? Civil servants contemplating the first new hawker licence in half a century are likely to fear the ramifications of public scrutiny and internal criticism, aligning with the Cantonese saying: 'No action means no mistakes.'
Temple Street in Yau Ma Tei is one of Hong Kong's top tourist attractions. Photo: Xiaomei Chen
This rigidity also stifles innovation. The drawn-out conflict between traditional taxis and
Uber -style platforms is a textbook example. Ride-hailing's dynamic pricing and superior responsiveness deliver better services at a lower cost – so long as drivers and customers can transact freely. However, a licensing regime built around a narrowly defined taxonomy of 'taxi' or 'private hire' struggles to adapt to these disruptive innovations.
Advertisement
Moreover, entrenched licensees can wield disproportionate power, forestalling necessary changes. Taxi plate owners and drivers can organise strikes to block roads, while elderly care providers frequently escape scrutiny even in the face of repeated abuse allegations. In contrast, individual hawkers – many of whom are elderly and struggling to make ends meet – lack the clout to challenge arbitrary enforcement. This creates a system where those with power rarely align with those championing justice.