Franklin Koo

Opinion | Lessons from the UAE: Hong Kong’s problems might go away when the government puts Hongkongers first

Why did the UAE emerge unscathed from the Arab spring? The country has a tax and welfare system that prioritises citizens. In Hong Kong, however, the common perception is that its policies benefit tycoons, immigrants – everyone but Hongkongers

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Skyscrapers stand beyond a residential construction site at Dubai Marina in Dubai, the United Arab Emirates. Photo: Bloomberg

Franklin Koo

Published: 3:00pm, 29 Dec 2019Updated: 3:00pm, 29 Dec 2019

Hong Kong has failed to close its wealth gap. A 2018 report found that the fruits of economic growth were not being spread to the poor; rather, the rich were getting richer. Nearly 210,000 people live in subdivided flats, and despite almost full employment, 920,000 workers remain poor. Official figures this month revealed that more than 1.4 million people, or about one in five Hongkongers, lived below the poverty line in 2018, a 10-year high.

To improve the situation, perhaps we should look at policies implemented elsewhere. Take the United Arab Emirates for example. The towering skylines and wealth of the seven states that constitute the UAE, including Dubai, an international trade hub, hide an extreme inequality. A recent study has found that the top 1 per of the UAE population own 51 per cent of the wealth held in the country.

Yet, unlike Hong Kong, the UAE emerged unscathed when the Arab spring and social unrest erupted in the Middle East in 2011. Social cohesion was reinforced under the UAE’s taxation and welfare system, which saw the fortunes of the middle class grow. No income tax is levied on individuals. Instead, corporate taxes are levied on oil companies and foreign banks.

That being said, only Emirati citizens are entitled to the benefits of the welfare system. Citizenship is confined to about a million people whose ancestors had lived in the seven constituting emirates before 1925.

Even with that difference, figures suggest that both Emiratis and expatriates have benefited. According to figures published in 2016 by the government of Dubai, the average monthly income of an Emirati family was 72,241 dirham (US$19,600), while that of an non-Emirati family was 28,116 dirham (around US$7,600).

In Hong Kong, the median monthly household income was HK$28,000 (US$3,600) in 2018, less than half that of the non-Emirati family.