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Hong Kong keeps its overall competitiveness but there is room for improvement in areas like education, environmental protection and quality of life, the Bauhinia Foundation Research Centre (BFRC) said yesterday.

The centre released results from phase one of a four-part study yesterday, which said the SAR's overall competitiveness rankings are well ahead of other economies and cities in the Asia-Pacific Region.

The study says that Hong Kong gets right in most of the "first order" business conditions, which include basic legal and regulatory conditions, tax rates and openness.

Yet, Hong Kong is lacking in some of the "second order" conditions like education, air quality, quality of life and the political system when compared to the world's best.

The BFRC, which is widely deemed as the policy think-tank behind Chief Executive Donald Tsang, recently commissioned a study on the multidimensional approach of Hong Kong's competitiveness.

Strategy consultant Michael Enright said he had attempted to assess Hong Kong's competitiveness from different perspectives with reference to surveys by international organizations.

Hong Kong's international competitiveness assessments vary, he said. For example, the World Economic Forum (WEF) 2005-06 survey probably understates competitiveness because a different methodology is used.

However, the study by Lausanne-based business school probably overstates it, while the WEF's 2006-07 survey is closer to reality, he said. "WEF 2005-06 gives Hong Kong a middle ranking based on perception of deterioration in public institutions and low rating for education and technology," he said.

"The overall conclusion is that Hong Kong has a very competitive economy, but there is room for improvement in specific areas."

He went on to elaborate on the deterioration in public institution by saying that too close relation between the government and the consortiums gives the impression that the interests of the consortium are protected.

To sum up, Enright said Hong Kong gets most of the "first order" business conditions right but it is lagging behind in some of the "second order" business conditions.

"The second order conditions are likely to become more important in future as the other economies get the basics right and Hong Kong strives to create a higher value-added economy.

"These are clear targets for investment and further development," said Enright, who is also a visiting scholar at the School of Business of the University of Hong Kong.

On Hong Kong's competitiveness and economic growth, Enright said the SAR, being part of China and the gateway to the mainland, will also benefit from the economic growth of the mainland cities.