China joining the World Trade Organization, an agreement signed at a recent meeting in Doha, Qatar, is not going to solve all our economic problems, whose roots are at home. For months, as the recession deepens, our officials are depending a recovery on China's entry into the WTO. This is wishful thinking at best and delusion at worst. Unless we tackle the domestic issues that are making us less competitive, not only are we not ready to benefit from WTO but be hurt by it.

The private sector, unlike the insulated government, cannot afford to be naive or simplistic. We realize that Hong Kong needs urgent reforms, not just of laws but attitude, to get our economy moving again and prepare ourselves to take on the WTO challenge.

Premier Zhu Rongji was asked whether WTO would deliver China into the Promised Land of prosperity. Even though he is the ardent advocate of China's accession to the trade body, he has reserved final judgment, saying only time will tell, because the risks and opportunities are numerous and interwoven. The Premier said China has to make the right decisions about altering laws, customs and practices to gain the most from increased foreign investment, open competition and free markets.

Mr. Zhu has that prudent frame of mind, which is lacking in the Hong Kong government that the Premier had inadvertently, but cogently, criticized as being indecisive and inert. At last Wednesday's Legislative Council members debated the very subject of our economic environment, which is bad going to worse with no chance for even a modest rebound until the end of next year.

The Liberal Party concluded some time ago that our economy has been rendered less competitive by the very policies the government adopted from years ago which have become institutionalized and, therefore, difficult to change. Our Hong Kong dollar peg to the US dollar in effect for 18 years is fixed which prevents us from competing with those economies whose currencies are free floating. Because of this peg, our costs of business - salaries, rent, utilities, and other living expenses - have been made less competitive than our regional rivals. We agree that the peg should be kept in the near future because of current uncertainties. Therefore, the only option open to us is to cut costs on wage bills and improve business efficiency.

Liberal Party legislators understood this and made a gesture to reduce our salaries by 10% with an invitation for civil servants to respond in kind, arousing from them angry, personal rebukes. A 10% cut in civil service salaries would reduce $16 billion in the coming budget deficit and avoid perhaps a tax increase or cuts to programs for the needy. The civil servants' sense of outrage stems from what I suppose is a feeling of total entitlement matched with scorn for the public interest.

Not only is the government insensitive to the plight of many in our community who are losing jobs and facing wage cuts. Officials are also bent on micro-management by proposing all sorts of rules and regulations that stifle business development. I cite as one recent example the "Occupational Safety and Health (Display Screen Equipment) Regulation" that, when adopted, would be very hard to implement and create problems for small to medium enterprises. We must not over-regulate!

The Liberal Party conducted a survey last week to gauge the business sector's mood. More than 85% of the 256 enterprises that responded to the questionnaire said they were "dissatisfied" with the present business environment; of these, 34% stressed that they were "very dissatisfied". Over three-quarters described laws on business as being too harsh and draconian; 88% wanted these restrictive measures amended or abolished.

At last Wednesday's Legislative Council motion debate several of my colleagues outlined the inefficiency and excessive bureaucracy of doing business in Hong Kong. A businessman getting into the restaurant trade, for example, can spend up to a year applying for a wide range of licenses from various departments. A developer has to endure the same expensive and time consuming run around for inspection and approval from many departments such as the Fire Services, the Electrical and Mechanical Services , Drainage Services, Water Supplies, Building, the Lands, the Traffic, Town Planning and Environmental Protection. Confronted with such a costly mess, the Liberal Party last week proposed one stop licensing application procedure for different businesses.

Not only businessmen are frustrated. The Liberal Party also interviewed by phone 1,126 families, almost three-quarters of whom felt the business environment, and therefore their own work prospects, is bleak. Even though these are supposedly the beneficiaries of a range of labor laws and measures - such as more paid holidays, overly generous maternity leave, Mandatory Provident Fund (MPF), labor insurance, and long term gratuity - they instinctively know that, if businesses flounder or fold, many would lose their jobs and these benefits would be meaningless.

Businessmen are practical. They are not trying to circumvent necessary regulations or seeking a reversal of the benefits workers have gained but only strike a right balance that can keep themselves in business and staff employed because many factors are not contradictory, rather complementary. They requested in the survey and in the Legco debate for government to streamline business license application processing, reduce fees and charges, and freeze MPF and similar ordinances until the economy revitalizes. The Liberal Party agrees with those reasonable demands and proposes, for a start, a "Business Environment Assessment Committee" similar in scope and statutory powers to those enjoyed by the Advisory Council on Environment. Even though the Legislative Council's unionists have rejected the suggestion, such a Committee remains a sound idea for helping to cut red tape and encourage business.

Unless the government acts on business sector's sensible requests, it would further alienate investors and employers, who could be tempted away from Hong Kong by China joining the WTO. I really hope officials can work as hard for the public interest as they do in defense of their inflated pay and perks. If not, then these self-appointed custodians of the communal good will have to answer for the WTO opportunities missed and Hong Kong's decline. History is always less forgiving than the tolerant, patient people whose trust must not be betrayed or abused.

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