Motion Debate on Motion of Thanks for Policy Address (2) (26 October 2006)

MR JAMES TIEN (in Cantonese): Madam President, today, in this session, we will discuss issues related to commerce and industry, economic services, financial and labour affairs, areas which the Liberal Party as a political party with the outlook for the business sector is deeply concerned.

Madam President, since 2003, the economy of Hong Kong as a whole has recovered rapidly. The unemployment rate has come down to four-odd percentage points, the level of several years ago, while economic growth has picked up gradually. We can also see the stock and property markets scaling new heights. I thus have full confidence in Hong Kong in the coming year, that is, the prospect in the coming year as mentioned in the policy address. Certainly, part of the credit should go to the good governance of the Government. I have to mention the financial front in particular, which Mr Jeffrey LAM has also mentioned earlier. Many people used to think that the abolition of estate duty would only attract overseas Chinese in the Southeast Asia, such as those in the Philippines, Thailand or Indonesia, to come to Hong Kong. However, we find out recently that a lot of Indians in India are interested in it and have made enquiries about it. The economy in India is now prospering. Many people are of the view that, in terms of political development, India may grow faster than China, while in terms of economic development, particularly technological development, India has indeed outrun China. In respect of economy, many listed companies of India have achieved outstanding performance, and many Indians are very wealthy. They consider that upon the abolition of estate duty in Hong Kong, it will be of great help to them to invest in Southeast Asia, including the Mainland, via Hong Kong.

On the other hand, last year, the Financial Services and the Treasury Bureau proposed to exempt offshore funds from taxation and set out clear terms and conditions in this respect. At present, many overseas companies think that they no longer have to worry about this uncertainty when they conduct transactions in Hong Kong. We think this is a point worth mentioning. Regarding another relatively controversial issue, I think it is a matter of disagreement over terminology, that is, the so-called "positive non-intervention". On the interpretation of the term "positive non-intervention", I think, in English, the word "positive" should be rendered as " 正面 (favourable)" in Chinese. That is to say, when something is favourable, there should be no intervention, but when it is unfavourable, intervention is in order.

But it does not mean that in the course of "positive non-intervention" estate duty should not be abolished and that other new problems should all be ignored. I think all these are good proposals. However, I think that now in Hong Kong, the one sector that badly needs assistance, as Mr Jeffrey LAM mentioned earlier, is the SMEs. They really need help. We can note from the development of large consortia in the Mainland in recent years that they are constantly finding opportunities to invest in various areas. In the past, their operations were often in the real estate sector, but now, their investment in road construction, electricity supply and even large-scale investment projects has greatly increased. As for identifying opportunities, the Liberal Party met with the leader in Beijing recently, and they gave us an analysis on the opportunities available in China. They, in fact, wanted to encourage more SMEs from Hong Kong to go to the Mainland, not to big cities like Shanghai and Beijing, but rather other secondary cities where opportunities abound. Certainly, in encouraging SMEs to seek opportunities in secondary cities, the Government has in fact done a lot. For instance, deputations led by the Chief Executive have already covered a number of places. These can indeed be called the "ice-breakers", opening up communication channels between the leadership of both sides and that between the business sectors in the Mainland and Hong Kong. I think SMEs will thus be able to find abundant opportunities in this respect.

Certainly, some people may say, as large consortia have found opportunities in the Mainland, professionals have also got their opportunities under CEPA and now even SMEs are relocating their operations to other places one after another, this trend will be unfavourable to the general wage earners in Hong Kong. However, in view of the continuous drop in the unemployment rate recently, I think we do not have to worry about this. The mechanism we have will adjust naturally to strike the balance, and job opportunities for the people of Hong Kong will continue to exist. Recently, an opinion poll conducted in Britain has caught my attention. According to that opinion poll, where do you think most foreigners desire to visit? Hong Kong, it is on the top of the list. Of course, you may say that it is because Hong Kong used to be a colony of Britain and the British thus have a good impression of Hong Kong. This may be one of the reasons ─ my colleague beside me reminds me that it is because of our good promotion, and it is certainly because of our good promotion that so many people have come here. As for other aspects, I think the Government does need to step up its efforts in assisting the SMEs.

Moreover, there is another point which I would like to make. Regarding the motion debate last week which talked about the economy, I think there are two issues worth mentioning. First, it is about GST. Since a detailed debate was held on this last week, I am not going to talk about it at length again. The other issue is labour matters, one of the areas covered in this session.

Madam President, let me first talk about GST. I recall that two years ago, the Liberal Party did state that if we wanted our economy to develop soundly and at the same bring revenue to the coffers and create more job opportunities, we thought it was worthwhile to consider the establishment of a so-called restricted multi-purpose gambling facilities on Lantau Island. However, at that time, for all kinds of reasons, the Government considered that we should not put forth such a proposal, for some people in Hong Kong did oppose it and the Central Government might have different views.

However, the fact proves that we were not wrong to say so at that time. Which point we said was not wrong? We noticed two years ago that in Macao, a place with a population of several hundred thousands, around 300 000 to 400 000, its Government was spending around $12 billion to $13 billion per annum. From the development of casinos in Macao at that time, it could be inferred that it was receiving a colossal amount of revenue from the entertainment industries. The amount is so enormous that it did not have to worry about losing part of its business to Hong Kong even if Hong Kong considered doing the same business.

Actually, it is right. For we have learned from a recent report in newspapers that the total turnover of Las Vegas in the first half of the year was US$3.3 billion, while that of Macao had reached US$ 3.1 billion. Moreover, it was pointed out in another report released recently that the turnover of Macao had exceeded that of Las Vegas. Based on this figure, the amount of revenue the Government of Macao will receive from the entertainment sector this year may reach some 30 billion MOP. In other words, in Macao, the amount of revenue generated from the gambling sector in a year is already three times that of its government spending. In that case, can the Hong Kong Government reconsider the proposal or negotiate further with the Central Government? If this development trend continues, Macao will certainly accumulate a large amount of reserve, but given its population of only some 300 000, is that amount of reserve necessary? In the case of Hong Kong, not to mention professionals employed by large consortia and those who are able to find jobs under CEPA and employed by SMEs, for the great majority of low-income earners and low-skilled workers, the place where they can most easily find a job is entertainment establishments, that is, jobs falling into the so-called casinos category.

Macao is even facing a shortage of manpower now. When you visit Macao, you may meet some familiar faces, for workers who used to work in Hong Kong have been headhunted to work in those hotels. The same case also happens to restaurants, for workers in Hong Kong have also been headhunted by restaurants in Macao. Never ever had any one thought that this would happen. In the past, it was usually people from Macao who came to Hong Kong to find jobs, and Hong Kong people seldom went to work in Macao. I think the labour shortage situation in Macao has now reached a point that its unemployment rate is nearly zero.

Moreover, I would also like to talk about the Wage Protection Movement. The Government introduces the Wage Protection Movement and proposes to co-operate with the business sector and the labour sector to provide wage protection for the cleansing and guarding services sectors as a start. The Liberal Party fully supports the Movement. The five major business associations in Hong Kong have also indicated immediately that they would do their level best. Moreover, they have already started introducing the Movement to their members, hoping that with all large corporations taking the lead, other SMEs which have the capacity will join the Movement soon. Recently, I have heard some friends of my mine in the business sector say that they have just promised to render assistance by all means on one issue. We fully agree that society should give more attention to people earning particularly low incomes. If they are given two more years, they will do their level best. But in just a little while, the Government has already bowed to the pressure of Members from trade unions. In the 34th paragraph of the policy address, it is said that it would "monitor the effectiveness of the Wage Protection Movement…… and conduct a comprehensive review two years after the implementation" ─ the word "after" is used. But all of a sudden, the Government has changed it to one year. I believe this will make a lot of people, the business sector in particular, think that the Government is again making unpredictable changes, which is not the way in which a Government pursuing strong governance should act.

At first, the Government proposed that it should be two years, and large corporations would certainly have no problem with this. As for SMEs, the Government said that the figure was the average figure. With regard to average wage, the business sector holds that wages do vary. Take the wages of security guards as an example. Security guards employed by large corporations to work in Central may get $7,000 to $8,000 monthly, but others working in North District or Tuen Mun in small-scale domestic premises may only get $4,000 to $5,000 monthly. When the Government sets the average wage at around $5,000 to $6,000, we will regard $6,000 as the average. It is readily seen. As it is the average figure, it means that about half of the employees are earning wages above the average while the other half are earning wages below it. Of course, no one will suggest lowering the wages of employees who are now earning $7,000 to $8,000 monthly to the average wage of $6,000. No one will do so. The only way to cope with this is to raise the wages of employees now earning $4,000 to $5,000 monthly to the average wage of $6,000. However, many SMEs and commercial tenants not operating in Central District already find the target quite difficult to achieve within two years. But, suddenly, it was changed to one year. Some members in the business sector thus feel concerned about the intention of the Government. Does the Government really want employers to do their best to foster harmony in society, or does it think the other way? All of a sudden, Members from trade unions proposed shortening the period to one year. There was also another idea which proposed to limit the review period to one year for they knew for sure that employers would not be able to meet the target within such a short period of time and legislation had to be enacted as a result.

For according to the initial proposal of the Government, employers would be given two years to meet the target, and if they failed to do so, the Government would decide whether or not it would enact legislation or consider enacting legislation. This is a hidden worry to many members of the business sector. I hope the Government can clarify this point. Just as Mr Jeffrey LAM said earlier, the latest Nobel Prize Laureate in Economic Science, Prof Edmund PHELPS, also considers that more often than not, arguments on minimum wages and average wages seems to be pretty correct at first glance, but since employers have to employ staff at a higher cost, that is, from some $4,000 to some 5,000, they will definitely select workers with a higher level of skill and many non-skilled or low-skilled workers are bound to become jobless. This is his view and I am just quoting him. Under this circumstance, what worries the Government most is whether the number of people applying for Comprehensive Social Security Assistance (CSSA) will increase. This will naturally be the case, for incapable people will become unemployed. If capable people do become unemployed, you do not have to worry about them, for they will easily find other jobs. I think this is a point to which the Government should pay attention.

We have to understand that SMEs will be the hardest hit by the average wage, and some management companies of small and medium scale or many owners of private buildings will also be affected, for they all have to pay management fees and cleansing service charges. Many of them belong to the middle class, so what do they think about this? People may have the impression that the request for prescribing an average wage or minimum wage is only related to the business sector or large corporations, but actually, many other people will be affected as a result.

As I mentioned earlier, at present, the stock market is scaling new heights, the property market is flourishing and the unemployment rate is dropping, the best way to induce a rise in the wage level is ─ we used to have a very low unemployment rate, around 2%, in the '90s, but I think we can hardly return to that level, unless we set up casinos like Macao. At present, there is a shortage of supply in the manpower marker. Every employer fears that his employees will look for greener pasture. They fear that their employees will quit at any time. Employers now have to put up with their employees' temper and have to ask their employees what they can do for them when their employees are unhappy. There are surely some problems, such as family matters, which employers cannot help. But if the employee complains about his low wages or that another company is offering him higher wages, the employer will immediately say, "I may perhaps give you a raise, so will you stay, for it is better to work in a familiar environment than a new one." I think we are confident under such a circumstance. Therefore, many members of the business sector are of the view that if the Government implements the Wage Protection Movement for a duration of two years, they are confident that they can make it. We are also confident in encouraging SMEs to do so. One of the major reasons is that we think the economic development in the next two years will be extremely good, and employers will have difficulty in recruiting staff, so there will certainly be a rise in the wage level. Since Hong Kong always upholds free economy, I think, in particular in this respect, "positive non-intervention" should be desirable. From our point of view, non-intervention should be applied in such a way.

Madam President, this is all I have to say in this session. Thank you.