Motion Debate on Motion of Thanks

Madam President, the problems that beset Hong Kong now are far from unique. Right across the world, in countries as diverse as Argentina or Japan, governments are grappling with economic woes for which it seems that at present, there is no end in sight.

Of course, it is disheartening for our citizens to hear the stark facts spelled out once again in this year's policy speech. We had become so accustomed to ever-growing prosperity in the '80s and early '90s with increased fiscal reserves that of all the people in the world, we are perhaps the least adapted to cope with economic downturn.

That may be why there has been a generally negative response to the Chief Executive's speech. Critics seem to expect the Government of the Hong Kong Special Administrative Region could come up with answers to external problems like a magician pulling rabbits out of a hat. Fiscal problems are not so simple. This is a changing world. It is in the process of becoming one vast global market with ever-fiercer competition and we must adapt to it or go under it. That means economic restructuring on a major scale, and that takes time. It means making our economy leaner and fitter, more keen-edged, more streamlined, and it also means greater sacrifices from many of us.

Naturally, that is not the kind of message that Hong Kong wants to hear. But it is undoubtedly the way forward. When we are facing a predicted deficit of over $70 billion this year, we must welcome every move that the Government makes to reduce spending and increase revenue — no matter how painful or distasteful that may be.

The Liberal Party has been urging action to reduce expenditure on the Civil Service for a long time, and we are relieved to learn of plans for a 10% reduction in staff numbers. We are also very encouraged by the news that civil servants are willing to accept a pay cut if necessary. At time of crisis, we must all do whatever we can to help, and we would hope that, in consultation with the Civil Service, the precise details will be announced in the Budget speech in March, when we will be able to learn many more details of the plans announced in the policy speech.

In view of the huge budget deficit projected last year, next year's Budget is the time to impose tax increases, but also a cutback in civil service pay to bring it back to the 1997 level, which would be perfectly fair, given that we have suffered a 13% deflation in the same period. There has been enough time to prepare for this, and we cannot afford to prevaricate any longer. If there are reasons for further delay, then they should be clearly explained. At the same time, it should be emphasized that whenever the cuts are decided, they will be backdated to 1 April 2003, the exact same date for tax increases.

I believe that this is fair and what the public wants, and what the majority of civil servants should accept as necessary and helpful to our economy in a time of need.

Madam President, the rest of us face the unpalatable prospect of small increases in taxes — another necessary evil in troubled times. Hong Kong is celebrated for its low and simple tax base, and we must strive to keep it that way, or lose one of the greatest selling points in attracting both local and foreign investments here. But however much we deplore increases in salaries or profits tax, or land and sea departure taxes, we can take comfort from the promise that the rises will be small, although the contribution that the extra revenue will make to reduce our deficit will be meaningful.

Just as crucial are moves to attract more investors, from abroad and inland. An inflow of new blood from the Mainland, allowing young professionals and entrepreneurs and their families to settle here and benefit from all the expertise and knowledge that a world city like ours can offer, will revitalize the dynamism and enthusiasm which has been lacking here lately. And if the new task force to improve Hong Kong's business environment is made up of people at the sharp end, who know from personal experience where the obstacles are, and what needs to be done to make things better, then it should come up with some positive and constructive ideas to attract investment and create new jobs.

So long as Hong Kong returns to the policy of "big market, small government" and continues to be celebrated for its free flow of information, it will always attract venture capital and be the best place in Southeast Asia to set up regional headquarters.

Madam President, these are testing times, but the difficulties are not insurmountable. We are still extremely strong in fundamentals. Our infrastructure, our people's know-how, our rule of law, our freedom of expression, efficient port facilities and our unrivalled strengths in finance, tourism and logistics equip us to ride out the present storm. Adding to that, we have the backing of China, which continues to forge ahead even in the present very challenging global economic crisis.

If the policy speech did not produce an immediate panacea for all economic ills, that is because recovery will take time and will be a gradual process rather than an overnight cure, especially when our society is determined to keep the currency pegged to the US dollar. If people look beyond the present woes to the long-term prospects, they will see a far brighter picture. We have the Disney Theme Park in full steam, there are 20 new hotels in the pipeline to cope with Hong Kong's growing popularity as a tourist destination — a fact that comes not from the Government, but no less an authority than the World Tourism Organization — and we have no lack of visionary ideas and big thinking in proposals like the Hong Kong-Macao-Zhuhai bridge, which is undergoing a feasibility study by the State Development Planning Commission.

Madam President, if that can be concluded quickly, it will chime in perfectly with the positive moves that are underway to link us ever closer to Guangdong and the many cities of the Pearl River Delta. The plans are there, the prospects are extremely positive. But we must be a bit more patient and, above all, optimistic. Behind the sombre words of the policy speech, that is the real message: The economy will recover, the jobs will come, provided that everyone in Hong Kong is prepared to do his or her bit for Hong Kong.

Madam President, I have just spoken in English on the economic development from four aspects. Besides the tremendous support from me personally, the Liberal Party has some concrete suggestions to make as follow-up.

First, in the context of economic development or recovery, Hong Kong has now adopted a much better, new policy towards mainland talents and professionals. Subsequent to the abolition of quota restrictions on specific trades and industries, talents from the Mainland are now being treated on a par with those from Europe and the United States. It is really wonderful that the former may now bring their families with them. Many talents from overseas come to Hong Kong probably because their companies or friends know Hong Kong very well, or they think they can find their desired jobs very easily here. In the past couple of years, many mainlanders became less enthusiastic in taking up employment in Hong Kong because of the attitude of Hong Kong people towards them. The Hong Kong Government should indeed actively publicize Hong Kong in various major cities on the Mainland, given that there are many choices for mainland talents and professionals and Hong Kong is not their only option.

Some members of the community have questioned whether mainland professionals taking up employment in Hong Kong will rob Hong Kong people of their "rice bowls". As far as I understand it, professionals with university qualification and 10 years' working experience can generally earn RMB20,000 yuan to RMB30,000 yuan monthly in Shanghai. Such a salary level in Shanghai is almost equivalent to a salary level of $60,000 to $70,000 in Hong Kong. They would not have come to Hong Kong, if not for our lobbying and incentives. Instead of questioning their motives of applying to work here for fear that the "rice bowls" of the people of Hong Kong will thus be robbed, we should indeed welcome them with open arms. I think the Government can launch publicity work in this area. Of course, some may question the necessity of publicity, given that Hong Kong is very good already. Recently, the principals from several prestigious institutions in the United States, including the Cornell University, visited Hong Kong to appeal to Hong Kong students to pursue studies in their institutions. I asked them this question: Why is it still necessary to launch publicity in Hong Kong, given that the ratio of admission of local students is already close to 100:1? Their response was: We still have to publicize our schools to the rest of the world however good we are. I think Hong Kong has to adopt this attitude too. We must not think that we can wait quietly for applications from mainland professionals, since the scheme for the admission of professionals has already been launched. Now that one year has passed. I wonder if Members have noticed that the response from mainland professionals has apparently not been enthusiastic. Actually, the number of mainlanders now wishing to come to Hong Kong is less than those during the period between 1995 and 1997, or even earlier. I hope the Government can pay attention to it.

The second point I wish to make concerns investment settlement. A new proposal has been made with respect to the investment settlement arrangements for people from abroad. Yet, the matter remains unresolved insofar as mainlanders are concerned. This is of course understandable. Given that free exchange of Renminbi is not yet permitted, the country may probably have fear of a capital drain. So what can be done? I can think of a short-term solution. As far as I understand it, if mainland businessmen who have applied for two-way permits to do business in Hong Kong are found to have behaved well, that is, they return to the Mainland before the 14-day deadline, they may be granted a further three-year period of stay by the authorities. In that case, they will find it very convenient to do business in Hong Kong. However, I have been told by mainland businessmen that their investments in Hong Kong are subject to limitations — they are not allowed to set up companies in Hong Kong or to act as directors of local companies. I think the Hong Kong Government should examine this issue shortly. Two-way permits used to be issued to mainland employees working in branches set up by Hong Kong businessmen in the Mainland to work in the headquarters set up here. Now the situation under discussion is just the opposite. Why can mainland companies not set up branches in Hong Kong? This will impede our search for further investment opportunities. I also understand that businessmen or companies operating private enterprises in the Mainland usually hold two accounts in different currencies: a Renminbi account and a foreign exchange account. Actually, mainland businessmen already hold certain foreign currencies. There will be no problem of exchanging Renminbi for foreign currencies, even if mainland businessmen are allowed to make investments in Hong Kong. It is therefore not necessary for the country to waste too much effot dealing with this matter.

The third point I would like to raise concerns our integration with the PRD. Many of the Principal Officials serving in the Government today, like Secretary Antony LEUNG, Secretary Henry TANG and Secretary Frederick MA, used to be members of the business sector. Of course, Secretary Stephen IP is very capable too. I have the feeling that mainland officials, particularly many of those from the PRD, because of their long-time partnership with the Hong Kong business sector since the '80s and the '90s, compare better than Hong Kong officials in terms of communication with the local business sector or fulfillment of their investment commitments. Hong Kong officials are probably more pragmatic. Even if they have undertaken to implement certain projects, they will still have to first apply for funding from this Council and then conduct various studies. As a result, the progress of the projects is usually very slow. On the contrary, projects can come to fruition very quickly on the Mainland after officials have given their approval to certain projects. Insofar as the PRD initiatives are concerned, it will be most welcome if the business sector can join the responsible Secretaries to discuss with mainland officials. The project can probably be expedited if the local business sector, particularly senior-level personnel from major corporations, can take part in discussions with respect to the construction of bridges and roads, handling of logistics centres, and so on.

Now I would like to respond to the question on issue of bonds. The Liberal Party still has reservations about this proposal. Many countries resort to issuing bonds simply because they do not have any reserves, or they have to undertake certain massive infrastructure projects that can yield returns only in the long run. We have abundant reserves because we have purchased some bonds from overseas countries. Conversely, if we are to issue bonds, it is impossible for Hong Kong, owing to its status, to offer a higher rate of return than the United States. Will a person intending to make investments have more faith in the United States Government plus the greenback or the Hong Kong Government plus Hong Kong dollar? I believe they are somewhat different. Therefore, the Government has simply no justifications to issue bonds at low interest return and, at the same time, pay high interest to someone else, for losses will definitely be incurred. Actually, all bonds must be redeemed sooner or later. This is the same as credit card loans in the sense that repayment must be made sooner or later. So why do we not use our own money while we still have it? I therefore consider it inappropriate for Hong Kong to issue bonds.

Lastly, Madam President, on behalf of the Liberal Party, I would like to express its disapproval of the amendment proposed by Dr YEUNG Sum on behalf of the Democratic Party. We really doubt if it is really the case that Dr YEUNG expressed regret simply because the Government had failed to submit a White Bill on the enactment of laws to implement Article 23 of the Basic Law. After the publication of the policy address, Members from the Democratic Party have, over the last couple of days, expressed dissatisfaction with the Government over numerous issues, condemning the entire policy address for lacking substance and Principal Officials for refusing to exchange views with them, only that the wording "regret" has not been used so far. Is it true that the Democratic Party will give the policy address its full support once a White Bill is submitted? I do not think this is necessarily so. As such, the Liberal Party will later vote against Dr YEUNG Sum's amendment. Thank you, Madam President.