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The following is the speech by the Chief Executive, Mr Tung Chee Hwa, at the luncheon jointly organised by chambers of commerce today (Friday):
C C Philip, chairmen of all of the chambers of commerce, friends, ladies and gentlemen,
I am delighted to be back here. I am truly amongst friends especially after yesterday afternoon's experience. I am so happy to see so many familiar faces, many I haven't seen for some time. I'm also happy to have a chance just sitting next to my own brother, and we haven't had lunch or dinner together for a long, long time also. But I'm grateful for this opportunity to be here, talking to you.
The third Policy Address was a very important Policy Address because it marked also the midpoint of the administration. It marked the process looking ahead at the beginning of a new millennium, so it was a Policy Address which I myself, my colleagues in the Government, really spent a lot of time on trying to see and to develop into looking to the future.
It's been two years four months since the return of Hong Kong. It's been a very eventual two years four months. We had to overcome, I think, two very major challenges in the process. One is the challenge brought about by the change of status in Hong Kong from being a colony to becoming part of China under 'one country, two systems', and it is an enormous undertaking because it's never been done before, anywhere in the world. It is an effort that took all of us - all of you sitting around the table - and all of the six and a half million people to work together to make it work. I'm very pleased that after two years four months, we see things are really working. 'One country, two systems' has had a very good beginning and the foundation is now solidly being laid. This is amply manifested by the fact that more and more people are now returning to Hong Kong. They emigrated from Hong Kong before 1997, and also amply demonstrated by the fact that almost 55,000 families in 1998, the worst year probably in Hong Kong's history from an economic term, spent over $100 billion buying new apartment units, and these are tremendous manifestation of confidence in Hong Kong's future especially, as I say, time was particularly difficult last year.
We also have to face the Asian financial turmoil squarely. It began the day after the return of Hong Kong on 2 July in Thailand. I have to say that we all underestimated the severity of that particular turmoil, but we stood firm. We worked hard. All this last year, after very careful deliberation, we went into the market, not with a view to control the market, but with a view to liberalise the market, to make sure the market can operate as a free market. And in doing so, I think we preserved the financial integrity of Hong Kong and prevented a possible meltdown of our economy. We were wrongly criticised everywhere but I think, looking back, we did the right thing.
We're also facing with the downturn of the economy, we took many steps to try to stimulate the economy, but at the same time, laying the foundation for a long term recovery. To stimulate the economy, we cut taxes, we reduce rates, we freeze charges. All total about $40 billion were returned to the community. We boldly move ahead with five-year plans in infrastructure projects, roads, railways, schools, sewage plants. We also set up a financial assistance for the medium and small-sized industries, knowing that how important they were for us as a community. And on the tourism front, we are also trying as much as we can to revive the industry.
Looking back, it has been a very difficult two years. I'm pleased that measures seem to be working. Of course, the environment around us has also vastly improved, whether it's Japan, Thailand, Korea, Taiwan, Singapore, economy all picking up very nicely. So I'm happy that we are now moving out of the bottom and that we expect that the recovery for the second half of this year, we'll see a growth rate of about two per cent or maybe over two per cent.
These have been difficult times but I'm glad that in these difficult circumstances, the community pulled together and we moved forward. But throughout all this time, I want to assure you the Government never lost sight as to where we want to be in the future because it is so often, so easy to lose sight of where we want to go because there are so many immediate problems. We never lost sight of where we wanted to go. And we in fact took the opportunity of all the difficulties to re-examine every aspect, of what can be done for this particular community, and I thought for those who might have missed the two and a half hour policy speech, I'd just like to recite some of the points.
First of all, we ask ourselves what are the new challenges facing us as a millennium beginning? First of all, of course, we are now in a world where the economy is very global, where the information technology is changing the way of doing business, and this will have far ensuing impact to almost every community, every country in the whole world. And to Hong Kong, these changes will be devastating to us if we do not respond and take appropriate measures.
Secondly, we look at Mainland of China. As many of you do, you visit Shanghai, you visit Beijing, you visit Tianjian, and almost all the major cities, you see the changes that's happening inside the country.
One of the reasons of our success in the past, we have to admit, is because there was a huge difference between many cities on the Mainland and Hong Kong, and the Mainland as a whole and Hong Kong. But as the gap narrows, we face a lot more new uncertainties. Where do we go from here? People on the Mainland, they are hardworking, many of them very well educated, and because of their involvement and participation in many foreign businesses, they have picked up very fast. Where are we going to go? How do we face this new challenge? But on the other hand, we can also see that the Chinese economy is already the seventh largest in the world and that the World Bank says that by 2020, it could become the third largest in the world or certainly one of the largest. Well, there it is - a lot of opportunities for us to participate in that economy. So there are challenges, worries, but on the other hand, there are many opportunities. So that's the second challenge; second change we are facing in Hong Kong.
And then there's a third change. The third change, of course, is what's happening in Hong Kong ourselves. In the 90's, there was a bubble economy. We relied a great deal on the rapid rise of physical assets to increase wealth and to get more growth, but what about the future? Are we competitive? Is our cost being effective? And it is really, if you look at Hong Kong in the 60's, Hong Kong had a major change because we became a labour-intensive manufacturing centre. In the 80's, we had another change. Hong Kong became a service centre as we moved all our manufacturing across the border. Now, what is Hong Kong going to be in the 21st century? The question we have to ask ourselves, and how can we make ourselves more competitive if we are going to continue to become a service economy? I know many companies here are down-sizing, and it is important, and I know many companies are increasingly using IT to improve the efficiency and that is important, too.
So within Hong Kong, we are facing change too, and the question is that we're facing all these changes, all these three major changes. The question is, where do we go from here? One thing I'm sure - very sure - the reasons of past success do not guarantee future security. It does not, and in this government, throughout all the two and a half years, very difficult environment, facing all the day-to-day issues. We never lost sight in thinking and planning where we want to be in the 21st century.
We felt the most important thing is for us to position ourselves. There are many cities in Asia who aspire as to become this and that. What could Hong Kong become in Asia? Because obviously, because of our tremendous location, our obvious role is in Asia, and we felt, after a lot of soul searching and advice from the Executive Council and the Commission for Strategic Development, that really, we can become the most cosmopolitan city of Asia; New York of North and South America, and I know those from San Francisco won't quite agree, or London of Europe. Even my friends from Paris can't even agree, but we feel that we can become the New York of the America or the London of Europe, and it's not just to be fashionable. It's not just it sounds nice. Because if you look at it, those important cosmopolitan cities, their per capita income is higher compared with the rest of the country. And then what therefore is important to us is to say to ourselves, 'Yes, do we aspire to this but can we get there? What does it take to get there, and what does London have? What does New York have? What does Hong Kong have?' And if you look at this, you will find, you know, they are of course overwhelmingly important financial centres. We are a financial centre in Asia, perhaps not as important, but we are hoping as the Chinese economy grow, we will become more important.
There are centres for tourism and we are also the most favourite tourism destination of Asia. About 10 million people every year visit Hong Kong, and I would hope this would rapidly increase if some of the discussions we are conducting will become successful.
Remember, the two cities are transport centres, airline hubs, cargo, port hubs. We are also a very successful air centre and a very important container port centre of Asia. So if you look down the list, many things they have, we also have, you know? And we are ahead of many of the other cities in Asia who aspires to this. So the important thing for us to do is to make sure that all we have, all these advantages or strengths, we need to consolidate them, work hard on them, make sure everybody else who want to catch up, they won't be able to catch up with us.
And on top of that, we have another strength which other cities in the rest of Asia do not have is our relationship with the Mainland of China. That economy is growing. It is growing very fast, and there is a whole lot of opportunities for us to participate in that economy which some of the other cities don't have the opportunity on.
So there you are. We are in a wonderful situation. We have all these advantages and the question we then ask ourselves is, 'Well, what else do we need to do?' And then, of course, you understand that, you know, we come to these conclusions which I spoke a great deal upon at the policy speech. One is that to ensure Hong Kong becoming the most cosmopolitan city of Asia, we need to look at the human resources. On the one hand, although we have had a successful education system, but we are now faced with having to move into a knowledge intensive economy and that our education system, therefore, must be designed to match that aspiration.
And then the other, of course, is to have a quality of life that everyone in Hong Kong should be very proud of. And if you look at that, you right away realise that environment issue is a very serious issue, and I know in the community, the polls show that Hong Kong people's care - you know, if you compare with all the other things we care about - is only about two per cent, and then someone told me I'm politically suicidal, you raise such a high profile on environment, but I think it's so important to Hong Kong's long-term future. We need to do it, and I'm quite sure with all your help, we will be able to convince the whole community to come along with this. It's just like -- investing in environment is like investing in schools and hospitals, roads and railways. It's investment that needs to be made for the future.
But it is not just environment only. It's not just about the air and the water and the sewage treatment and waste disposal, and these are all very, very important, and I want to assure you that the government (a) has the financial resources; (b) the government has the determination, and I think, has the support of many in Hong Kong to get on with it. We need to mobilise the public opinion and I know we will be able to deliver this.
I have said that we will begin to see - if the measures we have planned on, for instance, air pollution - start to work, and I know it starts to work. We will see improved air quality from probably 2002, 2003 onward, and by the time of 2005, our objective - and we will define this internally - is to make sure Hong Kong's air quality is as good as New York and London by 2005, and we will work very hard at it and then we would have all the reasons why we believe it will work. On the drinking water, many of you, I know, are very concerned. I just want to assure you that after many, many discussions within the government, we're quite sure the drinking water today is safe. It's well treated. It's WHO standard. It's American standard, but there's no doubt that the Dong Jiang, where the water come from, is going to become increasingly polluted in the future, and this is why we are going to pay a lot of attention to this particular Dongjiang to make sure that in the years ahead, we continue to get a reliable source of water supply. So far it's all right, but we have to watch out for this and we'll work very hard to make sure this is done. Sewage, too. A lot of work needs to be done, and I don't think I should be going into details on this, and so is waste reduction.
But as I said earlier on, it's not just waste reduction. It's just not air quality. It's also about how can we make our ordinary citizens live a better life, and that's where we come to urban renewal - the need for urban renewal. Unfortunately, there are about 8,000 buildings which are over 30 years old and we believe there are about 2,200 of them lacking proper maintenance. So it's not just a question of safety. It's also a question of -- it's also a social issue, you know that, that this should be allowed to happen. And therefore, we will move ahead with urban redevelopment as rapidly as we can. The point has been made, 'Well, you were doing that before with a Land Development Corporation.' Land Development Corporation actually works very, very hard, but unfortunately the structure isn't quite right and I'm very hopeful that the new Urban Renewal Authority and my colleagues are sitting there, will have the proper tools and properties to go ahead much more rapidly on this.
And also, we are moving ahead in the urban redevelopment in a way somewhat different from previously. It's that we have identified nine urban areas that redevelopment must be done, and we will try to make much bigger areas for redevelopment, so that you can provide better road networks, greener environment and retaining some of the old heritage. So a whole lot more things we can do with it. It is quite bright for us to be looking at it this way because, as I say, it is the ordinary people of Hong Kong. We really need to look at this seriously.
Of course, Victoria Harbour is an integral part of Hong Kong. It's very much in your blood, in my blood, and the Government is determined to make the Victoria Harbour a heritage for which we would even be prouder in the future. And from Lei Yue Mun on the eastern side to Kennedy Town on the western side, we are going to plan the walkways, open space and cultural areas for people to walk, for tourists to enjoy the natural beauty, and also in order to ensure that the design of the reclamation - which is much scaled back - the design of the reclamation of Central, eastern Kowloon and the western Kowloon side. The reclamation and the overall design is the best you can find. We are going to invite talented local and international firms to competition, to see how we can all together choose the best way forward.
These are things that we need to build Hong Kong into a world class city in the 21st century. So it's about human resources, it's about the environment, including our living conditions all around, to make sure that we will become a world class city as the new millennium begins.
I know some of you will be concerned if I do not utter a word about what the role government plays in the economy because I keep on reading that I myself or my colleagues are always interfering with the normal function of the economy. So I thought I would take this opportunity just to say a few words on this.
You know, Hong Kong's success over the past 50 years is based on a belief of free market, based on a belief that it is a market which operates the best, and that fundamental belief is still with us today. It hasn't changed. We do not wish to interfere with the market. Only when there are abnormalities, we will interfere but even so, after very careful consideration and with minimum amount of disturbance. We believe in small government. We believe in prudent financial management. This has been the hallmark of our success. We continue with that. We believe in the government providing software infrastructure and hardware infrastructure. Hardware infrastructure meaning roads, railroads, airport, ports, cyberport. Software infrastructure meaning education, environment and some of the other things. So we would not change - we will continue to provide these necessary infrastructure. Of course, when we provide these infrastructure, we have to look at a strategic direction as we did before. Where do we want to be? How do we get there?
And I want to assure you the Government do not sit in a vacuum. We listen to the voices of the public, particularly the private sector businessmen who had a lot of experience in all these areas. We listen to them: what are the things that's going to be good for Hong Kong? What other things do I prepare to invest in? What other things that will lead us better into the 21st century? We listen very carefully to their views and then come to a conclusion as to the strategic direction we should take. But when we take the strategic direction, you can appreciate it is also market driven and private sector led, basically. So if you ask me, is there a difference? I have said and asked both Anson and Donald, I said, "You were here before me. Is there a difference?" And the answer is, "No, there is no difference." And perhaps the only difference is that because of the very rapidly changing environment, we are moving probably faster at our feet than before if there is a change. I want to assure you this success formula which we have had will continue to be with us as far as I can see.
Before I close, I would like to take this opportunity, really, to underscore one point that is my belief in the role of the importance of a business community for Hong Kong, because you are the driving force. You create the vitality and you create the wealth of Hong Kong, and it is important that we as a government continue to listen very carefully to your views and we will do so.
For Hong Kong to move forward to an era in a knowledge-based century, much needs to be done, as I said, between the government and the community in a partnership. We have successfully met the two challenges; one posed by the change of status and the other because of the Asian financial turmoil. We have proved that we can as a community overcome these very difficult challenges. It makes me feel much more confident that we will be able, together, to build a Hong Kong in the 21st century which is the most cosmopolitan city of Asia, one of the most important cities of our own country, and above all, a home we can all be very proud of. Thank you very much.
End/Friday, October 8, 1999
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