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The following is the transcript (English only) of the question-and-answer session given by the Chief Secretary for Administration, Mr Donald Tsang, at the Credit Lyonnaise Securities Asia (CLSA) Conference today (May 14):
Question: How will Hong Kong work towards finding a new role for itself as Taiwan, China establish direct links and trade switches to the shorter routes?
Mr Tsang: First of all, I never believed the opening-up of China, the modernisation of the Chinese system, is likely to progress at the expense of Hong Kong's prosperity. I don't subscribe to the view of a zero sum gain. I believe the opening-up of a market is likely to benefit not only people in that market but everybody trading in that market from the outside. So I believe - and I can see an open and more open China - it is likely to benefit those economies which are: (a) nearer to it; (b) familiar with its systems; and (c) which are open traders themselves.
So, by that definition, Hong Kong is likely to benefit quite a lot from the opening up and the modernisation of China. And our own estimation indicates that if China is going to become a World Trade Organisation member, our trend GDP growth in Hong Kong is most likely to be boosted by a half to one percentage point a year. So that is, from our point of view, not a zero sum gain. And Hong Kong because of its geographical advantage and because of what we are able to offer which many of our competitors cannot provide, and our qualities are not yet available in the Mainland of China, we believe that we are able to bring in new business for ourselves and a new impetus, a new way of developing things in the Mainland as well. So I think it is a good opportunity for us and a good opportunity for us to compete with everybody else. And I believe we have the skill to stay ahead in that game.
Question: Mr Tsang, Chief Secretary, you say that Hong Kong is going to be the Asia world city. One of the properties of making it a world city is the human resources. Can you give us an idea how you, as the Chief Secretary, formulate your human resources or human capacity building programme?
Mr Tsang: We have got a problem here, a problem not only faced by Hong Kong, as one problem faced by most other developed economies in that the knowledge-based requirements of a new industrial configuration requires a different brand, a different breed of people, and it requires long term investment. For that reason, the SAR Government is putting a lot of emphasis and resources in educational programmes. Nearly 25% of our total expenditure is now dedicated to education and it will be a permanent policy for the foreseeable future. So it is, from our point of view, an important thing.
But that will take care - probably it will take care of our requirements in the long term or the medium term. But in the short term, like many of our competitors, we are facing a critical shortage.
We have a totally free human resource regime here - almost totally free I'd describe it - in that any people, any person, any professional with skill, can come into Hong Kong to work, without restraint, once they have got a job here, and that is a very liberal regime.
Whether you come from Japan, from Europe, from America, from Australia, from New Zealand or from India, everywhere you are from you are able to come here. But there is one little limitation so far: that is the professionals coming from the Mainland of China. For historical reasons we have been barring the professionals coming from our own Motherland. Now, that is likely to change. There has been a continuous debate on this subject and we believe it is important for us to remove the unnecessary handicap in respect of two disciplines: one is financial services and the second is tele-communications.
We are going to introduce a scheme very shortly. We will not undermine job opportunities of the people in Hong Kong but rather create additional opportunities and jobs for the Hong Kong people, but at the same time open the door to those people possessing the essential skill and knowledge of the Chinese economy and who are able to help us to fill this short and medium range critical shortage here in Hong Kong. And we will announce the scheme later on, having considered the views of all sectors of the community on this subject. But there has been overwhelming support that we should do it as quickly as possible.
So, in the short term our human resources plan will be anchored on high investment education and a totally liberal immigration policy. In the short term it will rely on an enhanced immigration programme of professionals in the relevant fields.
Question: Historically, the property market has been a key barometer of confidence in Hong Kong and despite record low interest rates there doesn't seem to be a lot of interest from Hong Kong people to buy property. Can you tell me how important this is to the government and what you can do to try to improve confidence in the future?
Mr Tsang: The lacklustre property market is a consequence of a very traumatic, a very serious financial crisis. The property market here is not at its best, in fact it has knocked off value of about 40% since its peak. But let's talk frankly, it is not any worse than any of our neighbour's property markets for that matter, coming right from Japan down to Singapore. This is not a good excuse. But what we need to do is, since autumn last year, we have explained quite clearly what our land policy is and what our policy on housing is, telling people how exactly government intends to sell its land, telling people the number of flats we are going to build for the less privileged class. So the market is totally transparent and I am glad to see that since November last year, the market has been very stable and the market is steadily going upwards.
But I would suggest that this will take time to heal. It will then, as any free society, we are likely to face the feed and famine situation here, in that at certain times of our economic cycle there will be a shortage of supply and then at some other time there may be a surplus in the supply. At the moment we are facing the latter. But I think it will work things through.
Looking through the crystal ball, looking at the number of submissions we have for building permission, looking at the number of projects under construction, there is a school of thought that we might face a shortage after 2004-2005. And if you look at it on a macro scale, this is a territory of only 1100 square kilometres, where over 6.5 million people are making an economic growth of over 4% on trend growth rate basis, and land will continue to be a premium. It will be a premium. But of course, even against that backdrop you have an economic cycle to contend with. We are now in a little downswing but I think we are going up again; it is pretty steady at the moment.
But the world is like this. People are getting worried and concerned about what is happening in the United States, what is happening in Japan and elsewhere. The confidence needs to be built up over a period of time. The government itself cannot work magic. But we are helping it by declaring, articulating a very clear policy, which we are not going to change. And at the same time we want to help people understand what is going on in Hong Kong: the competitiveness of Hong Kong; the opportunities we are going to have because of the opening up of China; and the fact that we are far better than most other people. Look at our savings, look at our balance of payments - we are running our fiscal system in an exemplary fashion and we have a balance of payments which is respectable, and we regulate our banks very well. There is no reason why this economy should not regain its own confidence at a speed faster than most others in the region.
End/Monday, May 14, 2001
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