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Following is a speech by the Chief Secretary for Administration, Mr Donald Tsang, at a luncheon with the Hong Kong Association today (UK time, November 20) in London:
Baroness Dunn, Lord Wilson, ladies and gentlemen,
Before I begin I must congratulate Lydia on taking up the chair of the Association. I'm sure you will all be in good hands under the watchful guidance of Baroness Dunn. And I would like to pay tribute to Henry Keswick for his fine stewardship of the Association over the past dozen years. Henry has always proved to be a loyal friend of Hong Kong, and never hesitated to speak up in our interests.
I have a sense of deja vu today. Not only do I see a number of familiar faces from last night, but this splendid setting takes me back to when I addressed the Hong Kong Association here in Painters' Hall just over a year ago. And what a year it has been.
So I thought it appropriate, on this occasion, to have a title for my speech. Not based on a movie, as I have done in the past, but this time a play on the words of a song. I have decided to call my speech: "What a Difference a Year Makes". Who could have foreseen that in such a relatively short time frame the world would be a changed place? Indeed, who could ever have foreseen the tragic circumstances under which that change has occurred. I will come back to that a little later.
For me, personally and professionally, the biggest change came in January this year when Anson Chan announced her decision to retire. I stepped into the CS's post in May - the bow tie has replaced the dimpled smile in the Chief Secretary's Office. Anson has been a hard act to follow. But while our personalities and style are different, we have always shared a common goal. And that is to serve the people of Hong Kong to the best of our ability, and to use our own value system of the rule of law and of the freedom of the individual to guide our decisions. That is what I have been doing since May.
That has been the easy part. When I spoke to you just over a year ago, Hong Kong was in the midst of a rather robust recovery following the Asian financial crisis. We finished 2000 with a GDP growth of 10.5 per cent, our strongest performance since 1987.
We knew this could not be sustained because we were bouncing back off a low base. But by the beginning of this year, quarterly GDP growth was already settling back into a more sustainable pattern. As a result, I was able to forecast in my final budget in March that we could expect growth of around four per cent in the medium term. There were some warning signs, though - the US economy was beginning to slow down and Japan's economy was still bumping along the bottom with little or no sign of growth.
That was the scenario before the US downturn really began to bite and then accelerate following the horrific events in United States in September. Now, for the second time in three years, we are bracing ourselves for another recession. Certainly, we have had to lower our sights and the Financial Secretary is now forecasting just one per cent growth for the year as a whole. He has warned that modest figure may have to be adjusted downwards after the Third Quarter GDP figures are released at the end of this month. Unemployment is edging up again; exports, which spearheaded last year's dramatic recovery, are edging down; and through all this we continue to restructure our economy to a more knowledge-based one with innovation and technology as the new economic drivers.
The people of Hong Kong are feeling the pain. Just when we were beginning to bounce back, another blow to the solar plexus. But we are not down for the count, nor will we hit the canvas. We have been bounced off the ropes before and always come back fighting. I am the eternal optimist. I have every confidence in the indomitable spirit of our people. But it is not blind faith.
The measures we are putting in place to enhance our competitiveness; to upgrade our knowledge skills through innovation and technology; to build on our strengths as a leading international financial, business and logistics centre; to position Hong Kong as Asia's world city; to improve the accountability of government will see us through the tough times and put us in the front seat when the global economy begins to turn for the better. There's an old saying "tough times don't last, but tough people do" - that's my yardstick for the people of Hong Kong.
The East Asian economies are in generally better shape than they were at the start of the Asian financial crisis in 1997. All of us are now pursuing our own social and fiscal policies to stimulate our economies. There is a general confidence about medium and long-term prospects, both for the world economy and those in Asia Pacific. Successive interest rate reductions in the US, coupled with additional tax cuts, should help strengthen the US economic rebound when it comes. The speed at which that will happen will depend very much on restoring the confidence of Americans to spend, travel and invest.
I do not want to leave you with a gnawing feeling in the pit of your stomach, particularly after such a good meal. I was simply apprising you of the "difficult" news first and leaving the "best" till last.
There is no doubt, China's entry to the World Trade Organisation, formalised just nine days ago, will have a profound impact on the development of our nation, including Hong Kong, long into the future. It will bring about a fundamental change in the mindset of the people, in the conduct of business, how China opens up further to the world. And it will speed up the modernisation of the Mainland.
These changes are already taking place. The pace will quicken as the opening up of the economy stimulates more competition, particularly from multinational companies wanting to access a market with such a huge potential. For us in Hong Kong, this presents both a challenge and an opportunity. The challenge is to capitalise on our position, identify our niche, enhance our infrastructure and sharpen the capability of our workforce. Since the Handover we have been working towards this goal - developing an economy that harnesses technology, excellence and innovation; and nurturing a community that is dedicated to the pursuit of excellence and life-long learning.
An early, positive advantage for us has been the decision by an ever-increasing number of multinational corporations to set up their regional headquarters or regional offices in Hong Kong. The most recent survey, released earlier this month, showed a record number of over 3,200 regional operations in the city - an increase of almost eight per cent over the previous year. This was on the back of a 20 per cent increase the year before. In the past two years, about 750 additional companies have established a regional headquarters or offices in Hong Kong. That is a powerful vote of confidence in our future and our strategic location.
But there will be further opportunities for Hong Kong as the Mainland economy transforms into a more liberalised and transparent regime. We will benefit from reduced transactions costs, expanded trade and investment potential. There will be greater business opportunities particularly in areas such as the distributive trades, banking, finance, insurance, telecommunications and tourism.
In these areas we already have a head start. Our renowned trading experience, extensive business network, and close cultural and language links with the Mainland will help us to capture a good slice of the emerging economic opportunities. And our professional talent will be in a position to help contribute to strengthening China's business and legal systems still further.
The benefits won't come overnight. They will be progressive. We will all have to work hard in the face of tough competition. But I have no doubt that China's WTO membership marks a watershed in the development of our nation that will have enormous spin-offs for Hong Kong and the rest of the world.
It is inevitable that these changes will also bring greater economic and social interdependence between Hong Kong and our hinterland, the Pearl River Delta. This is only natural, and the process has already begun. But we will not, in any way, let this dilute our total commitment to maintaining and, indeed, strengthening the "One Country, Two Systems" principle. We know we must jealously guard our separate systems, our way of life and the principles under which we have operated for so long. In other words, the core values planted in our society and common in most developed economies. A legacy that we continue to cherish and preserve - the freedom of speech and of expression, freedom of the press, the rule of law, the right to demonstrate within the law, a level playing field for business, an independent judiciary, and a clean, apolitical civil service.
Now that I have mentioned the civil service, I am sure many of you are interested in the new accountability system announced by the Chief Executive in his Policy Address last month. Since the Handover I can tell you, from my own experience, that increasing demands have been placed on the government and the civil service. People are no longer focused on a single date on a calendar, wondering what will happen to Hong Kong after reunification. Now, they are single-minded and serious about making a success of "One Country, Two Systems". In other words, Hong Kong people running Hong Kong as promised. The economic downturn over the past three years has heightened the speed and politics of this attitudinal change. The taxpayers are asking at every turn of daily events whether they are getting good value of money from the civil service and the public sector in general.
Under the Basic Law, Hong Kong must have an executive-led system based on a clear separation of the Executive from the Legislature. But this ideal will be very difficult to achieve without reforming the Executive as our political system evolves towards the ultimate goal of universal suffrage for all 60 LegCo seats. We must expect - indeed we are now facing - demands for greater accountability for those who formulate government policy. This begs the question - how do we maintain the tradition of an apolitical civil service when those same civil servants are also, by and large, called upon to formulate and implement policy? How do we enhance accountability while protecting the inherent merit of a permanent civil service that speaks truth unto power without fear or favour? The answer lies in removing that Catch 22 situation.
What is proposed is to introduce a new tier of principal officials under the Basic Law, who will be appointed by the Chief Executive to serve on a limit term not exceeding his own. Portfolios could cover the entire spectrum of policy bureaux and will include my post, as well as that of the Financial Secretary, the Secretary for Justice and most Directors of Bureaux, or what used to be called Policy Secretaries. All these new appointees would also form the Executive Council. This in turn would allow ExCo to function more like a Cabinet in setting policy, explaining policy and selling policy to the public. Existing Directors of Bureaux who remained on civil service terms might have their post titles changed. Their positions would be similar to that of a Permanent Under Secretary, and they would advise and work to the new appointees, as well as helping the latter to administer their bureaux.
The new system will more clearly define the roles, powers and responsibilities of top government officials. It will also build on the civil service's existing strengths, such as permanency, professionalism, neutrality, efficiency and freedom from corruption.
We are now looking at how to take this proposal forward - such things as job descriptions, employment conditions, codes of practice and remuneration packages possibly enabling legislation and funding requirements. The Chief Executive Mr Tung believes that he has the responsibility to address this important issue about governance and accountability. He also believes that while preparation work will proceed forthwith, implementation of the proposals should not take place until after the election for the Chief Executive's position in March next year. It will be up to the Chief Executive in the second term to take the final decision.
Ladies and gentlemen, I know there are some who are sceptical of how we may have tackled problems since 1997. They doubt our sincerity and then string isolated, unrelated issues together to accuse us of slowly eroding the foundations of our success. But we will not let this happen. Those decisions were taken with one purpose in mind - to protect or enhance the interests of Hong Kong and its people, not to weaken our institutions or our systems. Our unique role in the Mainland and the region, and our long history of successful involvement in global market places, augurs well for our ambition to be recognised as Asia's world city. You will see this ambition blossom when we bring the skills and knowledge to bear on the open market of the Mainland.
Thank you.
End/Tuesday, November 20, 2001
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