*********************************
Following is the transcript of the media session by the Chief Executive, Mr Tung Chee Hwa, on housing policy at the Central Government Offices (Main Wing) this (November 13) afternoon:
Mr Tung: The property market forms a very important part of our economy. The Government takes the healthy development of our property market very seriously. Later this afternoon, Mr Michael Suen will be announcing before the Legislature a series of measures aimed at stabilising the property prices. I would like to talk to you though about the close link between the property market and the economy. A better understanding would be helpful for everyone to understand how these decisions are being made.
In the past five years, Hong Kong has faced unprecedented economic challenges. Though we have successfully overcome the Asian financial turmoil, we still have a long way to go to bring the economy out of the doldrums. We must do our best to facilitate economic restructuring, to improve our business environment and to maximise our growth potential by exploiting the close economic relationship between Hong Kong and the Mainland in order to speed up the economic recovery.
A major hurdle to economic recovery is deflation. Over the past four years, our cumulative deflation rate has reached 13 per cent. It is a very high number. Deflation severely dampened people's desire to spend, to consume, or the investors' desire to invest and has caused serious damage to Government revenue and has stifled our growth. A major cause of our persistent deflation is the estimated 65 per cent drop in property prices or rental since the bursting of the bubble economy. According to an economist's assessment, 50 per cent to 60 per cent of Hong Kong's deflation is attributable to the continuing fall of the property market. To break this vicious downward spiral, it is essential to break that downward spiral, the Government will take resolute measures to stabilise the property prices and the property market, to restore public confidence in property ownership, and at the end to speed up the recovery of our economy.
After a very thorough and comprehensive review, Mr Michael Suen will be announcing a series of measures this afternoon with that purpose in mind. These measures would also include ways and means to continue to provide housing or housing assistance to those who are really in need. I will leave it to him to give you all the details. But I want to emphasise that the aim of this review is to restore confidence in the property market, to speed up economic recovery and ultimately, to help us successfully restructure our economy.
Thank you very much.
(Please also refer to the Chinese portion of the transcript.)
End/Wednesday, November 13, 2002
NNNN
