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Following is the transcript of the Q&A Session given by the Chief Executive, Mr Tung Chee Hwa, at the Hong Kong Business Community Luncheon on the Policy Address 2005 at the Hong Kong Convention and Exhibition Centre today (January 17) (English only):

Question: Mr Tung, in your Policy Address you placed a lot of emphasis and also your speech just now on alleviation of poverty. Could you please elaborate on the good things that the business and professional sectors have done today that you would like to see continued, and the areas in which you feel that more can be done by the business and professional sectors to help the under-privileged? Thank you.

Chief Executive: Thank you very much. There're those people out there who have been left behind as we move rapidly forward in the knowledge economy. We need to help them, but as I said, the best way to help is through developing good economic policies, good economic activities, through education, through training and re-training. And a good way to help them is a good and comprehensive social welfare scheme. But I think at this moment, in this economic restructuring, they're those who are left behind and they need more support and more attention. And I think the best way the business and the professionals can help is devoting your time and also making generous contributions to the effort that is being made by the non-government organisations (NGOs). As you know, we have, in the government, a $200 million fund to help the disadvantaged, and this could be used specifically, if an NGO is able to raise funds from the community at large. So if you support a fund like this, the government will automatically match it on what project that the NGO suggests. And I think it will be a very very good thing for you to do. But just as important, if you can devote some time because of the wealth of your knowledge, I think it will be very very useful help also. Thank you.

Question: Mr Tung, you said Hong Kong's economy has been in bad shape since the Asian financial crisis. Can you tell us whether Hong Kong has successfully restructured its economy, and the so-called knowledge-based economy? If not, under what circumstances do you think Hong Kong will enter that stage?

Chief Executive: I thought everyone here is a professional businessman. Our economy is being restructured. Restructuring is an on-going process. Science and technology is improving everyday, globalisation is moving rapidly forward. Cities all around us are trying to improve themselves and compete with us. So if we stand still for one moment, one day we will wake up and say to ourselves "how come we have lost our position?" Let me tell you, the good news is that we are in the front. The bad news is that others are trying to catch up with us. What we need to be doing is being constantly focussed to look forward, to understand what the competitive advantages are, what our weaknesses are and keep moving forward. Unfortunately, this is the world we live in and I know that other countries, regions and other cities certainly have this mentality in creating wealth and creating economic prosperity.

Question: There are 600,000 cases of illegal structures in Hong Kong, many of which belong to the business sector. I understand that more than 90% of these do not present safety problems. I did a survey outside this room before lunch and find that four people have similar problems and have a difficult situation under the Buildings Department. I would hope the Government would be able to do something on these cases. Take the example of four people per case, then you are talking about 2.4 million people who are not really happy, so if the Government could give us more time to relieve our pain from the Buildings Department, we would have time to do better business and to support the poor people in Hong Kong.

The SMEs and also a lot of people in the business community, particularly in the New Territories have been wasting a lot of time dealing with the so-called illegal structures in the New Territories. We hope what the Government announcing is what will be done to relieve these problems so that we can spend more time focussing on business rather than all the time working with the Buildings Department doing something which is a total waste of time.

Chief Executive: There are a number of deep-rooted issues that need to be resolved for the indigenous residents of the New Territories. All I want to say is this. We are the world city of Asia and are moving into the 21st century. The indigenous residents and everyone else must work together and move forward together. Outstanding problems need to be solved and will be solved if we work together and work hard at it. I am confident we will be able to solve it, not the least because I need you to help to do other more constructive things anyway.

Question: My question is on constitutional reform, which is something that your speech has been rather non-specific about. You have said before in the past that constitutional reform will proceed according to the Basic Law, but beyond that, there hasn't been anything particularly specific about that. And given that hundreds and thousands of people have marched in the streets in the past two years, I think there is some curiosity as to what kind of a timeline Hong Kong will have in the future. Is this something you see as an issue that will be tackled by your successor rather than by yourself? A little bit more elaboration on this would be very much appreciated.

Chief Executive: We are moving forward in the constitutional development in accordance with the Basic Law, in accordance with the principle of moving forward in a gradual and orderly manner. We are also moving forward in accordance with the decision of the National People's Congress Standing Committee made on April 26. We have to understand the Central Authorities have both the right and responsibility in taking that position. So we are moving forward in this manner. At this moment we are in the stage of consultation, which is spearheaded by the Chief Secretary for Administration and I urge all of you to give your opinion to this consultation exercise. In the meantime, as we move forward in this exercise and as we move forward to develop the constitutional arrangements for the future, we will make sure that Hong Kong continues to be a free, plural and open society, and a society based on the rule of law. The ultimate objective is very clear, that there will be universal suffrage. At this moment, the discussion is about the timetable and this is where we are today. For me, we are moving forward, looking at the election for the Chief Executive in 2007 and the Legislative Council in 2008. Please give your views to the task force headed by the Chief Secretary for Administration.

Question: I'm sure like most of us in the room, people have been struck by the fact that the picture behind you today is nothing at all what it should look like if we looked across the harbour at our city, and I ask this question as a permanent resident of Hong Kong and someone who views this place as my home and where we are raising our children. I think all of us agree that without good health all the prosperity and all of the cultural development and all of the other worthy achievements that the Government is pursuing won't amount to a heck of a lot. So I would very much appreciate your thoughts on what we can do to address this situation better here in Hong Kong and across the border where we know it expands to the Pearl River Delta, because I'm not a smoker, but I'm told I'm smoking eight cigarettes a day by breathing the air here and I don't think any of us here look forward to having our lives shortened by 18 months as reports tell us we are by living in Hong Kong.

Chief Executive: Thank you very much for that question. I think we are all very concerned about this issue. In the Policy Address I talked about the need, even in Hong Kong, to do more, to ask our power companies to use liquefied natural gas in the future, which obviously will improve the quality of air here and to look at other ways of renewable energy. Similarly, we are working very closely with Guangdong province. We have an agreement that by 2010 we will be able to reduce particulates - sulphur dioxide and I think a few other things - by enormous percentages based on 1997 levels as a yardstick. We have regular meetings with them. We believe we are making progress. We are confident we will be able to achieve that particular target of levels of reduction agreed to by both sides by 2010. So this is the way we are moving forward. I know it is not fast enough. We will be constantly looking at ways to try to do more, but so far this is where we are and we are trying to do that.

Question: Mr Tung, I am from the real business community. I represent CMA (The Chinese Manufacturers' Association of Hong Kong), that's one of the big names behind you. As a matter of fact, I think most of us here in the hall would agree with me that the Government has been actually putting forward a lot of good policies and a lot of good intentions to help the disadvantaged. Recently, EMB, the Education and Manpower Bureau, has put forward a so called "QF", i.e. "Qualification Framework", to help those uneducated or less educated to get the qualification they deserve from their working experience in the past. I think this is a very good policy and I hope the Government will pay attention to this and to help all of us in the business community to help the disadvantaged, so that they have the good qualification in order to compete in the coming knowledge-based economy. We need decision, we need confidence, and we need consistency in our policies, Mr Tung. Thank you very much.

Chief Executive: We really need consistency and we need delivery, we need good delivery. Since the introduction of the Accountability System, we have made delivery of promises in the policy speech as a yardstick of how well we are doing. I just want to tell you, for the 2003 Policy Address, though there were many policy initiatives, there was only one that was not delivered. And in the policy speech of 2004, there were many many policy initiatives, an overwhelming number of them have been delivered. A few have not been delivered because it's only at the end of 2004, they need to move on a bit. But I'm quite sure we will be doing them too. I just want to tell you these are all efforts of this Government trying to improve ourselves, to develop accountability, the timetable and the commitment to delivery. You've just reminded me and we will take this forward seriously. Thank you very much.

Ends/Monday, January 17, 2005

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