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Following is the speech by the Chief Executive, Mr Donald Tsang, at the Joint Chambers of Commerce Luncheon at the Hong Kong Convention and Exhibition Centre today (October 17) (English only):
Ian, Peter, chamber members, chamber chairmen, ladies and gentlemen,
It is a great pleasure to join you today for this traditional post-Policy Address speech to the joint chambers. Looking at the press coverage on the Address over the past few days, I can see that some have said I have gone too far; others have said I didn't go far enough. So, I guess, on balance, it was about right.
I hope you can see that I do mean business – if you pardon the pun – when I say that I am determined to improve governance, foster harmony and promote widespread economic development. I hope you can also see that I do have a realistic and pragmatic agenda for action to achieve these goals over the next 20 months of my term. I want to build confidence in our government, and build confidence in our future as Asia's world city. I am sure that these goals strike a chord with the business community as well.
I believe it is vitally important that the business sector – so central to Hong Kong's success - has a clear idea of our policy thinking and direction. I want you to be absolutely sure of a number of things while I am in the Chief Executive's Office.
First, we will vigorously uphold the pillars of our success, you are very familiar with those - the rule of law, the free flow of information, a level playing field for business and a clean, efficient public service. On this last point, I will ensure that the Chief Executive is also subject to anti-corruption regulation. Nobody in Hong Kong is above the law.
Second, we will continue to play to our strengths as Asia's world city – a city that beautifully blends the Orient and Occident; a city steeped in Chinese culture that is also outward-looking, cosmopolitan, and closely connected to the rest of the world. We will strengthen our links with the international business community in Hong Kong and abroad – for example, we will open a new Economic and Trade Office in Central Europe. We will strengthen our links with the Mainland business community by improving our co-ordination and co-operation channels, and by opening two new offices in Shanghai and Chengdu. We will continue to welcome people from all over the world to come and live and work in Hong Kong. We are working out the details of a new scheme that will allow talented people from the Mainland and overseas to come to Hong Kong to look for work, without first securing a local job offer. This will not only boost the talent pool, but also add to the eclectic mix of people who call Hong Kong home.
All of this is closely related to my third point, and that is to continually improve the business environment in Hong Kong. We want Hong Kong businesses to succeed at home, in the Mainland and abroad. The expanded scope of RMB business will provide a definite boost to our financial services sector. CEPA III will provide more opportunities in the Mainland for Hong Kong manufacturers and service providers. We will ensure that Hong Kong's infrastructure remains among the best in the world both in terms of extending transport links in Hong Kong, and boosting connectivity with the Mainland, especially the Pearl River Delta (PRD) and the Pan-PRD areas. And we will do more to improve the living environment, especially in terms of air and water quality. If we can attract more companies to Hong Kong – big and small – we can also provide more jobs for our people.
Here, I might add that the Government and the public also need a clear idea of the business community's policies and thinking on issues of major concern. In this very forum, I have previously urged the business community to play a more active role politically in Hong Kong. I restate that request today. I urge those of you here who may have political ambition to take the plunge and get involved in running Hong Kong.
Greater involvement by all sectors in the running of Hong Kong is essential for better governance. I want to bring a wider spectrum of people into the government's advisory machinery. If we expand the scope of our contacts – for example, through grassroots organisations, business associations, district councils or statutory advisory bodies – we can gain new perspectives on myriad topics of concern to the public. If we can make better use of the huge pool of specialised knowledge in the community, we can develop policies that dovetail more closely with society's needs and requirements. As a result, more people will have been part of the decision-making process. This in turn helps engender inclusiveness.
My colleagues and I are determined to make policies that will give all residents an equal chance at making a success of their lives. Such policies impart a sense of fairness and equity. An ingrained sense of fair play underpins our level playing field for business and the rejection of corruption. A clean business environment attracts investment, which creates employment opportunities. More jobs can boost our economic development and give people a greater sense of security and confidence in the future. This builds stability in society, attracts investment and nurtures effective governance. As you can see, the pursuit of better governance, harmony and economic development are all closely interlinked.
I believe we are now entering a new phase on all these fronts in Hong Kong. Economically, politically and socially Hong Kong has become more stable, and its mood more upbeat. This provides us with a golden opportunity to engage in some really constructive dialogue about important issues, without the excessive rhetoric that only creates division.
Over the next few months, we will be tackling many important issues. We will soon be releasing our recommendations on the way forward for political development. We are preparing to revive the development plans on the Tamar site. We are tackling in earnest the development of the West Kowloon Cultural District. Certainly, other important issues will emerge. We will handle them in an open and transparent manner, and fully engage the public when we do so. And this includes some of the more sensitive issues to the business community, two of which I mentioned in my Policy Address – the questions of a fair competition law and a minimum wage.
In regard to fair competition, I want to state quite clearly that my starting position is not to intervene in the market. Up to now, we have taken a sectoral approach. That has meant opening up various sectors for more competition – such as what we did for the telecommunications industry - or by introducing regulations or laws to facilitate market development or prevent market distortions. This approach has so far worked well.
But, I also feel we should take a closer look at whether the current approach serves our long-term interests. An independent Competition Policy Review Committee is looking at this issue, and we are keeping an open mind on whether a comprehensive, cross-sector fair competition law is right for Hong Kong.
You might well ask, why now? As I mentioned earlier, economically, socially, politically I believe the atmosphere is more conducive to rational discussion on a range of issues. The economic recovery has taken root. Business and consumer sentiment is quite positive. So, we are tackling a sensitive issue from a position of strength. We are taking proactive steps to look at it; rather than fighting a rearguard action.
Another reason is that our economy is moving further up the value chain and becoming more sophisticated. We have almost 3,800 international companies using Hong Kong as their base for regional operations. Hong Kong conglomerates are getting bigger, and extending their reach even further across the globe. And we also need to consider the fact that small and medium enterprises account for 98% of the businesses in Hong Kong, and employ 60% of the private workforce. We need to guard against the situation where big companies, whether local or international, corner the market, which in turn can lead to price fixing or bid rigging. We don't believe that such harmful practices exist in any prominent way in Hong Kong now. But we must do our best to avoid them. We must ensure the integrity of our level playing field.
A further reason we are now in a better position to assess whether a fair competition law is right for Hong Kong is that we can draw on a wealth of international experience in this area. Many countries have adopted fair competition laws, and I believe they have been generally well received. This provides us with an opportunity to assess how these laws have been implemented – to look closely at what works, and what doesn't; to see what might be right for Hong Kong's particular situation as an extremely open and externally oriented economy. But one thing I can say at the outset: we do not want to see too much litigation, which could hamper, rather than help, orderly market operation.
Overall, I want to be sure we have an environment where small and medium players have an equal opportunity to boost the vitality and scope of our market, as much as the big players. Hong Kong people have a strong work ethic. They are willing to take risks if they can see there is a good chance of enjoying the fruits of their labour. They are not looking for special treatment. But they do want to be able to compete fairly. And that's why I believe we owe it to them to look more closely at whether our current approach is right for Hong Kong and for our future economic growth.
The same applies to the question of whether a minimum wage is right for Hong Kong. On this point I must stress that our starting point is to ensure that any policy change, if there is one, does not have a negative impact on overall employment. Obviously, it would be counter-productive if a minimum wage resulted in more people being out of work. I believe the overwhelming majority of unemployed people would rather work than be on welfare. That is the Hong Kong way. The main point of a minimum wage is to ensure a basic standard of living for those people who want to work.
At the moment, there is concern within the workforce – and within Government – that the fruits of the economic recovery are not filtering down to the unskilled workers. At the same time, the recovery is lifting living standards, making it even more difficult for those earning a bare, basic wage to make both ends meet.
We also must factor in ongoing immigration from the Mainland. We welcome our Mainland sisters and brethren who come to Hong Kong legally for family reunion. But many of them are unskilled workers and their arrival continually replenishes the pool of low-skilled workers looking for jobs. We will do our best to help them gain the skills they need to find a job in our knowledge-based, services-oriented economy. But if there is a constant stream of workers at the lower tier, the rules of supply and demand dictate that wages in this sector remain stagnant, or may even fall, while wages of the highly skilled ones in the top tier continue to rise.
On the face of it, business might well say they are all in favour of rock-bottom wages for unskilled workers because that reflects the market rate for workers at that level. A lower wage bill means more disposable income for the company, whether that is reflected in greater profits, or higher spending on plant and equipment or R&D, or dare I say, bigger bonuses for management.
However, we also need to ponder whether wages can be driven too low. Can we see a situation emerge in Hong Kong where decent men and women trying to eke out a living simply give up working? Can we see a situation where wages are so low that a more attractive option is to rely on welfare payments? Then, we have an entirely different situation, where welfare payments replace wages rather than provide a stopgap safety net for people in between jobs. Then, we see the welfare bill begin to escalate. Then, the Government will need to look closely at its revenue base and allocation of resources. The bottom line in that regard is whether we have to adjust our tax structure to accommodate an escalating welfare bill. That is not the business community wants to see.
I certainly hope we do not see that situation emerge, and that the benefits of the economic recovery do eventually filter through to those in the lower-level wage brackets. The Government has taken the lead by ensuring that all of its service contractors pay wages no lower than the average market level wages for non-skilled workers. We have also asked all public organisations, subvented organisations and schools to do the same. In the spirit of corporate responsibility, I make a personal appeal today to the private sector to do the same.
Ladies and gentlemen, as ever you have been very patient with me and kind. I have enormous faith in the future of our society. And I know that faith is shared by the business community. As I mentioned earlier, I believe that Hong Kong is on the verge of a new era of growth and prosperity. I am determined to ensure that your Government works for you; that we create a business environment second to none; that we develop our own home-grown model for political development and approach to governance that looks after all sectors of society. That we all work together to make Hong Kong, truly, Asia's world city.
Thank you very much.
Ends/Monday, October 17, 2005
Issued at HKT 16:49
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