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LCQ7: Economic freedom and competitiveness of Hong Kong
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    Following is a question by the Hon Jeffrey Lam and a written reply by the Financial Secretary, Mr Henry Tang, in the Legislative Council today (February 7):

Question:

    It has been reported that in its Index of Economic Freedom study report released recently, the Heritage Foundation of the United States has, for the 13th consecutive year, ranked Hong Kong as the world's freest economy.  Hong Kong ranks first in four areas: trade freedom, investment freedom, financial freedom and property rights.  However, the Foundation also indicated that the Government of the Hong Kong Special Administrative Region ("HKSAR") should shorten the processing time for issuing licences and should not formulate any market intervention policies (such as setting minimum wage).  In this connection, will the Government inform this Council:

(a) how it will consolidate Hong Kong's competitive edge in the above four areas;

(b) how it will enhance the business freedom of Hong Kong and expedite the licensing process, so that Hong Kong will not lag behind other regions; and

(c) as the above report complimented that business regulation by the HKSAR Government was simple and the labour market was highly flexible, how the authorities ensure that new policies will not be formulated to weaken such competitive edge?

Reply:

Madam President,

(a) We are proud that Hong Kong has been ranked by the Heritage Foundation as the world's freest economy for 13 consecutive years.  We will continue to enhance proactively Hong Kong's competitiveness in various aspects, including the rule of law, market system, business facilitation, etc.  Besides, we will continue to invest in infrastructure and human resources, and to promote an open market with a view to facilitating sustainable economic growth and improving efficiency.  Our strategies to strengthen trade freedom, investment freedom, financial freedom and property rights are as follows -

Trade Freedom

      We will continue to implement the current free trade policy, actively support and promote continued trade liberalisation, as well as open up our trade regime as much as possible, in order to bring about mutual benefits to Hong Kong and its trading partners and enable global trade to prosper.

      Furthermore, for the protection of intellectual property rights (IPR), we will continue to reinforce various measures, including: (i) building up an effective legislative framework; (ii) taking vigorous law enforcement; (iii) implementing ongoing public education; and (iv) co-operating closely with IPR owners and relevant agencies.  We will also step up exchanges with our counterparts in cities in the Pearl River Delta and other regions in the Mainland to share our experience.  On law enforcement, we have one of the strongest dedicated teams (about 400 officers in the Customs & Excise Department (C&ED)) in the region in combating IPR offences.  To combat IPR offences, C&ED will continue to take vigorous enforcement action through intelligence-led investigations and raids conducted at different levels, including import and export, manufacture, distribution and retail.

Investment Freedom

      In attracting external direct investment, we will strive to maintain Hong Kong's competitive edges, including free flow of foreign currency, simple tax regime with low tax rates, free flow of information, clean government, political stability, rule of law, etc.  We will also continue to strengthen Hong Kong's position as a gateway for foreign investors to enter the Mainland market and for Mainland enterprises to expand overseas, with a view to enhancing Hong Kong's attractiveness as a destination for business and investment.

Financial Freedom

      We will continue to strive to update the regulatory regime in the financial markets in light of operational experience, market development and international standards.   In the coming months, the Financial Reporting Council will come into operation in full to strengthen corporate governance and investor protection.  Apart from reinforcing our status as the premier capital formation centre for Mainland enterprises, we will encourage more quality overseas companies to list in Hong Kong in a bid to consolidate our position as an international financial centre.  

Property Rights

      The protection of property rights is enshrined in Article 105 of the Basic Law.  To ensure that property rights are protected, we will continue to strive to maintain the rule of law and a high quality and independent Judiciary as well as an open, transparent and efficient land administration system.

(b) Over the past years, we have been implementing various business facilitation initiatives to eliminate and simplify regulations which are outdated or hinder business operation and development.  In order to enhance our business freedom, we will continue to gauge views from the business community, actively look for ways to simplify our licensing and regulatory regime, increase the transparency of our application handling process, and make efforts to promote business facilitation culture within the civil service.  We will, under the steer of the Business Facilitation Advisory Committee and its Task Forces, continue to systematically review the licensing and regulatory regimes of selected business sectors with a view to reducing regulation, thereby improving the business environment and reducing the compliance costs to the trade.

(c) As in the past, when formulating policies, we will assess the feasibility of different regulatory options and their regulatory impact on the relevant trades carefully.  Regulatory impact assessments will be conducted as appropriate.  We will also conduct trade consultations before implementation of new policies.

Ends/Wednesday, February 7, 2007
Issued at HKT 11:48

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