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Following is the transcript of remarks by the Financial Secretary, Mr John C Tsang, at the Question and Answer session of the Joint Business Community Luncheon at Hong Kong Convention and Exhibition Centre today (March 9):
Question: We at the CMA (Chinese Manufacturers' Association of Hong Kong) welcome very much your initiative to issue Government Bonds. As you said in your Budget speech, there are many advantages in so doing. However, other than saying that, the sums raised will be credited to a fund to be established under the Public Finance Ordinance. You didn’t seem to have told the public whether the funds, and how the funds raised, will be used. Will you tell us whether the funds will be used to finance, for example, government infrastructure projects, which make a lot of sense, or whether the funds will be used and managed in a similar way to the Exchange Fund.
Financial Secretary: I don't think I can add much more to what I put down in my Budget. The basic objective is to promote further and also promote the sustainable development of our bond market. In Hong Kong, in our financial services sector, we excel in many areas but in the bond area we come out a bit wanting and that's why I feel it would be important that we could further develop the bond market. I want to make it clear to everyone outside that we don't raise this money to service our expenditure, our recurrent expenditure in particular, because I think that would be the wrong use of money. We need to retain a certain level of discipline in terms of our expenditure and also we do have a pretty healthy reserve that we can count on. We will be disclosing more details after we have consulted the financial services and to get some of their input. Our current intention is to set up a special fund under the public finance ordinance and we will decide on its eventual use. Yes, it could very well be on infrastructure projects, perhaps on environmentally-related projects, or other things. We haven't decided what it is yet. We don't really want to spend the borrowed money, but rather we want to spend on the profits we could make on the money that we borrow. This is for a much longer term, but we will be disclosing more of the details as we proceed.
Question: Ronny Tong, Legislator. I was pleased to hear in your "Letter to Hong Kong" yesterday and today the message that you want to pass on to the people of Hong Kong that you are reserving our ammunition for something else later on in the year. Can you be more positive and more open about what is in your mind. Are you waiting for the unemployment rate to rise to a particular level to say 6% or even 8%, or are you waiting for certain economic indicators to fall further to any particular level before you would act, or would you respond to the views and demands of the people of Hong Kong and improve your Budget here and now.
Financial Secretary: I think it would be too simplistic for me to look at any one figure and make a decision that would have long-term implications like what you are talking about. We probably need toward the middle of the year when we have the benefit of further data so we can have a much better sense of where this crisis is going. As I mentioned in my speech, just in the last week alone all these things have happened. All these things that have not even been forecast before, not just in terms of the extent but also in terms of the seriousness of each one of these issues. We would expect that more of this will come in the future, but how serious? We need to look at that. We have, as I also said in my speech, in the past year come out five times from my Budget to this Budget – five times altogether - to sort of pinpoint and target a way to help the community, and we continue to do that. I think the Budget as it is now is appropriate and there is no intention to alter any of that in the Appropriation Bill. But as I have said in my Budget, if the economic condition should warrant it we will consider it when we have more data toward the middle of the year.
Question: Cliff Sun from the Federation of Hong Kong Industries. In your Budget last year you used a lot of our public money to help the needy ones, which I don't think the business community was too much against. However, this year you are still using more money to helping the needy ones, however very little was mentioned about helping industries or the SMEs. I want to raise the question, in your Budget address you mentioned about broadening our economic base, diversifying and expanding our economic base, as well as promoting the technology base, creative and green economies. Will you consider or help to show the manufacturing industry sector that the Government is willing to commit and consider requiring all government departments in a more aggressive green procurement policy to stimulate and underpin the development of the local environmental industries.
Financial Secretary: There's a big difference between when I was here last year and here now. There has been a very big difference. The whole purpose of what I did last year was to share the prosperity that we had at that time with the community, and that in fact was the mainstream wish of the people I consulted last year. This year, the mainstream wish is not to have a lot of concessions, but rather that we should concentrate on protecting or creating more job opportunities for the people. Clearly the unemployment situation will get worse. It grows from a low point of 3.2% in the middle of last year to about 4.6% now and from all indications, those figures will rise. How much we don't clearly know but we know that the trend is going upwards. So not only do we need to sort of move forward and enhance what we are doing well now in terms of the basic pillars in our economy. We also need to explore new areas and what you mentioned in terms of environmental protection. This is one area that we are very keen about. We want to move in that direction and not only should we improve the quality of living but we should also create industries out of that. One such thing I mentioned in the Budget is that I will chair a steering committee to look at the whole industry of electric vehicles and see how it could benefit Hong Kong in the longer term, both in terms of cleaner air and creating an industry that people can engage in. You mentioned about green procurement. The Government is totally supportive of that. Even at this stage our regulation prescribes that we are rational. We encourage our departments to procure stores that are recyclable, that are durable, that are energy efficient. I understand that we are doing a review right now that will be ready by the middle of this year that would point the way as to how we could enhance that even further.
Question: ... You said the Government has given a guarantee of $100 billion to the SMEs through banks. The demand should not be $100 billion, but much more. A surprise only $8 billion has been given by the bankers. They are still very reluctant to support the SMEs and give them loans. Do you think ... with those bankers about what are their worries and concerns why they are not giving loans to SMEs.
Financial Secretary: The scheme is $100 billion in total, that is the guarantee and we are guaranteeing 70% of all the loans lent to SMEs. In fact it did not really start the process until toward the end of December. So actually in the last two or three months it has been moving quite quickly with close to 4,000 applications approved and about $8 billion lent during that period. We are satisfied with the magnitude of that and I think the process will accelerate and go further and we will have a review of that at some stage and see if there is anything further that we need to do.
Question: My name is Marcus Shaw. You painted a very convincing picture of how bad the economy is today and equally convincingly you have warned us that things are going to get much worse. Then you said you want to take a pragmatic, prudent approach to the problem. I don't think there's anyone here who doesn't agree with the principle of fiscal prudence. But it seems to me you could equally argue that the prudent approach today is to spend more rather than to spend less. To anticipate the problems rather than react to them.
Financial Secretary: What I have mentioned is we have not held back at all on our expenditure. This year our expenditure is over $300 billion and if you would compare that with our expenditure of two years ago. I did not want to use last year's figure because we had a lot of one-off items like $21 billion for West Kowloon, for Sichuan project, the MPF and so forth. It would not be fair. Comparing with our figure of two years ago we have increased by 20%. During that period the GDP growth is 1.8%, so we are keeping up at a very high expenditure level. All our departments have increased expenditure and we are maintaining that. I don't think that is a short-order for this period and we are continuing to do that. We have also introduced a very big infrastructure programme. This year it has gone up to about $40 billion and in the coming years it will go as high as $50 billion each year for quite a sustained period of time. This is very high expenditure but that is paying for the future because with our infrastructure projects we will have improved connections with the Mainland and that ultimately will improve our economic well-being. All of that is really preparing for the future and there's really no question that we are holding back on expenditure at all.
Question: I am ... from the Chinese General Chamber of Commerce. You mentioned in the Budget about the promotion of a green economy and transforming the Pearl River Delta into a green and high-quality living area in co-operation with Guangdong. I believe this will not only create more business opportunities, but generate more jobs. However, it appears so far, the promotion of the green economy such as green buildings and refuse recycling are still at a conceptual stage or still under consultation. Can you tell us whether the Government has policy measures that will accelerate the development of the green economy in Hong Kong.
Financial Secretary: That is a big subject for us, and for this administration we created, specifically, a bureau for the environment just to deal with that and they have done a lot of work in that respect, not only cleaning up the air here in Hong Kong, cleaning up the water in Hong Kong, but also working very closely with the Pearl River Delta, Shenzhen and other areas of Guangdong to make sure we have a high quality living environment in this area. This is something that we would do. We are pushing out a whole series of legislation in Hong Kong on different aspects to help us improve the environment here. Recently with the plastic bags, we are talking about the cars ... not ignited during idling ..., all this will be coming out. We have been working closely with the power companies, working together to improve the air quality in Hong Kong as well. We are working closely on different levels with our neighbours to the north and we are beginning to see results of that. We have set up some objectives that we achieve a certain standard by 2010 and we are on the way to achieving that as well. We will keep reviewing where we are heading and keep improving on those standards and I have every confidence that we will be able to achieve that in no time.
Ends/Monday, March 9, 2009
Issued at HKT 17:55
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