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The following is the speech given by the Chief Executive, Mr Tung Chee Hwa at the Far Eastern Economic Review Conference this (Wednesday) afternoon:
Mr Chanda, ladies and gentlemen, friends,
It is almost one year since I took on this tremendous responsibility. People asked me how do I evaluate myself, and I said I have failed miserably. Firstly, I was not able to fix the Asia financial crisis. And secondly, I could not get a good word in so we do not have so much rain.
But it is a pleasure to be addressing this conference. I am sure everyone is a reader of the Far Eastern Economic Review, a magazine which is printed here, is very well informed about this region. Although I must say I don't very often entirely agree, Mr Chanda, with what the magazine has to say.
But having said that, I have to comment on the current edition which I have read with great interest. Mr Chanda referred to the cover story. In case you have not seen it I have brought a copy with me. I think that photo on the cover will come back to haunt me for a long time to come. But I like the photo on the cover, which was in fact flashed across every television screen on that day, and was in every newspaper the next day. And in fact recently, you may or may not know it, it even won the Hong Kong Best Photograph of the Year 1997 Award, organised by the Newspaper Society of Hong Kong. And in fact I went to present the cup. Truly, it is also a picture which makes me feel a great deal of humility because the fact is that nobody is infallible. There are others who draw a parallel between my mishap to whatever is now happening in Hong Kong, and that is understandable. But let me tell you what happened after I slipped that day - as Mr Chanda was trying to do - I really got straight up, brushed myself a bit, then got on with the job.
You may be interested to know the occasion was the Voter Registration Week Kick-off Ceremony, the beginning of a major effort by this Government to encourage Hong Kong citizens to register and to vote. Despite my clumsiness at the beginning of this effort, the entire exercise, which lasted five months, resulted in 53% turnout of 2.8 (million) registered voters. The effort was an enormous success by any standard. Therefore, ladies and gentlemen, never, never underestimate the resilience of Hong Kong people. We will come back strongly from any adversity, as we have done before. Hong Kong's economy might have taken a tumble but we will come back and we will come back soon. And incidentally, Mr Chanda, I must thank the Review for giving me this opportunity to get this message across to everybody.
The contents of the Far Eastern Economic Review cover story this week was somewhat negative but the editorial last week in a sister publication - it was the June 2nd edition of the Asian Wall Street Journal - summed up very well what I and some of my colleagues in the Government have been saying for some time, and here I quote: "As the Asian doom and gloom spreads, it is important to remember that Hong Kong is a thriving financial centre, not a domino. Its physical and human infrastructure makes it one of the world's premier places to conduct business. The banking sector is fundamentally sound and the currency stable. On top of that there's Hong Kong's role and potential as banker to the juggernaut next door : China." End of quote.
I am sure if a reader would have an opportunity to read both articles, they could decide for themselves which version is more accurate. The Review article and the Journal editorial are also very good reminders of the vibrant, free and critical press we have here in Hong Kong - even two very different views from sister organisations. I remember before the Handover there were many commentators who predicted a curb on press freedom on and after July 1, 1997. But as you can read any day in our Chinese or English-language press the administration is under as much scrutiny now as it ever was, perhaps much more so today.
I would like just to spend some time to talk about the subject of the rule of law, which is one of our greatest strengths and cornerstone of our success. Virtually all of the laws that were in place before July 1 have been adopted as the laws of the Hong Kong Special Administrative Region. Criminal prosecutions are controlled free of interference by the Department of Justice and in accordance with established common law principles. Our prosecution system is independent and effective, and our prosecution policies are applied without fear or favour. We have our own Court of Final Appeal, which is the ultimate arbiter of the common law in Hong Kong. And we also have a unique arrangement under which judges from other common law jurisdictions are invited to sit on the Full Court of five judges. I can't think of any other common law jurisdiction where this has happened.
There was also concern about the adaptation of laws exercise. There was a lot of misunderstanding about this. The adaptations were necessary to maintain the laws previously in force, to remove colonial terminology and to ensure that laws were consistent with the Basic Law. At a simple level it meant removing words such as 'Crown' and 'Governor' and replacing them with 'State' or the 'Chief Executive'. Another aspect was to provide clear definitions of the 'State' and its subordinate organs of power. This aspect provided that the 'State' was bound by the ordinances to the same extent as the 'Crown' before the Reunification. It reflects a principle which applies in almost all common law jurisdictions, for example Australia, New Zealand and the UK, that the sovereign government is not bound by legislation enacted in the absence of express provision.
The adaptation of laws exercised actually reinforced the common law system in Hong Kong by providing clear definitions of the word 'State' and the criteria under which the subordinate organs will qualify. It has also maintained rather than changed the laws in place before reunification and removes any uncertainties which may arise when Hong Kong's courts have to interpret the law.
Some people believed that State-owned enterprises would get special treatment as a result of this exercise. This is simply not true. The term 'State' has been clearly defined to exclude State-owned commercial undertakings. It reinforces the fact that Hong Kong has a level playing field for all who do business here. It also reinforces the fact that no one - from the Chief Executive down - is above the law. And that is the way we want it.
Ladies and gentlemen, it is almost a year since China's resumption of sovereignty over Hong Kong. I am glad there is universal recognition with the concept of "one country, two systems" is truly being implemented here in Hong Kong. We in Hong Kong have worked hard to ensure "one country, two systems" becomes a reality. The central leadership in Beijing has demonstrated their determination to ensure the successful implementation of the "one country, two systems" concept.
Before July 1, 1997, there were many sceptics in Hong Kong and around the world, but we proved them wrong. Fundamentally, it is in China's national interest, as a whole, that "one country, two systems" becomes a reality here in Hong Kong. Not only because a successful Hong Kong can contribute to China's modernisation, equally important is that successful implementation of "one country, two systems" concept here in Hong Kong can help the realisation of an early reunification of the entire country. This is a common aim of Chinese people everywhere. The fact is that the Chinese leaders today have very clear vision in the direction in which China will be moving in the 21st century. Many of the challenges they are currently undertaking will be difficult but I have full confidence in their ability to ensure the realisation of their vision. And just as important, they have the support of the entire people.
The results of the policy of economic reform and opening since 1978 has been for everybody to see. The progress made in the decades of the 90's has been especially astounding. The fact is China's position in the international community has been rising because of the recognition of the achievements of China during this decade. The continued stable and successful development will have a profound and positive improvement, will have a profound and positive impact on the continued prosperity and stability here in Hong Kong. We certainly need to do our part in Hong Kong in contributing towards China's continued successful development.
Perhaps at this time, I really need to talk about our problems in Hong Kong, about our economy. It is a subject of primary concern for everyone in this room and all the six and a half million people. The Asian financial turmoil has resulted in a much higher interest rate, a much tighter liquidity situation in our banking system. The depreciation of other currencies in Asia has also caused a substantial reduction in tourism. On the other hand, years of high property prices, high inflation and negative interest rates had created a bubble economy which needed to be corrected if we are to remain economically vibrant. The Asian financial turmoil accelerated the pace of this correction. Indeed, we are now in the depth of a major economic adjustment, the result of which may be prolonged and painful to everyone. We have registered negative growth in the first quarter of this year and unfortunately the economy will continue to be difficult in the near future.
As a result of this adjustment, property prices have fallen very substantially in the past months. Let me assure everyone that we recognise the importance of property development as part of our economy as a whole. Let me assure you that the Government does not wish to see a collapse of the property prices as this will have serious impact on our banking system and will further erode the already very weak consumer confidence. Indeed, to the extent that additional measures need to be taken, can be taken to achieve this objective, the Government is determined to do so.
Some had called for additional spending cuts and tax cuts in order to help the economy. The fact is that through the Budget presented on February 18 by the Financial Secretary and approved in April by the Provisional Legislature, tax cut equal to 1% of our GDP, and investment in expenditure increases equal to 3% of the GDP were already made. In money terms this is equal to HK$53 billion. The provision of these stimulus are the largest in our history and in time will provide the necessary boost to our economy. We know the pain of the adjustment process but the Budget measures must be given time to work. Furthermore, I must emphasise that the Budget was prepared in line with our long held tradition of fiscal prudence. Any deviation from our long held philosophy of fiscal prudence may well give rise to speculative attacks again on the Hong Kong dollar, the result of which may well be another increase in our interest rate. This is not something we want. Indeed, with the weakening of the yen this week, Hong Kong currency is already under pressure in the form demonstrated in the higher interbank interest rate in the last few days.
We are today facing a serious credit crunch. We are extremely conscious of the effect of the credit crunch on our economy. We believe an effective way to relieve credit crunch is to mobilise existing liquidity in the banking system. To that end, the Hong Kong Monetary Authority is implementing the proposal to develop a Hong Kong dollar repo market to facilitate interbank lending, especially at the longer end; and a facility under which the Hong Kong Mortgage Corporation will streamline its mortgage purchase programme to make it more attractive for banks to sell mortgages to the corporation. This would give banks more assurance about their access to liquidity and make them more confident to lend. Without interfering with the normal operation of the currency board, we will continue to look for whatever means and ways to improve the liquidity of our banking system.
Over the next several years, we are committed to improve our infrastructure in building more railroads, schools, highways, and in pushing ahead with information technology. All this is important for our long term future. The total spending over the next five years is no less than HK$235 billion. I believe while these projects go ahead, new jobs will be created.
Many in the community have put forward suggestions as to how we move forward with our economy. All these suggestions are welcome. Some are good. The Financial Secretary is also actively listening and consulting the members of the leading political parties and other Legislative Council Members for their views. We need to work together to overcome this enormous challenge.
Ours is a free market and an economy which adjusts upward and downward very quickly. At the same time, it must be recognised that the driving force of the economy is still in the private sector. We will work closely with the private sector to ensure early recovery of the economy.
We are fortunate in that we have very solid fiscal reserve, very strong foreign exchange reserve, we are fortunate that our rule of law is firmly in place. We are fortunate that China's economy is still going well. I am confident that we will be able to go through this difficult period and resume the path of economic growth in the not-too-distant future.
The torrential rainfall yesterday caused floods and landslides which once again exposed the area in which urgent attention is needed here in Hong Kong. The Asian financial turmoil has also exposed areas of weaknesses which we need to confront and to overcome. But yesterday's record rainfall also showed the other side of Hong Kong. We saw people risking their own lives to save others who may not be even related in any way to themselves. We saw members of our disciplinary forces spending all day out in the torrential rain to pull people out from the floods and from difficult situations. I was deeply touched.
The whole community is in action to demonstrate in full - to demonstrate in full our ability and commitment to help ourselves and help each other. This spirit is not only with us in meeting challenges from nature, it is also with us in meeting challenges posed by the Asian financial turmoil. This spirit, I must say, is unique among the people of Hong Kong. It has helped us through many difficult times in the past. I know together we will be able to overcome our difficulties and together we will build a better future.
Thank you very much.
End/Wednesday, June 10, 1998
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