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The following is a question by the Hon Abraham Shek and a written reply by the Financial Secretary, Mr Henry Tang, in the Legislative Council today (November 2):
According to the World Economic Forum's Global Competitiveness Report, Hong Kong's global ranking plunged from the third place in 1999 to the twenty-eighth in 2005. On the other hand, the Economic and Employment Council ("EEC") Subgroup on Business Facilitation currently only has two task forces, i.e. Pre-construction Task Force and Retail Task Force. In this connection, will the Government inform this Council:
(a) whether the Financial Secretary, being the EEC Chairman, plans to establish new task forces for improving the licensing regime and eliminating regulatory barriers for different economic sectors;
(b) as it has been reported that deteriorating pollution and rising inflation have adversely affected investors' commercial decisions, of the ways the authorities have to tackle these problems; and
(c) as the above Report attributed the fall in Hong Kong's position to a weakening in perceived judicial independence and in the protection of property rights as well as rise in corruption levels and government favouritism in policy-making, whether the authorities will set a timetable for reviewing Hong Kong's competitiveness in the light of these comments?
Reply
Madam President,
(a) It has always been the aim of the Government to enhance our overall competitiveness and to maintain our position as one of the best places in the world for doing business. The Economic and Employment Council (EEC), comprising LegCo Members, business and labour representatives, academics and concerned Secretaries of Bureaux, has been working towards this direction since its establishment in early 2004.
A Subgroup on Business Facilitation (“Subgroup”) was set up in March 2004 to oversee the implementation of a program to systematically review government regulations and procedures impacting on business from a users’ perspective. In view of the wide range of business sectors that may be involved, the EEC concluded that a sector specific approach to the review should be adopted and the priorities of the business sectors for review should be based on regulatory impact and employment considerations. To make best use of resources available, the Subgroup initially accorded priorities to the construction, real estate, retail and entertainment sectors for review. Task Forces have been set up under the Subgroup to co-opt representatives from the specific business sectors under review to provide input and views from the industries’ perspective. For those sectors which have a relatively small number of operators in the sector (e.g. entertainment), the Subgroup has not set up a dedicated task force, but has worked directly with the operators instead.
The EEC and its Subgroup will continue to appraise the need for reviewing the regulatory or licensing regimes for other business sectors and to adopt the most appropriate approach, including the setting up of dedicated task forces, to undertake the reviews. The views of the respective trades will always be taken into consideration to ensure that their concerns are properly addressed.
(b) As pointed out by the Chief Executive in his Policy Address, Hong Kong, as Asia's world city, cannot tolerate foul air. The Policy Address reiterates our determination to meet the emissions reduction targets for 2010. To improve air quality, we will continue to take vigorous measures on three fronts to make sustained improvement to air quality. As power plants are still the major source of air pollutants, our primary task is to reduce emissions from power plants. We have asked the power companies to accelerate the timing of emissions reduction projects, increase the use of ultra-low sulphur coal and use natural gas for power generation as much as possible. In addition, we will progressively tighten the emissions caps during the renewal of specified process licences for the power companies. In formulating new schemes of control, we will require the power companies to install effective emissions reduction facilities and ask for the use of renewable energy to generate electricity and the implementation of demand side management measures.
We will further reduce local air pollutants. To reduce vehicle emissions, we will introduce in stages Euro IV emission standards for newly registered vehicles from January 2006. We will issue guidelines to all government drivers, requiring them to switch off engines while waiting, and will appeal to private car drivers to exercise the same self-discipline. We will also take the lead in using ultra-low sulphur diesel in all government projects in 2006. We will further take the lead in reducing power consumption. Starting in January 2006, power consumption in all government office buildings will be reduced by 1.5% annually.
We will continue to deal with regional air pollution. Both the Guangdong Provincial Government and the HKSARG are determined to meet the emissions reduction targets for 2010 through the implementation of the PRD Regional Air Quality Management Plan. The two governments have agreed to make arrangements for reporting to the public on a daily basis the PRD Regional Air Quality Index from the fourth quarter this year. Details of the Pilot Emissions Trading Scheme among power plants in the PRD, jointly undertaken by Hong Kong and Guangdong, are expected to be finalised in 2006. The scheme will allow power plants to look for trading partners and enter into emissions trading contracts. The two sides are working towards the agreed emissions reduction targets in 2010.
To improve the water quality of Victoria Harbour, we are taking forward the Harbour Area Treatment Scheme Stage 2, which, coupled with the improvement to all sewer facilities in Hong Kong, will tackle pollution at source. Whilst the Government will bear the construction costs, the public has to pay for the operating costs of sewage treatment in line with the "polluter pays" principle.
On inflation, consumer price inflation was still modest in the first nine months of 2005, with the Composite Consumer Price Index rising by an average of 0.9% year-on-year. The climb-up in inflation over the past few months was a natural consequence of an increasingly entrenched economic recovery, and is already well anticipated. Although inflation is expected to go up further towards the end of this year, for 2005 as a whole, we expect that inflation would remain moderate, at 1.5%.
Hong Kong is a key global and regional destination for foreign direct investment (FDI). According to the World Investment Report 2005 released by the United Nations Conference on Trade and Development, FDI flows to Hong Kong increased by 150% from US$ 13.6 billion to US$ 34.0 billion in 2004. In 2004, Hong Kong ranked seventh in FDI inflows in the world and second in Asia, behind the Mainland. Hong Kong’s FDI prospect in 2005 remains positive. According to the latest figures released by the Census and Statistics Department (C&SD), the FDI inflows in the first six months of this year amount to about US$ 20 billion, more than half of the FDI inflow in 2004.
While we are optimistic that Hong Kong will remain one of the largest FDI recipients in Asia, we will continue to actively promote Hong Kong to retain this leading position. Invest Hong Kong (InvestHK) has been publicizing Hong Kong’s advantages to potential investors. InvestHK also assists investors in setting up and expanding business in Hong Kong, and provides aftercare services to them after establishment. In the first six months of 2005, InvestHK assisted 144 overseas and mainland companies to set up or expand operations in Hong Kong, representing a year-on-year increase of 13.4% for the same period.
As at 1 June 2005, there were over 6,200 companies with parent companies outside Hong Kong set up as regional headquarters (1,167), regional offices (2,631) or local offices (2,472) – an all time high figure in all three categories.
(b) The recently released World Economic Forum's (WEF) Global Competitiveness Report’s allegations of a weakening in Hong Kong’s judicial independence, property rights protection, and a rise in favouritism in government decisions and corruption are not supported by facts. Our firm commitment to rule of law, level-playing field, and efforts and achievements in respect of anti-corruption are internationally recognized. We believe that the mainstream opinion of the general public in Hong Kong also do not agree with the conclusions of the WEF relating to Hong Kong.
The Government recognizes the crucial importance of safeguarding judicial independence and protecting property rights, and will continue to be vigilant in this regard. The vigilance is ongoing and not subject to any timetable.
According to the Global Competitiveness Report, Hong Kong’s ranking in the Corruption Subindex of the Public Institutions Index (one of the three competitiveness ranking indices) fell from 4th in 2004 to 26th in 2005. This is inconsistent with the findings of the Report that only 4% and 5% of the respondents considered corruption a problem for doing business in Hong Kong in 2004 and 2005 respectively. Moreover, among the 159 countries and places covered in the Transparency International’s Corruption Perception Index this year, Hong Kong was ranked 15th, one place higher than last year. In terms of actual score, Hong Kong registered a score of 8.3 which is the highest since 1997.
According to Independent Commission Against Corruption (ICAC), Hong Kong’s corruption situation is well under control and there is no sign that the corruption situation has deteriorated. Statistically, the number of corruption reports that the ICAC has received has been on the decline since 2002. In 2004, corruption complaints dropped 13% as compared with 2003. In the first nine months of this year, the total number of corruption reports received decreased by 6%, with a 12% drop recorded in the government sector, and 5% and 1% decrease in public bodies and the private sector.
The ICAC will closely monitor the corruption situation and will continue to rigorously tackle corruption through its three-pronged approach of effective law enforcement, education and prevention.
The Government is committed to promoting competition and providing a level playing field for all businesses to enhance economic efficiency and free trade, thereby benefiting consumers. All bureaux and departments are required to adhere to these pro-competition principles which are set out in the Statement on Competition Policy promulgated by the Competition Policy Advisory Group (COMPAG) in May 1998.
To ensure that the Government’s competition policy caters for present day’s circumstances and enables Hong Kong to maintain its competitive edge, COMPAG appointed on 1 June 2005 an independent committee, the Competition Policy Review Committee (CPRC), to review the existing competition policy and the composition, terms of reference and operations of COMPAG. The CPRC, chaired by a non-official with members drawn from different sectors of the community, expects to complete its review in mid-2006.
Ends/Wednesday, November 2, 2005
Issued at HKT 20:20
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