Transcript of remarks by CE at question-and-answer session of Joint Business Community Luncheon 2017 (2) (English only)

Moderator: Okay, if you have questions, please raise your table number, as you can see there are many tables here.  I see a 19 here.
Attendee: I am George Yuen, ICBC. I’d like to ask the Chief Executive that the US President Donald Trump not supporting TPP, and with Australian Prime Minister saying that China taking up a leading role. Hong Kong being a super-connector and also an international financial city, how will you see the strategy for Hong Kong to promote a bigger role in this globalisation and trade activities?
Chief Executive: I think Hong Kong can truly and honestly hold itself out as a leading light in this campaign, in this global campaign for global free trade. And that’s the message I brought to fellow leaders at the Lima APEC meeting last year.
     Hong Kong is a great example as to how you could do without the trade barriers and at the same time chalk up great trade volumes and economic prosperity at the same time. As I said, trade is very important to us and the volume of trade represents several times of our total GDP. If you look at the past year, for example, despite the slowdown of the global economy, we are doing reasonably well with our new partners. If you look at the two countries I mentioned, two of the countries as I mentioned in my (Policy) Address. For the first ten months of last year, our export to India increased by 12 per cent compared to the same period in 2015, and the export to UAE (United Arab Emirates), went up by 14 per cent compared to the same period in 2015. A little Hong Kong is India’s seventh, eighth largest trading partner. So I am a firm believer in free trade. More free trade. And that’s why we have been working very hard and we have been having very regular meetings with my colleagues in the Trade and Industry Department, and want to sort of keep abreast with the latest negotiation with each and every of the ten partner countries of ASEAN (Association of South East Asian Nations). As I said, ASEAN is our second largest trading partner when comes to merchandise trade, and we are looking forward to concluding our last negotiations with all member countries of ASEAN in late March. So yes, we will do whatever we can as to what China and Hong Kong should do with TPP. I think we’ll let the dust settle for a while and then we’ll make a decision.
Moderator: Certainly I think the US will be an exciting year for us to observe. Well, let’s try on this side. There is a hand raised on table 26.
Attendee: Thank you. Andrew Wells, Lai Sun Group. First of all, thanks to the Chief Executive for his presentation today and for all his efforts over the last five years on all of our behalves. My question relates to land and housing. I’m sure we all welcome the long-term possibilities put forward by brownfield sites, reclamation and so on. But in the short term, what we have seen is very high prices being paid at auction which has the result of, of course, increasing prices at the retail level, irrespective of what developers may wish to do. In the short term, my question then is - can the government look at, first, reintroducing at least to some extent, a tendering system such as operated in the days I remember. And secondly, looking at the system of lease modification, which currently for developers in Hong Kong is both very expensive and very time consuming, which is why some may be prepared to pay the high auction cost rather than actually use up their existing land bank. So, could we perhaps have some quicker wins through those measures? Thank you.
Chief Executive: Your second question first, Andrew. We are doing whatever we can to speed up the lease modification process. The modification itself is not time consuming. What is time consuming, as things often turn out, is the period to get developers agree with government’s evaluation of modification premium. I mean, we are getting onto technical grounds. Modification premium is the additional money you pay government that represents the enhancement in the value of the piece of land as a result of changing from one use to another use, from industrial use to commercial use for example. The two sides don’t always see eye to eye on this. And that’s why, I introduced - with a lot of efforts, to get all parties agreed - I introduced this arbitration mechanism, basically allowing developers, land owners to take government to arbitration, so that’s there is finality to determine what is the right level of premium. But somehow that mechanism is not triggered by developers as often as I would like to see. So far, I might be a bit outdated. But we waited a long while and we wouldn’t have one singular case of arbitration. So the mechanism is still there. As far as government is concerned, we have increased resources to make sure that we shortened our turnaround time as much as possible. The question of selling government land - we have been using tender. Cannot remember when was the last time we sold by auction. Coincidentally, the private sector has not been using auction either. The private sector has been using tender as the sort of normal way of disposing of landed properties as well. But what we’re saying in the development industry is that we have many more new entrances to the market. Gone are the days when people complained about oligopoly - that we always sell land to a fixed number of developers in Hong Kong that you can count them by your fingers on one hand. Now, you read in the newspapers all these new bidders, new arrivals on the market. And every time, we attract, and every tender attracts more than fifteen bidders. Keen competition and this is one of the reasons behind high prices we fetch in the market. But I think in the end, supply is a crux. The crux of matter is really supply and we are increasing new supply. And if you are really interested in all the details, there is a long chapter on what we are doing short-term, medium-term and long-term.
Moderator: Okay, well, I want to thank all your questions. I was signalled the running of time, so if you would join me to give a big hand to Mr Leung for this question-and-answer section.

Ends/Thursday, January 26, 2017
Issued at HKT 17:25