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Transcript of remarks by CE at question-and-answer session of Joint Business Community Luncheon (English only)
     Following is the transcript of remarks by the Chief Executive, Mrs Carrie Lam, at the question-and-answer session of the Joint Business Community Luncheon held at the Hong Kong Convention and Exhibition Centre today (October 31):

Attendee: Jimmy Ng of Chinese Manufacturers’ Association (CMA). Chief Executive, CMA are heartened that the Government is stepping up its efforts to develop innovation and technology, and your maiden Policy Address has proposed a host of new initiatives with a focus on building a conducive ecosystem. I’d like to ask, if I may, Chief Executive, will the Government consider drawing up more concrete measures to support and stimulate our traditional industries – I must stress again, our traditional industries – so as to encourage them to embrace new technology and innovations? Thank you.

Chief Executive: Well, thank you very much, Jimmy. I think that area of work has already started with the Financial Secretary chairing a committee on innovation and technology and re-industrialisation, but of course in the internal steering committee that I’m going to chair, I will be monitoring the progress closely and see whether we need to put in place concrete measures. While on this subject I just want to share with you a very enlightened conversation I have with Dr Harry Lee, Chairman of Hong Kong RITA (Hong Kong Research Institute of Textiles and Apparel), about how innovation and technology could help to re-energise the very traditional textile industry. So if it needs more resources in R&D, it needs government support in the IP protection, licensing and reaching out to international institutions, I said I will be very happy to support those initiatives. Thank you very much.
Attendee: Good afternoon, Chief Executive. My name is Derrick and I’m from the Chinese General Chamber of Commerce. In the Policy Address, land and housing issues are the top of your agenda and you proposed to use a piece of land in Kwun Tong as a pioneer project for the “Starter Homes” (Pilot) Scheme. However, that piece of land is already under the land sale programme for private homes, so simply turning that into “Starter Homes” will not necessarily increase the overall supply. Would the Government consider to form a private-public partnership with the private sector by utilising their farmlands? On one hand, the private sector have to provide lands for “Starter Homes” free of charge and be responsible for building and selling the affordable homes for the eligible homebuyer at cost. On the other hand, the Government can offer lower land premiums required for the private sector to build private homes. Would that be a win-win situation?
Chief Executive: Well, first of all, housing is an extremely complicated and difficult issue, but at the same time it is the highest priority topic that the people of Hong Kong want the Government to tackle. But the solution lies in land – if there is no land available for the building of housing, we will just be taking a piece of land from one category to another. So, I agree with you that we cannot keep on taking land from the Land Sale Programme, which is for private housing, for the “Starter Homes”. So, this piece of land is taken out, because first we have been doing quite well in terms of private housing production in the last two years or so, because of larger than expected number of lease modifications providing private housing, and I need to pilot and to see how we could use the land lease to stipulate conditions to produce this type of “Starter Homes”. So, that is no more than just to demonstrate and to test out the land lease arrangements to get that in place. But I have made it very clear, absolutely clear in my Policy Address, I’m not going to take land designated already for the public housing programme, whether it is HOS (Home Ownership Scheme) or public rental housing or this new green form subsidised home, to do the “Starter Homes”, because I know very well that in terms of prioritisation, the Government’s primary duty is to look after the grassroots, the lower income families. So, it does mean, and as stated very explicitly in the Policy Address, that the sources of land for doing more “Starter Homes” in the future will be land in private developers’ hands. So, it will be some of the land that you have mentioned and we all know they exist if we care to look at the annual reports of some of the developers, then we know that they do have a land bank of their own. How to do it is not too difficult, but how to get society to accept it, that is, overcoming the political hurdle and all these worries and suspicions about collusion, transfer of benefits, is a huge challenge. But in my usual style, I’m not going to shy away from difficulties, so I will continue to engage with the stakeholders, with people, with people who are in the know about Hong Kong’s housing policies and I’m sure there are quite a few here, with Stanley Wong and Marco Wu and so on, to find a way, a very transparent way to get this sort of co-operation underway. But I just want to respond because I notice you mentioned about lower land premium. I would be very hesitant to attract developers to join the scheme by offering lower land premium. We will have to find other means to ensure this type of co-operation, which I agree with you would be a win-win arrangement to happen but certainly unlikely to be through a lower land premium. Thank you very much.
Attendee: Hello. Aron Harilela, General Chamber of Commerce. Thank you, Chief Executive, for your wonderful speech and your Policy Address. You know, we are very pleased to hear that the Central Policy Unit will be revamped into the Policy Innovation and Co-ordination Office, which will be responsible for working with all the government bureaux to proactively review existing legislation and regulations in order to remove the outdated provisions that impede the development of innovation and technology. Hong Kong is far behind many other cities in this regard, and it's very nice to hear that you have eight different priority areas that you'd be working on. In addition, I think most of the licences and codes in Hong Kong are outdated. For example, most licences restrict e-commerce, selling online, for example, vitamins and minerals. The fire codes actually restrict robotic automation. Could you elaborate a little bit on this? And I'd pledge that the Chamber would certainly take our time and go through a list of outdated codes and licences if the Government wanted any help on that. We would certainly pledge our resources and our time for that.
Chief Executive: Thank you very much, Aron, for asking that question and also offering to help. We do need some outsider help in this particular area. Yes, I have proposals to revamp the Central Policy Unit into a new unit called the Policy Innovation and Co-ordination Office (PICO). One of the assignments I am going to give to this new office is to do one of the eight areas in the I&T (innovation and technology) blue print, that is to review the obsolete legislation to facilitate new forms of economy and to provide business-friendly environment and so on. The reason why it has to be assigned to an outside unit, that is outside of the 13 bureaux is because I suspect there will be some resistance within the Government bureaux because they have been very used to this sort of legislation, rules and procedures and to deviate from them would sort of create a bit of anxiety. So, my experience in public sector tells me that very often for this sort of ad-hoc, important assignments, it should be undertaken by an office under the personal steer of a very senior official but not within an existing bureau. So I would, first thing when this unit is established and the key officers are there, I will ask them to come to see the chambers individually or collectively to get from you your input into this list that you want us to review. Thank you very much.
Attendee: Eric Yim, representing the Federation of Hong Kong Industries. Chief Executive Carrie, thank you for your sharing. We are very pleased to learn about the tax reduction on R&D spending in your recent Policy Address – the 300 per cent for the first $2 million and 200 per cent for the rest. This would undoubtedly encourage R&D spending. However, in your Election Manifesto, you also mentioned about possible tax reduction that could also apply to spending on design, branding and environmental protection. Could you share with us whether you have any time table of implementation of these measures on these areas?
Chief Executive: Actually, first of all, don’t worry, 不是「走數」, Eric. Well, the two very concrete tax measures were presented in very concrete terms during the election, and they are relatively easy to implement because it is nothing new under the sun. Many tax jurisdictions have this sort of tax regime. It is easier to do. So, my colleagues in the Financial Services and the Treasury Bureau have already come up with the needed content of changes to the legislation. But the point I want to make in my Election Manifesto and I continue to make it here today is tax - Of course, tax is means to collect revenue to support the government’s operation and activities - but tax is also a very effective instrument to induce certain behavioural changes, whether it’s for progressing the economy or just to improve livelihood. We do have tax deductions for life-long learning, for supporting your own elderly parents in residential homes and so on. So, I’m open. To answer your question, I have an open mind, I am open to suggestions. I believe at the first Summit on New Directions for Taxation last week, the Financial Secretary and his team would have collated a whole host of ideas on how to make our tax regime more competitive. If nobody has mentioned about design in that context, I suggest Eric you put in a submission to him and to me and I can promise you we will seriously look into it because design within this bigger category of creative industries has been identified as the second major area for us to diversify our economy and I really see the huge potential in Hong Kong’s design industry. Thank you very much.

Attendee: Eva,…a Shanghainese working in Hong Kong, just moved in by September,現在在學廣東話,希望下次可以用廣東話交流。Back to English, I worked 14 years plus for Mainland China for the company. So, due to responsibility, there are chances that I see, the Central Government, the provincial government and also a lot of interactions with Guangdong and like Shenzhen, Guangzhou, Zhuhai, Zhongshan, etc. Carrie Lam, you are just talking about the “Belt and Road” strategy and also the Greater Bay Area initiative, so honestly, I would like to see any solid plan, especially the differentiation against the competition or constructive one but also people want to make their own city attractive,  like Shenzhen or Guangzhou whatever. Recently in a seminar in Guangzhou, I raised a similar question, and the Government just said, “Oh, don’t look at Guangzhou, they are older schools, they are out of date, we are here innovation, technology- big companies like Shenzhen Huawei or … whatever.” So I would love to see, like Hong Kong, actually carries its competitive edge. Ten years ago when I landed in Hong Kong and also I worked with my international colleagues, they recognised Hong Kong as a …city… and I think I enjoyed so much of the advantages and good things and I do hope it carries all. And during my assignment here, I commit myself and also for company, but also for my team in Hong Kong, that I can do just more than good business for the company, but also … in the long-term prosperity of Hong Kong. Thank you.
Chief Executive: First of all, thank you very much for your vote of confidence in this city. I do feel very passionately that Hong Kong still possesses a lot of unique advantages, whether it is under “One Country, Two Systems”, or as a result of our years of operating in the international scene. But the two important national initiatives now before us- one is the Belt and Road, the other is the Bay Area, do require the Government to really map out a strategy and some very concrete measures in order to seize those opportunities. For example, in the Bay Area development, having signed a framework agreement on the first of July witnessed by President Xi Jinping, the three Governments together with the National Development and Reform Commission are now working very diligently in the development plan. And I expect the development plan would contain many concrete measures, especially to address the point you raised about the competitive advantages of the nine cities and Hong Kong and Macau, so as to avoid unnecessary duplication in working resources and in investment, but try to do the things that is best being done by one of these cities. As I mentioned, I see a lot of synergy between Hong Kong and Shenzhen, and maybe one of the advanced manufacturing cities, whether it is Dongguan or Zhongshan, in order to ride on this I&T development and the commercialisation of the research outcomes. So, this is an area that we will work very closely with our counterparts in the Guangdong Province. Thank you very much. 
Ends/Tuesday, October 31, 2017
Issued at HKT 21:14
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