Action Agenda on "China's 11th Five-Year Plan and The Development of Hong Kong"
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Reporter: This high-level mechanism that Mr Fung's group is proposing to supervise the implementation of policies related to improving air quality. How high should be the level for this mechanism and can you give more details about what mechanism should be. And a question for Mr David Li whose group has talked about the urgency for Hong Kong to do more to enhance its status as an international finance centre, mostly on establishing commodities futures markets, also options and futures markets. Can you elaborate on that?

Victor Fung: Thank you very much for the question. We think that the whole area of dealing with pollution is a very important issue and a lot of the possibility lies with us and the factories that we own on the other side of the border ¡V the 60,000 factories. The government, together with all the major trade associations and many organisations like the Greater Pearl River Delta Business Council and so on have been working on this issue for some time, mainly working on the whole idea of voluntary programmes to adopt clean air charters and so on. And looking at ways to do clean production which I think is very important. What we think, the state that we've reached today is a state of implementation. I think it¡¦s quite clear what needs to be done, what can be done. I think the time for study is over and I think what we are looking for is a high-level group within the government that could orchestrate the different departments in government and perhaps working with different sectors of society and also dealing with cross-border issues, cross-border officials and so on. As far as the level is concerned, we have not been specific but obviously our hope is that it should be as high as possible. It should be the CS or even the CE level if that is becoming a priority item for the community.

David Li: The study group basically has a lot of facts about the demand of China on mineral sources, which is great. Also, if you look at a recent statistic, China purchased about 30% to 40% of world oil. So we felt that rather than having all those contracts going to London or Chicago, why don't we bring them back closer to home because we are close to China, we are part of China. We are in the same time zone. Why benefit others, why don't we do it ourselves? And there's a reason why we urged the government to have a consultancy study done on how this can be achieved in the shortest possible time frame and what needs to be done in order to attract Mainland companies to use this exchange rather than going to London or New York.

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Reporter: Just a follow-up on the air pollution problem. You suggested there should be a master plan with short-term deliverables that are quick to implement. Can you be more specific as regards which kind of indicator that can add as a benchmark as whether we are able to achieve or tackle the air pollution problems.

Dr Victor Fung: We have not gone as detailed as that because it's really up to the committee that will be formed to really choose the indicators and so on. One thing I have learned is this. I'm not a technical expert on pollution, but the level of pollution, the indicators, actually in recent years have been improving. However, it is very important to also look at the visual side which actually, as we all know, perhaps has been going the other way. So the fact that the visual and actual indicators are two different things, I think one has to separate them. The fact that we have a very clear sky does not mean that pollution is very good. What we do feel on a more pragmatic level is that we need to have involved in this effort not only different departments and different sectors, but we need different disciplines ¡V people who are experts in air pollution etc. We are also in need of people who are experts in let's say production ¡V clean manufacturing capabilities. We should also go as far as having experts that are very strong in city planning. Why? Because a lot of pollution you can see in Wan Chai areas are trapped there because of the way that our buildings are structured and the wind direction (I'm told by the experts). What we are looking at is a comprehensive across-the-board implementation group that can actually formulate plans and objective deliverables for the short term, medium term and long term.

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Reporter:? Two questions. Does this whole process that you have been through, the reports you have done, the recommendations, does this represent a departure in the way that Hong Kong and Hong Kong businesses would do business in future, change the way of thinking. If so, how? The second question is specifically on infrastructure. The infrastructure report seems to be saying that instead of having supply to meet demand, that supply should be developed ahead of time in order to create demand. I'm wondering whether that¡¦s a correct interpretation of what¡¦s recommended.

Leung Chun-ying: I don't believe there is a fundamental departure from the government's well-practised philosophy of policy in promoting Hong Kong's economy and economic activities. If you read the whole report you will realise that the role of government is essentially the same that the government has adopted over the last few decades. This is to facilitate the government's role as a G to G (Government-to-Government) and G to C (Government-to-Consumer) facilitator. Much in the recommendations and the action reports proposed by the four groups require Hong Kong Government to act in tandem with various Mainland authorities including the Central Government. This is G to G. And no one else in Hong Kong could substitute the HKSAR Government in discharging that duty. Secondly, much of the recommendation also rests on this G to C promotion ¡V government through government agencies whether it's TDC or Hong Kong Tourism Board will have its responsibilities squarely on its shoulders to promote Hong Kong as a tourism centre, as a professional services centre, as a trading centre, as a transport hub to consumers whether they are private individuals or enterprises on the Mainland or overseas. My short answer to your question is that the way I see it, government has not really changed its philosophy or its role in a fundamental way.

Victor Fung: I think what we are really now seeing is that we need to think about making sure Hong Kong has the capability to handle the flows over time. We are talking about the flow of people, flow of goods, flow of funds and flow of information. What we should be thinking about is making sure that the capacity of these flows and the connectivity of these flows are very much matching the needs to the extent that the sources of where these flows are coming from and where they are going to. We need to be anticipating that. To answer your question, in terms of just physical infrastructure ¡V the flow of people, the flow of goods ¡V I think we need to recognise that the whole process is once a process that¡¦s long lead time and hence we need to anticipate both the capacity we need and also where we would connect to. Our job, I think, in terms of thinking through the infrastructure in Hong Kong is to anticipate this. And especially in view of the long lead time to put programmes in place so that the capacity constraints and the connectivity issues never become a constraint to Hong Kong's growth and Hong Kong's needs. We always need to actually make sure that the availability of capacity in infrastructure and where it¡¦s connected to ¡V I would like to emphasise both ¡V is always being put in place in anticipation and ahead of demand. I don't think it's the idea of using infrastructure, building a drive demand. I don't think we've never thought about that, but it's important to think about just in time and given the long lead time and anticipation and some of the uncertainty of the demand we need to put in the infrastructure with a safety margin on a just-in-time basis.

Tung Chee-chen: If I may supplement. So far as the infrastructure on the marine side, cargo side or logistics side is concerned, what we are suggesting is that Hong Kong cannot consider itself to be an isolated entity and to the extent there are available cargo for Hong Kong to handle. If it is in excess of current capacity then we decide to build terminals and so on. We must look at the region as a whole and then say what is the participation we wish to achieve. To that extent obviously, that a competition, whether cost-competitiveness is basically we are on par with what¡¦s in our neighbouring cities. Therefore, if you look at the study itself, we are talking about overall total competitiveness being one of the foundation and hence the land transportation consideration, even to the extent we are talking about software, we are talking about efficiency, we are talking about IT system and including, for instance, the overall construction cost for whatever new facility. If you look at the whole cost structure and then we say this is what we need to do to become competitive. Together, looking at the entire region growth as I cited earlier, in 2000 Shenzhen handled about 4 million TEUs, last year about 18.5 million TEUs and in 2010 the anticipation is rising to about 45 million TEUs. We need to consider the totality in terms of the growth of available marketplace, if you will, for Hong Kong and determine whether we are competitive. If so when do we need to build in additional capacity. It's in that context that the report was put together.

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Reporter: You said you would try to increase the quota for non-local students in Hong Kong and to relax restrictions for their working part-time. My question is (1) to what degree would those relaxations be, (2) whether the work entails on-campus or off-campus work, and (3) would it affect the local workforce?

Victor Fung: Now I¡¦m wearing my hat as chairman of the Council of Hong Kong University. I think there has been a tremendous amount of progress already made in terms of using non-local students in our tertiary educational institutions. Five years ago the number was 2%. We have now reached the 10% range and I¡¦m not satisfied. I think Hong Kong should have 20% or more. I think it¡¦s very important if we aspire to create world-class universities in Hong Kong and training our next generation of leadership that we actually have a chance to give our own people the opportunity to rub shoulders with the best and brightest from around the world, including the Mainland. I must emphasise non-local does not mean only the Mainland. We certainly would like to make Hong Kong a cosmopolitan place that includes people from Southeast Asia, from America, from Europe etc. I think it¡¦s essential for the development of talent in Hong Kong that we move in this direction. Of course, if we ask these people to come it would be best if we are able to also give them an opportunity to stay and add to our talent pool. And to make it more attractive for their stay we want to give them some working experience and that is also very important for their education and for them to know about Hong Kong and use Hong Kong as a platform to learn about the rest of the world. All these are contributing very much to the overall development of talent. I am not concerned about the potential competition and so on, primarily because we will be attracting talent at a very high level that would actually have the effect of moving forward different sectors of the economy if they do stay and become part of the workforce. They will benefit job creation generally in the entire workforce. At the same time I think that level of talent is also very mobile. I hope they will stay but if they don't stay I don¡¦t think it¡¦s Hong Kong's loss. Why? Because if we have a group of people on the Mainland or in Southeast Asia that have been educated in Hong Kong, who know about Hong Kong and understand Hong Kong culture, that will be a huge force to actually promote Hong Kong and allow a very important and creative workforce for our people as we expand in those places. All in all I think this is a very important part of the whole programme. I think a very important specific part of what we want government to help with is for example allowing the opportunity to create dormitories to house them, otherwise there is no way to increase the intake. So this is the direction.

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