The Chief Executive’s Policy Address for her first year in office contained many positive new initiatives which the Chamber supported. It would be tempting to do a “scorecard” and assess whether the Government has delivered on these promises. But we believe it is more productive to take a step back, and reassess the Government’s vision. 

A vision for Hong Kong
Chief Executive Carrie Lam stated in her first Policy Address:

“My vision for Hong Kong is for a Hong Kong of hope and happiness – a city we are all proud to call our home...To achieve this vision, we need to have a society that is united, harmonious and caring.”

To achieve this vision, Hong Kong citizens need the opportunity to enjoy a good quality of life. It is arguably the failure to make this a reality that has caused the divisions that have arisen within our society in recent years. 

The goal of a good quality of life is increasingly threatened by a fragmented society underscored by discontentment and a lack of trust. In the process, businesses appear to have been used as a scapegoat because of their allegedly singular pursuit of profits at the expense of everything else. 

The otherwise innocuous approach of Public Private Partnership has become a buzzword for alleged government-business collusion. This is unfortunate, as it prevents business from cooperating with the Government on public projects where private sector know-how is invaluable. 

The roles of business and the Government
Businesses have always been the engine of Hong Kong’s growth and the foundation of its economic prosperity. They provide our citizens with employment and income, and with a wide variety of products and services. By generating tax revenues, they help to look after our elderly population and achieve other social objectives. As the Chief Executive said in her speech on 1 July: 

“Economic growth provides us with the necessary resources for the continuous improvement of people’s livelihood.”

We should never forget that Hong Kong’s economic success is largely due to its traditional light touch and free market approach. The Government’s role should be confined to the minimum: ensuring that unnecessary obstacles to doing business are removed, providing appropriate infrastructure, protecting the environment, and providing essential services such as education, elderly care and social housing.

Challenges in achieving the vision

Removing the regulatory bottleneck 
Hong Kong must ease the burden of doing business here. Too often, our businesses have been hampered by unnecessary regulations and red tape. We often hear complaints from our members about having to deal with multiple Government departments with different timelines and overlapping responsibilities. 

New projects often get bogged down in bureaucracy, new ideas are prevented from coming to fruition, and government funding for innovative projects is difficult to access. To address these problems, the following steps need to be taken:  

• Implementing proper “joined up” Government. Attention should be given to making sure that processes are fast, smooth and predictable, using the “one-stop shop” principle. There must be a strong central coordinating unit rather than each department being left to its own devices. We have high hopes that the newly-formed Policy Innovation and Coordination Office will achieve this. 
• A proper and compulsory regulatory impact assessment (RIA) should be carried out before any new regulatory intervention is made. The RIA should quantify the costs and benefits of each option to the different stakeholders, the economy and society in general. A Hong Kong RIA would build on the Government’s existing “Be the Smart Regulator” programme. 
• It should be a systemic, universal and compulsory part of Government processes that legislation and regulations are reviewed regularly – we suggest every two years – to ensure that they are still fit for purpose. 

Removing the land bottleneck
It is well recognised that there is a chronic shortage of land being made available for housing and commercial use in Hong Kong. Part of the problem is that our existing land is not being put to the most efficient use. This is compounded by the lack of supply, which has stagnated while the population has continued to grow. As the Task Force on Land Supply said in its April 2018 Consultation Document, “land development has virtually come to a halt since 2005.” 

The result is that prices for housing and commercial property are the highest in the world. This has a major impact on the quality of life of our citizens and the costs of doing business. It also increases the risk of our younger citizens relocating overseas, which exacerbates the problems of our labour shortage and ageing population. 

We believe the following steps should be taken as a matter of priority:

• When the public engagement exercise on land supply is completed, the Government should, as a matter of urgency, publish its proposals as to which options it proposes to implement, accompanied with a full RIA. Priority should be given to redeveloping “brownfield” sites and re-zoning industrial sites. In addition, serious consideration should be given to creating more land through reclamation outside of Victoria Harbour. 
• The town planning process must be thoroughly reviewed and updated if necessary. Building codes also need to be reviewed and updated. To that end, we welcome efforts by the Development Bureau to review the standards and definitions adopted by the Planning, Lands and Buildings Departments for the purpose of streamlining vetting procedures for applications.

Removing the labour bottleneck
Being a small jurisdiction, manpower is also a scarce commodity. In March-May this year, unemployment stood at 2.8% – the lowest rate in 20 years. 

We support the Government’s policy intentions of prioritising Hong Kong citizens for jobs where they have the requisite skills. At the same time, we must recognize that there are skills gaps in areas such as construction, healthcare, hospitality, IT and certain professional services, and that we have to recruit overseas citizens to fill those gaps. With this in mind, the Government should give priority to the following:

 Equipping our young people with the skills that will be in demand in the future, such as in IT and AI. We must prepare our future workforce to adapt to the changing employment landscape brought on by advances in technology. The Technology Talent Admission Scheme should be opened up to businesses from outside Cyberport and the Science Park.

 Reviewing our immigration processes to ensure that they are as efficient as possible – especially if we are to take advantage of the opportunities that initiatives like the Greater Bay Area will present.   
 Special labour importation schemes should be set up for industries suffering from acute manpower shortages.

Making Hong Kong a smart and more liveable city 
A healthy and comfortable outdoor living environment contributes to the quality of life of our citizens. Technology can also help, by implementing the Government’s proposal to make Hong Kong a smart city. In this regard, there is still much that can be done:

• The Government should roll out the proposals in its Smart City Blueprint as soon as possible. In order for its Smart City plans to succeed, the Government should be prepared to ‘think big’ and take calculated risks.
• Although there has been a marked improvement in Hong Kong’s air quality in recent years, air pollution is still a problem that we must continue to tackle.
• We must balance the need for construction and renovation with the need to keep noise pollution to a minimum. 
• We must increase the level of waste recycling in Hong Kong. There should be efforts to find alternatives to single-use products, especially those made from plastic.
• The Government should implement its objective of making Hong Kong a more “walkable” city. 

                                                                                                 
Grasping the opportunities
Hong Kong has a number of significant advantages and opportunities:

The New Economy or “Fourth Industrial Revolution” 
The growth in markets such as machine learning, biotech, fintech and big data presents Hong Kong with tremendous opportunities if we get our policies right. Although Hong Kong is considered a late starter in the innovation and technology stakes, there are advantages to being a laggard, such as the lack of legacy issues. 

We would also be able to ascertain the types of technologies that offer the most promise and direct our investments accordingly. In this respect, the Government’s decision to focus on AI, biotech, fintech and smart city should help us take advantage of the opportunities. 

The ability to leverage on smart city technologies is of particular importance as it is closely associated with the issue of livability. The challenges thrown up in the pursuit of livability can also offer considerable market opportunities. One of these involves finding solutions to Hong Kong’s ageing population. In addition to filling gaps left by a shrinking workforce, there are also demands from a growing ‘silver hair’ market that will need to be catered for.

Greater Bay Area and Belt and Road Initiative
Hong Kong’s geographical position and strong expertise in legal and financial services make it perfectly positioned not only to act as the gateway to the expanding Mainland Chinese economy generally, but to take advantage of the opportunities provided by the Greater Bay Area (GBA) and Belt and Road Initiative in particular. 

To tap into these opportunities, it is essential to have free movement of capital, people, goods and services within the GBA. The ability of individuals to move freely is particularly important. In this regard, a recommendation that the Chamber made last year bears repeating. We recommended the introduction of a visa system, based on the APEC Business Travel Card Scheme, for selected categories of GBA residents to enter Hong Kong and vice versa for work and business purposes. A pilot scheme at the Lok Ma Chau Loop could be carried out before being adapted to the GBA on a wider scale.

As well, the Government should facilitate the development of a data centre hub in Hong Kong, utilizing our strategic advantages to serve the GBA.

Conclusion
Perhaps the most fundamental challenge in achieving our vision of improving the quality of life for our citizens is ensuring that business, as well as Government, has a critical role to play. We need to get back on the same side, as we all want what’s best for Hong Kong. Removing unnecessary obstacles to business is therefore indispensable if we are to achieve our vision.