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Speech by the Chief Secretary for Administration at the Hong Kong General Chamber of Commerce Distinguished Speakers Series
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The following is the speech (English only) by the Chief Secretary for Administration, Mr Donald Tsang, at the Hong Kong General Chamber of Commerce Distinguished Speakers Series today (July 27):

Mr Chairman, distinguished guests, ladies and gentlemen,

Thank you, Christopher, for those very kind words of introduction. I'm conscious of the honour - and responsibility - you have bestowed on me by inviting me to address you today in your Distinguished Speakers series to mark the 140th anniversary of this venerable institution. I'll try not to let you down.

It also happens to be my first opportunity to speak to you as Chief Secretary for Administration. And while I will inevitably touch on economic matters in the course of this speech, I want to speak in broader terms about issues which are of concern to the business community and, indeed, the community as a whole. I want to say something about our society, the way in which it has developed; and the direction in which it is heading. I intend as well to look at the wider role of the business community and how it might change as Hong Kong itself takes on different shapes and hues.

First, Hong Kong. How do we feel four years after the transition? Are we in good shape? Are we heading in the right direction? What does the future hold for us? Can we compete with our regional rivals?

These are good questions which I hear debated all around me. By legislators, commentators, critics, business people, academics, teachers, nurses, doctors, lawyers, taxi drivers and men and women on the top deck of the Shau Kei Wan tram. That's the great thing about Hong Kong : you never find yourself short of someone with an opinion to express or, more likely, an argument to make.

Some people worry about this apparently cantankerous tendency. But coming as I do from a large and competitive family, and from a profession in which I have been encouraged to argue the point and defend my corner, I see this simply as part of the fabric of Hong Kong, and one of its greatest strengths. The trick is to harness this energy and enthusiasm - and occasional angst - and turn it to positive advantage.

We have managed to do so in the past, and I think it is important to do so again if Hong Kong is to fulfil its true potential. That last point is important because one hears so much negative comment these days about the state of the economy, the performance of the government, the lack of drive and motivation and skills among the younger generation, the threats to our future from neighbouring cities - not to mention the lousy weather we've had this summer. If we are not careful we'll talk ourselves into a funk.

Now I'm not denying that we have problems. Of course we do. I should know, because it is my job to identify problems and try to fix them. My point is that we need to see our challenges in context - consider for a moment the problems of some of our neighbours in the region - and look beyond the present to visualise how we might emerge on the other side. In short, it's about time we recaptured some of that good old Hong Kong chutzpah.

I was born and bred in Hong Kong. Not to put too fine a point on it, I came up the hard way. I've got to where I am because of the opportunities the Hong Kong way provides. It's not who you are, but what you do. I've been a civil servant for 34 years and I have seen our community overcome challenges that would have daunted or even broken other communities.

Hong Kong people come from a long line of survivors and doers. We are practical people. We are not easily put off, or scared off. What we have achieved in the past reinforces my faith in our ability to scale the heights that beckon us in the future.

In my own short lifetime so far, I have seen Hong Kong written off more times than I can recall : the embargo on China trade during the Korean war; the destabilising fallout from the Cultural Revolution; the oil crisis; the run on the dollar at a moment of white hot tension during the Sino-British negotiations; Tiananmen; the Handover; and, immediately afterwards, the Asian financial crisis. And that's just the short list. Through all these trials and tribulations, Hong Kong people's survival skills were put to the test. We emerged from each challenge wiser and for the most part stronger. We take that as part of our life's learning curve.

It's useful to look back at how we coped with these problems in the past in order to draw lessons on how to meet the challenges of the future. Hong Kong is a place that has always thrived on confidence. As pragmatic people, we instinctively understand that we need to have confidence in ourselves if we want others to have confidence in us. Whatever our current problems, we need to be a bit more gung ho.

We really do have a lot going for us. And we now have a clearer idea of who we are and where we are going. Since 1 July 1997, the identity issue for Hong Kong people has crystallised. No longer subject to colonial administration, we are once again a part of our great nation, with its civilisation spanning 5,000 years. We are part of a historic political and constitutional enterprise that, on the one hand, bestows on us nationhood and, on the other, the benefits of the civil society which is the legacy of our history. In many ways, we have the best of both worlds. This is a very secure basis on which to move forward.

Having said that, I can understand why in the aftermath of the Asian financial crisis, many of our fellow citizens still feel bruised and battered. I can understand why they are worried by the uncertainties of the world economy and the march of globalisation. That's only natural. But have we forgotten that Hong Kong is the most international of all cities - Asia's world city? Is it not true that globalisation will naturally benefit more those economies which are open and competitive? To my mind the new opportunities which globalisation offer are abundant enough to hurdle any hazards that may come our way.

This audience does not need yet another primer on what China's accession to the WTO means for us. Five percentage points added to our GDP over a decade is plain enough language, even if it paints only a small corner of a bigger picture. The Chief Executive, in launching this Distinguished Speakers series, went into some detail about his vision of our role in the Pearl River Delta. It's a role full of promise, so long as we are prepared to seize the synergy. The very productive and encouraging meeting of the Hong Kong-Guangdong Co-operation Joint Conference held earlier this week was another important step in this long term process.

The whole of China is our backyard. This is the country which is expected to become the world's second largest economy within the space of the next 25 years. Is that an opportunity or a threat? Will poor little Hong Kong get steamrollered on the way to this astonishing achievement? Will we be left behind by Shanghai? Let me deal with that last question, as it is one that has taken on a life of its own.

It has almost become an urban myth that before too long Hong Kong's star will be eclipsed by Shanghai's; that Shanghai is a 'happening' place that is fast catching up and even now luring business away from Hong Kong. More often than not, the rapid advances in Shanghai - and elsewhere in China such as Shenzhen and Guangzhou, not to mention Singapore and Sydney - are explained in terms of 'win and lose'. As in : Shanghai is becoming much more prosperous and open so therefore Hong Kong will lose out.

This proposition is far too simplistic. Not only that, it's wrong. Hong Kong and Shanghai do, and will continue to, play complementary, rather than competitive roles. Hong Kong is and will remain the pre-eminent international financial centre for the Mainland as well as in the wider context the major hub for regional headquarters in the Asia-Pacific. Shanghai will continue to develop as the major manufacturing, financial and business centre for the domestic Mainland market. The Mayor of Shanghai sums this up rather well by describing Hong Kong and Shanghai as the twin-engine of the national economic machine, helping the nation to take off, and reach higher economic platforms in this century.

Think of Hong Kong like New York; Shanghai like Chicago. There will be plenty of business to go around for both cities, as well as other rising stars such as Guangzhou and Shenzhen.

Having said that, there are certain major strengths that Hong Kong does have in comparison with our Mainland cousins, and will continue to have in the foreseeable future. These strengths factor heavily in the decision-making process of multi-nationals looking for a regional base, or of small and medium-sized enterprises looking for a foothold in the Mainland market or the Asian region.

The most important is our legal system. We operate under a common law system that is trusted, tried and tested by international business. Our capital account is fully convertible. You can buy, sell or convert as much of our currency when and where you like, without restriction. The same applies to property, securities, gold and silver - anyone from anywhere can buy or sell these commodities in Hong Kong without restriction. A strong and well-regulated financial sector; a free press; the free flow of information; low taxes and a simple taxation system; a pool of managerial talent with international experience; ease of access, proximity to major markets; a dense network of services firms. And a clean, corruption-free administration that believes in a level playing field.

These are our strengths. This is the Hong Kong advantage. It's imperative that we protect and enhance these assets. We must ensure the integrity of this advantage under One Country Two Systems. We must not undermine our strengths or blur our unique character, lest we become just another city in China, and not a Special Administrative Region of China as enshrined in the Basic Law. Here lies the essence of our competitive edge.

This competitive edge is what Brand Hong Kong means. Our strategy is to leverage the brand to strengthen perceptions of Hong Kong as Asia's world city. The business community has a key role to play in this. As businessmen and women you will understand better than I - a humble civil servant - that the core qualities of a brand are the constituents of its success.

We have defined the core values of our brand - Brand Hong Kong - as follows: progressive, free, stable, opportunity and high quality. These are the values we must communicate in every way we can to our citizens at home and to audiences abroad.

The most effective way the business community can contribute to this effort is by continuing to demonstrate the dynamism, flair and entrepreneurial spirit that is recognised throughout the world as a hallmark of Hong Kong. Your role as a creator of wealth and opportunities has been the catalyst of Hong Kong's great success story. For all of the changes we may undergo, that will always be the case.

The challenge for you is to adapt with dexterity and skill to the changes taking place in the global economy, and which have already impacted on our own economic landscape. So far, I am encouraged by the way in which Hong Kong has embraced the new economic parameters of innovation and technology.

This is not the only shift affecting the business community. Just as the economic landscape is changing, so too is the political and social landscape. The government is subject to scrutiny now as never before : through the legislature and, unrelentingly, through the eyes of the media. We are being held to account for each and everything we do, both large and small. This trend is likely to become more marked as the political system develops in tune with the requirements and ultimate goal of the Basic Law.

There is certainly a recognition of this by the Hong Kong General Chamber of Commerce. I welcomed the initiative of this, our oldest and largest business organisation, just over two years ago when the general committee set out its stall, so to speak, on the changes in the SAR's political scene. In acknowledging that the SAR political environment is evolving in one direction: towards greater democracy and a more developed, plural society, the general committee had this to say:

"Communication and dialogue with the media, with the politicians, and with the grassroots population is a requirement in the post-handover 'Hong Kong people ruling Hong Kong' society. This dialogue will not be easy, since not everyone will agree with every agenda item of the business community and since politics is often messy and sometimes openly adversarial in nature. But businessmen must be prepared to roll up their sleeves and set out their case. And the business community has a good case, since the true definition of 'business community' is almost as wide as the entire six-million-plus population of Hong Kong."

I believe all fair-minded members of our community would endorse those sentiments. Now, more than two years on, how does the report card read? Is the business community out there in the market place of ideas and community aspirations, sleeves rolled up, making its case? Winning the arguments? Is the message of business getting through to the grass roots? How will philosophy and aims of business be translated into success at the ballot box? Believe me, sharp elbows and nimble footwork are required.

I know from long years of experience that members of the business community are just as committed to the success of Hong Kong and to the well-being of their fellow citizens as any other sector of society. True, there was a time when it did not seem necessary to be part of the fray. Those "good old days" have gone forever.

I have seen signs in recent times of a greater awareness by businessmen and women of the need to become more deeply involved in public affairs. I wonder if it is enough. Is it too little, too late? Unless these efforts are stepped up, as among your counterparts in other developed economies, and you are prepared to mix it with other interest groups, the business community may well find itself increasingly marginalized in the political debate. That would not be good for business. That would not be good for Hong Kong.

Public servants have learned that in this day and age you need to be part of the process. By the nature of our profession, we are reluctant "politicians". But as members of the executive we are accountable to the legislature. This is mandated in the Basic Law.

That means we spend a good deal of our time explaining ourselves at the Legislative Council. In the session just concluded, government officials attended some 258 LegCo panels - that's one every working day. This does not take account of regular meetings of LegCo, the Finance Committee, the Establishment Sub-Committee or the Public Works Sub-Committee, not to mention any number of Bills Committees.

This involves a huge amount of time and resources and commitment. It is taxing, trying and sometimes tiring. But the upside is that at the end of the day, the public can be satisfied that every piece of legislation that goes onto our law books has been debated and dissected to the point of exhaustion. This is what transparency and accountability are about.

Mr Chairman, I apologise if I have gone on at some length. But I did not want to let this opportunity slip to convey some important messages to this audience. First, that for all our problems, real and imagined, Hong Kong has a hell of a lot going for it; and we can capitalize on that if we rekindle some of our fighting spirit. Second, that we have nothing to fear from neighbouring cities so long as we leverage our unique advantage under One Country Two Systems. And third, that the business community needs to think about doing more to make its case in the SAR's evolving political scene. I hope these messages have provided some food for thought.

Thank you very much.

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Transcript of the Q&A session by the CS at HKGCC luncheon

The following is the transcript of the question and answer session given by the Chief Secretary for Administration, Mr Donald Tsang, after addressing the Luncheon by the Hong Kong General Chamber of Commerce today (July 27):

Question: Sir, may I go to the earlier part of your speech when you said that one of your jobs is to find whether the problem is economic or social. Have you realized there is some social problem of racial discrimination and do you think this is the right time to have legislation against racial discrimination?

Mr Tsang: Well, racial discrimination exists in all societies. It is an evil. But sometimes it is very difficult to change what is in the minds of people in one generation or two. As a government, we are against it. I think it is counterproductive, it is inhibiting, it certainly does not sit well with the international character of Hong Kong. We can do well without it, and certainly we should stop it as much as we can.

The question, the real question is how we should go about it. Some communities, some societies, some countries, have tried legislation. Some other countries have tried education. Some countries have tried more to send out codes of practice. But we believe, in Hong Kong, the problem is there but it is not manifested in such a way that it is something which we should go write-up into outright legislation. But our mind is open on this, totally open on this, we want to listen to people's views on how we should tackle this.

But I can agree with you, sir, one very important point, social racial discrimination is an evil. We can do without it. And as an international community, we do not want it because it is inhibiting our growth. It does not sit well with the international character of Hong Kong. We want all people of this world, irrespective of creed, colour or religion, to come here and thrive and be part of us, to make this a really great city of the world.

Question: I hesitate to mention Singapore but as you did, I will. You might have noticed, anyone who went to work during the typhoon day would have noticed, that earlier this week, Brigadier George Yeo, the Minister for Trade and Industry in Singapore, announced a substantial package of measures to help keep Singapore companies competitive during the current slowdown in international trade and the regional economy. I was wondering if you could foresee any circumstances in the near-term future when Hong Kong might need to bring on a package of measures like that?

Mr Tsang: I will be very careful answering that question. My honourable, venerable press over there are watching every word related to economics and then rightly accuse me of overstepping my role. But I do have a memory of some Financial Secretary, back in 1999, did something of the kind - a package larger than what the Singaporeans have tried to do now. But whether or not we should do more, I'll give you a good recommendation, Ian. The Financial Secretary is likely to speak later this afternoon - ask him that question.

Question: The question I have is looking into your future administration, Mr Tsang. And the question is - and I wrote it down so I don't cock it up: When Mr Tung implements the ministerial system, would the Chief Secretary become a ministerial appointment or would he remain the head of the civil service? And which would you prefer?

Mr Tsang: Gerry is such a gentleman. He never hits below the belt - in the past. We are in the middle of going through a very serious discussion session internally with Mr Tung and many of my colleagues on the new accountability system. And in that, we are moving to look at how we make the upper echelons of this administration more accountable to the public. In that process, political appointments will be discussed, but in what shape and what kind, it is very difficult to say.

All I know, Gerry, is I know what I want to be. I want to be a public servant. I want to be of service to the public of Hong Kong and that is my lifelong commitment. Exactly what it would be is a matter for Mr Tung to decide, and it is a matter for the community to decide at the end of the day. God willing, I am there. But I think it would be premature for me to say exactly what I would be before I know what it is all about. So that is hedging a bit. But it is true that we do not know exactly what the final shape would be. But I will be with you, I'll be there, I'll be pulling my own weight and making sure: we have a robust civil service, as the one envisaged in the Basic Law; and again we are evolving into something where the administration which is much more accountable to the public, to the legislature, to the people at large.

Question: Thank you very much, Sir Donald, for a very inspirational speech. As a member of the public, I would like to ask if the administration has any views on the current dispute between Cathay Pacific and the pilots. It seems to me that the two sides need their heads banging together and clearly, this is protracting for a very long time. Is there any way that the administration can step in or have some sort of labour relations to step in, because this is clearly very, very damaging for our economy and for our reputation at a time when we are trying so hard to build our dragon image.

Mr Tsang: I cannot agree with you more, we can do without disputes of this kind. But I can assure you my colleagues in the Labour Department have been in the fray from the word go. But the success of the negotiations or a conciliatory process for a conciliator such as the Labour Department, they have to be very careful, they must not overstep, they must not profile themselves too prominently. But they are working there. They are working there, I can tell you, every day, trying to put the parties back on track.

But I am glad to see that Cathay Pacific is now recovering and most of the flights and most of the routes are now in operation. But I agree entirely with you, this community can do without disputes of this kind. And organizations as large as Cathay Pacific - anybody else should try to avoid this. But everyone must pull his weight, the pilots, the companies and so on. But this is a question which we must, as a government, try not to intervene too much. It is a commercial decision, it is a labour situation and what we have to do is to bring the parties together without pontificating or forcing any party to accept something which is not acceptable. For instance, asking the company, the management, to accept something which is commercially not viable, or ask the labour side or the pilots' side to accept something which is professionally unacceptable. So we must make sure that in here we have to be very, very neutral but very sympathetic, fairly active, but in the background. Thank you very much.

Question: I read in the newspaper, in the gossip column, this morning, that you prefer to use administrative guidelines rather than to legislate. And hearing what you have just said, that it takes a long time to legislate, maybe you can enlighten us how truthful this gossip is.

Mr Tsang: There is no need for gossip. Legislation should not be resorted to unless it is absolutely necessary. Legislation imposes unnecessary restrictions on the community at large, sometimes a sector of the community and sometimes it is the entire community. So it is something which binds a free society. We should not have legislation unless it is absolutely necessary, because it is also costly to the community as well, in that you have to make sure that the laws are being enforced, otherwise there is no point in doing so. What I am saying is not legislative guidelines, let's think in terms of what is best for Hong Kong; let's think in ways in which we can reduce the amount of argument, in whatever forum, including the Legislative Council, which is so important; and let's also think of ways of doing things. But don't pretend that there is such a thing as perfect legislation, perfect law and a perfect world in which we must achieve it. If you have this in mind, you will find that after perfection is achieved, somebody will invent other imperfections in the system and you have to improve it yet again, and again, and again. In my mind, at least as an administrator and also as part of the administration, I always believe legislation must be held as a last resort, but something we have to do occasionally, but not just the first and ready solution would be legislation. That would be wrong, in my view.

Thank you very much, all of you, in hearing me out. And I think, really, they are fed up with me, aren't they?

End/Friday, July 27, 2001
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