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Prudence needed to safeguard local business environment

By James Tien

The recent run of interest rate cuts in the United States reflects the risk of an economic slowdown in the country. As Hong Kong's economy has yet to fully recover from the Asian financial crisis and is intrinsically tied to that of the U.S., the outlook for local industries and businesses, especially the small and medium enterprises, is not rosy despite the benefits of the rate reductions. As such, in my recent submissions to Legco, I recommended protecting our business environment to prevent increasing the business community's burden.

Liberalise software parallel imports

As I reported in last month's Bulletin, the new copyright ordinance, which came into effect on April 1, created many problems. The government has formally submitted a draft to Legco to suspend implementation of part of the ordinance till July 31, 2002. Regarding miscellaneous photocopying for causal usage, I strongly support deleting the provisions that are draconian, obstruct information flow and hamper the general public and businesses.

The government should also pay attention to the problem of high prices that businesses must pay for computer software. Because people must buy from authorised dealers and some software companies decision to "raise prices on their own initiative," software being sold in the local market is undoubtedly too expensive. According to government statistics, software sold in Taiwan is on average 12 to 15 per cent lower than that sold in Hong Kong. I therefore support parallel software imports to stabilise market prices.

Existing regulations on software parallel imports are quite strict. Parallel software can only be legally imported into Hong Kong 18 months after its release. I urged the government to eliminate these restrictions. In response, it said it is considered the issue and that it recognises the need to reduce regulations on parallel software imports. Since the government is planning to liberalise the market, I think we can consider adopting transitional arrangements to suspend application of the criminal provisions concerning corporate usage of parallel software. I will keep you informed of these developments.

Proposals to attract Mainland investment

I have proposed broadening negotiations between the Hong Kong government and Mainland authorities to attract Mainland professionals to invest and consume in Hong Kong.

On attracting Mainland investment, I recommended studying the introduction of a credit system to attract more wealthy Mainlanders to stay and invest in Hong Kong, as a complement to the existing one-way permit quota system based on family unification. Among the 150 Mainlanders that move to Hong Kong every day, the majority belong to the poor and low-educated groups, while the wealthy, highly educated Mainlanders tend to emigrate to foreign countries. If Hong Kong allows these people to immigrate as investors, it will not only reduce the outflow of the Mainland capital, but also enhance domestic consumption and investment in Hong Kong, which I think are beneficial to both the Mainland and the HKSAR.

To boost Mainland spending in Hong Kong, I suggested the government relax immigration regulations on Mainland tourists, in particular issuing multi-entry permits to high-income groups in the Pearl River Delta to encourage them to visit and spend in Hong Kong. Statistics reveal that Mainlanders are a major source of tourism receipts for Hong Kong, with each of them spending around HK$5,000, which is approximately the same as those of Japanese and American tourists. Issuing multi-entry permits to high-income groups would encourage them to visit and shop in Hong Kong, and invigorate the economy.

Issuing multi-entry permits to people in the Pearl River Delta would also improve economic relations with the delta to increase the flow of bilateral business and tourists, as Financial Secretary Antony Leung pointed out. My proposal will facilitate integration of business and travel between Hong Kong and the delta, and meets the need for mutual development between the two areas.

Raising fees burdens businesses

The impact that increased taxes on six items proposed in the Budget on our business environment is cause for concern. Although Legco is still examining such proposals, after an in-depth study I found only increases in tobacco duty and air passenger departure tax is acceptable. I object to raising driving licence fees, vehicle licence fees, duty on low alcoholic beverages and roadside parking charges.

As our economy has yet to fully recover and deflation persists, I must insist that the government refrain from increasing fees and charges. Given that it is sitting on huge foreign exchange reserves, the government does not need to hastily increase its revenue. Instead, I feel the government should exercise prudence in adjusting wages for civil servants to avoid increasing its expenses and passing the burden onto the public.