I. The third Policy Address since the Handover
Each of the Chief Executive Mr Tung Chee Hwa’s three Policy Addresses were delivered in very different circumstances. His first address was given three months after the Handover. In that address, Mr Tung was already beginning to put his thoughts into how he envisioned Hong Kong, but many did not understand why anything needed to be different — like his call for introducing high technology into Hong Kong — since the economy was still booming and would not be hurt by the Asian financial crisis for another three weeks. His second address a year ago was delivered with Hong Kong perhaps at the lowest point of the recession, with his Government having just engaged in a controversial entering of the stock market in August, and it was filled with measures which tried to prop up the economy and address the growing unemployment problem. Understandably, with the economic crisis raging all around Asia, these measures could only prevent disaster but could not lift Hong Kong out of recession.

This time, he spoke to the Hong Kong people at a time when the economic downturn is acknowledged to be past its lowest point, but when there is a general lack of confidence about the future of Hong Kong and a malaise in the society. In the business community, there were concerns of being overtaken by Singapore or Shanghai, of deterioration of the environment and of the English ability of the work force, of losing the status of "gateway to China", and of the continued high cost of doing business here. A common question: "How do we make money in the future?" summarised the uncertain feeling of many businessmen in Hong Kong. This feeling of self-doubt not only derived from the severity of the recession but also from an inability of the Government in the first two years to articulate a coherent and comprehensive strategy and a roadmap for Hong Kong.

II. A target
Therefore, what the Chief Executive needed to do two weeks ago was not to provide another laundry list of measures to handle the still existing effects of the Asian financial crisis, but to revive the confidence that people have in Hong Kong and to point the way to a future they can embrace and strive for. Mr Tung laid out his vision for Hong Kong, to be a world class city alongside London and New York. He then went over the strengths and weaknesses that we have in comparison to these cities and other aspirants.

He chose to give a Policy Address, not a Measures Address. This is a calculated risk, in that the frequently used criticism of "distant water does not save a nearby fire" was sure to appear, as the genuine difficulties of some of the population would not be dealt with in detail in the speech. But Mr Tung knew that the recovery was slowly on its way, that Hong Kong must return to the minimum interference philosophy of economic management, and that the future of Hong Kong was actually a more pressing issue. Renewed confidence can accelerate the recovery, and it can make people start working on reaching our community goal.

III. And a roadmap
The Chief Executive identified China as the main factor that gives us an edge, but he realised that our economic relationship with China is underdeveloped. His setting up of a Hong Kong-mainland trade coordination committee to look at trade policies which affect Hong Kong businessmen in China was called for by the business community for some time. He recognised the need to coordinate with Guangdong on infrastructure decisions. He said that the environment problems faced by Hong Kong cannot be solved without working with Guangdong, and he envisioned the Pearl River delta as one economic entity. He did not call for any special treatment of Hong Kong companies in the Mainland since Hong Kong enjoys the "one country, two systems" status, but for the first time, the SAR government is on board as agreeing that closer economic coordination between Beijing and Hong Kong at the official level is needed

Other than China, Hong Kong still had many advantages over other cities aspiring to be a world city — our international character, the rule of law and transparent operating procedures, the top port in the world, a strong financial industry, a hard working population with an instinct of entrepreneurism, a prudent Government with good reserves, and a philosophy of minimum interference that has fared well. There is no reason to lose confidence, but there are obstacles to our getting from here to the position of Asia’s world class city.

IV. Obstacles in the road
Mr Tung in fact had already defined for Hong Kong one of the obstacles, or challenges, to Hong Kong being a world class city. That is the challenge of turning Hong Kong’s economy into a knowledge-based economy with higher technology adding value to our strong service sector. This idea was fine tuned by the Commission on Innovation and Technology and accelerated by the recognition that Internet and communications advances can fit very nicely with Hong Kong’s financial, fashion, transportation, and telecommunication strengths.

Chief among the obstacles he mentioned this year is the deteriorating environment. The poor air and water are hurting the Hong Kong people and raising the cost of health care and lowering productivity. The poor environment also was beginning to affect foreign investors’ decision to come to Hong Kong and certainly would be a drawback to the goal of attracting overseas talent from high technology sectors. What was needed was a commitment by the Government to educate the citizens, to spend money when needed, to impose stringent regulations and standards, and to set up a swift timetable. Mr Tung did that in his Policy Address. The business community had already been ahead of the Government, calling for government commitment for some time now, and it was glad to see that we are now on our way to cleaning up our environment. To be sure, there will be additional costs and there will be resistance by special interest groups. But now the debate will shift to details and not on commitment. In the long run, environmental protection is a necessary and shrewd investment for the society as a whole. New industries and businesses in the environment field will also pop up, creating new jobs. Soon, people will see that good environment practices are part of the basic requirements for the society, not a luxury.

To enable Hong Kong to enter the "new knowledge-based economy" as exemplified in the booming United States at present, the Chief Executive identified human capital as another weakness for Hong Kong. The business community would like to see graduates who are knowledgeable in English — and Putonghua — and computer skills, and who can think flexibly. We are glad to see that the Government, with the ongoing education reform, is on its way to trying to provide such graduates. Complementary to future graduates will be foreign talent and talent from the Mainland, especially in high technology fields. Mr Tung’s plan to ease immigration of these experts will fill the gap and boost the technology competence of the work force.

V. A commitment by all
Hong Kong cannot be a world class city only by declaring that as a goal. Mr Tung laid out for us the advantages we have and the work we have to do. He struck a balance between restoring our confidence and being over-confident. A strategy is now articulated, and a roadmap is laid out in front of us. The obstacles and challenges are difficult, and many details have to be worked out. But at least, Hong Kong knows where it is going and what it needs to do to get there.

The business community feels that Hong Kong is now on the right road, if we stick to the commitments and the timetable Mr Tung laid out for us. In front of us is a long and winding road, but Hong Kong has a proven track record of being able to overcome the obstacles in between with nimble improvements. And with a Government of minimum interference, the stage is set for the business community to make the necessary improvements.