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FROM THE CHAIRMAN                                          February 2004 Issue

Constitutional Development:
A Complex Process Begins

We of the business community are also citizens of Hong Kong.  As citizens, we are concerned not only with the business environment and investment opportunities, we are also concerned about the society in which we live, and the government's ability to govern.  As I said at the Business Summit two months ago, to many people the current political system is dysfunctional and has led to many of the problems we have seen in the past few years.  Therefore, a determination to examine the political system and consider changes is necessary.  But this action, called constitutional development by many here, is clearly a complex undertaking.   We need to take our time, and get it right. Furthermore, since Beijing and the Basic Law are necessarily involved, the matter is doubly complicated and requires extra care.

Over 75 percent of those members who responded to us in a survey last November thought that consultation on constitutional development should start sooner rather than later.  Government took the first step in that process last month by appointing three top officials -- Donald Tsang, Elsie Leung, and Stephen Lam -- to a task force focused on laying the groundwork for adjustments to the political system. This is a very important task which is now very ably headed by three people whose expertise, dedication, and knowledge of Beijing and the Hong Kong people are reassuring. Their work needs careful attention to both the details of legal nuance and the political sensitivities. 

Start with the basics

One of the task force's first assignments will be to examine carefully the exact meaning of those parts of the Basic Law applicable. The most important of these are Articles 158 and 159, which state (respectively) that the power of interpretation of the Basic Law, and of amendment, is the responsibility of the Standing Committee of the National People's Congress.

Ultimately, what matters is the quality and effectiveness of government. In the past year, we've witnessed heightened confrontation between the government and those dissatisfied with its performance. In judging the need for change, and exactly what that change should be, we should think about how changing the political system will improve it.

Some people argue that a leadership -- whether it is the Chief Executive or LegCo -- that is elected by universal suffrage would be more inclined to pursue populist policies such as higher taxes on corporations and richer individuals or more social welfare spending. They even suggest that greater democracy would drive away investors and undermine the economy.  Others may argue that evidence from the democracies in the developed world does not support these assumptions.

We also need to ask if Hong Kong is ready for change and if it is decided that change is required, should it be done all at once, or on a more gradual basis. The dissatisfaction with government registered in numerous opinion polls and our own Business Prospects Survey suggests there is something wrong, but it is less clear if what ails Hong Kong would be set right by leaders chosen by a different method. Certainly, the economic troubles affecting us since the late 1990s could not have been avoided by elected, appointed or inherited leaders.

On July 1st and again at the beginning of this year, we saw ample evidence that the people of Hong Kong are quite capable of organizing and expressing opinions within the rules of society. Such peaceful demonstrations denote a high degree of political maturity. While a more representative leadership might have defused the situation earlier, one cannot say that Hong Kong people are politically immature.

We are, however, institutionally immature. Hong Kong lags far behind other economies with similar standards of living in the development of political parties. The SAR's party system is not as well developed as one would wish.

If we are to move toward greater direct election of our leaders, it is imperative that those leaders present themselves to voters as representing a specific set of policy choices. In more developed economies, political parties are supported by think tanks where scholars and out-of-work politicians have the time to think through the issues of the day. As we move forward, we will need to develop such research capabilities.

Aside from such broad, institution-building issues, we also need to appreciate the scope of change. Many argue that any change in the means by which we select the Chief Executive may have to be accompanied by a simultaneous change in the role of our legislative representatives. This is because there is little dispute that there is currently widespread dissatisfaction with the functions of the legislative council and its relationship with the executive branch.  In short, many, including our members, feel that the entire governing system may need to be revamped.

Last year's confrontation over national security legislation offers a reminder of just how important it is to get it right the first time. Certainly, the CE's deliberate plan to work through the basics before preparing policy choices for broader consultation may frustrate those who believe they already know what is best for Hong Kong. But constitutional development is a very delicate matter, and we need to ensure that considerable time is given to getting it right and that the community has ample opportunity to consider alternatives and build a consensus.

Anthony Nightingale
Chairman
HKGCC