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Rebuilding Confidence

Confidence in business conditions is returning to Hong Kong, but the government needs to do more to ensure it continues, writes the Chamber's Legco Rep, The Hon JAMES TIEN

As we enter 2004, I would like to wish all of you in the business sector a happy and prosperous new year!

Without doubt, 2003 was an eventful year for Hong Kong. During the year, we experienced a number of monumental events, from the terrifying SARS outbreak, to the Article 23 commotion and the July 1 demonstration, all of which took place amidst a weak economy. Fortunately, many of the year's incidents were resolved in the second half of 2003. As a result, Hong Kong's economy has now started to show signs of recovery. Looking ahead, Hong Kong now needs to grasp whatever opportunities it can to drive the economy forward.

Top priority

Although the January 7 Policy Address had yet to be finalised at the time of writing, I and other Legco members representing the Liberal Party met with the Chief Executive late last year to express our hopes and concerns. No doubt many people are concerned about the drafting of this blueprint, which will hopefully lead Hong Kong to a brighter future.

Top of the government's task list for 2004 should be rebuilding confidence in Hong Kong, both among the public and foreign investors, to boost the economy. To accomplish this, the government must improve its operations, learn from past experiences, and enhancing its communications with the community.

According to the Annual Business Prospects Survey conducted by the Chamber at the end of 2003, over 85 percent of members polled think the overall business conditions will be "satisfactory" to "very good" in 2004, up from 36.3 percent in the 2002 survey.

This indicates that confidence in the economy has improved dramatically. This is good news. However, I believe that the government still needs to incorporate a number of measures in the Policy Address to sustain confidence and the momentum of the economic recovery.

In my view, the government should do more to take advantage of CEPA and the Individual Travelers Scheme. It should ask the Central Government to extend the travel scheme to include more Mainland provinces and cities, and further liberalize various sectors under CEPA, including retail and distribution, insurance, accounting and legal services, through negotiations with the Mainland. Moreover, it needs to coordinate the dissemination of CEPA information for businesses, and promote the advantages of CEPA, both at home and abroad. This will help attract more foreign investment as well as help local enterprises tap into the Mainland market.

On top of this, it should strengthen Guangdong-Hong Kong economic integration, study the construction of industrial zones at the border, extend the business migration scheme and eliminate counter-business rules and regulations.

Social and political stability

To rebuild confidence, the government must maintain social and political stability. The Chamber survey found that over 70 percent of respondents were dissatisfied with the SAR Government's performance in 2003. I think this negativity can be attributed to a number of policies announced by the administration that failed to take into consideration public opinion. With the July 1 rally fresh in the government's mind, it should take this opportunity to improve its policies and performance to avoid public unrest in the future.

On formulating future policies, I suggest that the government consult not only Legco members, but also various sectors in the community. Only after taking into account public opinion should it then make a final decision and explain its reasoning clearly to the Hong Kong people.

To facilitate this consultation process, the government should allow more people from different sectors, including businesses, the middle-class, professionals and committed youths, to sit on advisory committees, which can bring input from these sectors to the highest decision-making level.

Adopting a comprehensive spending reduction plan to better manage the public coffers would also rebuild confidence among the public and investors.

The Chamber's survey also found that about 75 percent of members polled supported reducing the size, pay and benefits of the civil service. This is a clear consensus on the need to urgently cut public spending. If the government fails to tackle the deficit before it spirals out of control, it will undermine Hong Kong's credit ratings and shake confidence in the linked exchange rate.

Any increase in taxes to ease the deficit would have a negative impact on the business environment and upset the pace of economic recovery.

Echoing the views of others in the business community, I have called for the government to cut public spending on countless occasions, including during a recent meeting with the Chief Executive. I hope that the government can accept the recommendations that I have outlined above to enhance Hong Kong's prosperity and stability in the years ahead.

If you have any comments or proposals on my views, please send them to me directly at, Legislative Council Building, 8 Jackson Road, Central, Hong Kong.
Or email me at tpc@jamestien.com. Tel. 2500 1013, Fax 2368 5292.