Among the issues which have aroused much public attention in the past month is the internal transfer of senior government officials. As I wrote in last month's Bulletin, I believe the appointment of Donald Tsang as Chief Secretary is a good choice.

I hope that after taking over as the new head of the Civil Service, he will improve relations between executive and legislative authorities, and better coordinate execution of policies. I also think the appointment of Anthony Leung, who has a commercial background, is a worth successor to Mr Tsang. Given the depth of his knowledge of local business, I believe he can deliver policies to further economic growth.

As Hong Kong's economy has yet to fully recover, a prime objective of the new new secretaries should be to quicken the pace of economic recovery. Many factors have contributed to the economic doldrums, among which is the issue of negative equity.

First, the government must clarify its long-term housing policy and study whether construction of home ownership flats is contradictory to the underlying rationale. During the years when property prices rose considerably, construction of semi-financed home ownership flats encouraged public housing tenants to buy their own home and free up their flats to those really in need. Today, property prices have fallen considerably and I think the value of home ownership flats will compete with those of the private sector.

Second, the Monetary Authority should encourage banks to adopt a more relaxed approach towards mortgage rates. For example, it should provide a transition period for discrepancies between mortgage rates and market prices, in addition to the temporary arrangement of allowing the owners in need to repay the principal, but not the interest, of the loan. Third, the Monetary Authority should encourage local banks to implement identical mortgage policies for new and second-hand flats. This would stimulate the second-hand market and reduce pressure on homeowners with negative equity.

Legco will debate the negative equity issue in the near future, and I will keep you informed of the outcome.

I understand that the industry suffered considerable losses during the dispute and I am glad that the related parties reached a resolution to avoid even greater losses.

During a recent Legco Economic Affairs Committee meeting, a member proposed investigating whether container operators collaborated to raise charges, and whether the current charge mechanism can be monitored.

However, I object to hastily making a decision of such monitoring, because government intervention won't be as flexible and effective as free market regulation. Also, I think if shippers find fees too high, they will consider using other ports, such as Yentian in the Mainland. Therefore, operators know fees must be maintained at a reasonable level due to competing ports.

The government is planning to amend the existing legislation, and is suggesting that employers can even be prosecuted if they are deemed to have fired an employee without sufficient grounds for dismissal.