The event has adversely affected the global economy, including the Hong Kong economy, which is intrinsically linked to that of the U.S. The government recently cut its expected growth rate for the year to 1 per cent in view of the global economic downturn. However, the local business environment is expected to further worsen next year as a result of the tragedy. The growth rate is likely to be negative and the unemployment rate may also rise to 6 per cent or more from the present 4.9 per cent.

Many manufacturers recently told me that a lot of their American buyers have suspended and even cancelled orders for Christmas as well as the first quarter of 2002. This is expected to reduce turnover by 15 per cent, or HK$22 billion compared with the same period a year ago. Apart from exports and the manufacturing industry, freight, travel and related sectors will also suffer.

As the financial crisis is expected to plunge Hong Kong's economy into another cold winter, all sectors expect this year's Policy Address will suggest some measures to stimulate the economy. Although the Policy Address had yet to be released at the time of writing, I advised the government on a number of short- and long-term measures.

For the short-term, I have proposed suspending the collection of rates and MPF contributions for one year to reduce the financial burden of both firms and the general public. Given that the government would lose just HK$14.8 billion in revenue if this measure were implemented, I find this acceptable based on the huge financial reserves the government is sitting on.

It is imperative that the property market stabilises to revitalise Hong Kong's economy. I am delighted that the government has accepted my recommendation and announced a moratorium on all sales of HOS flats for 10 months. It will also provide additional home ownership loans equal to the number of flats being put on hold. Yet it is still inadequate. I think the government should also raise the mortgage ceiling from 70 per cent to 90 per cent of flat prices. It should also set up a HK$40 billion mortgage transfer fund to provide a maximum of HK$0.5 million for each home holder who owns a residential flat for his own use and has made repayments. The scheme will help reduce the interest rates burden of homeowners in negative equity.

For the long-term, this year's Policy Address must suggest active measures, such as freezing tax and fee increases, and streamlining the issuing mechanism for business licenses by introducing a one-stop shop or web-based application system. Besides, the government needs to formulate a 10-year plan for industrial development, which will assist traditional industries leverage high technology and value-added tools. It should also allocate resources to develop the skills and capabilities of employees, including English and Putonghua.

Hong Kong should leverage its geographical position and accelerate integration with Guangdong by implementing a series of infrastructure projects. This would enable Hong Kong and cities of the Pearl River Delta to develop into a logistics and shipping hub for South China.

Apart from allocating HK$5 billion to beef up the tourism infrastructure, the government should discuss with the Chinese Central Government ways to eliminate restrictions on Mainlanders visiting Hong Kong and to allow qualified Mainland people to invest and live here.