Chamber Annual Report 2003

The Economic and Legal Affairs Division is responsible for economic policy and research, as well as taxation and legal issues, real estate, construction, infrastructure, transport and shipping. These policy areas are managed under five committees within the Division: Economic Policy, Legal, Taxation, Shipping & Transport, and Real Estate & Infrastructure.

The year under review was another active one for the Economic and Legal Affairs Division. For the fourth year in a row the division supervised the Hong Kong section of the Global Executive Survey on competitiveness conducted by the World Economic Forum (WEF) -- famous for its annual Davos Summit -- and Harvard University in the U.S. The results, in "The Global Competitiveness Report," confirmed Hong Kong's strong role in the global economy.

At year's end, the Chamber's 6th Annual Business Prospects Survey of members presented an up-beat view of prospects in 2004. The turnaround in perceptions from one year to the next was dramatic, with over 80 percent expecting positive economic growth, more than two-thirds predicting an end to deflation in 2004 and better than 60 percent preparing to take advantage of the new Closer Economic Partnership Arrangement (CEPA) with the Mainland of China.

The Chamber's Chief Economist, David O'Rear, as head of the division, presents the Chamber's economic views and policy positions to a broader community audience, as well as acting as secretary to the division's Legal, Taxation and Economic Policy committees. In 2003, he briefed over 40 visiting delegations on the business environment, economy, political issues and broader trends affecting the HKSAR. The role also includes representing the Chamber on various external bodies, preparing a number of important submissions to Government and other organisations, dealing with a broad range of inquiries from Chamber members and the media, as well as giving speeches to outside organisations on various aspects of the local economy.

The division again drafted the Chamber's annual submission to the HKSAR Chief Executive ahead of his annual Policy Address in January, in conjunction with the key committees. It also prepared the Chamber's annual submission on the Government's Budget for the 2004-05 fiscal year, just now under way. The main theme in both submissions was the increasingly urgent need to rebalance the Government's budget through reduced recurrent expenditure, broadening the tax base and reforming the civil service.

The division annually prepares the Chamber's pay review recommendation for the upcoming year in co-operation with the Employers' Federation of Hong Kong. And, at various times during the year, it drafts submissions to Government and other bodies on key issues of interest to business.

Committee Work

Committees within the Division meet regularly during the year to discuss key issues and provide important input on Chamber policies, submissions and recommendations to government. Briefings from experts on particular topics helped shape members' thinking, ranging from health care reform to exchange rate regimes, regulatory structures and national security legislation. When called upon, the respective committee chairs present specific policy proposals for the consideration of the General Committee.

Members active in Chamber committees devote heroic levels of time, energy and intellectual capabilities, and the division sincerely thanks committee chairs, vice chairs and all committee members for their work during the year on behalf of the Chamber and the broader Hong Kong SAR business community. Without their efforts, the Chamber would have been unable to do its work in furthering the advancement of the Hong Kong SAR business community.

Economic Policy Committee

In 2003, the committee made substantial contributions to the Chamber's submissions to Government on the Chief Executive's Policy Address and the Financial Secretary's Budget. The committee received briefing from government officials and other experts on topical issues. The committee also established task forces to delve more deeply into the goods and services tax (GST), public-private sector initiatives, civil service reform and health care financing.

Legal Committee

The Legal Committee devoted much of the early part of the year to shaping and refining the General Committee's understanding of the terms and implications of the proposed Article 23 national security legislation. Amid very emotional debate in the community at large, the committee focused on the fine details of the original draft legislation and its many amendments.

Other topics that commanded attention, many of an on-going nature, included corporate governance (particularly the administrative relationship between the SFC and the HKEx); amendments to the Companies Law and the US Sarbannes-Oxley Act. The committee also monitored the progress of government legislation through the Legislative Council and examined a number of technical legal matters.

Taxation Committee

Many of the Taxation Committee's meetings were involved in recommendations for the annual Budget submission, of which the main emphasis was on the need for a comprehensive and credible plan to reduce recurrent spending, before looking to new or expanded sources of revenue. As part of this work, the prospects, details and timing of a possible goods and services tax were discussed. Other issues raised include the increasingly aggressive tactics adopted by the Inland Revenue in the face of dwindling revenues, international tax treaties, and the Joint Liaison Committee on Taxation.

Almost as soon as the Budget came out in 2003, SARS hit Hong Kong and caused the Chamber to rethink short-term fiscal priorities. The committee considered what would be the most effective responses by government, with an eye toward easing SMEs' cash flow problems. However, in recommendations on the General Committee's submissions to Government, the committee reiterated the need -- once the worst effects on the economy had passed -- to rebalance the budget and broaden the tax base.

Shipping & Transport Committee

SARS dominated the agenda for the initial part of the year as members assessed the impact of the outbreak on the industry. On an operational level, the Port Affairs Working Group held discussions with the Marine Department and the Pilots' Association on contingency measures in the handling of ship arrivals and departures.

The latter part of 2003 provided more cheer as finishing touches were applied to CEPA. Although regulations have in the main been relaxed, certain restrictions still remain such as those governing agency business. The committee continues to work closely with the relevant government bureaux and departments on issues of concern affecting shipping and transport.

Real Estate and Infrastructure

A number of issues were considered by the committee, including the redevelopment of old industrial buildings, real estate investment trusts, and the Tamar site, among others. A letter to government was issued in relation to the latter.

More recently, the committee invited government representatives to explain development plans for the West Kowloon Cultural District. A working group was set up in 2003 to formulate input to government on this massive project.

Chairman's Review   l  CEO's Report  l   International Business Division Report
Business Policy Division Report  l  Economic & Legal Affairs Division Report 
Certification Division Report  l  Business Development Division Report 
Human Resources Division Report  l  Operations Division Report  l  Chamber Services Limited Report