Policy Statement & Submission

Principles

1. In formulating the Chamber's response to the Green Paper on Constitutional
Development, we are guided by the principles established in the Chamber's 2004 paper,
titled "Constitutional Development – the Way Ahead". The 2004 paper was a
comprehensive response to the government's Third Report of the Constitutional
Development Task Force, addressing not just the imminent issues then (the 2007/08
elections) but also the wider question of political development of Hong Kong. The
views in the Chamber's earlier paper are as valid today as they were three years ago.

2. We would first reaffirm the Chamber's support for universal suffrage in accordance
with the Basic Law. For the Chief Executive elections, as stated in the Basic Law,
"The ultimate aim is the selection of the Chief Executive by universal suffrage upon
nomination by a broadly representative nominating committee in accordance with
democratic procedures" (Article 45). Likewise, for the legislature, "the ultimate aim
is the election of all members of the Legislative Council by universal suffrage" (Article
68).

3. In our view, the Green Paper is right to have set out at the beginning the "principles
of design of the political structure of the HKSAR". In particular, we would emphasis
the importance of the first and second principles, namely: "meeting the interests of
different sectors of society", and "facilitating the development of the capitalist
economy". These principles underlie the important contribution of the business sector
to Hong Kong's economy and society, and must be adhered to in developing the
political structure of Hong Kong.

The Chief Executive Election

4. Article 45 of the Basic Law has mandated that there will be a "Nominating
Committee" for Chief Executive candidates before the latter are presented to the
population for election by universal suffrage. A major issue, therefore, is how the
Nominating Committee is to be formed. The Chamber's previous paper mentions that
one option would be "to turn the Election Committee into a nomination committee for a
few CE candidates to be directly elected by the entire population" (para 43). We
observe that increasingly this is becoming a mainstream view on the formation of the
Nominating Committee.

Nominating Committee: size and composition

5. According to the Basic Law, the Nominating Committee should be "broadly
representative". While the current Election Committee fulfills this criteria, it can be
made even more representative. In the 2004 paper, the Chamber has made proposals
to revise the composition of the Election Committee. The same can equally apply to
the Nominating Committee.

6. The crux of the Chamber's proposal is to increase the representation of the
Nominating Committee (then Election Committee, hereafter same). In the previous
paper, we proposed that this be achieved by increasing the presence of members of the
District Council in the then Election Committee, thus strengthening its representation
considerably, as the great majority of DC members are returned through direct election
by the general public. In practice, this means adding more seats to the Fourth Sector
of the Nominating Committee (assuming it takes over the same structure of the Election
Committee) from the current 200 seats.

7. To maintain the balance of representation, the number of seats of the other three
sectors should also be increased proportionately. For the First Sector (industrial,
commercial and financial), for instance, the same number of additional seats will be
created. Instead of forming new sub-sectors, we suggest that the status quo be
maintained, with each existing sub-sector given the same proportionate increase in
number of seats. Thus the HKGCC, which has 12 seats on the original Election
Committee, will have more seats on the Nominating Committee, but the same
proportion (1.5%) overall. We favour the status quo because the possibility of opening
up new sub-sectors will encourage jockeying among various sectors and is divisive to
society. Since the Nominating Committee's role is intermediate (nomination only, the
election being by the population), it is not worthwhile to undergo the potentially
conflict-ridden process of defining new eligible sub-sectors.

8. In sum, the Chamber favours a proposal which has the features of both options (i)
and (ii) of para 3.18 of the Green Paper, i.e. increasing the number of seats evenly
among the four sectors, with the additional seats from the Fourth Sector being used to
increase representation of the Nominating Committee, e.g. through including more
District Council members.

Electoral base of the Nominating Committee

9. The Green Paper contains a proposal to expand the electoral base of the
Nominating Committee by replacing corporate votes with director's votes or individual
votes (para 3.20). We would, however, support the status quo, as we concur with para
3.19 of the Green Paper that a Nominating Committee based on the current Election
Committee is already broadly representative. In any case, as stated above, the
Nominating Committee only plays an intermediate role, and if our proposal for DC
members were accepted, then its electoral base would have been much enlarged already.

Nominating method

10. On the number of nomination required, we support maintaining the current 12.5%
threshold. This is also consistent with the Chamber's previous position, and will
ensure that the successful nominees will have a reasonably broad range of support
within the Nominating Committee.

11. A 12.5% will return a theoretical maximum of eight candidates. In practice,
however, it is unlikely to yield more than three to four candidates, as shown by past
elections.

Method of election after nomination

12. The Chamber does not have strong views on the method of universal suffrage
election after nomination, e.g. whether one or more rounds of election should be held.

13. If only one candidate is nominated, the Chamber's current position with respect to
election by the Election Committee is that the single candidate should be required to
undergo the election process and be confirmed after obtaining a majority of the votes
cast. This view is also applicable to the CE election under universal suffrage.


Legislative Council election

14. For the Legislative Council, the main concern of the business sector is to find ways
to maintain balanced representation, especially to ensure that business continues to be
represented in the legislature. At present, the functional constituency system (FCs)
helps ensure wide sectoral representation and provides checks and balances in the
legislature. In considering any future architecture for the legislature as we move
towards universal suffrage, the business community would wish to be assured that some
ways would be found to ensure that such checks and balances can be sustained as far as
possible.

15. In this connection, we note that the Green Paper has included the possibility of
retaining functional constituencies (FCs). One option outlined in the Green Paper is to
institute a "on-man-two-votes" system, where every voter has an FC vote in addition to
the usual vote to return legislators through geographical constituencies (para 4.13(ii)).
However, if the FC votes are evenly spread among the voters – for instance, instead of
corporate votes, all employees are eligible to vote in a sector – then such a system
would be no different from geographical constituencies. Even though the FC name is
retained, there is no assurance of balanced representation.

16. The Green Paper does contain a variation of this concept which allows a greater
degree of influence of current FCs, namely, to allow FCs to nominate candidates who
will then be presented to the general public for voting by universal suffrage (para
4.13(i)). Thus every FC legislator will be returned by the same process as the CE
under universal suffrage, the original FCs being akin to the "nominating committees"
for the CE. Such a model will be very complicated, and it begs the question of
whether the legislators will be returned by voters with little or no knowledge of the FCs
in question, but it will allow business representation to be partially retained as the FCs
will have some influence over whom to be elected. Provided that the candidates are
chosen by the current FCs, and that its consistency with the principle of universal
suffrage is ascertained, it can be a model worth considering by the business sector.

17. Other than the above, no other options have been offered on retaining FCs as part
of the political system under universal suffrage. The Green Paper does contain a
proposal to retain some FCs as an interim measure (para 4.15), e.g. through a phased
reduction in the number of FC seats until universal suffrage is attained. However, the
competition among FCs to stay behind may give rise to further divisions among sectors
and could be potentially divisive. On the other hand, the merits of this model is that it
allows FCs to be phased out gradually and hence gives more time for the business sector
to prepare for representation under universal suffrage.

18. Unlike that of the CE election, no obvious solution is in sight for the Legislative
Council election, especially on balanced representation which is the biggest concern of
the business sector. In the earlier Chamber paper, we have alluded to the possibility of
"a bicameral model akin to the two Houses in the UK system, with the functional
constituencies providing check-and-balance to LegCo which is returned through
universal suffrage" (para 49). We appreciate that such an option will pose difficulties
as it requires an amendment to the Basic Law, but given that there are no easy or ready
solutions, we would suggest that a wider range of options be studied further, including
the possibility of a bicameral system.

Roadmap and timetable

19. On when universal suffrage should be implemented, the Chamber's position is that
it should happen "as soon as practicable" (para 55 of the Chamber's 2004 paper), but
there remains a lot of work to be done on political institution building and effective
governance. Since the Chamber's 2004 paper, there does not appear to be a lot of
progress on political institution building.

Timing of universal suffrage

20. As noted in the consultation seminar organized by the Chambers on the Green
Paper, there appears to be a general view that direct election for the CE can be achieved
sooner than that of LegCo. On the as-soon-as-practicable principle, it is reasonable to
expect universal suffrage for the CE election to be implemented not later than 2017,
provided that the milestones in political institution-building advocated by the Chamber
can be achieved. In the case of LegCo, however, we do not foresee a quick resolution
to the problem over FC representation. We remain open to ideas on ensuring balanced
representation in the legislature, and we maintain our position of not being drawn into a
date for full direct election for LegCo.


Institution building and effective governance

21. Forging consensus on the LegCo elections will not be easy, but perhaps there is
another angle to pursue on constitutional development. In our earlier paper, the
Chamber stated, "constitutional development is much more than just election methods
and involves many other issues. Some of these have been highlighted in Chapter 3 of
the Task Force's Second Report, namely, 'political talent', 'the maturity of political
groups', 'public policy research' and 'the Executive-led system and the relationship
between the Executive Authorities and the Legislature'. Constitutional development
would, therefore, require that progress be made in other areas" (para 31).

22. The Green Paper does not offer any guidance on how progress is to be made in
these other areas, but if the community can be engaged on political institution building
and effective governance, the way may be opened up for other solutions to emerge to
move constitutional development forward.

23. In our earlier paper, we have listed a set of milestones for political development.
We maintain our view that the government and the community should continue to work
on building up our political institutions, instead of just focusing on the methods of
election. The milestones include the following:

i. Maturity of political parties. Possible indications could include
- contested election in every constituency; and
- the availability of well articulated political party manifestoes
ii. A regulatory framework for political parties;
iii. Sufficient representation of the business sector in the political structure, to ensure
balanced representation in the Legislature, following the removal of functional
constituencies;
iv. A network of thriving policy think tanks;
v. Establishment of a joint-liaison mechanism on the Basic Law;
vi. A system of appointment to advisory bodies that embraces balanced representation
of political parties;
vii. A solution to the systemic problem of balancing the Budget;
viii. Emergence of an improved model of governance, e.g. evidence of a structural linkage between policy objectives of the Executive Branch and political manifestoes of major parties.