For Immediate Release
The Hong Kong General Chamber of Commerce (HKGCC) urges HKSAR Chief Executive Carrie Lam Cheng Yuet-ngor to make rebuilding Hong Kong’s international competitiveness a top priority in her maiden Policy Address on 11 October. In its submission to the Government yesterday, the Chamber stressed that improving legislation, tax competiveness, talent supply and better utilization of the Greater Bay Area (GBA) initiative were four crucial areas that the Administration should focus on.
HKGCC Chairman Stephen Ng pointed out that there has been a marked increase in legislation in recent years, often in response to public demand.
“We are particularly concerned about the cumulative effects of increasing legislation, which, if allowed to continue, could have grave implications on Hong Kong’s hard-won and cherished reputation as a premier business hub,” he said. “Overzealous and far-reaching regulations inhibit normal business activities, deter innovation, drive up costs, and make Hong Kong a less desirable place to do business in the region.”
The Chamber has been calling on the Government to adopt thorough Regulatory Impact Assessments (RIA) into the law-making process. Although the pre-existing “Be the Smart Regulator” Programme is supposed to ensure Hong Kong maintains a light regulatory touch, in reality it falls far short compared to other RIA programmes implemented overseas.
“We would like to see the Government adopt the principles and some of the pre-conditions as provided in the U.K.s Legislative and Regulatory Reform Act 2006, in addition to making it mandatory that the revised programme be applicable to every policy intervention,” said Ng.
The Chamber has also called for a structural review of the Government to improve cross-departmental communication and effectiveness in the delivery of public services. “The notion of joined-up government has been a mantra of the Chief Executive when she was Chief Secretary of Administration. We would like to see better coordination amongst the various government agencies in serving the general and business communities going forward," said Ng.
On tax competitiveness, Ng said the Chamber is concerned that the newly established Tax Policy Unit (TPU) is under resourced and lacks direction to achieve its objectives. The Chamber urges the Government to allocate more resources to the unit, provide it with a clear direction, and involve more stakeholders from the private sector and tax professions to contribute ideas.
In addition, the Chamber suggests that the Government gives serious consideration to other more optimal means of returning budget surpluses to the economy. “Although the tendency to invest in new or the upkeep of existing infrastructure and welfare -- including education -- are worthwhile undertakings, we feel that the domestic economy would reap greater benefits by reducing the tax burden on the middle class and businesses. In the case of the former, the economic dividends accruable would be increased consumption while for the latter this would translate into investment growth,” said Ng.
Chamber CEO Shirley Yuen added: “We are pleased that the Government is finally moving ahead with a two-tiered profits tax arrangement, which the Chamber first proposed almost 10 years ago. We look forward to assisting the Government in bringing this into effect as quickly as possible. We also hope the Government can reduce the statutory time limit for tax reassessment from six to three years, and treating a loss statement as a taxable assessment so that taxpayers can object to the Inland Revenue Department’s decisions in loss cases.”
“There is a compelling need to review our tax regime and find ways of restoring our attractiveness. These proposals, in addition to allowing loss carry-back, would go a long way towards reversing Hong Kong’s dwindling comparative advantage as a low tax jurisdiction,” added Yuen.
Greater Bay Area
To realize the full potential of the GBA initiative, the Chamber suggests the Government set up a GBA Office to formulate proposals, strategies and policy directions to define Hong Kong’s involvement and role in the area. Such an office would facilitate better utilization and deployment of resources, especially in major infrastructure investments and collaboration. This would enhance the overall capability and capacity of the whole GBA. For example, better airspace coordination among the GBA airports could improve airport capacity, route efficiency and flight safety.
To optimize people flow, the Chamber proposes adopting a visa system, similar to the APEC Business Travel Card Scheme, to allow selected categories of GBA residents to enter Hong Kong for work and business purposes without restriction. This could be tried out in a pilot scheme at the Lok Ma Chau Loop before deciding on implementing it throughout the GBA.
Allowing the flow of talent will help alleviate some of Hong Kong’s talent shortages. However, to overcome our looming human capital challenge and shrinking labour force, the Chamber recommends that the Government adopt a two-prong approach to fill the labour gap within and without the domestic market. To coordinate this, a dedicated agency should be set up to oversee Hong Kong’s future human capital needs.
To grow talent domestically, quality and affordable English-based education needs to be made available, and better terms and remuneration need to be provided for teachers. The Chamber also proposes improving working conditions, offering flexible work arrangements, and providing training for women and older workers to help tap this pool of latent talent.
“We also hope the Government can remove professional barriers, optimize immigration arrangements to attract international talent, and relax labour importation requirements to help cope with our labour shortages,” said Ng.
The Chamber’s full submission can be downloaded here.
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