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HK's long-term prosperity needs visionary solutions

Updated: 2013-01-24 05:51

By Thomas Chan(HK Edition)

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Chief Executive CY Leung's first Policy Address was intended to present the working plan of his government and to set out his long-term objectives for Hong Kong. It is true he has laid down certain principles. Most important are his housing and land policies. However, I feel more long-term vision should be included in the Policy Address.

His two top objectives are to assist grassroots families to secure public housing to satisfy their basic housing needs; and to encourage those with the resources to buy their own homes. These principles refer to public rental housing and home ownership schemes, which have comprised the core of government policy in past decades, although unfortunately almost forsaken by the former administration and going back to the time of the handover.

By restating the original target of public rental housing and offering the promise to build more henceforth, we are given no clear perspective on the government's housing policy, in terms of local population to be housed in public housing or home ownership schemes.

HK's long-term prosperity needs visionary solutions

The Policy Address also says: "Sustained economic growth is a prerequisite for us to tackle the issues of housing, poverty, aging population, and environmental problems" and "Promoting economic development is therefore the primary goal of the government." The commitment, however, is immediately qualified by the decade-old belief promoted by the colonial government following "the principle of keeping expenditure within the limits of revenues, and to maintaining a business-friendly environment with a simple and low tax regime".

One should therefore not expect the government to employ any industrial policy, not to mention the "holistic industrial policy" it puts forth, to develop old and new industries in Hong Kong. It is still the non-interventionist and laissez faire approach of the colonial legacy. Constrained by such a neoliberal ideology, one wonders how the Leung administration can promote economic development in Hong Kong better than what had been done.

Leung proposed to set up an Economic Development Commission to be chaired by him. This may be the vehicle or think-tank for the government to initiate new economic policies and measures. The Commission is just established. We may have to wait for at least a year or so to hear any policy recommendations. From the working groups under the Commission, we might have some ideas about the understanding of priority or focus of economic development by Leung. The Commission has four working groups: Transportation, Convention and Exhibition Industries and Tourism; Manufacturing Industries; Innovative Technology and Cultural and Creative Industries; and Professional Services.

The pooling together of manufacturing industries, innovative technology and cultural and creative industries in one of the four groups reflects less priority being placed on these emerging industries, which have been transforming the world's manufacturing industries.

It is true that the fading export-oriented industrial processing in the Pearl River Delta, which has been the demand base for Hong Kong's producer services, should alarm the government and local services and set them to thinking about alternatives. In the section under "development of industries", the address mentions only financial services, business and professional services, international shipping center plus two of the six industries proposed by the previous administration. It seems Leung has made a choice over the six industrial areas proposed in the last administration, leaving only two. Yet, they still are clear - what are these areas precisely and how can they be promoted to help the development of the local economy.

Hong Kong is facing a difficult time of transformation. The Policy Address has not discussed the fate of the cross-boundary production system that has been the foundation of the service economy in Hong Kong and the prosperity of the local economy since the 1990s. It does not even recognize the importance or the existence of such a cross-boundary system. If the economic restructuring now happening on the mainland and in the world is going to phase out or reduce significantly the cross boundary industrial processing of Hong Kong, what will be left for the HKSAR and what will be the consequences for local economic development?

The author is head of China Business Centre, Hong Kong Polytechnic University.

(HK Edition 01/24/2013 page3)

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