Economist Praises HKSAR Chief Executive's Policy Address

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Last updated at: (Beijing Time) Friday, January 10, 2003

Economist Praises HKSAR Chief Executive's Policy Address

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An economist Thursday praised Hong Kong Special Administrative Region (HKSAR) Chief Executive Tung Chee Hwa's policy address delivered Wednesday for helping Hong Kong rectify its economic problems left over by the former British Hong Kong government.

Economist Edward Chen, who is also the vice-chancellor of Lingnan University in Hong Kong, has blamed Hong Kong's current difficulty, together with the government budget deficit, on the problematic policy legacies of the former British Hong Kong administration, which include the government's excessive reliance on raising revenue from land and property taxes and building up too big a civil service establishment.

China resumed the exercise of sovereignty over Hong Kong on July 1, 1997.

Chen made the remarks during a TV session late Thursday night, which was also attended by the chief executive who elaborated on some of the key issues in his policy address.

Chen said the key element that was responsible for the HKSAR government's structural budget deficit problem has been the incorrect land policy set forth by the British. Chen was implying that the British Hong Kong administration had been making profit by keeping land supply at a low level to boost land prices and rents here in order to reap high property tax revenue.

"That policy was wrong. This (the policy) has led to 70 percentof the government's tax revenues coming from property-related sources. Now what the government really needs to do is to broaden the tax base to include more of the business sector," he said.

Chen has also criticized the British for building up too high acivil service establishment in Hong Kong.

"Even though Hong Kong was not suffering from any budget deficit and even though we had a lot of surplus, I would still call on the government to review the civil service establishment because the civil service establishment needed now is not the sameas before in this current new economic era," Chen said.

Chen praised the chief executive's latest policy address as an effective anecdote for Hong Kong to rectify itself from its incorrect past by blazing a new trail for Hong Kong by forging closer economic ties with the Chinese mainland.

"So I want to say that Mr Tung's policy address, which calls for greater economic integration with the Pearl River Delta area, has directly addressed the heart of the issue, that is, Hong Kong's need to revitalize its economy and establish itself into a hub. I think Mr Tung's address shows a great deal of determination. Andthe direction is correct, too."

Chen highlighted Tung's exclusion of the manufacturing industryand the real estate industry and the inclusion of the four pillar industries, such as trade, shipping, information and services industries as the policy address's correct emphasis for the HKSAR's future development.

"This is a breakthrough. And being a hub for such industries, we have to develop a new mode of engaging in commerce trade," he said.

Chen has also proposed to Tung that a joint Economic Development Bureau for Hong Kong and the Pearl River Delta region be set up to manage the cross-border economic and financial development between both sides.

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