Hong Kong will soon establish a task force charged with monitoring and assessing the impact of the financial tsunami and proposing specific options for the Hong Kong Special Administrative Region (HKSAR) government and the business community, Chief Executive Donald Tsang said Wednesday.
The task force will be chaired by the Chief Executive and its members will include top government officials, finance experts, economists and people from major industries.
"This will help us overcome the crisis, turn it into new business opportunities and enhance our competitiveness," Tsang said in his annual policy address.
Tsang said the external economic factors now were the first major challenge for Hong Kong, noting that the financial turmoil triggered by the U.S. sub-prime crisis has continued to deteriorate and spread to Europe.
"It seems the worst is yet to pass," he said.
Hong Kong's economic growth declined noticeably to 4.2 percent in the second quarter, he said, adding that "we expect the economy to slow further."
Tsang cited the example of investors in Hong Kong suffering losses from the Minibonds, a derivative product issued by the U.S. investment bank Lehman Brothers.
In another example of the losses resulting from the fallout from financial turmoil, the Bank of East Asia experienced a bank run recently following rumors spread via text messages questioning the bank's financial health, although the panic soon came to an end as the senior management and the HKSAR government stepped in to quell the rumors.
Tsang said the destructive force of the current financial tsunami was much stronger and more widespread than the Asian financial turmoil in 1997 and that the recovery will take longer, be more difficult and cannot be taken lightly.
Tsang also said the financial infrastructure of Hong Kong was more robust than it had been in 1997, thanks to the maturation thereafter and the experience gained.
He said Hong Kong should concentrate on pursuing economic development and that the HKSAR government will implement the major infrastructure projects and the development strategies to reinforce Hong Kong's role as a global financial center.
"Although the current financial tsunami has not caused systemic damage to our financial market, we will not underestimate its impact, nor flinch from meeting the challenges," he said.