Speech – Resumption of Second Reading – Appropriation Bill 2013 (Andrew Leung)

President, the first Budget of the current-term Government announced by the Financial Secretary in February was, as expected by the public, devoid of any pleasant surprises. The public finance principles of the Financial Secretary have always tended to be pragmatic and conservative. Besides, global economy is still under the impact of the financial crisis in Europe and the United States, and economic outlook is overshadowed by the panic triggered off by the unresolved problem in Cyprus. Hence, our budget must be robust enough to guard against any financial impact. In this connection, Honourable colleagues of the Business and Professionals Alliance for Hong Kong (BPA) and I consider that the Financial Secretary must handle the substantial fiscal reserves carefully, while various one-off cash handout measures cannot be regularized, a safety net should be put in place to ensure that people in genuine need are taken care of.

It is disappointing that the Budget is too conservative. The contents related to economic development, support measures for small and medium enterprises (SMEs), and so on in the Budget, are much less than those related to policies on social welfare and people’s livelihood. We must maintain economic development before Hong Kong can provide sound welfare protection to its people. I concur with the concept of economic development outlined in the Budget, but the measures to facilitate economic development are not worth mentioning. The absence of specific long-term investment strategies and government policies for promoting Hong Kong’s development in the Budget has left us with the feeling that Hong Kong is not committed to staking on investment. It is our expectation that this Budget can propose concrete measures to facilitate Hong Kong’s economic development, and I hope the Government can actively consider and accept our views.

At present, the global economy is still weak, and the outlook is gloomy. SMEs must promote their own brands. Given that a stable society must be supported by a large number of SMEs, the BPA has proposed many measures to support SMEs. I am very glad that the Financial Secretary has taken on board BPA’s view and extended the application period for the special concessionary measures under the SME Financing Guarantee Scheme for one year to the end of February 2014, and increased the cumulative amount of the grant for SMEs under the SME Export Marketing Fund from $150,000 to $200,000. Although this news is encouraging, the amount is far from adequate.

It takes a long time to build up a brand, and the subsidy of $50,000 can only enable SMEs to participate in one exhibition. If a mere $50,000 was enough to build up a brand, many brands of SMEs in Hong Kong would have been world famous a long time ago, and there is no need to rely on government support. In addition to financial support, the authorities should, through quasi-government organizations, take the lead in helping SMEs open up business opportunities in the Mainland and emerging markets. Hence, I hope the authorities can provide additional funding to the SME Export Marketing Fund, increase the ceiling of grant thereunder, and allow the use of subsidies on promotion activities in emerging markets, so that SMEs can grasp the opportunity and complement the upgrading and transformation of China by enhancing the promotion of their own brands in order to open up the Mainland market and enhance their own competitiveness.

Members of the Federation of Hong Kong Industries (FHKI) have relayed to me that they welcome the Government’s proposal to increase the amount of subsidies under the SME Export Marketing Fund as it can help them open up the Mainland market. They also hope that the authorities can launch the relevant measures again if there is good response in application. I will also closely monitor the utilization of the SME Export Marketing Fund. Once the Fund is insufficient to meet the overwhelming demand, I will ask the authorities to increase funding provision on their own initiative so that more enterprises can benefit.

Hong Kong’s scientific research capability has reached an international standard for a long time, and the industrial and commercial sector of Hong Kong, being adept in applying technologies and grasping market trends, is aware that a new industry unique to Hong Kong can be developed by combining these two elements. All along, China has confidence in the products of Hong Kong, and I hope the authorities will continue to allocate additional resources in the area of testing and certification, in order to build up the reputation of local brands and promote the development of brands of Hong Kong enterprises. Regrettably, many people in the industry have relayed to me their disappointment that the authorities have still failed to provide support for the industrial sector this year. They hope the Government can face the development of industries in Hong Kong squarely and formulate forward-looking policies for SMEs.

The Budget proposes to provide subvention to universities for technology transfer. This news is encouraging. However, there were not many examples in the past where universities could successfully commercialize research and development (R&D) results. I hope the Government will make good use of this new policy so that incentive can be provided to universities in developing new technologies while focusing on the commercialization of such technologies. We propose that the Government should strengthen co-ordination in this regard so that the relevant work will be led by authoritative experts conversant in R&D, draw on overseas experience, and provide tax deduction at three times of the expenditure as all along suggested by the FHKI, in order to promote the research, development, design and brand promotion of products and assist local industries in upgrading and transformation.

Regarding environmental protection, I am very happy to see the authorities’ determination in improving air quality. The Budget proposes to earmark $10billion to progressively phase out old diesel commercial vehicles. Notwithstanding the original good intention, people in the industries have relayed to me that a large number of local commercial vehicles are Euro IV and Euro III vehicles, and the replacement of each vehicle can easily cost up to $600,000 or $700,000. The local transportation and logistics industries will be seriously hit by the excessively high replacement cost. Therefore, I hope the authorities will consider whether some types of vehicles should be allowed to replace the truck cab only and retain the old frame so that the owners do not have to buy a brand-new vehicle. This suggestion does not only extend the service life of vehicles, but also reduce the waiting time and cost of replacement. Hence, I suggest that the authorities should make reference to the experience in Mainland China or overseas countries, for example, the “green zone” established in London, so that non-environmental vehicles would be prohibited to enter busy districts like Mong Kok, Causeway Bay and Tsim Sha Tsui, or they could only enter such districts after paying a fine, in order to resolve this problem progressively through a gradual approach.

Apart from diesel commercial vehicles, ferries making hundreds of trips daily in the Victoria Harbour also need to have their engines replaced in order to comply with the emission standard of nitrogen oxides set by the International Maritime Organization and the Marine Department. I learn from people in the industry that the replacement cost of a vessel with a capacity of 400 passengers is about $20 million to $25 million, while the cost of only replacing the main vessel engine and the related spare parts is just $1.6 million. The authorities should help the operators replace the old engines of ferries in the same approach as the replacement of diesel commercial vehicles, so that the air quality of Hong Kong can be improved.

The Kai Tak Cruise Terminal (the Terminal) will be officially commissioned this June. Earlier, the authorities already said that a standard for measuring dark-smoke emissions from vessels in prosecution cases would be introduced expeditiously, so that vessels entering Hong Kong waters would switch to clean fuels. I hope the authorities would co-operate further with the local governments in the Pearl River Delta Region in the future, so as to mandate the use of clean fuels by vessels entering the region. The authorities also said that studies would be conducted on the installation of on-shore power supply facilities at the Terminal. On-shore power supply facilities are nothing new. As early as 2000, studies on the installation of on-shore power supply facilities in terminals around the world have already been conducted, and cruise vessels are encouraged to make use of these facilities. However, it is learnt that at present, 90% of cruise vessels have not been equipped with connection device for on-shore power supply, and the voltage of vessels of different countries is different. Therefore, appropriate support should be provided by the authorities when installing the facilities at the Terminal so as to facilitate the use of on-shore power supply by cruise vessels.

One berth at the Terminal is capable of berthing the world’s mega cruise vessel with a gross tonnage of 220 000 tonnes. Power consumption of a large cruise vessel is comparable to that of a small European town, and one of the largest cruise vessels in Asia ― Mariner of the Seas ― will be the first liner to berth the Terminal on 12 June. I hope the authorities will fully consider issues related to power supply and safety when installing the on-shore power supply facilities, and gradually encourage the use of on-shore power supply by vessels in order to reduce emissions.

As the public have increasing awareness on environmental protection, the development of green economy will be an important element of the future economy. Both the Policy Address and the Budget have neglected the possibility of developing urban mining in Hong Kong; exporting waste materials is not the best way to support and develop the recycling industry, and the authorities should promote urban mining in Hong Kong. Every year, over 70 000 tonnes of waste electrical and electronic equipment (WEEE) are generated in Hong Kong, containing valuable precious metals and rare metals. At present, the notion of urban mining is emerging in many advanced economies, or even some provinces and municipalities in the Mainland. According to the estimation of the Ministry of the Environment in Japan, the value of precious metals and rare metals contained in WEEE amounts to some ¥30 billion and ¥5 billion each year. Turning urban mining into a profitable industry will not only increase the number of jobs and vacancies, and develop the local recycling industry, but also reduce waste of resources and minimize environmental pollution.

Lastly, I would like to spend some time to talk about measures to support the middle class. The middle class has all along been the backbone of society. Society will become increasingly stable as more and more people enter the middle class. Many middle-class people consider that this year’s Budget has not provided many concessionary policies for them. But instead of merely focussing on short-term benefits, we should grasp the opportunities presented in the Budget. To provide people with the ladder of upward social mobility, the Budget proposes a number of measures to encourage self-education, for example, raising the deduction ceiling for self-education expenses, stepping up promotion and publicity of the Qualifications Framework for its wider acceptance among all sectors, and so on. I truly believe that investing in the future is the only way to help middle-class people move upward in the long run. Therefore, we need to develop a diversified economy and aim at the future by enhancing the training of professionals through improved education and manpower training policies, so as to dovetail with the development of Hong Kong into a knowledge-based economy, which will in turn promote social mobility and allow young people develop high value-added industries with their new skills. So long as the authorities are willing to invest in education and manpower training, as well as strengthen vocational training, Hong Kong’s manpower resources can surely catch up with the development of knowledge-based economies around the world, so that Hong Kong is well-positioned to open up new economic frontiers and maintain economic growth, while promoting upward social mobility. This is a good solution to the problem of poverty.

Regarding labour shortage, the Financial Secretary pointed out that a labour mismatch did exist in the labour market. The BPA hopes that the Government will closely monitor the impact of such on economic development. If the measures to address labour shortage proved to be ineffective, the Government should pragmatically and decisively import foreign labour in a timely manner, so as not to hamper the development of those industries with labour shortage and undermine Hong Kong’s competitiveness.

President, as the old Chinese saying goes, “When having a meal of porridge or rice, always think about the hard process of getting it; when holding half a thread of silk or hemp, always remember the difficulty of making things. Always make preparations before it rains; do not wait until you are thirsty to dig a well.” Although the troubling banking system crisis of Cyprus has finally come to an end lately, we must not overlook the domino effect which may be triggered off by the incident. After the financial tsunami, many European and American countries have been hit by financial crisis one after another, mainly as a result of long-term fiscal mismanagement by the local governments. At present, the global financial order is far from stable, coupled with the earlier announcement made by Japan that it will engage in large-scale money printing due to deflation in the country, Asia will probably be inundated by the overflowing capital and the world is set to face a new round of currency competition. Hence, I support that the authorities should strictly adhere to fiscal discipline and seriously learn from the lesson with European and American countries incurring heavy debts as a result of excessively bloated welfare expenditure.

In order to maintain the robustness of Hong Kong’s financial system, the authorities must keep the expenditures within the limits of revenues, so that continuous funding will be provided to address various livelihood problems by implementing relief measures in a timely and appropriate manner.

President, I so submit.


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