Speech – Promoting Hong Kong’s economic restructuring (Andrew Leung)

I believe Honourable colleagues would not disagree that economic restructuring is essential and the problem is how it should be implemented. Today, I will discuss this issue from my perspective as a member of the industrial sector.

Over the past few years, members of the Federation of Hong Kong Industries and the Business and Professionals Alliance for Hong Kong (BPA) and I have repeatedly conveyed our views to the Government inside and outside the Legislative Council. We stated that we cannot simply be tilted towards the financial and real estate industries in developing a knowledge-based economy. Moreover, we should not ignore our inherent advantages and other professional services in the development of services. We also need to make good use of our geographical advantage of proximity to the strong Mainland market, and focus on the general trend of economic development of the region as a whole. We cannot just keep an eye on this tiny place; instead we should think about how we can make use of our strengths to support regional development.

The industrial sector has always stressed that we cannot give up the industries and we have repeatedly asked the SAR Government to support local industrial development, so that we can still rely on the manufacturing industry to survive the storm if our export-oriented economy encounters another global economic downturn, the services industry are adversely affected and the financial sector is upset by a powerful tsunami.

Nowadays, the industries are no longer labour-intensive manufacturing industries and production does not only rely on a large number of blue-collar workers immersed in the operation of die cutting or sewing machines, and we should see industries in a wider perspective. In the past 30 years, we seized the opportunities in the Pearl River Delta (PRD) and expanded our production lines. At the peak, we employed 11 million workers in the PRD and the services industry in Hong Kong was greatly enhanced; and we call these “producer services”. In fact, the industries have not completely disappeared as Mr Ronny TONG has just said.

Those of us in Hong Kong are known as service providers; I am actually a factory operator. Nevertheless, I am just a service provider because my factory is not located in Hong Kong. Hong Kong products and industries have a very wide scope of coverage. Taking the Mercedes-Benz and BMW cars that many of us are driving as example, these cars cannot be driven in Hong Kong if some products are not made by local companies. Even some Apple products are produced in Hong Kong.

Therefore, we hope Honourable colleagues would understand that the definition of industries is really wide. The industries today are not just limited to manual labour jobs and we have a wider production chain. The local industries include design, research and development, manufacturing, integration, assembly, inspection, testing, quality assurance, brand promotion, product sales, and logistics and transportation, and each of these industry segments is a key to success. Let us take Apple Inc. frequently discussed by the industrial sector as an example. Is it an industrial company? It is actually a design company. Another example is Motorola which has a small number of factories. We should understand that an industry does not necessary refer to the business of assembling components in a factory.

At the meeting of the Panel on Economic Development last Wednesday, many members suggested that the manufacturing industry should be developed afresh in Hong Kong and something new should be done to change the previous production modes of industries. In the past few years, the industrial sector has already noticed this new tendency and we would like to seize the opportunity to focus on the production of high value-added products. High-tech design would be the main selling point or we would produce some products that meet the needs of individual users.

In the future, we should be further devoted to completing in Hong Kong the high value-added procedures including design, research and development, brand management, sales and supply chain management while other labour-intensive procedures would be outsourced to the manufacturing base in the PRD and even completed in Southeast Asian regions. Even if “Made in Hong Kong” is not marked on the products, “Made by Hong Kong” can be marked and the sign “Hong Kong Created” may also be used.

We have constantly told officials in the past few years that high value-added industrial development is essential, scientific research should be strengthened and design should be emphasized. Nonetheless, as most of the operators are small and medium enterprises (SMEs), it is not enough for us to rely on ourselves in the face of such a significant change. The industrial sector hopes that the Government will not only play verbal tricks or write articles to express support for economic restructuring and industrial innovation. The Government can also introduce new policies and ideas and take practical actions to demonstrate the SAR Government’s commitment and determination to promote innovation and technology, so that the community would be clear about the directions of development.

Therefore, the Federation of Hong Kong Industries has been fighting for the introduction of triple tax allowance for the expenditures on product research and development, product design and product promotion, so that the enterprises can drive forward the development of innovation and technology in a more flexible way. With the Government’s support, the enterprises will devote more resources to help create more new jobs and give young people more opportunities for upward mobility.

As to supporting SMEs, we cannot ignore the creation of a more favourable business environment for enterprises. The Government may make reference to the practices of the United States, Japan and Singapore, and increase the credit guarantee under the SME Financing Guarantee Scheme to 90%, so as to allow SMEs to get loans from banks easily.

In addition, the Government should start with regulation and manpower training and relax the uses of factory buildings, so that more SMEs can make good use of these places for design and brand promotion. The authorities should be more forward-looking and train more talents for local industries and other competitive industries such as the shipping and logistics industries, to support the long-term development of enterprises.

We also suggest that the Bureau should consider giving SMEs credit for developing emerging markets, providing interest subsidies, establishing a unified and comprehensive emerging market database, providing free of charge the relevant market information to SMEs, and providing one-stop services from the planning stage to implementation, reflecting the decision of the authorities through practical actions.

President, intellectual property rights are also essential elements. An original grant patent system should be established in Hong Kong as soon as possible. Given our financial, legal and intellectual property protection system, we have congenital favourable conditions for the establishment of an original grant patent system. We should seize the opportunity to introduce a patent system under which registration completed in Hong Kong can ensure patent protection in China and Hong Kong, to assist enterprises (especially SMEs) in introducing innovative products into the Mainland market, thereby promoting the development of Hong Kong in high-technology, innovative, high value-added directions.

I so submit, President.


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