Speech – Promoting Hong Kong’s economic restructuring (Jeffrey Lam)

President, the monotonous industrial structure in Hong Kong has always been the subject of criticism. To ensure the sustainable development of the economy, we have to continue to give full play to our competitive edge, support the traditional pillar industries and help them to upgrade and transform; on the other hand, we must also explore new industries and identify new points of economic development.

Looking at the experience of various places in the world, we see that in order to promote economic transformation and diversification of industries, the Government has to play a very positive role. After the international financial tsunami in 2003, the governments of various places in the world, including the advanced economies in Europe and North America, had taken various measures to stimulate their economic development. At the meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference recently concluded in Beijing, the new Premier, Mr LI Keqiang, also pointed out that to improve the people’s livelihood, the key was to promote economic transformation because only with new impetus would a place be able to foster the upgrading of its economy. This is very close to the philosophy advocated by the Business and Professionals Alliance for Hong Kong, which is “to promote the economic development through the industries and business”.

In my view, in the face of the current global setting, we have to maintain the stability of government policies and at the same time introduce new policies that are favourable to the business environment so as to enhance the competitiveness of Hong Kong.

With the Mainland’s economy undergoing transformation and upgrading, it provides Hong Kong with a golden opportunity. In fact, the domestic consumption market in China has entered the “takeoff period”. Recently many studies have pointed out that around 2015, which is the latter period of the 12th Five-Year Plan, China may take the place of the United States to become the world’s biggest consumer market.

The State has also mentioned in the 12th Five-Year Plan that it would support Hong Kong’s development as a regional distribution centre. I believe that this position provides Hong Kong with a great opportunity to become the commercial distribution centre of the Chinese domestic sales market. The SAR Government should promote this new industry of “domestic sales” with a new way of thinking and develop the “domestic sales” as a new pillar and impetus of the Hong Kong economy.

At present, the Pearl River Delta Region in Guangdong is the largest regional domestic sales market in China. I opine that the SAR Government should take advantage of our proximity to the Pearl River Delta to assist Hong Kong enterprises in the development of China’s domestic sales market.

At the same time, the Government should assist enterprises in developing their own brands, upgrade and restructure. It has been mentioned in the Budget that the Government will continue to make use of the $1 billion BUD Fund to assist Hong Kong enterprises to upgrade and restructure. In my view, the Government is moving in the general direction but the amount of fund should be increased, and the application procedure should be simplified as much as possible, so as to increase the flexibility of the vetting and approval procedure of the Fund. The Government should also step up its support for enterprises in conducting scientific research, including triple the tax rebate for scientific research. As most Hong Kong enterprises are only at the infancy stage in the development of China’s domestic sales market, I think that the Hong Kong Export Credit Insurance Corporation should provide more support for these enterprises, including expanding the coverage for domestic sales, so as to alleviate their difficulties in doing business in the Mainland.

President, I wish to talk about the difficulties that the small and medium enterprises (SME) face in the Mainland. The traditional SMEs have been plagued by the impact of the fluctuating global economy and are under the pressures of decreasing orders and increasing costs of raw materials and wages. They are already badly beaten. As the development of brands and building up connections in the domestic sales market require a long time and large quantities of resources, I believe most SMEs lack the manpower, financial capacity and experience required. Therefore, I hope that the Government will lend a hand to these enterprises by stepping up the communication with the Mainland authorities and formulating policies that will assist SMEs in Hong Kong in developing business in the domestic sales market in the Mainland.

Moreover, to promote economic restructure, Hong Kong must attract outstanding talents to Hong Kong. However, the statistics of the Immigration Department show that since the implementation of the Quality Migrant Admission Scheme in 2006, among the talents that have been admitted, most of them have a background in the finance or accounting sectors, followed by those with a background in information technology, but few in the field of scientific research who are keenly sought after in the whole world. However, our neighbouring cities are sparing no efforts to take in talents with all different backgrounds, making their people more competitive.

President, this is high time that the SAR Government reviewed the current immigration policy. Other than streamlining the application procedure, it should also adopt measures that attract talents of all different backgrounds to Hong Kong. If we hold onto our old policies, we will lag far behind our neighbouring cities who are taking in the most quality talents from the whole world or all over Asia to assist them in their development. We have seen a great change in the demographic structures in our neighbouring cities in recent years. Their populations are increasing faster and in a greater scale than ours and their qualities are also way above ours. Although this is not Secretary Gregory SO’s ambit, to meet the needs of our future development in scientific research and technology, I hope that the Government will attract more such talents to Hong Kong. Of course, we also hope that the education institutes in Hong Kong will nurture more talents in this area to help the relevant enterprises in Hong Kong to develop in diverse areas.

President, I so submit.