The 24 May election was an undisputed success. Accountants had turned out in force and casted 5,826 votes representing 58.8% of all registered voters. The territory wide average was 53%. It was a historic record that we can all be proud of.

As the serious liquidity crunch started to take a grip on the economy of Hong Kong, the inevitable deflationary pressure and the many facets of economic adjustments that followed had proved to be most trying for our new Government and the community at large. Nonetheless, our Government had taken a generally welcome turn to officially recognise the problem of slipping business confidence and provided a more active lead in stabilising the property, share and money markets. These economic policies naturally became instant focuses of public attention and debate. I took a quick lead in shaping public opinion on matters such as the possible floatation of public corporations, acceptance of deficit budgets in the next two years to help stimulate the economy, regular review of GDP growth rate, streamlining of Government staff establishment and pay structure on charged services to stay competitive etc.

The high profile visits of President Jiang and US President Clinton illustrated the unique position of Hong Kong as China's international window. The unfortunate airport opening saga that followed had somewhat dampened our otherwise jubilant July spirits and kept our feet a bit more on earth. It showed that over-ambition and self-grandiose should never be the Hong Kong way of achieving success.

I was elected Chairman of this important Committee on 10 July 1998 for the third successive term. All major political factions in Legco seemed to recognise the highly technical nature of the job and had persuaded me to take the chair. There will be three substantive reports this Legco year and an extremely heavy work load can be expected.

I was elected Deputy Chairman of this Committee on 14 July 1998. Both the Secretary for Financial Services and Secretary for Treasury had already been in touch with me and sought our views on a number of impending issues such as the reporting of suspected fraud and licensing of insolvency practitioners etc. A proposed list of future agenda items is attached as Appendix I.

I have also joined the Welfare Services Panel, Economic Services Panel and the newly created Information Technology and Broadcasting Panel to broaden my coverage of current issues.

I have joined both the Public Works Sub-committee and Establishment Sub-committee of the Finance Committee, as well as the working group in preparation of the Select Committee to investigate the Chek Lap Kok Airport bungle.

1. Exemption from Profit Tax (Interest Income) Order:

This order which aimed at effecting the recent Government announcement to exempt interest income from deposits placed with local banks was welcomed by the accountancy profession.

At a joint meeting between the Inland Revenue Department, HKSA representatives and myself organised on 7 July 1998, we decided not to obstruct the smooth passage of this order which has to be either accepted intact or withdrew completely. However, the Inland Revenue Department took note of our written submission on a number of technical points which I would follow up independently with them in due course.

A list of Motion Debate is attached as Appendix II.

The motion debate on "advancing the time for full scale direct election" was tabled by the Democratic Party on 15 July 1998. It raised a fundamental question about the Accountancy Functional Constituency on which I plan to take up with members in the Legco column of the July/August issue of the Hong Kong Accountants.

In short, the unavoidable review of our entire political structure in the year 2007 is fast approaching and the Government is likely to come under increasing pressure to launch its consultation process as soon as possible. As a responsible constituency, I believe that we must make preparation in good time and update ourselves of our Members' views. I am committed to organise focus group discussions and a scientific survey to gauge these views and would welcome Council's input on the best way forward.

V. General Political Background

A general consensus is emerging amongst political and business circles that the economy of Hong Kong will deteriorate further in the third quarter of 1998. Business confidence dropped to a low ebb while unemployment continue to rise and our negative growth in GDP sinks even deeper. The Government seems to believe that it has already done everything it could and is likely to wait patiently for the external factors influencing our economy (e.g. Japan's political and economic uncertainties) to settle. Some of the 1998 Budgetary measures and other more recent Government measures designed to boost-start the economy is likely to make some impact later this year but the full effects are unlikely to be felt until well into and beyond the year 1999.

The Legislative Council will take a break in August and early September and the Government is keeping its legislative agenda close to itself. I think that the Government is unlikely to make any major move to save ammunition for the Chief Executive's Second Policy Address scheduled to be delivered on 7 October 1998. Meanwhile, the various investigations into the Airport bungle and the possible substantive follow up action will, no doubt, help to keep scores of us busy.