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A Government's Duty in Time of Hardship
To prevent a feeling of lost confidence from setting in, most Governments will attempt to inflate the economy during a slowdown. The basic monetary strategies include progressively increasing public expenditure and/or money supply, lowering interest rates and allowing the currency to devalue freely.

The Hong Kong scenario though is that interest rates have already hit rock bottom and we are still flooded with easy credit for those who don't really need it and probably don't want it. The financial regulators, however, will not freely let our banks lend money to those who have a real need (i.e. those in possession of negative assets).

Devaluation of the Hong Kong dollar can be another viable economic option, notwithstanding that it is heavy medicine with strong undesirable side effects, which our timorous officials are trying to tell us is a matter too sensitive for public debate.

Under the looming threat of a possible structural fiscal deficit, the single most significant item of public expenditure that the Government seems happy to increase is its own salaries. Meanwhile, the frustrated community is besieged with bad news. It is told 'day-in and day-out' that the world's economy, like its confidence index, is still spiraling down. Massive downsizing and company collapses hit many families like bombshells.

Hong Kong has always been a 'can do' place. If only the officials would open their minds, there are plenty of creative and helpful suggestions in town that 'can be done' and do not cost a fortune. I have picked up quite a few of these ideas myself in just a week! I believe that they merit our Government's considerations:

Firstly, the Government can push, much more vigorously and visibly, for equal treatment of our businesses and professionals in mainland China. For example, the Government could:

  • support our professionals, such as accountants and lawyers, in their efforts to negotiate for the reciprocal rights to practise and to provide professional services in China

  • support our banking, insurance, stockbrokers and other financial services sectors to set up their businesses in mainland China, in the same way they have established, without restriction, their business interests here in Hong Kong

  • help gain free access for our many listed companies to seek secondary listings in China and to tap into their growing source of low cost equity funding

  • assist in obtaining permission from the Mainland for our companies to engage in acquisitions and mergers with China-listed companies

  • consider issuing a business category of the multiple entry visa to Mainland businessmen who needs to visit Hong Kong regularly to help us create wealth and procure the support of the PRC, and

  • ask the Government Committee preparing Hong Kong for the impact of China's entry into WTO to report on our state of readiness and assure us that we will have an equal and fair chance to compete with our Mainland counterparts on all aspects of our economic activities.

We can boost the hotel and tourism industry by:

  • opening up to greater competition, temporarily or permanently, to take in more inbound flights and tourists

  • updating the Tsimshatsui shoreline by redesigning, through international competition and redeveloping those outmoded cultural facilities that are no longer world class, and

  • sponsoring major international music and cultural festivals that would attract the world's attention to the fact that Hong Kong is not just a business and shopping centre.

We should start investing serious money into cleaning up Hong Kong as its pollution is already a well-known deterrent to overseas investors, tourists and skilled professionals alike.

We should promote growth in the long-term debt market at a time when the equity share market is weak, liquidity is high and the Mandatory Provident Funds are all looking for a safe shelter to invest locally.

I do not believe in throwing money at economic problems, but I still think that the time is right to unlock the safe to our fiscal reserves. The problem of sagging confidence requires a community response rather than top down leadership. The people of Hong Kong have to start believing in themselves before other business partners will believe in us.

A turbulent time tests the inner strength, creativity and resolve of a community collectively. Our economic structures and financial markets have operated smoothly despite difficult times. They have stood up to the tests well. It is now time to put our social and political structures to the challenge. Could we one day achieve a community consensus, including members of LegCo, that will join hands with the Government to put aside party differences and work towards leading our society out of this maze of gloom?

Adapted from 'Letter to Hong Kong' aired on RTHK on 16 September 2001. Eric Li is the Accountancy Functional Constituency Representative on LegCo. His website can be found at http://www.ericli.org.

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