Chief Executive CY Leung
Economic development is the only sustainable way to make lives in Hong Kong better. It is only through economic development that we can grow a bigger economic pie, find the financial resources to sustain our efforts in improving people’s livelihood.
That is what this year’s Policy Address sets out to do. What the five Policy Addresses of this Government have worked to do.
To grow the economy, we need to grasp the opportunities. And there are plenty of opportunities ahead. Globalisation and free trade – though somewhat challenged at the present – remain the driving force of global economic development. And the world is looking more and more to our country in promoting more free trade. Hong Kong, being the freest economy in the world, and given the importance of trade, in both goods and services, to us, can only gain from these latest developments. The National 13th Five-Year Plan, the Belt & Road Initiative, or the free trade agreement that we are negotiating right now with ASEAN, Hong Kong’s second largest trading partner, are all solid opportunities. And we will keep close tabs on the impact – and opportunities – brought about by Brexit.
The Government is part of the Hong Kong team, your team, and is determined to help businesses to make the most of these opportunities.
Belt & Road Office to be expanded
Last year, we set up a dedicated Belt & Road Office – headed by a Commissioner – to draw up strategies and measures under the Belt & Road. The Office has been in busy dialogue with the Central Authorities in Beijing and businesses in Hong Kong so that we could work, again, as a team. This year, we will expand the Office, giving it considerably more resources to execute business plans.
The Mainland of China is our biggest economic partner. The scope of our economic co-operation has been broadening. Every time I sit down with Mainland local government leaders, we find new things to do in new sectors. So we are fast expanding our official presence up north. There is now one Economic & Trade Office in each of the Mainland’s five regions. By mid-year, we expect to add under these offices new units in Tianjin, Zhejiang, Guangxi and Shaanxi, bringing the number of cities in the Mainland where the Hong Kong SAR Government is represented to 16.
Our network of Economic & Trade Offices (ETOs) in foreign countries continues to grow as well. When I took office in 2012, there were 11 ETOs in total. The one in Seoul is now under way, and we have announced the setting up of new ETOs in India, Mexico, Russia, South Africa and the United Arab Emirates. The new one in Indonesia of course has just opened its doors. Now, this will bring the total number of ETOs in foreign countries to 18, a marked increase from 11 when I took office four years ago.
And let us not forget about infrastructure – links that connect us with the Mainland of China, the wider region and the rest of the world.
Hong Kong-Zhuhai-Macao Bridge soon to be completed
Work on the Hong Kong-Zhuhai-Macao Bridge is now in its last phases. The three sides, namely Hong Kong, Zhuhai and Macau, will strive to complete the entire project by the end of this year for simultaneous commissioning. The Bridge will slash travel time from the Kwai Tsing Container Terminals to Zhuhai from three and a half hours to 65 minutes. This will boost trade, commerce, tourism, and more, between Hong Kong, the west coast of the Pearl River Delta, Guangxi Province and possibly Vietnam.
Then there is the Guangzhou-Shenzhen-Hong Kong Express Rail Link, a 26-kilometre line flowing from the terminus in West Kowloon to Shenzhen and further north, tying us seamlessly to the Mainland’s high-speed rail network. We expect that the Hong Kong section of the Express Rail Link will commence service in the third quarter of next year. And construction of the third runway at the airport has now started.
Within our urban areas, the new Central Kowloon Route will link West Kowloon with Kowloon Bay, cutting down travel time from 30 minutes to five minutes. We will also start the study on Route 11, which will enhance the long-term development of Northwest New Territories and its connection to Lantau and the airport.
So the opportunities are there and the infrastructure is there. What we need is the will to grasp the opportunities – and embrace the challenges at the same time.
One of the greatest challenges is to move up our value ladder, which raises this question: Does the Government have a new role in this?
Nurturing new industries
I said in this year’s Policy Address that we should consider a more active role – in promoting traditional sectors, and in nurturing emerging ones.
Take financial services as an example. Financial services is a key pillar employing over 250,000 people and contributing more than 17% of our GDP. Over the past four years, the Financial Services Development Council, which I announced to establish when I was Chief Executive-elect, has released 26 reports on how we could continue to grow this sector. The Government will actively consider the Council’s recommendations on taxation, laws and regulations, the nurturing of financial talent, and implement the feasible measures.
I have also asked the Trade Development Council (TDC) to work with the Financial Services Development Council in promoting also our financial services outside Hong Kong. The TDC, after all, has been promoting Hong Kong effectively for more than half a century now. And it has an extensive network of offices, both in the Mainland of China and overseas.
Innovation and technology (I&T) is another area where the Government can, and should, consider taking on a new role. I&T will be the growth engine of Hong Kong’s economy, providing jobs for our young people and making our industries more efficient and competitive.
Boosting I&T development
I suppose I could, without sounding immodest, say that this Government has given unprecedented policy and financial support to drive the development of I&T. We set up the Innovation and Technology Bureau in 2015. Last year, we injected some HK$18 billion to build up an integrated I&T ecosystem. We also helped by expanding the Hong Kong Science Park, by financing R&D, funding start-ups, by driving “re-industrialisation” and high-technology production, by raising tech-awareness generally and by encouraging SMEs to use technology services and solutions. Some of these programmes are already in place, and more will be up and running this year.
We are seeing results. Last year, Hong Kong counted nearly 2,000 start-ups, up 25% over 2015. And we have grabbed the attention of world-class research institutes and enterprises. The Massachusetts Institute of Technology set up its first overseas Innovation Node here. Sweden’s Karolinska Institutet – a leading medical university that selects Nobel laureates in physiology or medicine – opened its first overseas reparative medicine centre in the Hong Kong Science Park last October. The Alibaba Group launched a HK$1 billion Hong Kong Entrepreneurs Fund. And Sequoia Capital initiated a Hong Kong X-Tech Startup Platform to support early-stage and angel projects.
So we are bringing talent, ideas, capital, market, and entrepreneurial experience together onto the Hong Kong platform, a platform that provides the combined advantage of “one country” when we compete with other countries, and the advantage of “two systems” when we compete with the Mainland cities. This platform “super-connects” between the rest of China and the rest of the world, also in the space of I&T. And we should take note of the appointment last month of a new Deputy Director of the Central Government’s Liaison Office in Hong Kong, Mr Tan Tieniu – one of the leading scientists in the country. I think there is a message there.
Establishing a tech park in the Lok Ma Chau Loop
In the Policy Address, I announced a range of measures to accelerate the growth of the I&T sector, including considering tax and financial concessions to attract I&T enterprises from Hong Kong, the Mainland and overseas. The Hong Kong/Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop, four times the site area of the Hong Kong Science Park, will be a key base for I&T enterprises, research and higher education institutes from the region and around the world. When completed, this new Park will offer a total floor space that equals 13 million square feet.
The Government will support the Hong Kong Science and Technology Parks Corporation to build an InnoCell next to the Science Park, providing living space with flexible design and ancillary facilities for staff of incubatees, start-ups and research personnel.
We will, as well, ask our world-class universities to conduct more research in areas that tie in with Hong Kong’s “re-industrialisation”. The University Grants Committee will review allocation of research grants, expanding the assessment criteria to include research impact, and effectiveness of knowledge and technology transfer. We will also ask the universities to refine knowledge and technology transfer plans.
I am confident that our work has laid a solid foundation for Hong Kong’s I&T development. For the transformation and upgrading of the Hong Kong economy.
As we look for opportunities and growth, we have not lost sight of our goals, our obligations, to the community at large. Not for the few, but for all.
Increasing land supply to lessen housing shortage
Housing remains the biggest frustration for the people. It is our biggest hindrance to quality of life. And to tackle the root of the problem we have to increase land supply. After four and a half years, we have the following to report.
We have 94,000 private housing units that are at various stages of construction and are yet to be sold. This figure is 45% higher than that when I took office. This is also a record high since such statistics were released 12 years ago.
As for public housing, for the five-year period from 2016-17, the estimated public housing production is 94,500 units, an increase of 37% from the previous five-year period.
And let us look at Government’s land sale programme as well. Government land sale in the five financial years since I took office will produce more than double the number of units compared to that of the previous five financial years.
For commercial and other business land uses, government land sale in the current financial year can provide 555,000 square metres of floor area, exceeding the total supply in the preceding four financial years. This, I hope, will start to arrest the growth in rent, and ease some pressure off our businesses.
We all wish the new supply could have arrived earlier. But rezoning of land uses takes at least a year, land sale preparation six months and construction three to four years. Looking at the increased supply that I just mentioned, I believe we are seeing the tail end of the severe pent-up shortage.
Developing new areas and extending new towns
And there is good prospect in the pipeline – we expect to welcome in the first families to the New Development Areas and extended new towns in about six to 10 years. Longer term, we should look at the country parks, while carrying out technical studies on reclamation in Siu Ho Wan on Lantau, Lung Kwu Tan in Tuen Mun, and Ma Liu Shui in Sha Tin, which will be completed this year. We are of course studying also the brownfield sites.
Housing aside, helping the underprivileged is another key policy area. Indeed, we are now spending 55% more than the case five years ago. But the good news is that the number of CSSA (Comprehensive Social Security Assistance) cases on account of unemployment is now at its lowest since May 1997.
I know you – as employees and as employers – have a good deal to offer as to how we should move forward as a society on retirement protection. Especially on Government’s proposal to progressively abolish the “offsetting” of severance payments or long-service payments with Mandatory Provident Fund contributions.
I am sure I will hear from you in a short while. But let me just say upfront that I know there is no “perfect” solution, and doing nothing is not the answer. Like you, I have on my desk an “In” tray and an “Out” tray. Unlike you, I have a third tray that is labelled “Too Difficult”. This long-standing issue has been in the “Too Difficult” tray for too long and it stands in our way whenever we want to move forward our labour relations.
The proposal in the Policy Address is, I believe, practical and practicable. But Government remains open minded on the formulation of the solution. Government is in a listening mode and, as I believe, we should all be.
Chief Executive CY Leung gave these remarks at the Joint Business Community Luncheon 2017.
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