LEGISLATIVE COUNCIL ─ 30 May 2013 12791

OFFICIAL RECORD OF PROCEEDINGS

Thursday, 30 May 2013

The Council continued to meet at half-past Two o'clock

MEMBERS PRESENT:

THE PRESIDENT THE HONOURABLE JASPER TSANG YOK-SING, G.B.S., J.P.

THE HONOURABLE ALBERT HO CHUN-YAN

THE HONOURABLE LEE CHEUK-YAN

THE HONOURABLE JAMES TO KUN-SUN

THE HONOURABLE CHAN KAM-LAM, S.B.S., J.P.

THE HONOURABLE EMILY LAU WAI-HING, J.P.

THE HONOURABLE TAM YIU-CHUNG, G.B.S., J.P.

THE HONOURABLE ABRAHAM SHEK LAI-HIM, S.B.S., J.P.

THE HONOURABLE TOMMY CHEUNG YU-YAN, S.B.S., J.P.

THE HONOURABLE VINCENT FANG KANG, S.B.S., J.P.

THE HONOURABLE WONG KWOK-HING, M.H.

DR THE HONOURABLE JOSEPH LEE KOK-LONG, S.B.S., J.P.

THE HONOURABLE JEFFREY LAM KIN-FUNG, G.B.S., J.P. 12792 LEGISLATIVE COUNCIL ─ 30 May 2013

THE HONOURABLE ANDREW LEUNG KWAN-YUEN, G.B.S., J.P.

THE HONOURABLE WONG TING-KWONG, S.B.S., J.P.

THE HONOURABLE RONNY TONG KA-WAH, S.C.

THE HONOURABLE CYD HO SAU-LAN

DR THE HONOURABLE LAM TAI-FAI, S.B.S., J.P.

THE HONOURABLE CHAN KIN-POR, B.B.S., J.P.

DR THE HONOURABLE PRISCILLA LEUNG MEI-FUN, J.P.

THE HONOURABLE CHEUNG KWOK-CHE

THE HONOURABLE IP KWOK-HIM, G.B.S., J.P.

THE HONOURABLE MRS REGINA IP LAU SUK-YEE, G.B.S., J.P.

THE HONOURABLE PAUL TSE WAI-CHUN, J.P.

THE HONOURABLE ALAN LEONG KAH-KIT, S.C.

THE HONOURABLE LEUNG KWOK-HUNG

THE HONOURABLE WONG YUK-MAN

THE HONOURABLE CLAUDIA MO

THE HONOURABLE JAMES TIEN PEI-CHUN, G.B.S., J.P.

THE HONOURABLE NG LEUNG-SING, S.B.S., J.P.

THE HONOURABLE STEVEN HO CHUN-YIN

THE HONOURABLE WU CHI-WAI, M.H.

THE HONOURABLE YIU SI-WING LEGISLATIVE COUNCIL ─ 30 May 2013 12793

THE HONOURABLE GARY FAN KWOK-WAI

THE HONOURABLE MA FUNG-KWOK, S.B.S., J.P.

THE HONOURABLE CHARLES PETER MOK

THE HONOURABLE CHAN CHI-CHUEN

THE HONOURABLE CHAN HAN-PAN

DR THE HONOURABLE KENNETH CHAN KA-LOK

THE HONOURABLE CHAN YUEN-HAN, S.B.S., J.P.

THE HONOURABLE KENNETH LEUNG

THE HONOURABLE ALICE MAK MEI-KUEN, J.P.

THE HONOURABLE KWOK WAI-KEUNG

THE HONOURABLE DENNIS KWOK

THE HONOURABLE CHRISTOPHER CHEUNG WAH-FUNG, J.P.

DR THE HONOURABLE HELENA WONG PIK-WAN

THE HONOURABLE IP KIN-YUEN

DR THE HONOURABLE ELIZABETH QUAT, J.P.

THE HONOURABLE MARTIN LIAO CHEUNG-KONG, J.P.

THE HONOURABLE POON SIU-PING, B.B.S., M.H.

THE HONOURABLE TANG KA-PIU

DR THE HONOURABLE CHIANG LAI-WAN, J.P.

IR DR THE HONOURABLE LO WAI-KWOK, B.B.S., M.H., J.P. 12794 LEGISLATIVE COUNCIL ─ 30 May 2013

THE HONOURABLE CHUNG KWOK-PAN

THE HONOURABLE CHRISTOPHER CHUNG SHU-KUN, B.B.S., M.H., J.P.

THE HONOURABLE TONY TSE WAI-CHUEN

MEMBERS ABSENT:

THE HONOURABLE LEUNG YIU-CHUNG

DR THE HONOURABLE LAU WONG-FAT, G.B.M., G.B.S., J.P.

THE HONOURABLE FREDERICK FUNG KIN-KEE, S.B.S., J.P.

THE HONOURABLE STARRY LEE WAI-KING, J.P.

THE HONOURABLE CHAN HAK-KAN, J.P.

DR THE HONOURABLE LEUNG KA-LAU

THE HONOURABLE WONG KWOK-KIN, B.B.S.

THE HONOURABLE ALBERT CHAN WAI-YIP

THE HONOURABLE MICHAEL TIEN PUK-SUN, B.B.S., J.P.

THE HONOURABLE FRANKIE YICK CHI-MING

THE HONOURABLE LEUNG CHE-CHEUNG, B.B.S., M.H., J.P.

DR THE HONOURABLE KWOK KA-KI

DR THE HONOURABLE FERNANDO CHEUNG CHIU-HUNG

THE HONOURABLE SIN CHUNG-KAI, S.B.S., J.P.

LEGISLATIVE COUNCIL ─ 30 May 2013 12795

PUBLIC OFFICER ATTENDING:

PROF THE HONOURABLE K C CHAN, G.B.S., J.P. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY

CLERKS IN ATTENDANCE:

MISS ODELIA LEUNG HING-YEE, ASSISTANT SECRETARY GENERAL

MRS PERCY MA, ASSISTANT SECRETARY GENERAL

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MEMBERS' MOTIONS

PRESIDENT (in Cantonese): Member's motion: Enhancing the overall sustainable competitiveness of Hong Kong.

Members who wish to speak on this motion will please press the "Request to speak" button.

I now call upon Dr LAM Tai-fai to speak and move the motion.

(Originally scheduled to be dealt with at the last Council meeting)

ENHANCING THE OVERALL SUSTAINABLE COMPETITIVENESS OF HONG KONG

DR LAM TAI-FAI (in Cantonese): President, I move the motion, as set out in the Agenda.

President, two authoritative reports about competitiveness have recently been released. The latest report is the World Competitiveness Yearbook released by the International Institute for Management Development in Lausanne, Switzerland. Hong Kong ranked first in the last two years, and we have noticed, according to the latest report, the ranking of Hong Kong has dropped to the third place, which is the lowest in the past five years. The ranking of Hong Kong with regard to government efficiency has also dropped from being the first last year to the second. Furthermore, the Chinese Academy of Social Sciences has also released the China Urban Competitiveness Report. Although Hong Kong still ranked first for the 11th consecutive year, the Report has again warned that our competitive advantage has been gradually weakened, and the gap between Hong Kong and Mainland cities has continuously been narrowed. It is indeed worrying that we may, sooner or later, lose the leadership position. I believe the Government must address these two reports squarely and conduct a review.

President, it is also stated in the China Urban Competitiveness Report that there are three major hidden worries affecting the competitiveness of Hong Kong. First, the economy of Hong Kong has been over-reliant on the financial and real estate sectors; and owing to the shortage of land, the property prices and rents remain high, which is beyond the affordability of the general public as well as LEGISLATIVE COUNCIL ─ 30 May 2013 12797 small and medium enterprises, resulted in signs of virtualization and bubbling of the economy. Second, the rapid ageing of the population has seriously affected the sustainable competitiveness of Hong Kong. Third, Hong Kong lacks industrial and technological industries, which weakens the complementary relationship between Hong Kong and the Pearl River Delta. Hence, the original "front shop and back plant" model is facing great challenges.

President, with globalization and rapid development of information technology, the competitions among economies have become increasingly intense and white-hot. After all, the comparison among economies is a comparison of competitiveness. Here, I am talking about the overall, comprehensive and sustainable competitiveness. Simply put, it involves the comparison of soft power and hard power.

President, though Hong Kong is a small place with an area of only 1 100 sq km, and there are no natural resources, it has developed into a civilized cosmopolitan owing to the Hong Kong people's strenuous effort, their perseverance in overcoming adversity with the "Lion Rock Spirit". On the economic and political fronts, we occupy a pivotal position in the international arena.

President, good times do not last forever and development is like sailing against the current; either you keep forging ahead or you keep falling behind. If the overall sustainable competitiveness of Hong Kong is not enhanced but weakened continuously, even if we have considerable surplus, we will, sooner or later, be taken over by other cities in the global contest.

President, whether our society can have prosperous and stable development, whether businesses will thrive, and whether people can live and work in peace, contentment and harmony, the Government's administrative and executive abilities as well as its credibility are the deciding factors. A promising government must have a brilliant leader who knows how to recruit talents and appoint capable persons to form a governing team, consisting of officials who have the ability, integrity and ideals to readily and selflessly serve Hong Kong people, and formulate appropriate, timely and effective policies and measures. Moreover, they should have the breadth of mind to cast aside their prejudices and unite the community, build consensus and make concerted efforts to implement policies, as well as solve problems and face up to challenges. The policies and measures of the Government should consolidate the existing advantages and 12798 LEGISLATIVE COUNCIL ─ 30 May 2013 characteristics it enjoyed. Apart from giving full play to the existing advantages and characteristics, the Government should identify other initiatives that can promote development, and continually enhance the overall competitiveness of society.

President, the new Government has taken office for almost a year, but regrettably, it fails to implement policies smoothly and cannot gain the community's support. The popularity rating of the Government keeps declining and some officials even have negative popularity. Strictly speaking, the new Government has run into a stone wall in administration, and it is unable to move even a single step. When facing the many social issues such as developing our economy, improving and promoting people's livelihood, and so on, the Government has failed to effectively make improvements and resolve these issues, and the situation is constantly deteriorating. The Government has repeatedly experienced setbacks in administration, and members of the governance team have made blunders one after another, causing great chaos. The Government is tired out and weighed down with efforts to solve the problems. With repeated blows to the Government's credibility of governance, the efficiency and effectiveness of administration has certainly declined. It is said that the governing team now suffers from low confidence and morale. While the officials may not be panicking, they dare not introduce new policies and measures for fear of not getting support from the public and the industry, attracting criticism and further pushing down the popularity rating. President, if this saying is true, the overall sustainable competitiveness of Hong Kong will inevitably be hit; hence, we must immediately respond to the issue, make improvements and rectify the situation.

President, in order to improve and rectify the situation, one should prescribe the right medicine, be bold and resolute, have revolutionary ideas and think out of the box. Otherwise, the overall sustainable competitiveness of Hong Kong will be undermined. We must realize that even the sharpest sword will get rusty one day.

President, the governance team obviously has the problems of a mismatch of talents and a shortage of talents. Quite a number of people criticized that the current-term Government is an "army of amateurs", as many officials are not fit for their position in the Policy Bureaux. If officials have the inherent problem of not being familiar with their policy areas, how can they be competent enough to lead the departments concerned in formulating policies, and implementing LEGISLATIVE COUNCIL ─ 30 May 2013 12799 measures to resolve problems, thereby enhancing the overall sustainable competitiveness of Hong Kong? Honestly speaking, if these officials have to receive on-the-job training, how can people have confidence in them and approve their work? President, for this reason, I think the Government must immediately conduct a comprehensive assessment and examination of the abilities, integrity, potentials and state of mind of all accountability officials, so as to evaluate if they really have the abilities, resolution and determination to help enhance the overall sustainable competitiveness of Hong Kong. If officials fail in the evaluation, the Government must pick up the courage to replace them. It should not connive and be hesitant. Connivance and hesitation would only undermine the sustainable competitiveness of Hong Kong, and cause many existing problems in our society to aggravate.

President, as you had said publicly earlier, the Chief Executive should review the Executive Council system, including its composition and functions, as well as seriously consider how to revise its operation so that it can play a more important role. Unfortunately, it seems that your remark has not gain the approval of the Government and has even attracted criticism. In my view, it is most important to pick the right person. If outstanding persons with capabilities are picked, they can assist the Government and the Chief Executive in making wise decisions, thereby enhancing the overall sustainable competitiveness of Hong Kong. On the contrary, if persons with low moral integrity and capability and like to tell lies are selected, the overall sustainable competitiveness of Hong Kong will definitely be affected. Hence, the Government must overcome its psychological barrier, match its words to its deeds, and take actions to build up a "Hong Kong Camp". It should appoint capable persons for the benefit of Hong Kong.

President, Hong Kong is a blessed place without natural disasters. Yet, we must avoid man-made misfortunes which will not only seriously undermine the overall sustainable competitiveness of Hong Kong, but also lead to the downfall of Hong Kong.

President, Hong Kong has all along adopted the model of free economy; it is the cornerstone of our success over the years, our core value, as well as the most powerful asset in maintaining the overall sustainable competitiveness of Hong Kong. With China as our hinterland after the reunification of Hong Kong and under the principles of "one country, two systems", "Hong Kong people ruling Hong Kong" and a "high degree of autonomy", there should be much room 12800 LEGISLATIVE COUNCIL ─ 30 May 2013 for development, and our competitiveness should have been enhanced. Unexpectedly, after the new Government has assumed office, it has continuously undermined Hong Kong's competitive advantage by implementing various measures, such as the "powdered formula restriction order" and the new Buyer's Stamp Duty, using administrative means to intervene in the free operation of the market. As a result, not only has it failed to solve problems properly, but has also given rise to much controversy and disputes, which is really disappointing.

President, after Premier LI Keqiang had taken office, he has vigorously promoted the institutional reform of the Government. His idea is that the Government should not manage microscopic issues and these issues should be handed over to the market and society. He advocates the promotion of investment by the people, expanding job opportunities, enhancing enterprise competitiveness and stimulating the economic vitality of society. President, socialism is upheld on the Mainland while capitalism is upheld in Hong Kong. Yet, even the Mainland Government does not advocate administrative intervention in the market. Sometimes, I really do not understand why the Government would be backsliding and it has repeatedly implemented measures to intervene in the operation of the free market. It has removed the unique advantages of Hong Kong, and such actions are suicidal. President, I implore the Government and the Secretary to immediately stop acting silly in intervening in the free market. In doing so, they will only keep scaring investors away and the overall sustainable competitiveness of Hong Kong will decline continuously. In the end, our economy and people's livelihood will definitely be immensely affected.

President, I would like to talk about the harsh measures again. After these harsh measures have been introduced, trading in the property market has considerably decreased. The Government becomes complacent and thinks highly of itself, thinking that the housing problem has been completely solved. It is merely deceiving itself and others. Actually, the introduction of the harsh measures cannot solve the problem of first-time home buyers or shorten the waiting time for public housing. Conversely, the property market has become stagnant, and many people engaged in relevant industries have become unemployed or have their income considerably lowered. This will undoubtedly undermine the overall sustainable competitiveness of Hong Kong.

President, viewing from another angle, competition among societies is in fact a competition for talents. Hong Kong has been developing in the direction LEGISLATIVE COUNCIL ─ 30 May 2013 12801 of a knowledge-based community, and people of diversified abilities are required to work in different fields and areas. Therefore, a quality education system and sound talent training programmes are extremely important; otherwise, problems such as a lack of talents, mismatch of talents and declining quality of talents will arise, and a result, the development and needs of society as a whole cannot be met. In my opinion, to enhance the overall sustainable competitiveness of Hong Kong, we must immediately solve the long-standing education problems. For example, we should immediately increase resources and formulate policies to increase university places, so as to stop the wastage of precious talents. Moreover, children from poor families often lag behind at the starting line in their studies and work; thus, the Government must vigorously increase resources to support poor students by meeting the expenses on learning and extra-curricular activities. Otherwise, the phenomenon of inter-generational poverty will continue to emerge and persist, which will substantially affect the overall sustainable competitiveness of Hong Kong.

When the Government intends to develop a certain industry, it must provide relevant manpower training; otherwise, the industry cannot be effectively developed and has no competitiveness. For example, while the Government intends to develop Chinese medicine, it does not even support the construction of a Chinese Medical institute, which is undoubtedly a big joke. The Development Bureau proposes to build luxurious flats on the site of the former Lee Wai Lee Technical Institute, and refuses to allocate the site to a university for building a Chinese Medical Institute at its own expenses. People are just baffled, and the development of Chinese medicine has been seriously hindered, affecting the sustainable competitiveness of the industry.

President, I propose this motion today because I hope the Government would get prepared for the rainy days and work hard for better results. Many people say that Hong Kong will be marginalized when Mainland cities are rising. Competition will exist forever in such a large world. Hong Kong people are accustomed to stormy weather and we have rode out many storms in the past and have remained strong. With China as our hinterland after the reunification, we have been enjoying the advantage of "one country, two systems". Though the current economic situation is full of uncertainties, and there are many outstanding problems relating to people's livelihood and political disputes, so long as we make unremitting efforts and reduce internal friction, we should be able to maintain our status and attraction as a cosmopolitan city. Of course, President, we must have a promising government and a group of capable officials who can 12802 LEGISLATIVE COUNCIL ─ 30 May 2013 clean up this mess as quickly as possible, resolve disputes and lead 7 million people in striding proudly ahead, and keep on giving full play to our advantages.

If this road is right, President, we basically do not need a Plan B or to take two. I hope the Chief Executive would learn from mistakes, rally his supporters and boost their morale, as well as enhance the governance standard, so as to lead Hong Kong to move forward and enhance our overall sustainable competitiveness. I so submit, President.

Dr LAM Tai-fai moved the following motion: (Translation)

"That the China Urban Competitiveness Reports issued by the Chinese Academy of Social Sciences in recent years point out that the gap between Hong Kong's competitiveness and that of other Mainland cities is continuously getting narrower, and Hong Kong's overall growth is relatively slow, with the scale of its economy expected to lag behind those of Mainland cities such as Beijing, Shanghai, Guangzhou, Shenzhen, etc., by 2015; in this connection, this Council urges the Government to conduct a comprehensive review and assessment of areas such as economic development, improvement of people's livelihood, promotion of democracy, etc., and formulate feasible and timely policies which will be implemented, so as to enhance Hong Kong's overall sustainable competitiveness."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Dr LAM Tai-fai, be passed.

PRESIDENT (in Cantonese): Six Members will move amendments to this motion. This Council will now proceed to a joint debate on the motion and the six amendments.

I now call upon Mr TANG Ka-piu to speak first, and I will then call upon Mr Christopher CHEUNG, Ir Dr LO Wai-kwok, Dr Kenneth CHAN, Mr WU Chi-wai and Mr Charles Peter MOK to speak one by one; but no amendments are to be moved at this stage.

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MR TANG KA-PIU (in Cantonese): President, I always look forward to hearing Dr LAM Tai-fai's words of wisdom. After reading the wording of the original motion, I think some words are missing. In my view, the words "appointment of officials" should be added after "promotion of democracy". My amendment will better express his original intention. Moreover, last time when we held a motion debate on business environment, Secretary Gregory SO was the attending official, but this time when we hold a motion debate on competitiveness, Secretary Prof K C CHAN attends the meeting. In fact, Chief Secretary Mrs Carrie LAM should be in attendance and she should listen to Dr LAM Tai-fai's speech.

In fact, I am at a loss as to which departments or officials should be responsible for these issues. Competitiveness has a wide coverage, including urban competitiveness, competitiveness in economic development and sustainable competitiveness. I would like to cite the wordings of Dr LAM Tai-fai's original motion: "Hong Kong's …… the scale of its economy expected to lag behind those of Mainland cities such as Beijing, Shanghai, Guangzhou, Shenzhen, etc., by 2015". We need not worry for we will certainly lag behind in terms of scale of economy. The population of these four cities is doubled or 1.5 times of Hong Kong, and there is a secret tactic concerning the development of Mainland cities which Hong Kong cannot adopt. Did Guangzhou in the past include Panyu and Huadu? By annexing these two places, Guangzhou will have a higher GDP. This can easily be done on the Mainland but not so in Hong Kong. So, I think we should not worry too much about lagging behind these cities in terms of the overall scale of economy. It is a fact because the territory of Hong Kong is only slightly over 1 000 sq km.

On the contrary, we should pay attention to the Reports mentioned in the original motion. Hong Kong people should be proud of our achievement and we should examine how Hong Kong can remain in the top position, so as to become a model for other Mainland cities. I have read some extracts from the China Urban Competitiveness Report, and it is stated that Hong Kong continues to rank first in the list of liveable city. However, the four cities listed in Dr LAM Tai-fai's original motion are not on the list of liveable cities, and they are not qualified as liveable cities. In other words, even if these cities are competitive, are they liveable? They may not be liveable. Certainly, we wish that the four places on both sides of the Strait would have favourable development in respect of living environment and social construction, apart from economic development, and we should not merely attach importance to GDP.

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All in all, there are still many areas in which Hong Kong can take pride in, but is that enough? That is definitely not enough, especially when there are still many outstanding problems in Hong Kong, and some of them may aggravate.

It happens that another report is also released today by the International Institute for Management Development in Lausanne, Switzerland. I have read some news extracts, stating that the report mentions in particular that Hong Kong should invest more resources in education, so as to promote opportunities for upward social mobility. I agree with this comment and hence, my amendment is focused on employment and talent development. As compared with Dr LAM Tai-fai's speech a while ago, my speech is certainly not so loaded and interesting.

Regardless of the economic situation and whether the unemployment rate is 8% or the current 3%, the Federation of Trade Unions (FTU) always stresses that enterprises have the basic responsibilities of training talents. The employment relations in Hong Kong are not as stable as in the past, and wage earners may not work for a company or in a sector for a lifetime. On the other hand, as enterprises have continuously outsourced their work or employed staff on contract basis, they may not consider that they have the responsibility of providing training to employees who are not their permanent staff.

A problem thus arise, wage earners will change jobs which offer higher wages and better benefits. As a result, for industries which require high technology and sustainable development, they have difficulties in employing staff. For example, an Aircraft Engineering Technician Trainee in the HAECO earns a monthly salary of some $7,000. He has to go to work very early in the morning, the working environment is dirty and he has to meet more challenges and examinations. A salesman of mobile phones and computers at an electrical appliance shop in Mong Kok earns a monthly salary of $12,000 to $13,000; even though his working hours are also rather long, his benefits and salaries as comparatively better than the trainee mentioned above. Can one have a greater scope for development in the retail industry? Does Hong Kong need so many people to work in the finance and retail industries? We know pretty well that we do not have such a need.

For this reason, the Government should examine how to implement strategic measures in different industries, especially industries that cannot be relocated. I remember when I spoke on some motions some time ago, I asked if the Government could encourage different enterprises to employ trainees on a LEGISLATIVE COUNCIL ─ 30 May 2013 12805

"first-hire-then-train" basis. For instance, to solve the talent upgrading problem in the construction industry …… the industry has 300 000 registered construction workers, but only one third of them are skilled workers. I know the Government has promoted the "first-hire-then-train" approach to the business community, trade unions and the Construction Industry Council. Under this approach, workers who first work as casual worker can become skilled workers. Can this model be extended to different industries?

Earlier, we were very much concerned about the elevator industry, and I have revealed that one of the five major companies in the field employed trainees at a daily rate of $216. In other words, a trainee who works eight hours a day has an hourly wage of less than $30. An Honourable colleague queried how such contract could be executed since it has breached the minimum wage requirement. It is a standard practice in the industry that workers must work overtime for an hour and they must work on Sundays; and they will get higher pay if they work on Sundays. However, if workers do not work on Sundays or they insist on not working overtime, their hourly wage would really be lower than the minimum wage. Therefore, the Government must face up to these issues squarely.

Apart from the elevator and construction industries that I have just discussed, can other sectors be taken into consideration? Taking the ship repairing industry as an example, as far as I know, the shipping industry in Hong Kong is booming. Hong Kong no longer has a shipbuilding industry but it has a ship repair industry. A lot of large ocean-going vessels require maintenance services when they pass by Hong Kong; yet the industry cannot recruit workers. This industry also encounters the problem of the aircraft engineering industry as I have just described. Many young people prefer working as salesmen after they have compared the wages, and they wonder why they have to work so hard. In terms of prospects, while working in those industries has a prospect, the reality is that there will be an immediate reduction of wages of $3,000 to $4,000. If the Government wants to have diversified development, it must deal with these problems and adopt a more "aggressive" approach.

Regarding the issue of market intervention mentioned by Dr LAM Tai-fai who moved the original motion, the FTU always thinks that the market and the Government's policies may not be completely confronting. If the market has lost its imbalance or when there are obstacles hindering the development of the market, it is time for the Government to "react", such as Secretary Prof K C 12806 LEGISLATIVE COUNCIL ─ 30 May 2013

CHAN's intention to cap the fee of the Mandatory Provident Fund. We will fully support these measures. Thus, I believe it is unnecessary to say that it is necessary to bring the original market economy back to Hong Kong.

In addition, I would like to talk about point (4) in my amendment: to systematically absorb groups with employment difficulties. In view of the sound economic development of Hong Kong ― a view shared by all political parties and groupings ― we should put in more efforts to build a more benevolent and caring society, so that people in disadvantaged positions, such as having financial difficulties, having physically disabilities or having a lower education level, would at least have opportunities for development. There is an English lady whom everyone knows. She is a single mother, but she is also the first writer who earned the first US$1 billion by writing. She is JK ROWLING, the author of the Harry Potter series. Everyone knows that she is a single mother who relied on social security when she wrote her novels. I trust that every society has people who have talents in different areas, and the problem is whether our society can provide essential opportunities for people with different skills to give full play to their abilities and power. I sincerely hope that Hong Kong can do so. Hence, in my amendment, I especially propose to systematically absorb groups with employment difficulties. We are not focusing on relief; these people have their own talents and they can continue to grow so long as our society provides them with the opportunities and there are adequate systems. This will enable Hong Kong to become more diversified in the economic, social and cultural respects, thereby continuing to be (The buzzer sounded) …… a model for Chinese cities.

PRESIDENT (in Cantonese): Mr TANG, your speaking time is up.

MR CHRISTOPHER CHEUNG (in Cantonese): President, this Council debated last week on "Maintaining a business-friendly environment in Hong Kong" and we had a previous debate on "Promoting Hong Kong's economic restructuring". Today, Dr LAM Tai-fai's motion on "Enhancing the overall sustainable competitiveness of Hong Kong" reminds us once again that we should put more energy and attention on social construction and economic development, especially on how to enhance our overall competitiveness. It is the right time to move this motion.

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Dr LAM Tai-fai just pointed out that the International Institute for Management Development in Lausanne, Switzerland published today the 2013 World Competitiveness Yearbook. Hong Kong ranked first for two consecutive years but its ranking has dropped to the third place, the lowest in the past five years. The China Urban Competitiveness Report released earlier by the Chinese Academy of Social Sciences under the State Council also stated that, although Hong Kong has been the city in China with the most comprehensive economic competitiveness for 11 consecutive years, the Chinese Academy of Social Sciences warned that there is a virtualized bubble economy in Hong Kong and our competitive advantage has gradually been eroded.

No wonder a Central leader has remarked, "Like a boat sailing against the current, we must forge ahead or be swept downstream". WANG Guangya, Director of the Hong Kong and Macao Affairs Office, also reminded us again yesterday that, among Asia's Four Little Dragons, Hong Kong was the leader in terms of economic and livelihood development; but there is a tendency that we are now lagging behind. If we do not address the issue, we will be the hare in the race of the hare and the tortoise; and we will be defeated in the race because we are too complacent and conceited.

President, I have pointed out in the last debate that Hong Kong is facing the pressure of competition from all sides. Places like Qianhai in Shenzhen which is closer to us, South Korea and Singapore which are farther away, and even Japan which is in economic doldrums, are committed to seeking a breakthrough and the opportunity of turning over in the aftermath of the financial tsunami, with a view to attracting foreign investment and revitalizing the local economy. These countries are directly or indirectly competing against Hong Kong.

I agree with the point previously made by a number of Members on different occasions that we must avoid the excessive concentration of our economic development in certain industries. I would also like to remind everyone, while it is not bad to destroy the old and establish the new, it is very dangerous to discard the existing economic model while we have yet to find a new route of development. The local financial and securities industries have been making significant contributions to economic development, and I believe the financial and securities industries will continue to serve as the pillars of our economic development.

While we are seeking the route of the overall development of Hong Kong, we must also enhance our position as an international financial centre, which is 12808 LEGISLATIVE COUNCIL ─ 30 May 2013 the reason why I propose this amendment today. I hope Members would not ignore the competitions and difficulties faced by our financial services industry.

To enhance the competitiveness of the financial and securities industries, in addition to weeding through the old to bring forth the new in respect of business scope, the most important thing is that the Government or the regulators should review the excessively harsh regulation at present, so as to avoid stifling the development of the local financial sector. They should also strive to create a fair business environment, in order to provide a level playing field.

The Securities and Futures Ordinance stipulates strict regulation on small and medium securities firms. Even if a slightest error is made, the firms may be denounced by the Securities and Futures Commission (SFC) in minor cases, and the firms may have to pay heavy fines and have their licences revoked in serious cases; and there is no room for making a turn. Concerning liquid capital, small and medium sized securities firms have to comply with overly stringent requirements, which greatly reduce the business capacities of securities firms and indirectly create unfair competition.

President, the Financial Secretary has expressly stated in the Budget that the Government will enhance Hong Kong's position as an international asset management centre. While the financial services industry also wishes to tally with the government policy in this area, the securities firms still have to complete complicated formalities when applying for the asset management licence commonly known as "No. 9 licence". If the Government and the SFC would simplify these procedures and exempt experienced securities firms from meeting some requirements, making it easier for them to obtain the licence, these firms will then have new space for development. Otherwise, even if the securities firms enhance the training of talents in asset management, they cannot attract new businesses, thus giving rise to the situation of "no outlet for professionalism", which is not conducive to the industry at all.

I hope that the Government, the SFC, the Hong Kong Exchanges and Clearing Limited and the Financial Services Development Council would consider the above comments because they will only do good in maintaining Hong Kong's role as an international financial centre.

President, I so submit.

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IR DR LO WAI-KWOK (in Cantonese): President, with the rapid changes in the internal and external economic environment in recent years, our economic development is now at a crossroads. On the one hand, Hong Kong has relied excessively on the financial and real estate industries these few years, and it has relatively ignored the development of other emerging industries. The lack of diversity in economic development undermines the abilities of Hong Kong in withstanding external economic impact. On the other hand, other economies within the region, including Mainland China, Korea and Singapore, have conducted reforms to strengthen their countries. They have proactively taken initiatives in economic and industrial development, and they have achieved remarkable results. Under these waxing and waning circumstances, some competitive advantages of Hong Kong have started to weaken and the overall growth has become relatively slower. Therefore, either the Mainland or international competitiveness reports have lowered the ranking of Hong Kong in terms of competitiveness ranking, which has sounded an alarm.

As a few Members have just mentioned, according to the 2013 World Competitiveness Yearbook recently released by the International Institute for Management Development in Lausanne, Switzerland, Hong Kong's ranking has fallen from the first place last year to the third place now, the United States has promoted from the second to the first while Switzerland ranks second. The Yearbook has been published for 25 years and it has important reference value. While we are proud of Hong Kong for the top ranking and even for the fact that we have been the champion, we are worried about the lower ranking. According to Prof GARELLI, Director of the World Competitiveness Center of the Institute, the most competitive nations' success relies upon export-oriented manufacturing, diversified economies and strong small and medium enterprises (SMEs).

President, the community has reached a consensus about the need for diversified economic development. But this does not mean that we have to deny the contributions of the pillar and traditional industries. As emphasized in my amendment, we must further "consolidate pillar industries, promote emerging industries and revitalize traditional industries", as well as expand existing strengths. In the development of the financial industry, my Honourable colleague, Mr Christopher CHEUNG, from the Business and Professionals Alliance for Hong Kong, has made a number of valuable proposals. Next, I am going to examine how another pillar industry, the trading and logistics industry, can be consolidated. At present, the industry accounts for one fourth of the Gross Domestic Product (GDP), it is the highest among the four pillar industries. 12810 LEGISLATIVE COUNCIL ─ 30 May 2013

Meanwhile, the trading and logistics industry in Hong Kong is moving in the direction of developing high value-added services, and Hong Kong has the conditions for developing into a regional trading and distribution centre for high-value goods. To this end, the SAR Government should take proactive actions in planning and support.

First, it has to allocate land exclusive for the development of logistics facilities. It is mentioned in the Budget that the Government has set aside in Tsing Yi about two hectares of land exclusive for the development of logistics facilities, and the sites will be launched in the market in the first half of this year. The authorities also plan to delineate about 10 hectares of land in Tuen Mun West, to be introduced to the market in phases. Although these plans have responded to some of the industry's demands for land exclusive for the development of logistics facilities, their implementation still requires speedy and detailed planning of various departments.

Second, it has to step up infrastructural planning and comprehensively enhance the external transportation networks of Hong Kong. About sea transport, after the authorities have completed the Strategic Development Plan for Hong Kong Port 2030 and the feasibility studies on the proposal of constructing Container Terminal 10 in Tsing Yi, they should expeditiously make comprehensive long-term plans for port development. As for land transport, with the completion of the construction of the Hong Kong-Zhuhai-Macao Bridge in 2016, the SAR Government should expeditiously provide coupling transport facilities for the section within the territory, so as to form a strategic road network with the western PRD and the surrounding areas. Regarding air traffic, the SAR Government should work with the Airport Authority and complete as soon as possible environmental impact assessment and related planning of the third runway; it should also discuss with the Mainland authorities to co-ordinate and improve airspace resources arrangements for the PRD, to make long-term and strategic development planning for airspace capacity of Hong Kong. I believe that these measures will help consolidate and enhance Hong Kong's position as an international trading and logistics centre.

President, we realize from the experience of other advanced economies that the important measures for economic diversification must include providing support to emerging industries. I have spoken in this Council several times, urging the Government to proactively promote the innovation and technology, environmental protection, cultural and creative industries. Today, I am going to LEGISLATIVE COUNCIL ─ 30 May 2013 12811 make some proposals concerning the testing and certification industry, another industry with clear advantages that has strong development potentials. First of all, I declare that I am a member of the Hong Kong Council for Testing and Certification and Deputy Chairman of the Hong Kong Quality Assurance Agency.

In 2011, there were approximately 600 private independent organizations in the industry, most of them are SMEs and their total business revenue amounted to $10.78 billion. In addition to making direct contributions to our economy, the testing and certification industry also supports the manufacturing, export and other services industries. The Chief Executive has explicitly stated in the 2013 Policy Address that "the Government will focus promotion efforts on six selected industries with potential demand for testing and certification services, namely, Chinese medicine, construction materials, food, jewellery, environmental protection and information and communications technologies". Yet, it is a great pity that the Budget has not correspondingly allocated additional resources, which made the industry players really disappointed.

Indeed, the testing and certification industry in Hong Kong has development advantages, which include a sound accreditation system, higher professional standards, outstanding creditability and intellectual property protection. Hong Kong also has a unique advantage: since the execution of the Supplementary Agreement VII on the CEPA, Mainland China has gradually opened up its market to the testing and certification industry in Hong Kong and the measures include the liberalization of China's compulsory product certification system. Thus, I urge the SAR Government and Mainland authorities to expedite negotiations, so as to optimize the mechanism for the mutual recognition of testing and certification conducted in the two places, and give priority to the development of some items of services related to people's livelihood, such as the testing of food and drugs, and the certification of the safety and functions of consumer products. Furthermore, the Government should assist the industry in promoting the product safety and quality certification mark in Hong Kong. These measures are conducive to the development of Hong Kong as the major testing and certification centre in the region.

President, the SAR Government plays an important role in the revitalization of traditional industries. Hong Kong has accumulated experiences and advantages in traditional industries such as the textiles, clothing and toys industries, and the operators are mainly SMEs. The revitalization of traditional 12812 LEGISLATIVE COUNCIL ─ 30 May 2013 industries is inseparable from the SAR Government's support of the development of SMEs. The Government should assist in the transformation of factories and expand the market. For instance, it should provide substantive support in respect of brand building, product development, marketing and trade fairs. In June last year, the SAR Government launched a $1 billion BUD Fund, which may play a certain role if there is timely review and optimization. The SAR Government should also co-operate with the Trade Development Council and the industry players and jointly promote Brand Hong Kong.

President, to consolidate the pillar industries, promote emerging industries and revitalize traditional industries seem to involve a multitude of matters; but to make things simple, the crucial point is whether the Government can play a proactive promotional role, especially focusing on the formulation and implementation of long-term, comprehensive and diversified industrial policies. In addition, the Government must enhance the education and training of talents, in order to enhance the overall sustainable competitiveness and extend the advantages of Hong Kong. It should also provide people with different academic qualifications, skills and experience with more job opportunities, such that various sectors of the community can share the fruits of economic prosperity, economic development can be achieved, people's livelihood can be improve and social harmony can be promoted.

Hence, I welcome Dr LAM Tai-fai's moving this motion for debate and I implore Honourable colleagues to support my amendment.

President, I so submit.

DR KENNETH CHAN (in Cantonese): President, Dr LAM Tai-fai has provided us with an interesting topic today by suggesting that the accountability team, or the governing team of the SAR, should receive a test on their competitiveness.

However, I have a question for Dr LAM Tai-fai. How can their competitiveness be tested when there is no universal suffrage? How can a small-circle election actually test the competitiveness of the Chief Executive candidate and his governing team? As the sayings go, "beauty is in the eye of the beholder" and "a foul pig head would be appreciated by the god with a bad nose". When the appointment is predetermined in this small-circle election, it is impossible for the governing team formed uncontested to be good.

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As Dr LAM Tai-fai favours free economy and free market, I think he will also favour free election. Some day, he may join us to run in the same one-person-one-vote election, on the same platform and at the same starting line, to test how competitive we are in the eyes of voters, and how well we respond to the public demands in Hong Kong. Therefore, I appeal to Dr LAM to consider supporting my amendment, which calls for the election of the Chief Executive by universal suffrage in 2017 and the abolition of all functional constituencies. As we love competition and freedom, we should not be bound by institutions dominated by vested interests.

President, today, many of us mention the research report of the International Institute for Management Development (IMD) in Lausanne, Switzerland. It compares the competitiveness of cities and countries all over the world on the basis of 300 criteria, over 20 factors and four major indicators. This year, Hong Kong has fallen two places to third in the ranking list. While the fall may have upset some of us, it serves no useful purpose if we just focus on the general ranking. Both Secretary Prof K C CHAN and I are from the academia. In fact, I am happy to have him here today as I do not want to listen to Secretary Gregory SO repeating his same old speech for the third time. I hope Secretary Prof K C CHAN can give us some insights today by employing his expertise as a scholar.

However, the motion moved by Dr LAM Tai-fai today is indeed prompted by the 2013 Blue Book of China Urban Competitiveness issued by the National Academy of Economic Strategy under the Chinese Academy of Social Sciences (CASS). If Honourable colleagues have paid attention to this Report, you will find that it contains some important details. The competitiveness of Hong Kong ranks first in China. According to the IMD's report, our competitiveness ranks third in the world. What are the contents of the report? The CASS made its comparison based on eight indicators which include 68 indexes. I am not going to read them out one by one, so do not panic. Regarding sustainable competitiveness, Hong Kong is among the best in terms of livability, business-friendliness, ecology, knowledge, information, culture, and so on. Yet, we should take heed of our rankings in three areas. As an eco-city, we have lost the first place to the nearby Macao. As a knowledge-based city, Beijing, Shanghai and Shenzhen have outperformed us. As an info-city, we are beaten by Shanghai and Guangzhou. We have failed to take the lead in these three areas, though I think the SAR Government and Honourable colleagues who care about economic development and policies would pay special attention. Besides, 12814 LEGISLATIVE COUNCIL ─ 30 May 2013 while we keep the first position in comprehensive economic competitiveness, we fall to the third place after Taipei and Macao in overall efficiency competitiveness. Regarding overall incremental competitiveness, we rank eighth after Shanghai, Beijing, Guangzhou, Tianjin, Shenzhen, Suzhou and Chongqing.

Just now, Dr LAM Tai-fai reminded us in his speech the areas that we should pay attention to. Have we relied heavily on the financial and real estates sectors? This is an objective fact. The report suggests that Hong Kong should revitalize and reposition itself. It particularly points out that there is no breakthrough in our transformation towards innovation and technology. How can we achieve that? Should the Government give more policy support and make better arrangement in resources allocation? Here, I would like to bring out the importance of institution, a subject matter often mentioned in social science or economics.

I do not think Secretary Prof K C CHAN knows nothing about Institutional Economics. We emphasize the importance of establishing and strengthening institutions because of their strong impacts on regulating behaviours and providing incentives. A healthy institution can ensure fair competition and effective checks and balances. If it is distorted, the result is disastrous. The institution will eventually collapse. By then, everybody, including individuals, enterprises, government, political figures and officials, may turn bad. The cultural values of society may also collapse. While a good institution can bring improvement, a bad institution will make things worse. With a good institution in place, we can have fair and healthy competition. But what if we have an unfair referee in a distorted institution? This referee will favour people with vested interests and turn a blind eye to their wrong-doings. Favouritism will then arise. It is dangerous to have such an institution as it will completely destroy our existing institutions and severely weaken our competitiveness. That is why the researchers highlight the strengths of Hong Kong's institutions in their report.

It is also the reason why I propose in my amendment that we should strengthen our existing institutions, especially those about integrity, the rule of law and freedom. I also suggest establishing an institution to implement democratic election by universal suffrage. Only in this way can we safeguard our core values and strengthen our freedom, rule of law, integrity and democracy.

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President, the recent series of incidents have made Hong Kong people worry. What is more, these incidents have affected worldwide impression on Hong Kong. The case of Timothy TONG reflects that the political culture of the Mainland has penetrated into Hong Kong. It deals a direct blow to the credibility of the Independent Commission Against Corruption, and makes people doubt whether the corrupt-free tradition of Hong Kong has been "Mainlandized" and eroded. In recent years, the Transparency International, a world-recognized organization, has reviewed the situation of Hong Kong in compiling its Corruption Perceptions Index. Unfortunately, our ranking keeps falling, as in the case of the competitiveness indices, imposing great pressure on the community. Moreover, the cases involving people like Franklin LAM and Barry CHEUNG have tarnished our image as an international financial centre.

President, why do we keep repeating that a fair universal suffrage is important for the elections of our Chief Executive, as well as Members of the Executive Council and the Legislative Council? The reason is simple. If we have to carry out reforms, we must have a credible and legitimate government to make things work. If the governing team is in lack of credibility and legitimacy …… of course, it can still keep talking about reforms. But how can reforms be implemented? Can Hong Kong people be pulled together? Can it settle arguments among people with different interests and views? That will be very difficult. Therefore, if we want to maintain our competitiveness, freedom and free market, we must reform our political institution. Only by this can the Government operate smoothly to implement a wide range of necessary reforms.

In order to safeguard the people's right to know and enhance our competitiveness, we must also enact an archives law and legislation on free flow of information. The sooner the legislation is enacted, the better. Market transparency, the right to know and the free flow of market information are keys to enhance competitiveness. In addition, our officials should be accountable. I hope the Government can enhance its accountability to the public through the enactment of an archives law and legislation on free flow of information. Otherwise, we will have to make wild guess or listen to hearsay on many issues. It will be a severe blow to our free market and culture.

Environment and sustainable development are also important. The current-term Government seems to have put much emphasis on its blueprints for the management of municipal solid waste and air quality. Other green policies 12816 LEGISLATIVE COUNCIL ─ 30 May 2013 may also be in the pipeline. Yet, the development of green economy, green industries and green-collar posts are still at an initial stage. While these ideas have been discussed for years, we need a credible and efficient Government to realize them. Recently, the Government has proposed setting aside $10 billion to phase out diesel vehicles; but even a proposal like this has caused controversies and grievances.

President, it is time to talk about education. However, regarding this issue, I cannot help but moan. Right now, our training for teachers is insufficient. The proportion of publicly-funded undergraduate places is low as compared to our competitors. Our university graduates are not interested in joining the academia. How can we motivate our university graduates to fight for their future? It is a difficult task, but this can only be done by the Government. Regrettably, in this Government, a layman is in charge of education. Therefore, it is hard to make any progress. Meanwhile, the supply of international school places is very tense. It hinders us from attracting sufficient foreign talents.

President, I believe in Hong Kong people. I believe in competitiveness. However, if LEUNG's governing team is incapable, they should just step down.

I so submit.

MR WU CHI-WAI (in Cantonese): President, according to the latest Blue Book of China Urban Competitiveness published by the Chinese Academy of Social Sciences (CASS), Hong Kong keeps the top position in competitiveness among Mainland and Taiwan cities, but our speed of growth is slowing down. Our decline in competitiveness is also noted in other rankings of international cities. For example, The Economist pointed out in its 2012 global city ranking list that Hong Kong's economic strength only ranked the 20th, which was inferior to those of Singapore, New York, Tokyo and many cities in China.

However, we are most concerned about the findings by the Transparency International. Its latest Corruption Perceptions Index shows that Hong Kong has, for the first time, scored a rating of less than 80, which is much lower than those of Singapore and the Nordic cities. What does that mean? It means our city is losing its competitiveness. We are gravely concerned if our institutions have become ineffective and hence hindered Hong Kong from making headway.

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I share the view of Dr Kenneth CHAN that our democratic progress is extremely slow. Sometimes, it even stays put and makes no progress. Consequently, our deep-rooted problems in society cannot be resolved. For what I remember, in yesterday's debate, some colleagues commented that a democratic system did not necessarily bring economic success. According to them, many countries have implemented democratic election, but have they attained impressive economic achievement? Nevertheless, they had not mentioned the other side of the coin. In many places …… an autocratic regime can be dangerous and have far-reaching impacts. For example, in North Korea, as the country is ruled by an autocratic regime, its people are not even guaranteed of the rights to life and food.

As for our country, China, it is ruled by a one-party dictatorship but its economy is developing fast. From the CASS report, we learn about the rapid development of Mainland cities. But what is the price for their development? Many hold that it is the green Gross National Product of China. What does that mean? It means those cities may no longer be safe to live. Let us think about the quality of their water and air. In addition, plenty of forests are destroyed in China. Many cities, if not the entire country, are now full of environmental risks. Because of this, crowds of Mainland compatriots flock to Hong Kong for buying stuff like milk powder. All they want is just a safe place.

The above situation is indeed a clear signal to Hong Kong: If we do not safeguard our unique institutions under "one country, two systems", Hong Kong will sink further. Yet, what can we do to save ourselves when the problem has already arisen? We should expeditiously implement the dual universal suffrage as promised. It is a possible solution, and it is better than hiding behind empty talk like an ostrich.

On the other hand, the upholding of integrity, human rights, freedom of press, freedom of speech and autonomy can shape a city's image in the eyes of the world. Just now, I have mentioned that the latest rating given by the Transparency International to Hong Kong is the lowest in the past five years. Is it not an alarming signal? Why do we have this alarming signal? The major reason is certainly the revelation of the corrupt practice of the former Chief Executive who, being the head of the Civil Service, was supposed to be corrupt-free. However, in the past few years, he greedily received over generous hospitality from various tycoons and large consortia. After Chief Executive LEUNG Chun-ying took office, a myriad of problems have emerged. Dr 12818 LEGISLATIVE COUNCIL ─ 30 May 2013

Kenneth CHAN has just mentioned some of them. For instance, Secretary Paul CHAN was found to operate "sub-divided units", and Timothy TONG is now under investigation. Of course, the latter case has nothing to do with LEUNG Chun-ying as Timothy TONG was in office during the era of Donald TSANG. However, these cases will still affect the administration of the entire SAR Government. The latest case which comes under the spotlight involved Barry CHEUNG of the Hong Kong Mercantile Exchange. He is now being investigated by the Independent Commission Against Corruption for suspected irregularities in financial dealings. All these cases have cast a shadow on the trustworthiness of public officers as we are no longer sure if they will perform their duties in public interests and for our better future.

Tai-fai has just made an excellent point. He asked for a review of the competitiveness of our public officers and the governing team. In my opinion, we must do this review regardless of whether we have universal suffrage or not. As universal suffrage has not yet been implemented, we do not have a mechanism to kick out the Chief Executive or any accountability officials. In this case, it is in fact more pressing for the Chief Executive to conduct this review and give the civil servants a fair comment. If even the Civil Service loses its image of being accountable and neutral, the impact will be profound. It took decades for our Civil Service to build an image of efficiency and integrity. Once this image is lost, it can hardly be rebuilt.

Meanwhile, our society is plagued by the widening wealth gap. Well, some may say that the poverty in Hong Kong is relative instead of absolute. I think no one will disagree with this point. But does it mean that we can neglect the problem of relative poverty? Of course not. In a competitive city, everybody deserves a reward or return for his work. People should also have a livable life. When workers have worked day and night, they should be able to make ends meet. This issue is relevant to our next discussion topic, that is, whether the working hours in Hong Kong are too long and whether we should begin to legislate on standard working hours.

We suggest enacting legislation on standard working hours at 44 hours a week, with overtime compensation 1.5 times of the normal pay, so as to balance employees' incomes and working hours and improve their quality of life. According to the Report of the Policy Study on Standard Working Hours, the average working hours of wage earners in Hong Kong are 48 hours per week. In other words, wage earners have to work nine to 10 hours a day. In some LEGISLATIVE COUNCIL ─ 30 May 2013 12819 industries, workers may even have to work for over 50 hours a week. They are usually people from the grassroots in elementary positions. While some may think that the introduction of standard working hours mainly concerns workers engaging in mental work or those who do not have fixed working hours, should we conduct a study to give specific statutory protection to grass-roots workers on working hours so as to ensure them a dignified life?

Besides, we often emphasize that it is important to provide a reasonable, fair and impartial business environment to allow fair competition for small and medium enterprises (SMEs). Here, I would like to repeat my view once again: The Competition Commission (CC) should act like the Audit Commission by looking into whether Policy Bureaux and statutory bodies have taken policy measures to limit competition or hinder SMEs from entering or operating in markets where some market players are protected by policies. If there are policies to deliberately protect individual industries but the CC has not looked into them, how can we ensure SMEs a level playing field?

In my motion amendment, I have also proposed implementing measures to improving air pollution, protecting our country parks, promoting sustainable urban development, and implementing 15-year free education to improve our human resources. All these are measures to be taken by a competitive city. I hope the Government can draw reference from this motion (The buzzer sounded) …… so that the competitiveness of Hong Kong ……

PRESIDENT (in Cantonese): Mr WU, your speaking time is up.

MR WU CHI-WAI (in Cantonese): …… can be enhanced. Thank you, President.

MR CHARLES PETER MOK (in Cantonese): President, today, in the original motion, Dr LAM Tai-fai has quoted the China Urban Competitiveness Reports issued in recent years to point out that the gap between Hong Kong's competitiveness and that of other Mainland cities is continuously getting narrower, with the scale of its economy expected to lag behind those of Mainland major cities such as Beijing, Shanghai, Guangzhou, Shenzhen, and so on, by 2015.

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As the latest report has just come up, I have not yet read it carefully. However, I have learnt some of the figures from the press release and the summary. In my opinion, this report gives similar comments on Hong Kong every year. On the one hand, it says that Hong Kong has certain competitive advantages; on the other hand, it warns that Hong Kong will soon be surpassed by other Mainland cities. As for its conclusion, it often makes us wonder if it is trying to draw Hong Kong closer to the Mainland so that the cross-border integration can be sped up.

According to the latest report, Hong Kong is still the most competitive city in China but "the growth of its competitiveness is slowing down". What does that mean? Actually, I do not quite understand how the growth of competitiveness can slow down. Competitiveness is neither a property price nor a product price. We should mind that the success of Hong Kong ― especially in comparison with Mainland cities ― does not hinge on a blind integration with the Mainland. Instead, it lies in our differences with Mainland cities.

President, I will first give a brief account on our rankings. In the report, Hong Kong does not only rank first in comprehensive economic competitiveness and sustainable competitiveness. It also secures a top position in five out of eight city indices, namely, "cultural city", "urban-rural integrated city", "harmonious city", "business friendly city" and "livable city".

I am going to elaborate on one or two of these city indices. "Urban-rural integrated city" is quite a new term to us. It refers to whether the institutions of a place can promote sustainable development in the process of urbanization. In this report, Hong Kong is commended for its housing policy, social welfare and healthcare system. The report suggests that the Mainland should learn from Hong Kong in these areas. Nevertheless, this comment indeed reminds us of the differences between Hong Kong and the Mainland. As Hong Kong people, we consider that there are problems in connection with these policies, and that is why we have to discuss them here every week. However, Mainlanders think that they are excellent. Does it exactly reflect that we have different standards from Mainlanders? And is it better for Hong Kong not to follow the standards of Mainland cities?

As for "harmonious city", what does it mean by "harmony"? The report points out that Hong Kong is a fair, open and clean society which allows most of its people to move upwards through their own efforts. As a result, it has a strong LEGISLATIVE COUNCIL ─ 30 May 2013 12821 middle class. Meanwhile, Hong Kong's housing policy, free education and new towns are able to meet the demands of different social strata. All these contribute to the harmony of Hong Kong. Yet, this comment seems to be describing our views in 1970s and 1980s. Back then, people only cared about their needs for accommodation, education and food. If all these needs were met, they would think that it was a harmonized society. However, the report has not touched on the facts that Hong Kong people are discontent with the political system and suspect if the police has become a political tool for suppressing social movements and creating white terror in the 21st century. As a matter of fact, we do not often find that Hong Kong is a harmonious place. But, of course, we know Hong Kong is more harmonized than many Mainland cities. On this comparison, I think the problem is that we should not compare Hong Kong with Mainland cities based on their standards. Instead, international standards should be adopted, though the comparison will still be unsatisfactory. These issues must be addressed positively.

President, apart from the China Urban Competitiveness Report, a number of colleagues have cited other international rankings today to serve as a comparison. For example, I have mentioned The Global Competitiveness Report in my amendment and Mr WU Chi-wai has talked about the global city ranking list of The Economist to tell the present situation of Hong Kong. I do not think these rankings are simply alarmist talks as Hong Kong is really declining over the past decade or so after the reunification. We are all clearly aware of the decline.

In my amendment, I have brought up The Global Competitiveness Report of the World Economic Forum. The statistics of this report indicate that the respondents generally opine that Hong Kong is being affected by factors such as insufficient room for innovative development, declining efficiency of government bureaucracy, and inadequate level of education of the workforce, and so on, which hinder Hong Kong's business environment. In view of this, I am going to speak on these three problems today in the hope that we will all face up to them.

First, insufficient room for innovative development. Yesterday morning, I ran into a friend of the industry in a seminar. He asked me how Hong Kong could provide better room for innovative development. After thinking for a while, all I could say was that it required the right environment. How can we create a good environment to facilitate innovation and encourage young people to be innovative? The Government, of course, has a role to play. At least, it 12822 LEGISLATIVE COUNCIL ─ 30 May 2013 should stop focusing solely on finance and real estates in its policies. My friend and I had mentioned some other problems in our chitchat, including the insufficient input in research and development, the over-emphasis on examination in our education policies and the insufficient room for free-thinking.

On industrial policies, I must say that it is always the hope of the industry to set up a technology bureau. However, whenever the Chief Executive comes to the Legislative Council, he always says that it requires Members' co-operation. That is what happened in his last Question and Answer Session when he stood there to answer our questions. Which Legislative Council Member is against the establishment of a technology bureau? Please raise your hands. When I heard the Chief Executive give that answer …… President, at that time, I was not allowed to rise to speak; but I really wanted to say, "Do not provoke a fight. Which one of us here opposes to this proposal?"

Second, declining efficiency of government bureaucracy. No doubt the past success of Hong Kong was built on the efficiency of the Government. It was once very efficient in regulating the business environment and taking all necessary measures. However, after the reunification, the Hong Kong Government seems to have a lower efficiency and becomes increasingly bureaucratic. There are lots of proofs on this point, and we do not have to look back on very old cases. The recent saga of the Marine Department is quite a good, if not excellent, example. On the other hand, integrity is undeniably a core value of Hong Kong. "Our advantage is always the ICAC". Unfortunately, it was revealed that the ICAC Commissioner had spent more than $700,000 on gifts for his guests (particularly Mainland officials). I am afraid this news has created an impression that Hong Kong's competitiveness is further weakened.

Third, inadequate level of education of the workforce. This problem is indeed more obvious. Some Members have repeatedly asked the Government to increase the number of publicly-funded university places. Yet, the Government always responds by adopting delaying tactics. If we compare Hong Kong with other developed countries, we will find that our university cohort participation rate is lagging far behind. Time is a friend of education and training. Regrettably, Hong Kong has to receive 150 Mainland immigrants with One-way Permits (OWPs) every day, even though most of them are old, uneducated and low-skilled. After the reunification, their number has accumulated to more than 700 000 and is close to 800 000. These new immigrants have put heavier burden on our social welfare system. If Hong Kong has to move towards LEGISLATIVE COUNCIL ─ 30 May 2013 12823 knowledge-based economy, we must get back the power to approve OWPs. Otherwise, it will be more and more difficult for Hong Kong to move forward.

President, I am happy to see Dr LAM Tai-fai mention the promotion of democracy in his motion, and I therefore add the point of implementing dual universal suffrage in my amendment. In my view, the business sector is aware that democracy will bring more good than harm. In our discussion over competitiveness, how can we leave out the political system and political factors? Businessmen love political stability. In doing business, they prefer following laws and regulations to relying on personal networks and bribery, because only the former can provide them with a good business environment. I think no one can deny that this practice is crucial to the survival and profitability of businesses. In this case, how can we leave out political reforms in our discussion?

At the end of my speech, I would like to conclude with the China Urban Competitiveness Report. I believe this report will have a stronger recognition if it includes "civic participation" as one of its indices and compares the civic development of various cities. It is because a high degree of civic participation can help a society move forward. It is not appropriate to just focus on the statistics for economic growth. Therefore, I hope "civic participation" will be included as an index some day.

Today, I basically support all of the amendments proposed by my colleagues. However, the proposal of introducing standard working hours across the board, which is in Mr WU Chi-wai's amendment, is a bit too rigid. As this proposal has not yet been consulted, we can only withhold our support for the moment. In addition, if any amendments proposed by other Members are passed, I will have to withdraw my amendment owing to the wording of our amendments. In that case, Members will not have the chance to vote for my amendment. But I hope my colleagues can support me in their hearts. Thank you, President.

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, first of all I have to thank Dr LAM Tai-fai for moving this motion today, and I am also happy to speak on behalf of the Commerce and Economic Development Bureau in this debate.

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The motion today covers a wide-range of areas. Apart from economic development, land and education are also involved. Today, a number of Members have mentioned in their speeches the ranking list contained in the World Competitiveness Yearbook, released by the International Institute for Management Development (IMD) in Lausanne, Switzerland, today. I agree with Dr Kenneth CHAN that we should analyse the factors behind any ranking. For most of the time, dozens of factors are involved. We must first understand such factors before we can truly analyse the competitiveness of Hong Kong and of our competitors. Even if we rank first, we cannot be complacent but should look into the reasons why we can take the lead. If we lag behind, we have to analyse the reasons for our underperformance. Therefore, an analysis of the factors behind the ranking will give us a better understanding to today's motion.

Now, I am going to illustrate why Hong Kong falls from first to third in the IMD's ranking announced today. Our analysis indicates that the poor performance of Hong Kong's domestic economy in the year is the major cause. Last year, the economic growth of Hong Kong has slowed down. According to our understanding and assessment, the reasons for a slower growth is due to the decreasing external aggregate demand, as the overall economic development of Asia has weakened, Hong Kong has also been affected. Therefore, Hong Kong is not the only place in Asia which suffers a lower ranking owing to a poor domestic economy. For other economies like Singapore and Taiwan, they have dropped from the fourth place to fifth, and from seventh to 11th, respectively. While our brief analysis has identified that economic performance is one of the reasons for our lower ranking, it does not mean that we do not have to go further and explore the reasons why our economic performance declines during the year. We will analyse this issue later.

Regarding the IMD's ranking, Hong Kong still gets high recognition in some areas. We should also pay attention to these areas, so as to learn about our competitive edges. In respect of international trade and international investment, Hong Kong comes first and second in global rankings. As regards government efficiency, particularly financial policies, Hong Kong ranks third in the world. In terms of business regulation, Hong Kong ranks first. As for technological infrastructure, Hong Kong also ranks first. It means Hong Kong still takes the lead in some rankings.

All in all, Hong Kong is still quite competitive as compared to other economies. In particular, we are open to international trade and investment; we LEGISLATIVE COUNCIL ─ 30 May 2013 12825 implement business-friendly policies; and we provide effective infrastructures. All these are our competitive edges.

However, as stated just now, we will not be complacent about our rankings. We will examine why our ranking drops this year. Will the sluggish economic development last for a short period of time or a long period of time? Does Hong Kong have a weakened ability to face up to adversity, such that we cannot improve our domestic economic performance when external economy is gloomy? All these questions are worthy of in-depth consideration. Of course, we think Hong Kong is quite competent to deal with adversity. Since the outbreak of SARS, we have weathered through a number of hard times. It proves that we are outstanding in economic performance. For a small and open economy like Hong Kong, our economic performance will inevitably be affected by external fluctuations. However, we will continue to study how we can strengthen the ability of our economy to face up to adversity.

In discussing how to strengthen our ability to face up to adversity, we tend to say that our economy needs to have new bright spots and new industries. It is certainly a good idea. But how can we identify these new bright spots and industries? Should Hong Kong identify new industries by referring to our edge? We must think about these questions. This year, some countries have got a higher ranking. One of them is Switzerland. Its success merits attention. Switzerland has optimized its edge to promote small economies like education and technology, and hence brought itself a higher ranking. I think we may learn from its experiences.

Competitiveness is not only relevant to industrial policies. It is also related to population policy, land policy, education policy, and the creation of room for innovation as stated by Mr MOK. If we wish to develop new industries, the key always lies in enhancing the competitiveness of our population. It is to bring innovation to the technology and education in Hong Kong so that we can have our own advantages in the open and highly competitive global market.

Today, I will keep my opening speech short as I would like to spend more time listening to Members' views. I will give a brief conclusion here. Hong Kong is a major trading, business and financial centre. Our present status is contributed by a number of factors, such as a market-led economy, free flow of goods, capital and information, sound rule of law, protection of intellectual property, a stable financial regulatory framework, excellent basic infrastructures, 12826 LEGISLATIVE COUNCIL ─ 30 May 2013 abundant supply of talents with technical and management knowledge, as well as world-class professional services. These are the advantages and competitive edges of Hong Kong's institutions. With these advantages and the spirit of self-strengthening, we have been able to respond to and grasp the ever-changing global and regional economic environment over the years, thereby enabling our pillar industries to sustain a rapid development and our emerging industries to grow.

We understand that amid fierce global competition, Hong Kong must sustain our growth and grasp every opportunity to stay competitive in the long run. Therefore, we must continue to consolidate our existing strengths and look out for new growth areas by, say, deepening and expanding our industries, such that Hong Kong's industries can move up the value-added chain and further develop. We are fully aware that it is not easy for Hong Kong's economy to gain its existing advantages. The Government therefore has to stay alert to potential risks, remain appropriately proactive and enhance the competitiveness of Hong Kong with foresight. The Government has taken measures in different areas to promote economic development, and consolidate and strengthen our existing competitive advantages. We are also reviewing our long-term development strategies and industrial policies to ensure our economic development can sustain.

Dr LAM Tai-fai has mentioned the improvement of people's livelihood and the promotion of democracy in his motion. In fact, people's livelihood is closely related to economic development. There is a strong interaction between them. As emphasized by the Chief Executive earlier, the Government attaches a great deal of importance to economic development because only sustained economic growth at a relatively high pace can give us sufficient strength to resolve the deep-rooted problems that have amassed in society over time, such as the problems relating to housing, poverty and upward mobility of young people.

This is why the Government has stated in the Budget just delivered that the objectives of promoting long-term economic development are to expand the scale of Hong Kong's economy, promote the holistic development of our society and create more business and job opportunities so that our people can realize their aspirations and improve their living standards.

President, I wish to continue to listen to Members' views on the motion and then respond in detail later. Thank you, President.

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MR KENNETH LEUNG (in Cantonese): President, Dr LAM Tai-fai's motion is based on the findings of the China Urban Competitiveness Report. While this report has given Hong Kong the top rank for 11 consecutive years, it points out the various problems facing Hong Kong, including the high reliance on the financial and real estate sectors economically, the shortage of land and housing supply, the excessive hikes in property prices and shop rentals, and the intense speculation atmosphere in society. These problems have virtualized and bubblized our economy, hindered the development of small and medium enterprises (SMEs) and increased the living pressure of the general public.

In fact, all these problems listed in the report have existed for a long time. Whenever an international organization announces its survey results, people tend to focus on whether Hong Kong will be surpassed by other cities in economic development. However, instead of worrying about Hong Kong losing its competitiveness, is it better to calm down and think about the factors that have contributed to the present status and success of Hong Kong? Mr CHAN King-cheung, Deputy Publisher of the Hong Kong Economic Journal, has recently written an article. Please allow me to quote a few lines from it. He said, "Hong Kong is a Special Administrative Region. Many of our institutions are different from those in the Mainland. Therefore, a direct comparison is quite impossible as some indicators cannot reflect the differences between Hong Kong and other Mainland cities. And, obviously, these 'differences' are the characteristics which give Hong Kong some different 'selling points' as compared to Mainland cities. It is just unreasonable to judge the merits and demerits of these differences."

As a matter of fact, when we compare Hong Kong to other Mainland cities, Hong Kong indeed holds a safe lead in "soft indicators", such as freedom, the rule of law, integrity, transparency and good governance, other than the eight "hard indicators" adopted in the aforesaid competitiveness report. But, of course, as remarked in the report, cities which rank second, third or fourth, such as Shenzhen and Beijing, are getting closer to Hong Kong in terms of overall competitiveness. Sooner or later, we will be outrun by these cities in economic development. However, size is not a dominating factor in judging the soundness of an economy. In discussing soft strengths, we must not overlook our rule of law, freedom and integrity. These strengths were hard-earned and have become part of our political and economic institutions. If we do not safeguard them, our competitive edge will soon disappear.

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President, in my view, the best way to safeguard the above soft strengths is to establish a genuine democratic institution in Hong Kong to check and balance the power of the Government. If we only seek to obtain a higher ranking in competitiveness, we may easily get lost. Notwithstanding this, we should enhance the overall competitiveness of Hong Kong by starting from some basic economics concepts. President, I have mentioned these concepts time and again in this Chamber. They are the key elements in production, which include land, manpower, capital and entrepreneurship.

First of all, I would like to talk about the relationship between land and the competitiveness of Hong Kong. Here is a simple figure: Between 2005 and 2012, the rents of Hong Kong's private commercial buildings had increased by 95.2%. We must not overlook the chain effects so caused. Because of the rent hikes, Hong Kong's business environment is getting worse; the threshold for starting a business has been lifted to an extremely high level; the profits of start-ups have very much been offset by rent increases; and it is increasingly difficult for SMEs to operate as their rent affordability is low. For owners of commercial premises, many of them have given up their own businesses and leased their vacated premises to make profits. If every owner in Hong Kong does the same thing, entrepreneurship and business sense, of which we used to think highly, will extinct. We cannot afford to miss this point, and must increase land supply to make up for the lack of commercial premises.

Secondly, I have to talk about the mismatch of manpower. When we look at another index, we will know that our education is not popular enough. In terms of university cohort participation rate, Hong Kong lags far behind other developed economies. In respect of science research, the resources input and training are insufficient. At present, our expenditure on public education represents some 4% of the Gross Domestic Product of Hong Kong. This percentage is much less than the average percentage of 5.4% in other developed countries. Education is a key investment in society. In a time of economic, social and cultural globalization, Hong Kong has to face competition from all over the world. If we have to maintain our edge in this international competition, we must train a sufficient number of high-quality and competitive talents. To be honest, for a small city like Hong Kong, we have actually got quite a number of high-quality tertiary institutions. Yet, our education system is often criticized for having an exceptionally low percentage of local students in many of our postgraduate programmes. Therefore, we must optimize the use of our existing resources to train more local talents.

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In discussing how to enhance the competitiveness of Hong Kong, if we want to maintain the role of economic and financial centre in the long run, we must bear in mind the importance of maintaining a free market to allow businesses to operate freely on a level playing field. Meanwhile, there should not be high thresholds to bar people from entering the market by starting up their own businesses. Otherwise, it will be useless to introduce more supporting policies for SMEs.

I so submit.

MR JEFFREY LAM (in Cantonese): President, the motion I moved last week on "Maintaining a business-friendly environment in Hong Kong" was passed, and today we once again discuss how the competitiveness of Hong Kong can be enhanced. ZHANG Dejiang, Chairman of the National People's Congress reminded us earlier that Hong Kong was losing some of its strengths. Hong Kong has fallen from the top to third place on the competitiveness ranking list of the World Competitiveness Yearbook 2013, recently published by the International Institute for Management Development, Lausanne, Switzerland. We must face up to this issue squarely, hold more discussions and put forward practical advices which are conducive to Hong Kong's economy.

Under the trend of globalization, the global environment has changed rapidly, all top talents would choose to work for global firms. Cities like Hong Kong, Tokyo and Singapore used to house the largest number of global firms in the Asia Pacific region, but now more and more global firms have set up offices in Shanghai; and other cities in the region have also tried to catch up by exhausting every possible means to attract multinational companies to do business and set up offices in their cities. Coupled with the current "urban agglomeration" concept, a number of our neighbouring cities have linked up to enhance their scale of economies and overall strength, as well as increase their competitiveness. With Hong Kong losing its advantages and other places catching up, it is no longer a place where everyone strives to come and do businesses. Hong Kong will be facing greater and greater challenges in maintaining its leading position and enhancing its competitiveness.

In addition to high rents and high salaries, Hong Kong has to face changes in social atmosphere and political environment in recent years, which have an impact on its competitiveness. Due to the limited land supply in Hong Kong, residential housing, office and shop premises are in short supply. However, not 12830 LEGISLATIVE COUNCIL ─ 30 May 2013 only are the people against reclamation, but the authorities have also encountered a lot of difficulties in new town developments and there is also not enough manpower for development projects. The Government has been subjected to severe criticisms even at any mention of discussing a temporary relaxation of the importation of foreign labour. Does it mean that we should only rely on the harsh measures to solve the problem of high property prices and rents? In fact, what we need is to develop new land as soon as possible. Otherwise, Hong Kong as a whole will remain at a standstill, then how can we enhance our competitiveness?

Some people of Hong Kong find faults with everything, they only make criticisms and forbid others to take actions, without coming up with any practical and effective solution. I believe that most Hong Kong people do not accept this complacent and conservative attitude. Though we do not strive to come first in everything, the reality is "he who lags behind will suffer blows". As an externally-oriented economy, Hong Kong has to compete with other places if it wants to do business with the world.

Take the construction of the third runway at the Hong Kong Airport as an example, some people are of the opinion that it will aggravate the pollution problem and the reclamation works will adversely affect our ecology, and thus find the proposal unacceptable even when the authorities have talked to them sincerely. I certainly respect the values of all individuals and everyone can have different positions. However, I cannot bear to think that the airports in our neighbouring regions have undertaken extension works one after another. The Shenzhen Airport aims to become a world-class airport, and the construction of its third runway will be completed in a few years. The Guangzhou Baiyun Airport will have its third runway serviceable next year, it aims to have a total of five runways, and hopes to catch up with Hong Kong by 2015 with a total of 130 international flight routes. In Hong Kong, we still have only two runways, the capacity of which capacities are expected to become saturated in 2017.

The construction of more airport runways will offer airlines with more choices in taking-off and landing times, and thus attracts more air routes and destinations and improves the access network. Travellers will continue to use their services if they find them convenient. By then, I believe that it will be very difficult to ask airlines and travellers to use the services of the Hong Kong Airport. We really should not take the matter lightly in face of intense competitions.

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President, a momentary glamour does not last forever. Many prosperous cities of the world had declined when they failed to keep up with the changing times and competitions from other places. Take Detroit, the "automobile capital" of the United States as an example. In the 1930s of the last century, Detroit was gloriously hailed as "Paris of the West" in view of its rapid development in the shipping and production industries. However, the petroleum crisis had led to a drastic decrease in car sales and factory lay-offs, and as a result, the city had lost over 60% of its population within a period of 50 years. With the closing down of enterprises and decreasing job opportunities, the Government, without the support of a strong economy, has to cut various benefits such as healthcare, housing and social welfare, which affect the livelihood of every member of the public. As more people get unemployed and suffer from hardship, the social atmosphere and state of law and order have deteriorated. Today, Detroit has lost all its previous glories, its government has gone bankrupt and the local economy is sluggish, it is even known as the "most miserable city of the United States". Hence, we can see that the changes can be drastic.

In the United Kingdom, Manchester and Liverpool were once very prosperous. Manchester was the pioneer city during the industrial revolution, renowned as the world's factory, while Liverpool was a trading city with a trade volume which accounted for 40% of the total world trade. The first passenger railway of the world had run from Manchester to Liverpool. These two former metropolises, with strong economic strengths back then, could not withstand the changing world economic trend and gradually declined under fierce competitions. At present, what would people think of these two cities? I believe people can only think of the two football teams of Manchester and Liverpool.

I hope we can learn a lesson from the failure of others, make a clear assessment of the current situation, put aside our complacent and conservative attitudes, draw on all useful opinions, seek common ground while reserving differences, strive to promote social progress and enhance the overall competitiveness of Hong Kong, so as to allow the fruits of our economic development to benefit every Hong Kong citizen.

President, I so submit.

MR ANDREW LEUNG (in Cantonese): President, I am not going to elaborate on the reports of the International Institute for Management Development, 12832 LEGISLATIVE COUNCIL ─ 30 May 2013

Lausanne, Switzerland and the Chinese Academy of Social Sciences for colleagues have expressed many views on this subject. It has been pointed out in the reports that Hong Kong has been losing its competitive advantages rapidly and everyone can see that instead of making any progress, we have fallen behind in terms of competitiveness. In fact, the relevant reports of recent years had all pointed out that other cities have caught up with Hong Kong in terms of competitiveness. In face of rising competitions from our neighbouring cities, the authorities have to play to our strengths, and enhance the overall competitiveness of Hong Kong by means of long-term policies. Ir Dr LO Wai-kwok and Mr Christopher CHEUNG have moved amendments and spoken on the industrial and financial industries, I will now focus on the issues of infrastructure, policies and talents.

President, at one time, the completion rate of Hong Kong's infrastructure projects had ranked among the highest in the world. However, today, it can only be described in one word "slow". The relationship between infrastructures and the economy are inseparable and I would like to illustrate this with the example of exhibition infrastructure facilities. Many Hong Kong exhibitors are of the opinion that the Hong Kong Convention and Exhibition Centre (HKCEC) is very important for many manufacturers have received more than half of their orders for the whole year at exhibitions. As Hong Kong enjoys the geographical advantage of its proximity to the Pearl River Delta cities, it has an ideal trading platform of "attending the exhibition in the morning and touring the plant in the afternoon". However, the industry has been plagued by the problem of shortage of exhibition venues for many years, and the problem is still not solved upon the completion of the HKCEC atrium extension works. As our neighbouring places have substantially increased the exhibition venues, many exhibition projects have abandoned Hong Kong a long time ago.

According to the information of the Hong Kong Trade Development Council, more than 10 exhibitions could not be held in Hong Kong due to the shortage of exhibition venues. As certain major international conferences or exhibitions cannot be held in Hong Kong or cannot be held in a larger scale, it is difficult for HKCEC to get to the level of major international exhibitions. Not only will this hinder the long-term development of the Hong Kong exhibition industry and weaken the ability of enterprises in exploring and developing business opportunities, but it will also have a negative impact on our supporting hotel, catering and tourist service industries, as well as the employment situation and overall economic development of Hong Kong.

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Apart from exhibition facilities, the development of other infrastructures of Hong Kong has also lagged far behind. Mr Jeffrey LAM mentioned earlier that the construction of the third runway in Hong Kong has failed to be implemented for many years. It has been more than 10 years since the reunification, but the construction of container terminal 10 is still empty talks. We will soon be overtaken by our neighbouring areas like Shenzhen, Guangzhou and Macao if we do not continue to develop. Moreover, it is not sufficient to have Central as the only central business district (CBD) in Hong Kong. I am very happy to learn that the Government is considering to establishing another CBD in Kowloon East. However, it is a pity that the authorities do not have any specific policy for encouraging landowners to convert the use of their land, and thus the progress is slow. We should examine our existing policy to see how to provide incentive to landowners for their speedy co-operation and support. Furthermore, we have also failed to conduct reviews on the existing industrial estates and the policy on the use of industrial sites. As such, how can there be sufficient land for building the fourth industrial estate, so as to attract high value-added emerging industries to come and develop in Hong Kong? As the construction of large infrastructure projects takes 10 years to complete and the opportunities for others to invest in Hong Kong are fleeting, I hope that the authorities will seize the opportunity.

On the issue of government policy, the authorities have always been indecisive in formulating policies to promote economic development. However, there are numerous policies which hinder our economic development, such as the recently introduced order to restrict the export of powdered formula, buyer's stamp duty and ad valorem stamp duty, and such policies are implemented immediately. I hope the Government would carefully assess the serious adverse impact of such policies on the business sector and foreign investors.

Currently, the global industry, in particular in the Asian region, is moving towards the direction of a knowledge-based industry. However, Hong Kong's research expenditure, as a percentage of our Gross Domestic Product (GDP), is lower than that of Japan, Korea, Singapore and the Mainland. The authorities' lack of support for research projects and systems has dampened the enterprises' interests on scientific researches. President, at this stage, I believe you would know that I am now going to mention, once again how to introduce threefold increase in tax deductions for research and development, design and brand building.

The Federation of Hong Kong Industries has always stressed that Hong Kong needs industries and its economy should not only rely on service industries, 12834 LEGISLATIVE COUNCIL ─ 30 May 2013 such as financial services and tourism. As Hong Kong industries need to be developed in the high value-added direction, and enterprises should be attracted to invest resources on research, development and design, the best and most effective way is to offer tax deductions. Without requiring any subsidy from public funds, enterprises can obtain concessions through their own profits, for they can only enjoy tax deductions when it has made a profit, and we are not using funds from taxpayers to subsidize enterprises which suffer losses in their business. We must develop towards the direction of a high value-added "creative Hong Kong".

Finally, I would like to talk about talent training. With the globalization of the world economy, our local business sector is now facing increasingly fierce competitions. If Hong Kong were to stand out, we should strengthen our talent training and enhance the level of employees' knowledge through lifelong learning.

Our education policy must meet the needs of the development of the modern knowledge-based society, enhance the training of research and development personnel with suitable on-the-job training, so that graduates can join the labour market upon graduation to promote research development in Hong Kong. At the same time, in order to attract talents, there is also a need to have other support measures in place, such as how to improve our air quality, increase the number of international school places, in the hope of attracting talents and creating a clustering effect, so as to develop Hong Kong into a regional research centre.

Many young people of Hong Kong have a high level of creativity and good knowledge of information technology, the Youth Business Start-up Park can offer them with more resources, as well as provide them with business start-up funds through "the Angel Fund", so as to help young people realize their dreams and give new impetus to the Hong Kong economy.

President, it is an undeniable fact that the gap between Hong Kong and other Mainland cities are becoming narrower. However, this does not mean that we have lost our advantages. If the authorities can seize the opportunity of the economic development of the Mainland in the coming years, and introduce more relevant measures on supporting diversified industries, Hong Kong can still maintain sustainable economic development. The authorities should also formulate a long-term policy blueprint on Hong Kong's future economic development, implement policies on emerging business, long-term population LEGISLATIVE COUNCIL ─ 30 May 2013 12835 planning and talent development, so as to lay down a sound foundation for the present and future of Hong Kong, and prevent us from being overtaken by our neighbouring countries or places in the coming 10 to 20 years.

MR TOMMY CHEUNG (in Cantonese): President, I spoke at great length on the difficulties faced by the catering industry at last week's debate on "Maintaining a business-friendly environment in Hong Kong", but the speaking time of seven minutes was inadequate and I am given another opportunity today to continue with my scolding. Last week, some colleagues said they had heard the same stuff over and over again, and as a matter of fact, I am still talking about the same stuff today. Unfortunately, as the Government has repeatedly turned a deaf ear to what I said and refused to do anything, I have to continue with my lashing, or to compete against the authorities in "longevity" and "long-windedness"

In fact, what has the Government done in recent years apart from "attacking" our industry? Yesterday, KO Wing-man, Secretary for Food and Health and the Panel on Food Safety and Environmental Hygiene of this Council went to public markets for site inspection, and everyone could see that on a hot day ― in fact, it was not that hot yesterday ― I nearly had to ask someone to revive me by means of artificial respiration as there was no air-conditioning at the markets, so how can those traders compete with chain stores of supermarkets?

The Food and Environmental Hygiene Department (FEHD) has done nothing apart from increasing rents. It often said that it has to get the approval of others before air-conditioning can be installed. I have fought for this for a long time and have asked the authorities for additional resources to support traders, but they have always turned a deaf ear. However, when The Ombudsman vigorously attacked food premises for obstructing the streets in its report earlier this month, the FEHD responded immediately and said that it would gradually introduce more stringent measures. After that, my office has been receiving calls for seeking redress and help from members of the industry.

I am not saying that street obstruction is without fault, but the crux of the problem is, open-air cafes can be found in all places around the world, but after fighting for so many years, we only have open-air cafes in 2003, and so far, only eight to 10 of these applications have been approved, and the number has become less and less. In fact, the demand for open-air cafes is so great and only a small 12836 LEGISLATIVE COUNCIL ─ 30 May 2013 number of applications are approved each year. The Ombudsman has treated the matter lightly and failed to prescribe the right remedy in its recommendation. It only said that the FEHD should make suggestions to the District Councils on places which are suitable for operating open-air cafes. Honestly, I have doubts on whether such proposals can be put into practice for I fail to see which District Council Member will have the guts to disregard residents' votes and dare to offend them for the sake of open-air cafes.

The fact is, District Councils have constantly tilted in favour of residents' interests in recent years and thus lead to imbalances in other areas of development, and this is especially true for the business environment. The processing and approval of liquor license applications is even worse for more and more stringent restrictions have been laid down by the Liquor Licensing Board. There are cases where food premises are asked to stop selling liquor at 10 pm and are not allowed to play music even when the premises are soundproofed, so as to prevent residents in the opposite buildings from being disturbed by noises from the premises in the event that their doors should be opened, but this is only a "possibility".

Upstairs bars have also been constantly cracked down upon, but why? The high land prices of the Hong Kong Special Administrative Region (SAR) Government has resulted in soaring street-level shop rents, so members of the bar industry are forced to move their operations upstairs. However, now the Government said that the processing and approval of liquor license applications for upstairs bars will be subject to further restrictions. At this moment, 10-odd to 20 people are attending a meeting at my office to discuss the report, and their conditions are worse than dead. Under such circumstances, I would like to ask how they can operate their businesses.

The licensing mechanism for open-air cafes and liquor are similar in that residents of the neighbourhood have to be consulted, but as no digital standards have been laid down, residents will still get a large degree of respect and favourable treatment even if dissenting voices are only very few in number. I appreciate that residents' views should be respected, but the problem is I cannot see any way out for the industry in face of increasing resistance from District Councils. Moreover, very often, the relevant administrative authorities will not take the initiative to mediate on their behalf and consider that it would be best for applicants to withdraw their applications. As such, many open-air cafes have withdrawn their applications in order to patch up the quarrel. But, when the LEGISLATIVE COUNCIL ─ 30 May 2013 12837 authorities receive any complaints, they will make a big fuss and threaten to arrest and lock people up.

President, you must be aware that I have been launching severe criticisms at Matthew CHEUNG, Secretary for Labour and Welfare for a long time. He has failed to properly assess the impact of minimum wages on business operations before its introduction. Furthermore, he said that its impact has been kept to a minimum without taking into account the ripple effect of the rate of capital increase and excuse himself by saying that it is impossible to make an estimate. However, I do not know why our survey can be so accurate and we can work out the figures.

Even the Administrative Officer who has always been known as very professional has fallen into enemy hands and followed the lead of accountabilty officers in reporting figures selectively and presenting a fake picture in order to defend the Government, and trying to allow policies which please the public but have far-reaching damaging consequences to muddle through. In fact, what I have said has only reflected one fact, and that is, everyone, from the Chief Executive at the very top, officers under the accountability system to various administrative organizations and District Councils, do not have "backbones" and "tend to lean towards the powerful and move towards populism". Both the previous and present Government have been duly influenced by Bill CLINTON and have placed securing public opinions and recognition above everything, and have even gone as far as to say that District Councils should be given powers, and thus resulted in having gardens everywhere but no place for garbage bins.

The business environment of Hong Kong has seriously deteriorated. Small and medium enterprises (SMEs) and micro enterprises are in dire straits, but I am afraid that we have not seen the worse for the worse is yet to come. It is said that standard working hours have to be established, and the number of leave days for the newly introduced parental leave and statutory holidays should be increased; furthermore the premium for labour insurance has increased many-folds, thus making it unaffordable for SMEs which would like to take out insurance. This has the same effect of gradually "phasing out" SMEs, restaurants in particular.

Today, the latest news is the report of the International Institute for Management Development, Lausanne, Switzerland. A number of colleagues 12838 LEGISLATIVE COUNCIL ─ 30 May 2013 have not spoken earlier because they heard the Secretary said that we should not be complacent even if we had ranked first. However, the way I see it is that we should congratulate Hong Kong on falling to the third place, for we may fall to the last three in future or even fail to remain on the list at a later date. Are the authorities aware of the seriousness of the problem? I am really a bit worried. Are there any problems with the existing opinion collection mechanism and channels of the Government? Where are the business sector representatives of the Executive Council or those of the Legislative Council? I cannot see these Members in the Chamber. Have they reflected the problems of SMEs and micro enterprises at the Executive Council on behalf of our SMEs? I do not mind that the representatives of trade unions have not mentioned our problems at the Executive Council, but have the representatives of our chambers of commerce spoken at the Executive Council?

A colleague has mentioned that the recent "powdered formula restriction order", and SSD, BSD and DSD duties, which were introduced for the purpose of curbing property speculations, have also adversely affected our SMEs and micro-enterprises. Today, I have been presented with a case where the person in question has to pay an additional 4.25% in stamp duty when he tried to purchase an office premises, and what is the reason for this? How can our SMEs and micro-enterprises be able to operate? How can property prices be curbed? At a time like this, I think it is really not too bad to have to rely on the rubber stamps, but I think that the Government might as well allocate more resources to the Efficiency Unit and the Economic Analysis and Business Facilitation Unit. I have worked with these two organizations in recent years and find that they can really do their job. As such, I hope that the Government can provide more resources to the Business Facilitation Advisory Committee under the two organizations, so as to enhance its influence, and allow it to conduct in-depth analysis and research on certain legislation and policies which may affect the business environment, in order to offer practical and useful suggestions to relevant departments. I advise the authorities to set things right by being realistic instead of just looking at public opinions; otherwise, the Government will only need to rely on pollsters for policy decisions making.

Thank you, President.

MS CLAUDIA MO (in Cantonese): President, speaking of the competitiveness of Hong Kong, we should certainly distinguish between hardware and software. LEGISLATIVE COUNCIL ─ 30 May 2013 12839

I fully agree with the proposal made by Dr LAM Tai-fai on education when he spoke on the original motion. He pointed out that we need a large number of diversified talents and should support poor students. After all, Hong Kong should still maintain its position as a cosmopolitan. If we were to continue to become internationalized, we must become a bilingual city where both Chinese and English are similarly popular.

English is not only the language of the United Kingdom, but also the language of the world and that for business communications. I believe that Mr Tommy CHEUNG must agree with this and you will not suddenly conduct business in French. We are still doing business with the Japanese in English.

I recently attended a major student concert entitled "Hong Kong Dream", sponsored by Rev. CHU Yiu-ming. For many years in the past, Mr SZETO Wah had been the guest of honour of this concert, and secondary students were invited to perform Rap songs this year. Though I do not know how to make a demonstration, I was shocked by one of the lyrics. The students sang and rapped that: "the English subject is most unbearable". I believe that some people may think that this is only a platitude, as we had also made similar remarks.

However, it is a commonly known fact that the teaching of English has completely failed in Hong Kong. Over the past 10 years, I have visited …… not visited, I should say given talks to …… students of several hundred of primary and secondary schools through the Hong Kong Professional Teachers' Union. If you tell teachers, principals or even students that English is the most tedious and hardest subject to learn, they will all agree for English is a foreign language which they think has nothing at all to do with their daily lives. We are now using the approach of mathematical formulas to teach English ― it is a regret that no representative from the Education Bureau, not to mention the Secretary, has attended our meeting today ― the more students recite, the more remarkable their English will be, at least their examination results must definitely be good. Therefore, in order to maintain the reputation of their schools, teachers will certainly train students to cope with the Territory-wide System Assessment (TSA), and their only intention is to let students achieve good results.

I heard that a former Secretary for Education once said, in his visit to a school run by the charitable organization, Caritas, "students of this school have very low marks in public exams", which implied "how will they live up to the 12840 LEGISLATIVE COUNCIL ─ 30 May 2013 expectations of their elders". Though the school did not disguise itself as an elite school, we should ultimately focus our attention at students. If their scores for other subjects are acceptable, and only that for English are poor, then what consequences will this have on Hong Kong's overall competitiveness in future?

English grammar alone is already rather intimidating. President, if I casually ask someone what is the Chinese term and meaning of intransitive verb, any adult will be at a loss how to reply. The Chinese term for intransitive verb is "不及物詞". One will not know how to translate the term offhand …… it is "不及物動詞". Awesome! The President knows the answer to the question and I am quite startled to hear it all of a sudden. Students told me that it is inadequate for them just to understand English grammar, but they also need to go through tests and examinations, and have to treat it like mathematical formulas and adopt the approach of rote learning. This is very miserable and they have lost all interests in learning English.

The biggest driving force for learning languages is interest. If grammars are taught in a rigid manner and students are required to take tests and examinations, they will become very puzzled; and if teachers teach difficult vocabularies in the same manner, students will feel that they are just devouring English without understanding. For example, when teachers only say that "A for arsenal" when they teach the word "arsenal", students will not understand why they have to recite that. Even if they can memorize it now, they may forget it next year. I am not blaming the teachers for they are only following the syllabus of the Education Bureau and teach what is required. You could not blame teachers and principals, and parents will only be at a loss what to do. As a result, the whole education system is distorted.

Children of rich families attend overseas boarding schools when they are 13 years old, and become "little foreigners" on their return to Hong Kong; the not-so-rich families send their children to Hong Kong international schools to receive westernized education, or do the next best thing by enrolling their children at schools under the Direct Subsidy Scheme (DSS schools). DSS school is the biggest "wound" in the existing system and something which is completely incomprehensible. Why does a school have to become a DSS school for no good reason at all? In order to be converted into a DSS school, a school has to revamp its management and accounting procedures, and I would like to ask how can the schools find time to deal with this? They have only done so to free themselves from the "evil clutches" of the Education Bureau.

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President, I have seen many overseas university students who can basically express their views in Putonghua comfortably ― they have learned Putonghua, after studying Chinese for two, three or four years at most at universities, when they come to Hong Kong. University students of Hong Kong have started to learn English since the age of two, so how come they still find it difficult to speak English after their graduation? I really hope that the Education Bureau will try to make a comeback attempt at teaching English, so as to allow us to maintain our status as a cosmopolitan. Thank you.

DR ELIZABETH QUAT (in Cantonese): President, Hong Kong's edges in development, especially as compared to the Mainland, has always been its rule of law, highly efficient professional services, quality assurance standards, integration of international cultures and foreign language abilities. However, Hong Kong's advantages in these areas have continuously become narrower in recent years. Speaking of competitiveness, the Secretary said that Hong Kong still has the edge. It is true that we still have the edge, but we are losing it gradually, so which are the areas that Hong Kong has got beaten?

In my view, Hong Kong has not been beaten by others but by itself.

Hong Kong has been beaten by the absence of a strategic blueprint on development. It has come to a standstill over the years and continued to rest on its laurels. It has only attached importance to financial services and real estate industries, and has not developed diversified industries, and thus, it has fallen behind for failing to make progress. Hong Kong has lost due to the absence of strategic personnel planning and the issue of continuous enhancement of our competitiveness has not been considered in the formulation of our education policy. At a time when competing for international talents are focusing on diversified creativity, scientific research and application, and at a time for competing soft strengths such as global executive abilities, we are still fighting for 15 years of free education, increasing investment on scientific research; we are completely out of touch with the international trend. Hong Kong has been beaten by internal struggles, repeated arguments and all issues being politicized. The fact that construction works can hardly make any progress has constantly undermined the business environment of Hong Kong and eroded our competitiveness.

Over the past 10 years, Hong Kong has not really made any serious efforts on developing a knowledge-based economy, while the Mainland and our 12842 LEGISLATIVE COUNCIL ─ 30 May 2013 neighbouring regions have continued to develop rapidly. The China Urban Competitiveness Reports 2013, recently published by the Chinese Academy of Social Sciences, pointed out that though Hong Kong's comprehensive economic competitiveness has continued to rank first in the whole country for 11 consecutive years, the growth rate of our comparative advantages has slowed down and our labour structure is also ageing. The Report pointed out the transformation process of Hong Kong's industrial structure towards innovative technology has seen no significant breakthrough and there are signs of virtualization and bubbles in the economy, which have lead to rapid increase in property prices. As China's opening up reform intensifies, the service industries of the Mainland will soon replace that of Hong Kong.

Today, a number of colleagues mentioned that Hong Kong's ranking has fallen from first place to the third on the competitiveness ranking list of the International Institute for Management Development, Lausanne, Switzerland. This is not surprising. Hong Kong ranked ninth last year on another ranking list, the World Economic Forum's Global Competitiveness Index, but only came 22nd and 26th in respect of "higher education" and "innovative research and development", whereas Singapore which ranked second in the world, has attached great importance to education, thus making it rising steadily to second place in the world in respect of its scores on higher education and training, which is far better than Hong Kong.

Apart from the abovementioned issues, Hong Kong also compares less favourably due to the lack of a daring entrepreneurial spirit among our younger generation. And, in face of the enormous market of the Mainland, Hong Kong people's knowledge of the Mainland is actually inadequate. Moreover, apart from large enterprises, the majority of Hong Kong's enterprises do not enjoy any economies of scale, thus making it difficult for them to open up the Mainland market and competing with international competitors.

President, in order to enhance the competitiveness of Hong Kong, we have to continue to consolidate our existing advantages and improve our weaknesses. The Government should formulate a strategic development roadmap for Hong Kong, so as to further strengthen the efficiency and quality of its governance, and thus enhancing the overall competitiveness of Hong Kong.

Switzerland ranked first in the World Economic Forum's Global Competitiveness Index, and the key of its success lies in its advanced scientific LEGISLATIVE COUNCIL ─ 30 May 2013 12843 research and development, successful commercialization and innovation capacity. I believe that the promotion of innovative technology, diversified and knowledge-based economy, and further consolidation of our pillar industries to allow small and medium enterprises (SMEs) to "play to their strengths", will be important tasks for Hong Kong to maintain its competitiveness.

The Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) thinks that Hong Kong should substantively increase its investment on scientific research to promote the development of innovative technology industries. Furthermore, the Government should also further promote the commercialization of scientific research results, and facilitate product "usability studies". At the same time, the Government should also make the best use of its time to promote the development of Hong Kong's intellectual property trading centre.

Moreover, the DAB thinks that the Special Administrative Region (SAR) Government should proactively promote the diversification of our local industries, such as to review its regulations on the Chinese medicine industry in order to facilitate its development. On the other hand, the Government should continue to increase exhibition venues and supply of commercial and residential properties, stabilize rents, strengthen urban development planning, improve the quality of our environment, which includes air quality, by means of measures on promoting and subsiding the use of low emission fuels for ships and fishing vessels, and strive to attract international talents, capitals and enterprises to come and operate in Hong Kong.

The DAB also urges the Government to place emphasis on diversified innovation in the training our younger generation from an early age, step up its efforts on the development of vocational training, foreign languages and higher education, so as to enhance the quality of our manpower. We propose that the Government should increase the ratio of its investment on education to our Gross Domestic Product, increase the number of subsidized university places and further enhance the university enrolment rate, and promote career planning starting from secondary school, strengthen and optimize vocational training, so as to allow secondary school students to make better career development plans and start equipping themselves and enhancing their competitiveness at an early stage.

President, in fact, if Hong Kong were to enhance its competitiveness, in addition to government promotion policies, Hong Kong people should also adjust 12844 LEGISLATIVE COUNCIL ─ 30 May 2013 their mentalities. The more apparent anti-Mainland and anti-rich sentiments and the attitude of seeing everything as political issues over the recent years are not beneficial to encouraging young people to work hard, and this unhealthy atmosphere also obstructs the economic development of Hong Kong. I think Hong Kong people should face up to macro-developments, make proper use of our advantages in international exposures and networks, and take advantage of the fact that our Motherland has served as our hinterland, and strive to develop our economy, improve people's livelihood and enhance the overall competitiveness of Hong Kong. I hope that the Government can do as it says. As the Secretary has said, we have to "do more on a more extensive scale", in this way, the competitiveness of Hong Kong can be enhanced.

President, I so submit.

MR CHUNG KWOK-PAN (in Cantonese): President, as the theme of this motion is very similar to that of last week's motion on "Maintaining a business-friendly environment in Hong Kong", what I am going to say will also be very similar. As we all know, the World Competitiveness Yearbook is released by the International Institute for Management Development, Lausanne, Switzerland today, and Hong Kong has fallen two places to the third place. After its reunification for over 10 years, Hong Kong has never succeeded in restructuring certain industries, and at present, the only industry which has still maintained an advantage is the finance industry, but how can Hong Kong's competitiveness be maintained by just relying on the finance industry?

In the absence of a government plan for economic development, Hong Kong will only fall behind others in the end. As in the case of Japan which has lost its direction for over 10 to 20 years since the 80s and 90s of the last century; its Government has failed to come up with an innovative plan in face of economic downturns, and even its traditional home appliances industry has eventually failed to maintain its leading position, thus making it difficult for the Japanese economy to recover for a long time.

Among the "four Asian Dragons", South Korea and Singapore have developed most rapidly and very successfully in recent years. In both countries, the government has provided enormous assistance and support in developing the economy. Singapore has directly invested in the market through the Temasek Sovereign Wealth Fund and the South Korean Government has also taken the LEGISLATIVE COUNCIL ─ 30 May 2013 12845 initiative to invest money on promoting and supporting industrial development, which eventually promotes the development of the South Korean economy. For example, South Korea has wisely used broadband application in a recent television programme to promote its local cultural and creative industries, thus resulting in Asia as a whole being swept over by the "Korea gale". Korean dramas and movie stars have become world famous, and the "horse riding dance" of the black-spectacled Uncle PSY has become very popular over the world and thus enhanced the international image of Korea.

Electronic products and scientific researches of South Korea have surpassed the world-famous Japanese electronic and home appliance products with strong support from its Government. In the past, we always bought Japanese brand televisions and stereos, but now Samsung and LG of South Korea have become better choices. After the financial turmoil of 2008, the South Korean Government decided to invest US$20 billion within five years on the continuous development of its key industries. So far, the automobile industry of South Korea has started to launch in the international market. Apart from seizing the opportunity of the Internet application and scientific researches and developments, the success of South Korea can also be largely attributed to the Government's courage in abolishing the old and building up the new, reforming the old economic structure and strongly supporting industrial developments by contributing both money and efforts in upgrading and restructuring its local industries.

President, I have just paid a visit to South Korea and found that its fashion industry has started to break out of Asia. The Dongdaemun district of South Korea has bought in over HK$70 billion in revenue for the South Korean economy, and one of the ways through which the Korean Government has achieved this is by organizing "fashion designers competitions" ― in the same way as beauty competitions with government funds, to find the most outstanding designers, help them to hold fashion shows around the world and with production pairing, in order to promote awareness of South Korea fashions and create international brand names.

On the contrary, the support offered by the Hong Kong Government to small and medium enterprises (SMEs) is very limited, as in the case of the cumulative funding ceiling of the "SME Export Marketing and SME Development Fund" approved by the Finance Committee last week. The Liberal Party has requested that the amount should be increased from $150,000 to 12846 LEGISLATIVE COUNCIL ─ 30 May 2013

$300,000, but the Government has only raised the ceiling to $200,000 by $50,000. How can an additional funding of $50,000 help with SME marketing? I think the SAR Government should change its traditional way of thinking.

Furthermore, the SAR Government does not have any plans on how our future economy can be built and does not have any specific plans on industrial development. We still remember that the Chief Executive has said at the Questions and Answers Session of the Legislative Council some time ago: "I hope that Members, and through media reports, all people of Hong Kong can be motivated to consider the issue of how economic developments can be promoted and put forward some specific proposals. If you all said that the SAR Government can implement one, two, three, four and five measures to make the economy of Hong Kong as a whole or certain industries develop better, then the SAR Government will consider the pros and cons of these proposals and put them into actual practice if they are found feasible." From this, we can see that the Chief Executive does not even have any idea on how to promote the economy of Hong Kong, how to develop our industries and how to promote the future development of Hong Kong.

In fact, I have proposed, and actually more than once, to the Government that the development of fashion industry is one of the most feasible option for upgrading and restructuring the industries of Hong Kong and helping our economy to move forward, for the textile and garment manufacturing industry has a strong foundation and huge market and there is also no lack of talents in the fashion industry of Hong Kong. With the support of government measures, I believe that the fashion industry of Hong Kong can certainly develop into a "Hong Kong gale" after the "Korea gale" and blast its way out of Asia.

(THE PRESIDENT'S DEPUTY, MR ANDREW LEUNG, took the Chair)

Thank you, Deputy President. I so submit.

MR YIU SI-WING (in Cantonese): Deputy President, over a long period time, Hong Kong has stayed competitive by relying on the well-established financial system, the training of talents, the implementation of simple tax regime and the construction of infrastructure facilities. Meanwhile, by upholding the rule of LEGISLATIVE COUNCIL ─ 30 May 2013 12847 law, integrity and freedom of speech, Hong Kong has an incomparable edge over all Mainland cities. They are the core values which keep Hong Kong prosperous.

However, every coin has a flip side. While Hong Kong enjoys a high degree of freedom of speech, and people are allowed to express themselves and fight for their rights, they tend to care about their own will more than the actual situation. Consequently, our society has to waste energy on endless political arguments. Some policies and infrastructural projects are embroiled, even if they are worth carrying out. Let us take Hong Kong's Express Rail Link project as an example. It took as long as five years for the Government to succeed in obtaining its funding approval. The estimated cost had hence mounted. In 2008, the estimated cost was only $39.5 billion. Yet, because of a series of controversies, the funding approval was held back until 2010. The project cost then rose to $66.9 billion, among which $10.6 billion were incurred by the delay in construction works. As we all know, before the commencement of any major infrastructural project, the Government must spend time on assessing the effectiveness of the project and studying its impacts on residents and environment in detail. It is no cause for criticism. However, if people with political motives argue for the sake of argument, or even provoke conflicts to increase government expenditure, it will be unacceptable. At the end of the day, it is always the people of Hong Kong who "foot the bill".

Another example is the project of North East New Territories (NENT) New Development Areas (NDAs). Its consultation has started since 2008, but we have not heard much opposition until last year. It is labelled as a move to "sell out Hong Kong" by building "a backyard for Shenzhen" or "a city for rich doubly non-permanent residents of Hong Kong" in the NDAs. In fact, the NENT NDAs are same as other new towns like Kwun Tong, Tsuen Wan, Sha Tin, Tseung Kwan O and Tin Shui Wai. Their main purpose is to solve the housing problem of our increased population. Nevertheless, the NDAs are now being unfairly labelled. Some people even call for a withdrawal of the entire development project. They have simply ignored the overall interests of Hong Kong. As NENT is close to various major ports, its development can be part of the tourism development plan. By developing tourist attractions and shopping areas in NENT, we can divert pedestrian flow from other hot tourist spots and create more business opportunities for the six industries with competitive edge.

Deputy President, Shenzhen and Macao, our neighbouring cities, are now developing their economy at full speed. While we are arguing about the NENT, 12848 LEGISLATIVE COUNCIL ─ 30 May 2013

Qianhai in Shenzhen and Hengqin in Zhuhai are building up silently. We must think about this question seriously: Once Qianhai and Hengqin are put into use and the Hong Kong-Zhuhai-Macao Bridge is completed in 2016, do we still have any competitive advantages over our neighbouring cities?

I agree that we should allow Hong Kong to have different voices so that the Government can absorb views from different sectors to enhance its governance and avoid taking a wrong step. However, it does not mean that our society can withstand endless political conflicts for extended period. It will just waste our time. I hope people from all walks of life and my colleagues in the Council can take an objective perspective, let go of our divided views, build up mutual trust, work together to capitalize on the rapid economic growth of the Mainland, and strive to enhance the market competitiveness of Hong Kong.

The Chinese University of Hong Kong announced its latest opinion poll results in May. According to the results, 59.7% of Hong Kong people agreed that the Government should further promote our economic integration with the Mainland; and 64.2% of people agreed that there should be more cultural exchanges with the Mainland. Among the public, there is already a shared view that Hong Kong should have more co-operation with the Mainland in economic and cultural spheres. Hong Kong, being an international city, should act as a bridge to link up the Mainland with the international community. While it is important for Hong Kong to maintain our uniqueness, we should optimize our nearby resources to achieve a win-win situation.

Deputy President, last week, Mr Martin LIAO earnestly reminded us that Hong Kong must avoid excessive welfarism if it wished to maintain its competitiveness. Indeed, I feel the same way. In countries which practise welfarism, wealth is redistributed through a big government and high tax rates. The most successful welfare states in the world are the Nordic countries. They share the common features of having a vast territory, a small population, low housing costs and high tax rates. Hong Kong has none of these features. As for countries like the United Kingdom and Greece, the political parties formulated a lot of high welfare policies to gain votes. Their tax rates are thus very high, and they now have to struggle with the problems so caused. In early 2011, the British Government increased the value-added tax from 17.5% to 20% to meet its huge expenditure. In April this year, it started the largest social welfare reform in the United Kingdom in decades to simplify the complicated welfare system and encourage its people to work instead of enjoying welfare benefits.

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While a good welfare system can bring a government with stability and benefit the people, a bad welfare system will pose risks to economic development. It is something beyond doubt. In my view, the Government should not only build a good welfare safety net but also create job opportunities and encourage the grassroots to make money and increase their income. The Government should not give up its sound fiscal policy to win a round of applause. Only when the Government is financially sound can it have resources to support different industries to enhance their market competitiveness.

Deputy President, I so submit.

MR MARTIN LIAO (in Cantonese): Deputy President, I would like to thank Dr LAM Tai-fai for proposing the motion on "Enhancing the overall sustainable competitiveness of Hong Kong" today. Just now, a number of Members have mentioned the remarks of ZHANG Dejiang, Chairman of the Standing Committee of the National People's Congress, as well as the comments raised in the competitiveness reports of the World Economic Forum, the Chinese Academy of Social Sciences and the International Institute for Management Development in Lausanne, Switzerland, on Hong Kong's declining competitiveness. Therefore, I am not going to repeat them. Although these reports are not always right, they may serve as useful references. In fact, the business and professional sectors have long noticed that Hong Kong's competitiveness is on the decline. We must learn from the painful experiences and grasp our opportunities to strengthen and enhance the competitiveness of Hong Kong.

Deputy President, when we refer to the experiences of our neighbouring places, such as Singapore, South Korea and the first-tier cities in Mainland China, we will find that the major reason for them to become increasingly competitive is that they are ambitious and aggressive in developing their emerging and diversified industries.

It is undeniable that Hong Kong's industrial structures are too monotonous. Worse still, our status as an international centre for finance, trade and maritime affairs is being seriously challenged. Our logistics industry, after losing the leading position to Singapore and Shanghai, has been caught up by Shenzhen in the first two quarters of this year. Deputy President, what are the reasons for that? Is it because Singapore, Shanghai and Shenzhen have got a better management system or rule of law than Hong Kong? I think we all know the answer. As for our financial industry, though it is still in an advantageous position, it is under the strong threats of our neighbouring cities. While the 12850 LEGISLATIVE COUNCIL ─ 30 May 2013

Government has planned to develop emerging industries, such as the innovative technology and creative industries, it does not provide much policy support. As a result, Hong Kong's competitiveness is so weak that we lag far behind our neighbouring places. As early as in the period of 2005 to 2009, which was before Singapore started to promote its gambling industry, the real Gross Domestic Product growth of Singapore had already reached 3.6%. It was much higher than the 2.6% growth of Hong Kong. Unfortunately, lots of Hong Kong people, including government officials ― I do not think Secretary Prof K C CHAN is one of them ― remain unaware of the threats and continue to indulge in our past success.

Deputy President, it is time to wake up. Hong Kong must enhance its overall competitiveness to face future challenges. We must also strengthen the foundation and improve the competitive edge of our existing industries, as well as further developing our emerging industries, to rise again on the international stage.

In order to enhance the competitiveness of Hong Kong, we must first solve certain problems. Apart from land shortage, high rents and the lack of policy support which I have mentioned before, the biggest problem lies in manpower. I have once said that there will be a scramble for talents in future. McKinsey, an international consulting firm, has recently remarked that there will be a serious imbalance in the global workforce, and the mismatch of manpower will become prominent and turn into a daunting challenge to all countries. At present, Hong Kong has a relatively low unemployment rate and is close to full employment. However, when we expect it to be easy for our graduates to find a job, things turn out to be the opposite as more than 60 000 young people have been out of work for a long time. If we dig into the major causes, they are still that our industrial structure is too monotonous and our education has long been failing to provide the required talents.

Deputy President, the availability of talents determines the rise and fall of a society. Over the past two decades, the Government has invested a lot in education and training. Regrettably, for a long period of time, education and training have failed to meet the demand for manpower. Due to the lack of co-ordination and clear targets, the manpower demand and supply do not match each other to meet the development needs. On the one hand, many graduates cannot apply their knowledge to their jobs; on the other hand, the required talents are not available to promote our industrial development. We end up having the unreasonable phenomenon that these two problems co-exist at the same time.

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The SAR Government must solve the mismatch of manpower by reviewing the existing degree and training programmes and making a comprehensive assessment on the demand for manpower in our industrial structures. It must take appropriate measures to fix the problems and enhance the competitiveness of graduates in the labour market. Meanwhile, it should continue to train better talents to suit Hong Kong's industrial development. Besides, it should adopt a new mindset in formulating concessionary policies and attracting overseas talents to Hong Kong so as to solve the talent shortage in the short and medium run.

Deputy President, we can afford no delay in enhancing Hong Kong's competitiveness. Yet, our society is increasingly politicized. While everybody should fight for their beliefs on a principle issue, the actual situation is that many people keep arguing for big and small issues. Consequently, our economy loses momentum and develops in an imbalanced way. We simply do not have rational discussion on public policies. Economic problems, livelihood issues and infrastructural projects can all become tools for attacking political enemies. In the long run, our endless internal conflicts will just weaken the competitiveness of Hong Kong. If Hong Kong does want to improve, the Government and the entire public are bound to work hand in hand. On issues concerning economic and social development, we should not just take a political perspective and let petty politics to hinder the development of Hong Kong.

A stable and harmonized social environment is particularly important to the sustainable development of a city. Here in Hong Kong, the rule of law is mature; we have got a free port status; our tax regime is simple; and we have a comparative advantage in freedom of press, freedom of speech and free flow of information. As long as we are willing to put away the unnecessary internal conflicts and stop wasting time but grasp the opportunities presented by the rapid development of the Mainland, we can regain our competitive edge. Deputy President, I do not believe Hong Kong is less competitive than other places. However, we do not always have the opportunity to bounce back. Before Renminbi is internationalized, it is the last chance for Hong Kong to restructure its economy. If we still do not set our hearts on seeking improvement, Hong Kong will not be able to move forward in future. At the end of the day, it is Hong Kong's interest that will be hurt.

I so submit.

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MR JAMES TIEN (in Cantonese): Deputy President, we discussed a similar topic yesterday, but the emphasis was merely the difficulties encountered by local enterprises. I will also touch on this point later on. I have also considered why there are problems concerning the competitiveness of Hong Kong, and wondered if they have anything to do with the current hot topic, that is, the method adopted by the Government for selecting the Chief Executive after the reunification, or the lack of consistency and continuity resulting from the change of the Chief Executive after each term, regardless of whether he is directly or indirectly elected. In other words, all newly selected Chief Executive will have different plans in mind when he takes office. Likewise, the three Secretaries of Departments and 12 Directors of Bureaux under his leadership will also have different views. Of course, the work which falls under the purview of Secretary Prof C K CHAN may have continuity because he has been a member of the governing team since former Chief Executive Donald TSANG took office. If this is the case of our Government, no wonder it is so difficult to maintain our competitiveness.

Speaking of the difficulties currently faced by the small and medium enterprises (SMEs), the first impression that people have is that since the Government has not formulated any policies, and people of Hong Kong are so competent, can we rely on the sound education system to nurture entrepreneurs, comparable to those who develop Facebook or Google in overseas countries. Nonetheless, only one or two such entrepreneurs can be identified in the United States which has a population of hundreds of millions of people. Such entrepreneurs are also available in the Mainland, but out of its 1.3 billion people, only a few have such power and capability to expand their business to such an extent. Hong Kong has 7 million people. I do not mean to look down on ourselves or rule out this possibility, but the chance is very slim.

If nothing can be done in respect of innovative technology, what about the other perspectives? Many people think that under our education system, many students learn by rote, and all they can think of are examinations and academic qualifications. The purpose of receiving secondary or tertiary education is to get academic qualification. It is true that those who learn by rote and have attained certain academic qualifications do not have much creativity. And yet, the high creativity of young people in overseas countries has driven them to engage in frantic acts. For example, in the United States, many young people had recklessly fired a gun for no reason. It might not be their intention to kill so many innocent people, but it did happen. On the nurture of talents, since Hong LEGISLATIVE COUNCIL ─ 30 May 2013 12853

Kong cannot rely on its tertiary or secondary education system to nurture a large population of creative young people, what can local enterprises do about its future competition? If there is nothing we can do, then redeveloping the traditional industries would be the only alternative.

Deputy President, you and I have engaged in garment industry for many years, and are well aware that the high land price and high labour cost will make our operation impossible. Hong Kong used to have other manufacturing industries, such as electronics, plastic and toys, but none of them survived. What remains is the servicing industry, and the only example is tourism. Nonetheless, even tourism has its problems. Is it true that the number of tourists has exceeded beyond our capability and thus caused inflation and public outcry? If not, if we solely rely on tourism, what about other industries?

Deputy President, for the rest of the time, I will specifically talk about the difficulties currently encountered by SMEs. Why large-scale enterprises are not mentioned? I am of the view that large-scale enterprises should be absolutely capable of operating on their own. If they do not invest in Hong Kong, they may invest overseas. All they ask for is the proper implementation of government policies. The Western Kowloon Cultural District project, for example, has been developed for more than a decade since the reunification. How is the situation now? This is a very large-scale investment project on which consortium have invested heavily. We have also visited the soon-to-be-commissioned Kai Tak Cruise Terminal lately. But with the exception of this cruise terminal, other projects have been reduced to empty talks, not knowing when they will be completed. As we can see, these two large-scale basic infrastructural projects are business opportunities for investment by the consortium, which will in turn provide the necessary space for SMEs to operate and ensure that they can afford to pay the rent and recruit their staff. Without the space for operation, do we expect SMEs to construct a building on their own? This is impossible.

As there is a lack of space, the increasing rent has become the headache of SMEs. At present, the Government only puts emphasis on the provision of public rental housing and Home Ownership Scheme flats, both of which are welcomed by members of the public. Has the Government sold any sites for building office buildings? Not many. So are hotels and shopping malls. This has become major stumbling blocks to the competitiveness of SMEs.

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The second point that we often mention is manpower. Under an unemployment rate of 3.3%, local industries can hardly recruit sufficient staff. If the word "training" is used instead, we might otherwise query if the provision of training would steal the manpower from another industry, or the provision of training by another industry will likewise steal the manpower from a third industry. If there is no way we can recruit sufficient staff under the 3.3% unemployment rate, will the Government boldly adopt an open attitude in formulating its population policy in the light of Singapore's open population policy? It should import talents with high academic qualifications and good technology knowledge as well as people with low academic qualifications to work as bus drivers and construction workers. No wonder Singapore has surpassed Hong Kong.

There are still one or two points that I would like to mention. Many SMEs have indicated that they cannot secure loans at present though banks have abundant cash flows. Some said that they still have to rely on "bricks and mortar" in securing loans. But as the price of "bricks and mortar" has probably dropped, the amount of loan has also decreased accordingly. Some SMEs said that their "bricks and mortar" are perfectly okay, it is the bank which has operational problem and thus led to a decrease in the amount of loan. As for financing, is there anything that the Government can do about the Hong Kong Monetary Authority or the Secretary?

Should the abovementioned problems remain unresolved, I believe SMEs would have to compete on their own. From our observation of the past few years, operation has become increasingly difficult. We certainly do not wish to see any SME or middle-class people keep sliding downward, but this is what have actually happened in these two years. Many middle-class people are complaining about the high commodity prices and rising inflation while their income keeps shrinking. If the situation continues, it would be very lucky for Hong Kong to remain in the third position in either the Index of Economic Freedom published by the Heritage Foundation or the IMD World Competitiveness Yearbook in the days to come.

Thank you, Deputy President.

MR MA FUNG-KWOK (in Cantonese): Deputy President, today's original motion mentioned the China Urban Competitiveness Reports. In this year's LEGISLATIVE COUNCIL ─ 30 May 2013 12855

Report, Hong Kong keeps the top position in comprehensive economic competitiveness and assumes leading positions in sustainable competitiveness, livable city and cultural city. However, in the Report, the Chinese Academy of Social Sciences (CASS) has stated specifically that the competitive edge of Hong Kong is gradually eroding. According to the IMD World Competitiveness Yearbook 2013 issued today, the ranking of Hong Kong has dropped from last year's top to the third, which is alarming. And yet, this is not at all surprising to me.

As specifically highlighted in the CASS's Report, Hong Kong's economy has been highly dependent on the financial and real estate sectors, thereby resulting in a unitary industry structure. In fact, undiversified local industries are not a recent phenomenon. Nor is the Government unaware of its existence. Previous policy addresses and budgets have already proposed the development of new industries, and this topic is discussed almost every year. Former Chief Executive Donald TSANG even proposed the development of six industries where Hong Kong enjoyed clear advantages, including cultural and creative industries. I would like to focus the discussion on this.

Deputy President, I cannot say that the Government has not introduced any measure to develop the cultural and creative industries, but under the doctrine of "positive non-intervention", the Government has been reluctant to play a positive role. As a result, the effort made in promoting industries is far less than other countries or regions which actively promote the cultural and creative industries.

(THE PRESIDENT resumed the Chair)

Among the numerous cultural and creative industries, greater importance has been attached to the film industry. The Government has established the Hong Kong Film Development Council and the Film Development Fund, but the annual injection is only around $30 million, which roughly equals to the production cost of a medium budget film and is far less than that of Korea or Taiwan. This year, the Government plans to launch the First Feature Film Initiative, which aims to nurture new filmmakers in Hong Kong. However, apart from nurturing new filmmakers, the Government should also devote more efforts and resources to provide them with more opportunities so as to increase local productions, or to bring the post-production process back to Hong Kong.

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Another problem currently faced by the film industry is cinemas being gradually squeezed out. Recently, another cinema had closed down. How can we develop the film industry if there is no venue for showing films? As the CASS has pointed out, the serious shortage of land and housing supply in Hong Kong has forced property prices and rentals to skyrocket. The rising enterprise cost is seen as a major threat to the development of the local economy. In my opinion, it is also a major stumbling block to the development of local cultural and creative industries.

Not only cinemas encountered difficulties, other facilities relating to the cultural industry (such as book shops, piano shops, record stores, and book or record rental stores) have also encountered great difficulties. Many of these facilities have moved from conspicuous locations in the streets or shopping malls to the corners of buildings or shopping malls. In recent years, local cultural stores, be they large or small, have either been forced to move out or simply closed down. Therefore, in order to maintain diversity in the industries and businesses of Hong Kong, I think the Government must adjust and introduce appropriate policies on land planning.

On the other hand, the original intention of the Government to introduce a policy to revitalize industrial buildings in 2010 was to release more space for development. However, the policy has pushed up the rents of industrial buildings. As a result, artists who have moved into industrial buildings long ago suffered and found themselves stranded in a long-standing predicament of having to work in the grey area. The policy to revitalize industrial buildings has imposed additional burden on them. Therefore, a major initiative to revitalize industrial buildings called the "Energizing Kowloon East", has been renamed by the arts and cultural community as the "Exterminating Kowloon East" initiative.

To promote the development of cultural, arts and creative industries, room for creativity is of paramount importance. Over the years, clusters of artists have been formed within the local industrial buildings, supporting the development of local cultural and creative industries. In implementing the policy on revitalizing industrial buildings, the Government must show care and love to the cultural ecology in industrial buildings, and adjust the flexibility of its policy so as to enable them to survive and develop.

President, as pointed out in the CASS's Report, Hong Kong still scores high in comprehensive cultural competitiveness and keeps the top position with LEGISLATIVE COUNCIL ─ 30 May 2013 12857 an absolute advantage. If we look carefully at the arts and cultural activities organized in the recent month, for example, the Jiao-festival with traditional characteristics; the international Art Basel, the international auction of art works, the exhibition of inflatable sculptures and the exhibition of the large inflatable duck in Tsim Sha Tsui, we may notice that they are actually the cultural effects brought by the SAR Government's development of the Western Kowloon Cultural District project. It is therefore a very important issue as to how this project will be implemented and developed to upgrade the standard of local art, and promote the development of cultural and creative industries. We must ensure that we can give full play to the effect of the project and properly grab what I consider as the very last chance.

I must point out that our absolute advantage in culture is facing challenges from our neighbouring countries. Not only Korea and Taiwan, various Mainland cities are also developing in full steam. What is more, our nation has been promoting the strategy of "vigorous development and prosperity of culture" in recent years. The efforts put in promoting culture should not be neglected. In fact, there is a "China wave" in Taiwan lately where people has become fans of WeChat, taobao and television programmes produced by the Mainland. This reflects that Mainland culture is becoming more influential.

Undeniably, the SAR Government's commitment to the development of local culture has been increasing. And yet, if we look back at the development of arts, we may notice that the amount of injection has remained at around $100 million since the establishment of the SAR Government 17 years ago, which is seriously insufficient. Furthermore, after the SAR Government introduced the cultural policy in 2003, how was it implemented during these 10 years? What is the result? Has it promoted the development of cultural and creative industries? The Government should conduct a relevant review and consider adjusting its policies in the face of the new developments and new trends. Also, in respect of the structure, improvements should be made to address the problem of cultural policies being scattered among different government departments, with a view to pooling the forces.

President, too little progress has been made in Hong Kong's economic and cultural development and we have stopped for too long. Although Hong Kong's competitiveness still enjoys certain advantages, challenges are around the corner. The Government must play an active role and introduce measures to enhance Hong Kong's soft power and competitiveness (The buzzer sounded) ……

12858 LEGISLATIVE COUNCIL ─ 30 May 2013

PRESIDENT (in Cantonese): Mr MA, your speaking time is up.

MR MA FUNG-KWOK (in Cantonese): …… Thank you, President.

DR PRISCILLA LEUNG (in Cantonese): President, regarding Hong Kong's competitiveness, other countries often have the mentality that "the grass is always greener on the other side".

The existing systems of Hong Kong do have its attractiveness. I am now teaching law at the City University of Hong Kong. Two of my colleagues came from France and have stayed in Hong Kong for three years. In our conversations, they often expressed their admiration for Hong Kong's tax regime and said that the French have strong affection for our low tax policy and simple tax regime. Both of them are lawyers. One of them told me that the tax rate in France is as high as 50%, and though he has worked many years (he is now some 40 years old), he does not have much saving and cannot afford to buy a flat.

However, after he came to Hong Kong, he really loves this place very much. He has obtained the law degrees of three countries, namely China, the United States and France. Under a progressive tax regime, even talents as brilliant as he do not have much saving. So, he decided to escape from such a tax regime. After coming to Hong Kong, he felt very happy. Sometimes, after reading the newspaper, he would ask me if Hong Kong was going to follow the footsteps of France. He said this is the last thing that he would wish to see.

When many colleagues spoke earlier, they said that the cause of the numerous problems in Hong Kong is the absence of universal suffrage, so that people cannot select their Chief Executive on a "one person, one vote" basis. Notwithstanding that France has implemented universal suffrage on the basis of "one person, one vote" long ago, its economy has been in the doldrums and the community has been torn apart. Some people even describe that France has been split into two countries. My friend predicted that if Hong Kong continues to develop along this direction, what happened in France in 2005 would occur ― 30% of the French residents went to the rural area to burn up the vehicles and stir up riots. Members may recall the incident and it so happened that I was in France for exchange purpose at that time. This serves as a good reminder.

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Hong Kong is an attractive place because we embrace the rule of law and the spirit of compliance with the law. Many foreign people have flocked to receive education in Hong Kong, hoping that they can jump to China to develop their career from the bridge of Hong Kong. YAU Shing-tung is an excellent and internationally renowned homegrown academics. He once expressed his admiration for Hong Kong university students' devotion in the student movement and the pursuit of social rights, but he warned that young people in Europe and the United States have a greater thirst for knowledge than local university students. Many of my university colleagues also share this view. YAU Shing-tung has an impression that local university students have been pre-occupied by political struggles in recent years, and have accorded a lower priority to learning, which is their foremost mission. He was pretty worried that if Hong Kong's talents continued to follow this line, Hong Kong would become a secondary city. We will have no one but only ourselves to blame. I think this is a very good reminder.

From today's radio programme, I heard a secondary teacher, who is a fresh graduate, saying that he is now living in a "sub-divided unit". To be honest, I also lived in a "sub-divided unit" when I was working in a law firm in the early 1990s. At that time, a total of nine households lived under the same roof. I lived in Tai Po but worked in Central, but I have never thought of seeking help. I firmly believe that I would get promoted so long as I work hard and pursue self-enrichment. I have not thought of seeking help. University students back then had to endure the same sufferings upon graduation.

I wish to point out to university graduates that it is not people of my generation who have seized the development opportunities. University graduates of different generations, and particularly those born in poor families, have to struggle hard for several years after they set foot in society. I hope the university graduates would understand that. And yet, people who have "come ashore" should also think what can be done to help the aggrieved young people, or middle-class people who have yet to buy a flat or become unemployed, in the light of the existing welfare system.

I have called on the Government time and again to go to the root of the problem instead of adopting a "pie-sharing" approach. Firstly, Hong Kong has a lot of talents, but they are unemployed as a result of economic restructuring. I want to reiterate that the Government should aim at getting them employed but not encouraging them to receive unemployment grants. I therefore consider it 12860 LEGISLATIVE COUNCIL ─ 30 May 2013 necessary to set up a loan fund for occupation switching, as I have proposed time and again over the past five years. Secretary, as you are very familiar with the economic lifeline, you should think carefully what can be done to enable middle-aged talents (people aged between 40 and 50) to take part in the creation of Hong Kong's economy.

Secondly, it is about the Angel Funds set up for young people. We have conducted an opinion poll and the findings showed that among the unemployed young people, 60% were unemployed not because they could not find a job, but because they were unwilling to work. I am not sure if this phenomenon is good or bad, but I do think that before anyone sets up his own business, he should first get some working experiences and endure some sufferings, so as to learn what is meant by "work" and "management".

The findings also showed that local young people did have an aspiration to set up their own business. And yet, I wish to point out that apart from capital, experiences in economic and entrepreneurial management are also necessary in starting up a business. Thus, the Government should assume a leading role and, apart from setting up a venture fund for young people and decide on the amount of provisions along the line of the Angel Funds, it should also consider working with the business sector and inspiring young people, especially when the idea of business start-up demonstrates potential in Hong Kong. This is another way of minimizing the unemployment of young people.

Thirdly, when carrying out a reform to Hong Kong's existing mechanism, the Government should avoid killing the bad cells and the good cells altogether as in the case cancer treatments. Hong Kong must preserve its established advantages. While Members appreciate the fight for political reform, for example, they may not support the use of such means as Occupy Central or Paralyse Central, or encouraging members of the public not to comply with the law. All these will deal a blow to the spirit of the rule of law and law compliance which Hong Kong has been proud of for many years. No legal system in this world is perfect. Some people may consider it unreasonable to impose a fine on people who recklessly cross the road. We should therefore resort to legislative amendments, but not break the law or encourage other people to break the law.

I hope that in the course of carrying out the political reform, people will maintain Hong Kong's existing competitive edge. Also, we should avoid LEGISLATIVE COUNCIL ─ 30 May 2013 12861 prescribing the wrong medicine and should exercise great caution (The buzzer sounded) ……

PRESIDENT (in Cantonese): Dr LEUNG, your speaking time is up.

DR PRISCILLA LEUNG (in Cantonese): Thank you, President.

MR WONG YUK-MAN (in Cantonese): President, debates on topics like "Enhancing the overall sustainable competitiveness of Hong Kong" should attain a certain standard. In this Chamber, we have representatives from the industrial and commercial sectors and also university lecturers, but after listening to a number of Members, I find the standard of their speeches extremely low. They merely took advantage of the situation and used the motion as an excuse to chide other people as if they were WONG Yuk-man. Their speeches are totally irrelevant. What is the connection between this motion and the Occupy Central movement? How can you say that the fall in ranking is attributable to the Occupy Central movement, as the movement has yet to commence.

I am pretty serious and have prepared a script, which the President should have in hand. Although it would not be possible to finish reading out this four-page script within seven minutes, I do intend to read it and make some comments. But since I am infuriated after listening to Members' speeches, I am not going to read from the script.

Actually, Dr LAM Tai-fai was of good intention. Instead of taking advantage of Mr LEUNG Chun-ying, he merely wanted to present an objective fact. It is only that his choice of words is different from that of WONG Yuk-man. In my opinion, the administration of officials has collapsed and Hong Kong's clean politics has been damaged. Will these undermine our competitiveness? Many people vow that the key to maintain competitiveness is social stability, and to them, social stability overrides everything. All divergent views, opposing noises, calls for the Occupy Central movement or protests in the streets must be eliminated. The elimination of these noises will enhance the competitiveness of Hong Kong. This is one point.

As a matter of fact, in order to maintain social stability, we must have a clean and efficient government, an independent judicial system and free flow of 12862 LEGISLATIVE COUNCIL ─ 30 May 2013 information. A society must adhere to these core values in order to achieve stability.

Next, we are going to escalate to a higher level and talk about Martin Luther KING. True peace is not merely the absence of tension: it is the presence of justice. If the gap between the rich and the poor persists in society, and there are as many as 170 000 people living in "sub-divided units", as we said at today's meeting of the Subcommittee on the Long Term Housing Strategy …… The number differs greatly from the 60 000 people initially claimed by the Censes and Statistics Department. If we had not forced the Government to conduct the relevant study, there would not be a report revealing the figure 170 000, which can be broken down into several categories. How can such a society enjoy stability? How can it avoid a decline in competitiveness? This is a causal relationship rather than a matter that many people have taken advantage of and overplayed. This is meaningless.

We have many economic experts here at the meeting, including Prof K C CHAN. There are many causes for the decline of Hong Kong's competitiveness, which include external factors, objective factors and subjective factors. Although the decline is not very significant, Members have already heightened their vigilance and then use it as an excuse to urge the Government to be smart, or something like that. Actually, this topic can be put to debate every year, or even every month and every day. I have seriously prepared a script, not aiming to take advantage of the situation, but to analyse the causes that led to the decline. I have put forward arguments by taking a more leftist policy stance and expect to hear views from Members of a more rightist stance, hoping that the discussion would inspire us to find out the real cause of the decline. We will not oppose views expressed by the rightist camp, including you, the President. Am I right?

By taking a more leftist policy stance to look at Hong Kong's economy and competitiveness, we have come up with some arguments which you cannot falsify. Mr Tommy CHEUNG may claim that the implementation of minimum wage and the formulation of standard working hours would threaten Hong Kong's business environment and the survival of small and medium enterprises, thereby putting Hong Kong's competitiveness at risk. This is nonetheless too biased. But what can he do? As a representative of his constituency, he must say something. If he does not talk about standard working hours and minimum wage, or denounce the Hong Kong Federation of Trade Unions, the Federation of Hong Kong and Kowloon Labour Unions, the Labour Party, which vow to fight LEGISLATIVE COUNCIL ─ 30 May 2013 12863 for the interests of the wage earners, what else can he say to justify his existence? But is what he said to the point? No, it is not.

From this motion on competitiveness and the use of the term "overall sustainable competitiveness", I know that Dr LAM Tai-fai is knowledgeable. And yet, he is also using this motion as an excuse. The main point of his entire speech is the poor administration of officials. President, is this not precisely the same point which I meant to highlight with the quote "People who know small tricks always go to your place"? You said that this quote may apply to all organizations, but it is particularly applicable to the SAR Government. Can you tell me what will happen to Barry CHEUNG? He will be condemned for sure and some bigger scandals are up and coming. Will this affect our competitiveness? Of course, it will. However, the point is not how individual cases affect the competitiveness, but the reasons why the overall economic development has been stifled.

The decline in the overall competitiveness can be attributable to structural reasons of both short- and long-term. We can actually tell by looking at the economic structure of Hong Kong. There is currently a tendency to overtly rely on the Mainland. In fact, I have listed out some figures in the script, but I do not bother to cite them now. Anyway, in the end, we will all catch influenza after the Mainland sneezes because Hong Kong can no longer retain its established foothold, or has lost its advantages. Actually, Members should think along this line. I certainly agree that it is pivotal to have open politics, but in order to maintain social stability so that foreign investors can rest assure about Hong Kong's investment environment, while improvements can be made to our business environment, we must thoroughly and carefully examine the existing structural problems. Should these structural problems remain unresolved, the situation of Hong Kong would only deteriorate. As these structural problems are mainly derived from the formulation of policies by the Government, I believe they can hardly be solved without changing the biased attitude.

Thank you, President.

MR VINCENT FANG (in Cantonese): President, my speech will be straightforward and will not take advantage of the motion. Many colleagues have cited the World Competitiveness Yearbook (the Yearbook) published by the IMD of Switzerland today, and I very much agree with the reasons set out in the 12864 LEGISLATIVE COUNCIL ─ 30 May 2013

Yearbook accounting for the decline of Hong Kong's competitiveness and the rebound of competitiveness of the United States, which has regained the top position.

The Yearbook stated that the decline of Hong Kong's competitiveness is mainly attributable to its poor economic performance, lower government efficiency, as well as poor performance in prices and basic infrastructure. Judging from yesterday's agenda, these criticisms are absolutely justified. I have counted the number of subsidiary legislation tabled by the Government yesterday, and there are a total 22 pieces. I then look carefully at the contents and discovered that they are mostly concerned with the business environment.

As I have asked time and again in this Council, what is the legislative intent of the Government? Are there really so many loopholes that justify the repeated enactment of laws to ensure the smooth operation of this society where the rule of law prevails? Or, is this an intention to demonstrate that Hong Kong is an advanced society on a par with other countries? Is there any communication among various government departments in respect of enactment of legislation? There have been cases where certain industries were subject to the monitoring of several ordinances all of a sudden. An additional law on the business environment will, more or less, raise the costs and lower operation efficiency. As the number of laws increases, the chance of survival of small and medium enterprises (SMEs), which are relatively weaker in respect of their financial power and manpower, will also get slimmer.

Let us look at the reasons why the United States has regained the top position in competitiveness. Of course, first of all, it is the rebound of its financial sector and an abundance of technological innovation. Although the United States has the most advanced financial tricks in the world, it has not relied heavily on one single industry. Technological development of the United States is also among the top of the world, coupled with little government intervention and great market potential, these factors have all given impetus to the development of enterprises, especially the Internet industry.

As learnt from those successful experiences, in order to enhance competitiveness, the Government must streamline all business-related initiatives; increase the operation flexibility of enterprises; lower the threshold for business startup; attract more young people of capability and creativity to risk starting up and operating their own business. This driving force will then become the force LEGISLATIVE COUNCIL ─ 30 May 2013 12865 of the community, and serve as an impetus to the sustainable social and economic development. Unfortunately, the SAR Government has neither formulated any plan to diversify the industries nor encouraged any SMEs or young people to pursue innovative development. Rather, it has imposed various restrictions to bring about additional costs and risks, thereby undermining the incentive for business startup.

Does the economic downturn imply that Hong Kong will have no more chance? Not necessarily. For example, different parts of the world are eager to attract Mainland visitors and Hong Kong definitely enjoys an absolute advantage in this regard. Regrettably, as a result of Hong Kong's failure to provide the necessary support, conflict between Hong Kong people and Mainlanders has intensified. Instead of restricting the number of visitors under the Individual Visitor Scheme (IVS), we should take this opportunity to expand the scale of our economy, enhance our visitor-handling capacity and promote diversity in our economic elements, such that different parts of our economy are able to benefit from the growth of visitors under the IVS. In my opinion, instead of spending large sum of money to engage consultancy firms to design stress tests for the law to restrict the export of powdered formula, the Government should think how the entire retail network can be expanded. This is because an increase in supply will lower the price, and this will help alleviating the pressure of price increase and improving people's livelihood.

Another major reason for the decline of Hong Kong's competitiveness is the thinking that, given the substantial surplus, the Government should hand out money or shoulder all additional expenditures while members of the public need not commit at all. If this is the case, how can Hong Kong's economy achieve sustainable development? Where does the money come from? Although the Treasury is now flooded with money, is it inexhaustible? If everyone just sits there and waits for welfare relief, and no one wants to be the "King Wage Earner" who pays more tax or start up his own business, Hong Kong will truly face a financial cliff.

I so submit. Thank you, President.

MR TONY TSE (in Cantonese): President, first of all, I wish to thank Dr LAM Tai-fai for proposing this motion, which has aroused our concern that Hong Kong's competitive edge has sounded an alarm bell amidst the rapid economic 12866 LEGISLATIVE COUNCIL ─ 30 May 2013 development of our neighbouring cities such as Shanghai and Beijing. While expressing concern over political development, social welfare and healthcare protection, Hong Kong's competitiveness should not be neglected. This is because if the local economy cannot progress and create more resources, it would be difficult to increase the amount of resources available for use in healthcare, education and social welfare, which is the last thing that we would wish to see.

To enhance Hong Kong's overall sustainable competitiveness, we often need the support and promotion of government policies and initiatives. These require the participation and concerted effort of different Policy Bureaux and departments. For example, the bun-scrambling competition, a ritual of the Jiao-festival of Cheung Chau, has attracted many local and overseas visitors every year. Yet, in order to further enhance the economic effectiveness of this event and create more business opportunities, the participation of the Hong Kong Tourism Board and the Home Affairs Bureau would not be sufficient. To achieve the best result, we also require the participation and promotion of Policy Bureaux responsible for planning, transport and economic development, so as to create more jobs and business opportunities.

Competitiveness and manpower training are inter-related. Young people are the pillars of our future society, but according to a recent report of the Census and Statistics Department, the unemployment rate for young people aged below 19 is 13.5% in the first quarter of 2013, and 7.3% for those aged between 20 and 24, which is a few times higher than the average unemployment rate. We are indeed concerned and worried about this situation. On the other hand, practitioners of the construction industry are concerned about the lack of new blood joining the industry, and there are difficulties in recruiting certain technical staff. They have therefore demanded the importation of labour. Although I believe Hong Kong still has excess labour force, more efforts should be made by the Government to further improve the career prospect, image and working environment of the industry, so as to attract or retain the young entrants and train up new blood, with a view to strengthening the competitiveness of the industry. Meanwhile, the Government should also implement a "local professions first" policy to provide more opportunities and support for the local professions and SMEs, with a view to enhancing their competitiveness.

President, as pointed out in the China Urban Competitiveness Reports, Hong Kong's economy is highly dependent on the financial and real estate sectors, but the shortage of land supply has pushed up rents and property prices LEGISLATIVE COUNCIL ─ 30 May 2013 12867 have skyrocketed. This is one of the reasons for the rapid slow down of Hong Kong's competitiveness. Although I am aware that the Government has introduced a series of short-term measures to ease the demand, increasing land supply is the solution to tackle the problem at its root. I therefore consider it viable to utilize the available land for development, which include converting the land use and appropriately increasing the density of development. Also, the vetting and approval process must be expedited. Regarding the reclamation of land other than the Victoria Harbour, consideration must be made to the implication on the ecological environment and the need to strike a proper balance before medium to long-term land reserve can be provided. I support measures in this respect.

President, in the past 30 years, the reform and opening up of China has offered enormous opportunities for Hong Kong's development and enabled our economy to enjoy long-term development. Looking into the future, I reckon that the development between Hong Kong and the Mainland will become more intimate and interactions will also increase. I therefore hope that the Government will pay more attention to the problems that may arise due to differences in culture and living habits, and take proper actions in advance. President, I believe so long as the residents of Hong Kong and the Mainland adopt a more accommodating attitude and strive for complementarity of edge, there will certainly be a win-win situation and opportunities will still abound in Hong Kong.

President, I so submit.

DR CHIANG LAI-WAN (in Cantonese): President, today's motion is "Enhancing the overall sustainable competitiveness of Hong Kong". First of all, what does Hong Kong have to compete with other places? In other words, what is the strength of Hong Kong? Hong Kong lacks natural resources, such as water source. We could stop purchasing Dongjiang water if we do not mind having water supply once every four days like decades ago. Nor do we have any underground resources, such as oil and minerals, unlike some places which can simply live on oil for generations. Land resource is also scarce in Hong Kong. We used to have excellent industrial performance and the percentage of manufacturing in the GDP was pretty high back then. However, it has dropped to 1.6% at present. Forget about the manufacturing industry, I will concentrate on the financial sector on which we depend heavily nowadays. The percentage 12868 LEGISLATIVE COUNCIL ─ 30 May 2013 of the financial sector in the GDP has dropped from 17.1% in 2008 to 16.1% at present. Logically speaking, the percentage should gradually rise, but it turns out that it has dropped. President, a drop of 1% is quite large.

Members have mentioned the China Urban Competitiveness Reports published by the Chinese Academy of Social Sciences, in which Hong Kong's competitiveness still top the list. But I hope Members will not forget that this is a comparison with major cities in the Mainland, which has started to develop 30 years later than Hong Kong. Therefore, if a comparison of competitiveness has to be made, we should better compare with the rest of the world, or the Asian region, which is nearer. We may even compare with the other "three little dragons" which used to be on a par with Hong Kong. I remember that soon after the reunification with China, a friend said to me proudly, "Our time has come. After the reunification, Hong Kong will definitely make a fortune out of Mainland support." In other words, the other "dragons" would lag far behind us. However, 15 years have passed, what has happened?

Let us look at some figures. Many Members have mentioned the World Competitiveness Yearbook just issued by the IMD for this year, in which Hong Kong has dropped from last year's top position to the third. According to the Travel & Tourism Competitiveness Report released by the World Economic Forum of Switzerland, Hong Kong's ranking has dropped from 12th to 15th this year. For the container port, Hong Kong's throughput between January and April 2013 is no longer among the top three. As for the airport, the Skytrax, a British independent airline rating agency, has rated 395 airports around the world in 2013 and the Hong Kong International Airport has lost its top three position for the first time in 12 years. Is Hong Kong regressing in all aspects with no improvement at all? It is not and the Secretary needs not worry. Hong Kong is terrific. According to the Democracy Index 2012 of The Economist, Hong Kong is ranked 63th out of 168 countries, a significant climb of 17 places. The number of protests is even more impressive, and we have now become a "city of protests". According to the statistics provided by the Government, before the reunification, less than three demonstrations were held in Hong Kong in one day. It then rose to an average of only 5.5 times per day. But in 2012, a total of 7 529 assemblies and protests had been organized in Hong Kong, giving an average of 20 per day. From this, we can see that Hong Kong has improved both in terms of democracy and freedom.

Of course, some people still found this insufficient and hope that Hong Kong would be the best in every aspect. I have no objection to this, but we must LEGISLATIVE COUNCIL ─ 30 May 2013 12869 proceed in a gradual manner. Hasty political changes usually give rise to resistance, and bring the society and the economy to a standstill. Sometimes, even government officials do not know how to respond to the new changes. For example, in the aftermath of the maritime disaster, the Marine Department had spent two weeks to discuss in numerous meetings how a simple apology should be made. As I saw on television on that day, after making an apology in the Conference Room, the Director of Marine had proceeded to the door to bow in apology again. I suspect that he had rehearsed for a couple of times. Some civil servants told me that they did have many plans in mind, but once they thought of the need to come to the Legislative Council to seek Members' approval for funding, during which they would have to pander to Members and being bombarded, they backed down.

Therefore, apart from fighting for democracy and freedom, we should also do well and compete in respect of the economy, people's livelihood, healthcare, education and social welfare. To develop a more diversified economy, increase export-oriented industries and enhance Hong Kong's overall sustainable competitiveness are our major ways out. Should our economy remain at a standstill, we will not be able to increase the expenditures for people's livelihood and welfare. As Chairman ZHANG Dejiang of the National People's Congress has said, a number of deep-rooted problems in Hong Kong's economic development have gradually shown themselves. We are sailing against the stream, and if we do not forge ahead, we will be left behind. Hong Kong society should therefore remain vigilant and think seriously.

We cannot rely on the Government alone to enhance Hong Kong's overall sustainable competitiveness, which can only be achieved through the concerted efforts of the Government, the commercial sector and the public. Members shouting at others, threatening the Government by filibustering and calling for Plan B or "Take Two" are nonsense, and did not do any help. Acts like the Occupy Central movement, for example, will only add fuel to the fire. In my opinion, if it fails, it will end up nothing more than a melodrama. If it is so unfortunate that it succeeds, Central will be paralysed and may deal a heavy blow to our economy. May I ask what good it does to Hong Kong people? Therefore, in order to enhance Hong Kong's competitiveness, Hong Kong people must work together wholeheartedly on a common ground (The buzzer sounded) …… We are sailing on the same boat ……

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PRESIDENT (in Cantonese): Dr CHIANG, your speaking time is up.

DR CHIANG LAI-WAN (in Cantonese): …… and must work hard to improve people's living.

PRESIDENT (in Cantonese): Dr CHIANG, speaking time is up.

DR CHIANG LAI-WAN (in Cantonese): I so submit. Thank you, President.

MR CHAN KIN-POR (in Cantonese): A number of colleagues have mentioned the China Urban Competitiveness Reports issued by the Chinese Academy of Social Sciences recently. Hong Kong has become the number one city in China in terms of competitiveness for 11 years in a row by leveraging on our edges in "comprehensive economic competitiveness" and "sustainable competitiveness". And yet, the credit is only superficial, as the Report has specifically pointed out that the competitive edge of Hong Kong is rapidly eroding and the gap between Hong Kong and other Mainland cities is also narrowing. Thus, the advantages that Hong Kong enjoys, including talents, hardware and software, are actually weakening.

Honestly, we are fully aware of the problems highlighted in the Report for they did not emerge only recently. It is only that they have remained unresolved. Today, Hong Kong has lagged behind Singapore in many aspects, and even the Mainland has been fast progressing and catching up closely with Hong Kong. If Hong Kong is still not determined to seek breakthroughs, our leading position will sooner or later be lost.

Recently, a number of Members have proposed different motions concerning the future of our economy, which include Mr Jeffrey LAM's motion on "Maintaining a business-friendly environment in Hong Kong", Dr LAM Tai-fai's motion on "Enhancing the overall sustainable competitiveness of Hong Kong" under discussion today and the motion on "Maintaining and enhancing Hong Kong's position as an international financial centre" to be proposed by Mr NG LEUNG-sing. We should be very grateful to these three Members because they are reminding us of the genuine and imminent danger that Hong Kong is LEGISLATIVE COUNCIL ─ 30 May 2013 12871 facing. I hope that not only the Government, but also the general public will seriously listen to Members' views and think about the future of Hong Kong, and they should no longer be obsessed with quarrels and fights.

According to the China Urban Competitiveness Reports, Hong Kong's economy is highly dependent on the financial and real estate sectors, but the serious shortage of land and housing supply has caused property prices to skyrocket. Coupled with an atmosphere of speculation, bubbles have been formed in our economy. Rapid increase in rentals of housing units and shop premises has not only pushed up inflation and stifled the development of the small and medium enterprises, but has also increased the people's burden of living. Furthermore, the increasingly ageing population will lead to a reduction in labour force, thereby directly undermining Hong Kong's competitiveness. The Report also projected that as the development of China matures, Hong Kong's servicing industry will definitely be replaced by the Mainland.

Amid this severe situation, we should inject new impetus into Hong Kong by all means in search of breakthroughs. I have put forward a number of proposals in the previous motion debates and will not repeat them. Today, I just want to add one point. In my opinion, in order not to be replaced by the Mainland, we must strive to consolidate some of Hong Kong's characteristics that China does not have, such as excellent goodwill, and this is the principle that Hong Kong must adhere to.

Since overseas investors have confidence in Hong Kong's contractual spirit, they can do business here without having to worry about any uncertainties, and Mainland consumers even have full confidence in the products sold in Hong Kong. Our excellent goodwill has enabled us to enjoy plentiful opportunities. We should therefore try our best to consolidate these characteristics, which are directly related to Hong Kong's core values, such as the rule of law, cleanliness, free flow of information and the quality of citizen. Recently, we have discovered some products of inferior quality. Beef balls, for example, are found to contain no beef at all. I think we should impose heavy penalties on any behaviour that may damage the goodwill of Hong Kong.

Another edge of Hong Kong that needs to be strengthened is our simple and low tax regime. As far as I understand, one important factor attracting foreign companies to come to Hong Kong and settle as a base for investment in China is our simple tax regime. Many foreign companies have complained 12872 LEGISLATIVE COUNCIL ─ 30 May 2013 about the increasing costs of investment in China due to its particularly complicated and heavy taxation. Some investors have therefore chosen to station their headquarters in Hong Kong so as to enjoy the low tax rate. Thus, the simple and low tax regime is still an advantage of Hong Kong, and a favourable condition to retain foreign companies that should not be changed.

Last of all, I want to talk about the local airport. At present, the Airport Authority is planning for the construction of the third runway. Yet, it has encountered great resistance and attracted queries. As an international aviation hub, the aviation industry can be said to be the main artery of Hong Kong's economy. So long as this main artery functions properly, our economy will develop healthily. Once it is blocked, our economy will suffer from "hypertension". Statistics showed that the airport has directly provided 65 000 jobs and indirectly created over 120 000 posts. If the four major pillar industries which have close relationship with the aviation industry are also taken into account, it may affect as much as half of the labour force. Thus, there is no need for me to explain the importance of the airport to Hong Kong.

Originally, it was predicted that the air traffic movements of the local airport would only saturate in 2018. Yet, latest figures showed that the first day of the long Easter holidays had set a new record for the airport's handling capacity on a single day, reaching as high as 1 172 aircraft movements and it needs only 28 more aircraft to reach the saturation point of 1 200 aircraft movements. Therefore, saturation will come sooner than expected. If aircraft traffic movements of the airport cannot be further increased in the long run after it is saturated, it can no longer cope with the demand for passenger and freight transport. As a result, airline companies will inevitably have to cancel a couple of flights and face the pressure of increasing fares, which will directly undermine the competitiveness of Hong Kong. Worse still, due to the complicated freedom traffic rights, aircrafts that cannot come to Hong Kong may not necessarily switch to other airports in Guangdong. Hence, our rivals will benefit in the end. Therefore, I believe the third runway should be expeditiously constructed so as to ensure that Hong Kong's competitiveness would not be undermined.

Of course, while there is a need to maintain Hong Kong people's livelihood, the natural ecology cannot be sacrificed as well. Since the construction of the third runway may affect the environment and the natural ecology, I hope that the Airport Authority will inject resources to take remedial actions to safeguard environmental ecology and promote the sustainable LEGISLATIVE COUNCIL ─ 30 May 2013 12873 development of ecology, with a view to ensuring that the construction project will not pollute the environment. I so submit.

PRESIDENT (in Cantonese): Does any other Member wish to speak?

MR RONNY TONG (in Cantonese): President, I am sure you may recall that, in the 1950s, a boss of a plastic flower factory had, due to his diligence and creativity, became the "head" of a huge enterprise within decades. He is the richest man in Hong Kong or even in the world. In fact, many successful persons in Hong Kong have similar stories, but it seems that such stories are getting fewer and fewer. Has the competitiveness of Hong Kong become increasingly lower when Hong Kong becomes increasingly successful? What are the differences between the 1950s, 1960s and today?

President, many Honourable colleagues are greatly concerned with the survey result released yesterday which claimed that Hong Kong has become less competitive. Therefore, many Members have made a lot of proposals on how to enhance our competitiveness. However, it seems that not many Honourable colleagues have thought about whether the existing social situation and political system have affected our competitiveness. President, I think there is such an impact, and it is getting more serious and with long-term implications.

President, first of all, I have to talk about the high land price policy which has been implemented since the colonial era and is now irreversible. While many people have said that we have a low tax system, for small and median enterprises, rents often account for 20% or even 30% to 40% of their costs, and they are in fact indirectly paying land taxes. As government land is sold to the highest bidder, the Government wishes to collect high land tax from various industries and sectors. Property developers also take this opportunity to make the maximum profit. Finally, the land users can only pass on the high costs to their service or sales targets; thus, the overall competitiveness of our economy has been diminishing. If we do not tackle the problem of a high land price policy, I believe it would be rather difficult to enhance our competitiveness.

President, why did the previous governments turn a deaf ear? That is really odd. As we all know, the previous governments had taken bold measures, one after another, to suppress the residential property market. Yet, they dare not suppress the commercial property market. What are the reasons?

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Honourable colleagues should consider that the rents of commercial buildings or shops affected our economy most. Why did the Government not combat the sales of commercial buildings or shops if they were concerned about competitiveness? It is simply because the previous governments relied on property developers and dared not offend them. Hence, they sacrificed our competitiveness.

President, this point can be extended to involve another force hindering competition, which is a human force. It can be said that our society is civilized or democratic, but, it is actually very feudal. "A change of sovereign brings a change of ministers"; we find it really scary when we consider the leadership of TUNG Chee-hwa, Donald TSANG and then LEUNG Chun-ying. We have taken a lot of trouble to pass the Competition Ordinance which seeks to enhance our competitiveness. Who have LEUNG Chun-ying appointed to the Competition Commission? I read the relevant document online last night, and I found that, out of the 13 members of the Competition Commission, nine opposed competition, they represented conglomerates or the business sector, or supported LEUNG. How can we depend upon these people to establish a platform for fair competition and promote competition? They cannot achieve these purposes. President, a powerful business force does not like our society to be competitive and it does not like to see examples of success like that of LI Ka-shing. As it has grown strong and become powerful, it fears that its kingdom would be eroded. This conservative force has precisely hindered the enhancement of our competitiveness.

Lastly, I must say that some Honourable colleagues have just remarked that Hong Kong is the city of protests and processions. Have we asked ourselves what the reasons are? Is it because Hong Kong people have nothing to do after they have had enough to eat, and they especially like to participate in processions and protests? Do they particularly like hunger strikes, protests, the containment of Central and the Cheung Kong Center? President, these are not the answers. The reason is that our society is filled with injustice and unfairness. A "working-class emperor" earning nearly $100 million appeared on television and gave very cold-blooded remarks, discrediting workers with the lowest wages. How can this not arouse the masses to take to the streets? How can we enhance our competitiveness when there is constant internal friction after these situations have emerged?

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PRESIDENT (in Cantonese): Does any other Member wish to speak?

MR PAUL TSE (in Cantonese): President, when we talk about health, we are talking about the health of every cell in our body; when we talk about the overall competitiveness of Hong Kong, I am afraid it should be connected with the competitiveness of every person. I have to say that young people today are rather pessimistic and it seems as though they have no sense of direction. Looking back at the time when Mr Ronny TONG and I were young ― I am not sure if Mr Ronny TONG had similar experiences. I grew up in a housing estate and I could easily move up the social ladder after I had completed my studies and acquired professional qualifications. However, young people today may feel like they have fewer opportunities and their only hope or so-called goal of life is to wait for public rental housing (PRH) allocation before they graduate from university, so that they can get a unit soon. Even though I may be criticized, I must fearlessly say that people like us who grew up in PRH estates wished to move out soon after graduation from school. Ironically, young people today wish to be allocated PRH units as soon as possible. This may be a rather sad reflection of our society.

When we were young, we never travelled to places to the north of Shenzhen River and the Internet had not yet come into existence. Now, young people with lofty ideals should definitely not yearn to live in PRH units. Instead, they should focus on places to the north of Shenzhen River and even the whole world. This is the appropriate attitude of promising young people having the will to fight. If they lack this courage and attitude, and they just resort to pressing the floor buttons of lifts when they are bored, I am afraid Hong Kong will have no future.

President, a number of Honourable colleagues have referred to the competitiveness report of the International Institute for Management Development in Switzerland or the report released by the Chinese Academy of Social Sciences. Another report published by the Heritage Foundation on Index of Economic Freedom should also be taken seriously, but no Honourable colleague has mentioned this report. I have briefly read the report and I found that Hong Kong has ranked first for 19 consecutive years, which is not bad; Singapore which is the competitor that is often compared with Hong Kong ranked second. As the two places have a lot of similarities, they will inevitably be compared when competitiveness is discussed. Both societies uphold the rule of 12876 LEGISLATIVE COUNCIL ─ 30 May 2013 law and attach importance to being clean ― this year, Hong Kong may score a lower mark in this area ― we emphasize a low tax rate and we are pursuing a "small government", for which we get a very high score. We also have a very simple regulatory regime. I frequently observe, in the course of work, that many people from foreign countries doing business in Hong Kong are really astonished to find that, after someone has acquired a company, he can change the name of the company within one day, establish another new company, and start operating right away. There is no requirement of minimum capital and the documents do not need the approval of a number of departments. These are essential factors contributing to the success of Hong Kong throughout the years.

Recently, the Government has inevitably made massive moves in the course of increasing democratization. As we have observed, the Government has increased the welfare expenditures as pressure is getting heavier. The most crucial point is how long we can hold on to this boundary. As I have commented before, to superficially maintain the "small government" strategy, the Government has invested a lot of surplus in so-called funds, lest people should think that it has overspent; even though it has really overspent. I certainly wish the Government would understand that this is one of the most important links to maintaining our competitiveness.

President, the central idea is to refer to the Basic Law after all. Chapter I of the Basic Law clearly defines such issues as the previous capitalist system shall remain unchanged and the socialist system will not be practiced in Hong Kong; people's property rights, freedom and free trade shall be protected and safeguarded; and there will be a conventional and well-established legal system. This is the foundation of our success and for remaining highly competitive. Nevertheless, the Government may not be able to withstand pressure from all sides or there may be various reasons …… this is excusable if we formulate long-term strategies like Singapore, to protect or develop certain industries; yet, I am worried that Hong Kong may become neither fish nor fowl or fall between two stools, and it cannot act like the Singapore Government and vigorously promote certain industries.

For example, the tourism industry in Singapore is doing well in respect of airports, airlines and infrastructural construction while there are more and more restrictions in Hong Kong. For instance, the BSD and the SSD are introduced under momentary pressure; and the "powdered formula restriction order" is even more ridiculous, and it has ruined our excellent capital that was originally the LEGISLATIVE COUNCIL ─ 30 May 2013 12877 most outstanding and considered as superb by the whole world. I would like to spend a little time advising the Government that, even if we are not going to achieve a lot, we have better not fail too often; otherwise, Hong Kong's established capital cannot last too long. Thank you, President.

PRESIDENT (in Cantonese): Does any other Member wish to speak?

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): Dr LAM Tai-fai, you may now speak on the amendments. You will have five minutes to speak.

DR LAM TAI-FAI (in Cantonese): President, first of all, I would like to thank six Members for proposing their amendments which have enriched the contents of my original motion, and for their valuable views on how to enhance the overall sustainable competitiveness of Hong Kong, which I believe should be very useful to the Government. If time permits, I will briefly respond to each of these amendments.

I very much agree with Mr TANG Ka-piu's proposal on developing diversified industries to make the economic structure more balanced. We have repeatedly said that Hong Kong cannot rest on its laurels. If our economy is dependent on the financial and real estate industries, it will collapse when these two industries do not perform well. Our economic system is actually weak, not supported by a real economy. For more than a decade since the reunification, nothing has been mentioned about industrial development in each year's policy address. The industrial sector is surely very angry, and this also proved that the Government does not attach importance to the real economy.

However, regarding Mr TANG Ka-piu's amendment that the Government should implement social policies to ensure that all sectors of society may share the fruits of economic development, I would like to raise some comments. Before the introduction of any measures and policies that may affect the business environment, the Government should, apart from listening to the views of the labour sector, conduct extensive consultations and have in-depth discussions with all stakeholders. In particular, the Government must consult stakeholders in 12878 LEGISLATIVE COUNCIL ─ 30 May 2013 various sectors of the community when the issues concerning standard working hours or the rights to collective bargaining are discussed in the future. We must not forget that it is most vital not to dampen the sustainable competitiveness of small and medium enterprises (SMEs). If SMEs cannot operate anymore and have to close down, wage earners will ultimately be affected, and nobody wants to see that happen.

Second, I concur with Mr Christopher CHEUNG's proposal on continuous promotion of Hong Kong as an international financial centre. Secretary, Mr Christopher CHEUNG is a financial expert, he is well-experienced and honest, and the Government should more readily listen to the opinions of these experts. With the continuous economic development of the Mainland, Hong Kong, as an offshore RMB centre, can assist in the internationalization of Renminbi. It can play an important strategic role in strengthening the country's "going global and attracting foreign investment". Of course, I am worried that the recent incident concerning the Hong Kong Mercantile Exchange Limited ― you may either describe it as a scandal or a fraud ― may affect Hong Kong's well-established reputation as an international financial centre. I also wish to emphasize a point, as many Members have said, the free economy and free trade are the cornerstones of our success. I hope the Government would no longer implement any stupid measure to break this cornerstone, and I hope the "powdered formula restriction order" would be the last measure of this sort. The Government should stop such silly acts; otherwise, the most powerful weapon of free trade on which our success depends will be turned into waste.

Third, I wish to respond to Ir Dr LO Wai-kwok's remarks. I strongly agree with his proposal on consolidating pillar industries, promoting emerging industries and revitalizing traditional industries. Hong Kong has always relied on the four pillar industries for success. The Financial Secretary had mentioned earlier in the Budget that the trade and logistics industry must be consolidated. But, as Mr CHAN Kin-por has just mentioned, the development of logistics infrastructure has been slow and the construction of the third runway is still at the stage of consultation and study. If we do not make extra efforts to catch up at full speed, we will certainly lag behind the neighbouring regions and lose our sustainable competitiveness. I hope the Government would address these issues squarely. In addition, concerning the six priority industries proposed by the last-term Government such as the testing and certification industry, the current-term Government should tell us whether it will continue to develop these industries, so that industry players will know how to respond.

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Just now, Mr Charles Peter MOK criticized Mr WU Chi-wai for being too rigid as he demanded for enactment on standard working hours before the commencement of consultation. I fully support Mr Charles Peter MOK. In our future discussions on standard working hours or the rights to collective bargaining, we must, as mentioned by Mr Charles Peter MOK, consult various stakeholders in the community, so that the policies to be introduced will not undermine Hong Kong's sustainable competitiveness. In addition to labour protection, we must also ensure that employers can do business in a favourable business environment.

Lastly, Dr Kenneth CHAN has just said that functional constituencies should be abolished in 2017. I think the idea is not realistic at this stage. Hence, I will not support his amendment.

Thank you, President.

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, I would like to thank a number of Members for speaking on the motion on "Enhancing the overall sustainable competitiveness of Hong Kong". I also note that six Members have proposed amendments to the motion. Members have made marvellous speeches, they talked about the various aspects related to enhancing the overall sustainable competitiveness of Hong Kong, including the population policy, land policy, education policy, as well and talent training. The questions raised by Members are right. In order to enhance our competitiveness, we must make Hong Kong a city with favourable living conditions; we must have land for business and trade activities; and without an education policy, how can the competitiveness of Hong Kong be enhanced? All these aspects are important. Simply put, the discussion today involves the work of the Government and the Legislative Council in many areas, and I believe that, in the days to come, how to enhance the sustainable competitiveness of Hong Kong will top the agenda of the Government in respect of its governance and political deliberation. It is because the continuous enhancement of the competitiveness of Hong Kong will affect the well-being of all Hong Kong people.

Today, I will briefly speak on the industrial policies and related policies, and report on the measures recently taken by the Government for Members' consideration. I will also respond to the remarks made by Members.

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The development of a comprehensive industrial policy is the most important task of the Government in respect of economic development. It is explicitly stated in the Chief Executive's Policy Address that we must make use of our competitive edge, and the shifting of the global economic gravity to the East, as well as the opportunities arising from the implementation of the National 12th Five-Year Plan, together with the Government's "appropriately proactive" approach, to diversify industries to meet the needs of our people in various respects.

To formulate a holistic industrial policy, the Chief Executive announced in January this year the establishment of the Economic Development Commission (EDC). The EDC will explore ways to make use of our long-standing advantages and the opportunities offered by our country to broaden our economic base, work on the overall strategy and policy to enhance our long-term development, and identify industries which present opportunities for Hong Kong's further economic growth. The Working Groups under the EDC have started operating. We are confident that the concrete recommendations made by the EDC can appropriately assist in promoting Hong Kong's long-term economic development.

The Financial Secretary has stated in the Budget that traditional pillar industries have been the major driving forces behind Hong Kong's economic development. They have clear advantages internationally and are highly competitive.

In order to maintain Hong Kong's competitiveness, the Government has all along supported the development of the four pillar industries, namely trading and logistics, tourism, financial services and business and professional services, so that they can serve as a powerful driver for economic development. For example, the Government has designated land for the development of modern logistics facilities by the logistics industry, and it will explore how best to use existing port facilities to cater for the future development of the trading and logistics industry, and continue to promote transport infrastructure projects. The Government will also assist local enterprises in developing new markets to facilitate more diversified development of the trading and logistics industry.

Concerning the tourism industry, the Government will make greater efforts in tourism infrastructure, hotel supply, marketing, complementary services, and so on. The Working Group on Convention and Exhibition Industries and LEGISLATIVE COUNCIL ─ 30 May 2013 12881

Tourism under the EDC has already started to explore the development direction of our tourism industry.

Mr Christopher CHEUNG has stressed in his amendment that the Government should focus on the continuous promotion of Hong Kong as an international financial centre. In fact, the Government has all along been vigorously promoting the development of the financial industry.

In promoting the development of the asset management industry, the Government adopts a multi-pronged approach, combines market conditions and assists in the development of Hong Kong into a comprehensive fund and asset management centre, covering registration, product manufacturing, investment management and sales promotion. For instance, early this year, we introduced into the Legislative Council the Inland Revenue and Stamp Duty Legislation (Alternative Bond Schemes) (Amendment) Bill 2012 and the Trust Law (Amendment) Bill 2013. These two Bills seek to improve the Islamic finance platform and reform the trust law respectively, with a view to creating a favourable environment for the asset management industry. It is proposed in the Budget to extend the profits tax exemption for offshore funds to include transactions in private companies which are incorporated or registered outside Hong Kong and do not hold any Hong Kong properties nor carry out any business in Hong Kong. This will allow private equity funds to enjoy the same tax exemption as offshore funds. We believe these measures will enable Hong Kong to become the base for identifying domestic and international funds projects, and create different kinds of job opportunities.

Regarding the insurance sector, the Government attracts enterprises from different places to set up captive insurance companies in Hong Kong through a sound regulatory system and tax concessions, and it also promotes captive insurance through various channels.

One of the financial aspects that we have vigorously developed is RMB business. The latest development includes the arrangement to expand the RMB Qualified Foreign Institutional Investors (RQFII) pilot points as announced by the Mainland regulator in March this year. This measure is conducive to the introduction of more innovative and diversified RMB investment products in the Hong Kong market to help promote the internationalization of RMB.

To further promote the development of the financial industry, the Chief Executive has set up the EDC, to advise the Government and make 12882 LEGISLATIVE COUNCIL ─ 30 May 2013 recommendations on how to promote the development of the financial industry and consolidate Hong Kong's position as an international financial centre. The EDC and the working groups under it have commenced full operation.

As regards commercial and industrial support and professional services, we will continue to assist the services industries by means of the "Mainland/Hong Kong Closer Economic Partnership Arrangement" (CEPA), including the provision of commercial and industrial support and professional services, and preferential treatment for entry to the Mainland market, to help industry players grasp business opportunities.

The Government wishes to develop a diversity of industries, increase the number of industries and broaden the scope. Supporting the development of new industries may create a more diversified economic base. A few Members including Mr Charles Peter MOK, Ir Dr LO Wai-kwok and Mr TANG Ka-piu have proposed in their amendments to promote and support emerging industries, and develop diversified industries. The Government has implemented various measures for the support of emerging industries, especially the development of the innovation and technology, and the cultural and creative industries.

Concerning innovation and technology, the Government is committed to creating an environment conducive to the development of innovation and technology and enhancing the provision of complementary hardware, policies and resources, to promote co-operation amongst the Government, industry, academia and research sectors. The specific measures include extending the funding ceiling and scope of the Innovation and Technology Fund, optimizing the Small Entrepreneur Research Assistance Programme under the Fund, increasing the cash rebate amounts under the Research and Development Cash Rebate Scheme, extending the operation period of four research centres, and implementing the works on Phase 3 development of the Science Park. As announced in the Budget, starting from the year 2013-2014, the Government will provide funding support to six universities engaging in technological research and development. Each of them will be provided with a maximum of $4 million per annum for three years in order to enhance the universities' capabilities in technology transfer as well as commercialization and realization of research and development results. The Hong Kong Science and Technology Parks Corporation will also provide incubation services to assist technology start-ups to nurture young technology entrepreneurs.

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Through the Create Hong Kong Office, the Government closely co-operates with the industry in promoting the development of creative industries. We will apply to the Legislative Council for an additional injection of $300 million into the CreateSmart Initiative to continue to finance activities, nurture talents, expand foreign markets, establish brands, and organize large-scale creative activities, to consolidate Hong Kong's position as Asia's Creative Capital.

To promote the development of the design industry, the Design Incubation Programme (DIP) offered by the InnoCentre with funding support from the Government provides assistance to newly established incubatees. In addition, the Cyberport Incubation Programme organized by the Cyberport will support the incubated digital entertainment and information technology companies. The incubatees in the Cyberport Entrepreneurship Centre enjoy rent-free use of office or rent concessions.

As regards available space, the former police married quarters on Hollywood Road will be transformed into a creative centre known as "PMQ", which provides approximately 130 studios for the creation, display and sale of creative products. The Leisure and Cultural Services Department has converted the former Royal Hong Kong Yacht Club clubhouse on Oil Street into the Visual Arts Exhibition and Activity Centre. This Centre was opened in May this year, and it provides a venue for training new visual arts talents and a platform for promoting exchange.

We also have appropriate measures for supporting and complementing industrial development in respect of talent training. I note that Mr TANG Ka-piu's and Mr Charles Peter MOK's amendments have also mentioned talent training and education, and I will respond to these points in due course.

We very much agree with Members' views on maintaining a fair business environment and we will continue to maintain Hong Kong's favourable business environment in various ways, such as promoting the creation of a platform that facilitates business, supports small and medium enterprises (SMEs) and promotes sustainable and fair competitions.

The Government will continue to closely co-operate with the business sector and various related parties, to jointly consider, through the Business Facilitation Advisory Committee and the task forces under it, how to optimize the 12884 LEGISLATIVE COUNCIL ─ 30 May 2013 regulation of our business environment and implement various programmes and measures to facilitate business.

The Government has always been supporting SMEs in many ways so as to enhance the competitiveness of enterprises. Specifically, we have extended the application period for the special concessionary measures under the SME Financing Guarantee Scheme for one year to late February 2014. We have also proposed to increase the cumulative amount of the grant under the SME Export Marketing Fund from $150,000 to $200,000, subject to the meeting of relevant additional conditions. From 1 March this year onwards, we will introduce a small business policy scheme to be run by the Hong Kong Export Credit Insurance Corporation for Hong Kong enterprises with an annual business turnover of less than $50 million to provide more flexibility for exporters in taking out insurance cover. Within a period of two years from the same date, insurance policy holders under the scheme will enjoy waiver of the annual policy fee and premium discount.

By means of the dedicated fund of $1 billion launched in June last year, we will continue to assist Hong Kong enterprises in upgrading and restructuring, brand development, as well as promoting domestic sales in the Mainland, so as to enhance their competitiveness in the Mainland market.

To regulate possible anti-competitive behaviours in various industries, thereby promoting sustainable and fair competition, the Competition Ordinance was enacted by the Government in 2012 and passed by the Legislative Council. It seeks to enhance economic efficiency and promote free trade, as well as create a win-win situation for the business sector and consumers. The Ordinance will be implemented in phases. In April this year, the Government announced the appointment of the Chairman and members of the Competition Commission. We believe that, in the long run, the Competition Ordinance will help local enterprises strengthen integration with enterprises in various parts of the world and enhance their competitiveness.

The Government has been actively investing in education to nurture talents and promote social mobility, so that Hong Kong can have sustainable development and maintain its competitiveness. In respect of vocational training, the Hong Kong Vocational Training Council provides about 260 000 vocational education and training places. These programmes comprise training in professional knowledge and general education, and they are both theoretical and LEGISLATIVE COUNCIL ─ 30 May 2013 12885 practical. The trainees who completed these programmes can immediately join the workplace or take up further studies.

In addition, the Employees Retraining Board develops programmes under the "market- and employment-oriented" principle and it offers diversified training programmes to eligible employees aged 15 or above, with associate degree or lower academic qualifications.

In encouraging and supporting employment, the Labour Department provides a range of comprehensive and free employment services, and it has introduced targeted employment support services, including the Employment Programme for the Middle-aged and the Work Orientation and Placement Scheme, in light of the needs of job seekers with different employment difficulties.

While making efforts to promote economic development, we are also concerned about the population living in poverty and workers' rights. Poverty alleviation is one of the Government's policy priorities, and the goal is to provide the disadvantaged groups having the abilities to work with opportunities self-reliance and improving their livelihood. Public resources will be used to care for those who cannot help themselves, so that the general public can share the fruits of economic growth.

On the policy on working hours, the Government will carefully consider the overall long-term interests of Hong Kong. Under the premise of a reasonable balance in the interests of employers and employees, we will progressively improve employees' rights and benefits. The newly established Standard Working Hours Committee has held its first meeting in May. We believe that the Committee's platform would help promote the community's complex and in-depth discussions about this complicated topic, thereby reaching a consensus and determining the way forward.

The Government attaches great importance to environmental protection, and it will invest more resources to build Hong Kong into a liveable, healthy and green international city. In recent years, the Government has implemented a series of measures against pollution sources, with a view to improving Hong Kong's air quality. The Government also announced in conjunction with the Guangdong Province last year the new emission reduction plan for the Pearl 12886 LEGISLATIVE COUNCIL ─ 30 May 2013

River Delta Region, setting air pollutant emission reduction targets for Hong Kong and the Pearl River Delta in 2015 and 2020.

In waste management, the overall direction of the Government is to give priority to waste reduction. The newly launched "Blueprint for sustainable use of resources" analyses the challenges and opportunities of waste management in Hong Kong, and maps out a comprehensive strategy, targets, policies and action plans for waste management for the coming 10 years. The Government will also formulate the implementation strategies and action plans for the promotion of green energy-saving buildings in the public and private sectors, and encourage the private sector to make carbon reduction efforts to promote low carbon living.

Mr WU Chi-wai's and Dr Kenneth CHAN's amendments propose to uphold a clean level-playing field, and safeguard human rights, the rule of law and freedom of the press in Hong Kong. I must emphasize that being clean is one of the core values of Hong Kong. The ICAC will continue to fulfil its mission of fighting corruption. It will adopt three-pronged strategies by combining law enforcement, corruption prevention and community education, so as to fight against corruption in an all-round manner through the ICAC's professional team.

In terms of human rights, the legal protection, set out in detail in the Basic Law, the Hong Kong Bill of Rights Ordinance and other relevant regulations, is founded on the rule of law and judicial independence. The Government will continue to protect people's rights in accordance with the Basic Law and relevant regulations, and it will resolutely safeguard the freedom of speech and freedom of the press.

Dr LAM Tai-fai's motion for debate is very meaningful as it promotes discussions concerning our economy, social development and people's livelihood. Dr LAM Tai-fai's motion has touched upon the 2013 China Urban Competitiveness Blue Book: the China Urban Competitiveness Report, which pointed out that Hong Kong is suffering from the gradual weakening of the advantages. Some Members have just talked about their worries related to the industrial structure; our economy's being highly dependent on the financial and real estate sectors, the social atmosphere of speculation, and so on.

I would like to point out again that the Government attaches great importance to the development of diversified industries, so as to maintain the overall competitiveness of Hong Kong. In fact, the financial and insurance LEGISLATIVE COUNCIL ─ 30 May 2013 12887 industries and the real estate industry only accounted for 16.1% and 5.6% of the GDP, showing that Hong Kong does not only rely on the financial and real estate sectors. In addition, over the past few years, the Government has done a lot of work, such as levying additional stamp duties in the property market and introducing a series of demand management measures, with a view to reducing the risk of a hyper property market to financial stability.

I will convey to the relevant Policy Bureaux the individual specific recommendations made by Members during the debate. We believe that, so long as various sectors of the community work together with one heart, Hong Kong will continue to give play to its competitive advantage, reach another milestone in economic development, and become our home where we can live and work in peace and contentment.

Thank you, President.

PRESIDENT (in Cantonese): Mr TANG Ka-piu, please move your amendment to the motion.

MR TANG KA-PIU (in Cantonese): President, I move that Dr LAM Tai-fai's motion be amended.

Mr TANG Ka-piu moved the following amendment: (Translation)

"To add ", given that" after "That"; to delete "; in this connection" after "by 2015"; and to add "; such policies include: (1) to develop diversified industries to make the economic structure more balanced; (2) to strengthen talent training, make good use of the "first-hire-then-train" approach to attract new entrants, and reform the apprenticeship system, so as to strengthen youth vocational training and develop talents for the future; (3) to lower the rental costs in society; (4) to systematically absorb groups with employment difficulties, including the middle-aged, persons with disabilities and single parents, etc., and to train them and provide them with employment support; and (5) to ensure through social policies that all sectors of society may share the fruits of economic development" immediately before the full stop. "

12888 LEGISLATIVE COUNCIL ─ 30 May 2013

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment, moved by Mr TANG Ka-piu to Dr LAM Tai-fai's motion, be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections, who are present. I declare the amendment passed.

PRESIDENT (in Cantonese): Members have already been informed, as Mr TANG Ka-piu's amendment has been passed, Mr Charles Peter MOK has withdrawn his amendment.

PRESIDENT (in Cantonese): Mr Christopher CHEUNG, as Mr TANG Ka-piu's amendment has been passed, you may now move your revised amendment.

MR CHRISTOPHER CHEUNG (in Cantonese): President, I move that Dr LAM Tai-fai's motion as amended by Mr TANG Ka-piu be further amended by my revised amendment.

Mr Christopher CHEUNG moved the following further amendment to the motion as amended by Mr TANG Ka-piu: (Translation)

"To add "; and (6) to continue promotion of Hong Kong as an international financial centre" immediately before the full stop."

LEGISLATIVE COUNCIL ─ 30 May 2013 12889

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr Christopher CHEUNG's amendment to Dr LAM Tai-fai's motion as amended by Mr TANG Ka-piu be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections, who are present. I declare the amendment passed.

PRESIDENT (in Cantonese): Ir Dr LO Wai-kwok, as Mr TANG Ka-piu's and Mr Christopher CHEUNG's amendments have been passed, you may now move your revised amendment.

IR DR LO WAI-KWOK (in Cantonese): President, I move that Dr LAM Tai-fai's motion as amended by Mr TANG Ka-piu and Mr Christopher CHEUNG be further amended by my revised amendment, which mainly adds the wordings "consolidate pillar industries, promote emerging industries and revitalize traditional industries".

Ir Dr LO Wai-kwok moved the following further amendment to the motion as amended by Mr TANG Ka-piu and Mr Christopher CHEUNG: (Translation)

"To add "; and (7) to consolidate pillar industries, promote emerging industries and revitalize traditional industries" immediately before the full stop."

12890 LEGISLATIVE COUNCIL ─ 30 May 2013

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Ir Dr LO Wai-kwok's amendment to Dr LAM Tai-fai's motion as amended by Mr TANG Ka-piu and Mr Christopher CHEUNG be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections, who are present. I declare the amendment passed.

PRESIDENT (in Cantonese): Dr Kenneth CHAN, as the amendments of Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok have been passed, you may now move your revised amendment.

DR KENNETH CHAN (in Cantonese): President, I move that Dr LAM Tai-fai's motion as amended by Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok be further amended by my revised amendment.

Dr Kenneth CHAN moved the following further amendment to the motion as amended by Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok: (Translation)

"To add "; and (8) to implement the election of the Chief Executive by genuine universal suffrage in 2017, abolish the functional constituencies in the Legislative Council, enact an archives law and legislation on freedom of information, safeguard human rights, the rule of law and LEGISLATIVE COUNCIL ─ 30 May 2013 12891

freedom of the press in Hong Kong, uphold a clean level-playing field for businesses, promote environmental protection and sustainable development, and put forward a visionary blueprint on education and manpower training" immediately before the full stop."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Dr Kenneth CHAN's amendment to Dr LAM Tai-fai's motion as amended by Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr Christopher CHEUNG rose to claim a division.

PRESIDENT (in Cantonese): Mr Christopher CHEUNG has claimed a division. The division bell will ring for five minutes.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Dr Joseph LEE, Mr CHEUNG Kwok-che, Mr Charles Peter MOK, Mr Dennis KWOK and Mr IP Kin-yuen voted for the amendment.

12892 LEGISLATIVE COUNCIL ─ 30 May 2013

Mr Abraham SHEK, Mr Vincent FANG, Mr Andrew LEUNG, Mr WONG Ting-kwong, Dr LAM Tai-fai, Mr CHAN Kin-por, Mr IP Kwok-him, Mr Steven HO, Mr YIU Si-wing, Mr MA Fung-kwok, Mr Christopher CHEUNG, Mr Martin LIAO, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan and Mr Tony TSE voted against the amendment.

Miss CHAN Yuen-han, Mr KWOK Wai-keung, Mr POON Siu-ping and Mr TANG Ka-piu abstained.

Geographical Constituencies:

Mr LEE Cheuk-yan, Ms Emily LAU, Mr Ronny TONG, Ms Cyd HO, Ms Claudia MO, Mr WU Chi-wai, Mr Gary FAN, Mr CHAN Chi-chuen, Dr Kenneth CHAN and Dr Helena WONG voted for the amendment.

Mr CHAN Kam-lam, Mr TAM Yiu-chung, Dr Priscilla LEUNG, Dr Elizabeth QUAT and Dr CHIANG Lai-wan voted against the amendment.

Mr WONG Kwok-hing, Mr Paul TSE and Miss Alice MAK abstained.

THE PRESIDENT, Mr Jasper TSANG, did not cast any vote.

THE PRESIDENT announced that among the Members returned by functional constituencies, 24 were present, five were in favour of the amendment, 15 against it and four abstained; while among the Members returned by geographical constituencies through direct elections, 19 were present, 10 were in favour of the amendment, five against it and three abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.

MR ANDREW LEUNG (in Cantonese): President, I move that in the event of further divisions being claimed in respect of the motion on "Enhancing the overall sustainable competitiveness of Hong Kong" or any amendments thereto, this LEGISLATIVE COUNCIL ─ 30 May 2013 12893

Council do proceed to each of such divisions immediately after the division bell has been rung for one minute.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mr Andrew LEUNG be passed.

PRESIDENT (in Cantonese): Does any Member wish to speak?

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections, who are present. I declare the motion passed.

I order that in the event of further divisions being claimed in respect of the motion on "Enhancing the overall sustainable competitiveness of Hong Kong" or any amendments thereto, this Council do proceed to each of such divisions immediately after the division bell has been rung for one minute.

PRESIDENT (in Cantonese): Mr WU Chi-wai, as the amendments of Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok have been passed, you may now move your revised amendment.

12894 LEGISLATIVE COUNCIL ─ 30 May 2013

MR WU CHI-WAI (in Cantonese): President, I move that Dr LAM Tai-fai's motion as amended by Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok be further amended by my revised amendment.

Mr WU Chi-wai moved the following further amendment to the motion as amended by Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok: (Translation)

"To add "; (8) to promote democratic progress, immediately launch public consultation on constitutional development, formulate constitutional reform proposals in accordance with the Basic Law and the International Covenant on Civil and Political Rights of the United Nations, and implement universal suffrage for the election of the Chief Executive in 2017 and that of all Members of the Legislative Council in 2020, and put in place a democratic political system marked by universality and equality; (9) to review and uphold Hong Kong's integrity, and safeguard human rights, freedom of the press, freedom of speech and judicial independence in Hong Kong; (10) to actively alleviate poverty, narrow the disparity between the rich and the poor, conduct extensive public consultation for formulating a development blueprint on Hong Kong's social welfare policies for the next five and 10 years to ensure eligible persons receiving the required services within an appropriate time frame; and, in response to the changes in Hong Kong's economic and social environment, to formulate a comprehensive poverty elimination policy to reduce the negative impact of the disparity between the rich and the poor on Hong Kong's social development; (11) to enact legislation on standard working hours at 44 hours a week, with overtime compensation 1.5 times of the normal pay, so as to balance employees' incomes and working hours and improve their quality of life; (12) to expeditiously grant free television licences, which not only enables the public to watch television programmes with choices, but also facilitates the development of the television and creative media industries in Hong Kong; (13) to provide a reasonable, fair and impartial business environment to enable small and medium enterprises to have opportunities to compete with large consortia fairly; (14) to implement various measures for improving air pollution (including local and regional pollution sources) and reducing carbon emissions; (15) to protect the ecological resources of the existing country parks and marine parks, and promote sustainable urban development; and (16) to implement 15-year free education, practise small-class teaching in LEGISLATIVE COUNCIL ─ 30 May 2013 12895

secondary schools, increase the number of funded programme places offered by post-secondary institutions, and set a quota on the number of overseas students under postgraduate programmes in graduate schools of universities, so as to guarantee the quality of local education, enable its development and nurture local talents for enhancing Hong Kong's competitiveness" immediately before the full stop."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr WU Chi-wai's amendment to Dr LAM Tai-fai's motion as amended by Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Ir Dr LO Wai-kwok rose to claim a division.

PRESIDENT (in Cantonese): Ir Dr LO Wai-kwok has claimed a division. The division bell will ring for one minute.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

(Mr Paul TSE stood up)

PRESIDENT (in Cantonese): Mr Paul TSE, what is your point?

12896 LEGISLATIVE COUNCIL ─ 30 May 2013

MR PAUL TSE (in Cantonese): It is displayed on the computer screen that we are now voting on shortening the time to vote. I just wish to clarify the question on which we are now going to vote.

It is displayed on the computer screen that we are now voting on shortening the time to vote.

PRESIDENT (in Cantonese): The message displayed on the computer screen is incorrect. We are now going to vote on Mr WU Chi-wai's amendment to Dr LAM Tai-fai's motion as amended by Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Dr Joseph LEE, Mr CHEUNG Kwok-che, Mr Dennis KWOK and Mr IP Kin-yuen voted for the amendment.

Mr Abraham SHEK, Mr Vincent FANG, Mr Andrew LEUNG, Mr WONG Ting-kwong, Dr LAM Tai-fai, Mr CHAN Kin-por, Mr IP Kwok-him, Mr Steven HO, Mr YIU Si-wing, Mr Charles Peter MOK, Miss CHAN Yuen-han, Mr KWOK Wai-keung, Mr Christopher CHEUNG, Mr Martin LIAO, Mr TANG Ka-piu, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan and Mr Tony TSE voted against the amendment.

Mr POON Siu-ping abstained.

Geographical Constituencies:

Mr LEE Cheuk-yan, Ms Emily LAU, Mr Ronny TONG, Ms Cyd HO, Ms Claudia MO, Mr WU Chi-wai, Mr Gary FAN, Mr CHAN Chi-chuen, Dr Kenneth CHAN and Dr Helena WONG voted for the amendment.

LEGISLATIVE COUNCIL ─ 30 May 2013 12897

Mr CHAN Kam-lam, Mr TAM Yiu-chung, Mr WONG Kwok-hing, Dr Priscilla LEUNG, Miss Alice MAK, Dr Elizabeth QUAT and Dr CHIANG Lai-wan voted against the amendment.

Mr Paul TSE abstained.

THE PRESIDENT, Mr Jasper TSANG, did not cast any vote.

THE PRESIDENT announced that among the Members returned by functional constituencies, 23 were present, four were in favour of the amendment, 18 against it and one abstained; while among the Members returned by geographical constituencies through direct elections, 19 were present, 10 were in favour of the amendment, seven against it and one abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.

PRESIDENT (in Cantonese): Dr LAM Tai-fai, you still have 10 seconds to speak in reply.

DR LAM TAI-FAI (in Cantonese): President, I hope the Government would understand our worries, listen to our views and learn lessons from experience, so that the overall sustainable competitiveness of Hong Kong will not decline further. I also hope that Hong Kong could go back to the highest position next year.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Dr LAM Tai-fai, as amended by Mr TANG Ka-piu, Mr Christopher CHEUNG and Ir Dr LO Wai-kwok, be passed.

PRESIDENT (in Cantonese): Will those in favour please raise their hands?

(Members raised their hands)

12898 LEGISLATIVE COUNCIL ─ 30 May 2013

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections, who are present. I declare the motion as amended passed.

NEXT MEETING

PRESIDENT (in Cantonese): I now adjourn the Council until 11:00 am on Wednesday 5 June 2013.

Adjourned accordingly at twenty-four minutes to Seven o'clock.