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Press Release - June 26 1998

SAR Government Takes Bold Steps To Reverse the Asian Financial Crisis

The Director of the Hong Kong Economic and Trade Office of the Hong Kong Special Administrative Region (SAR) Government , Mr Donald Tong, today (June 26), told influential Canadians that the SAR Government has introduced a series of bold measures to alleviate and help reverse the present economic and financial crisis sweeping Asia.

Speaking at a dinner in Calgary in Alberta province, to commemorate the first anniversary of the SAR, Mr Tong said the latest package of measures announced by the Chief Executive, Mr Tung Chee Hwa on June 22, are aimed at helping both the local and overseas business community and the population at large.

Some 300 people from the business sector, community organisations and government officials attended the dinner organised by the Hong Kong Canada Business Association, Calgary Section, the Chinese Cultural Centre and the University of Calgary.

"We realise that Hong Kong cannot stay immuned to the contagion and that is why our Chief Executive has taken the initiative by announcing the measures a few days ago so as to address the present problems and to smooth the adjustment to the economy now in progress," Mr Tong said.

The package of measures include:

  • Exempting interest income earned locally from profits tax with immediate effect to improve liquidity in banks

  • Setting up a new C$377 million scheme to help non-export related small and medium enterprises to obtain loans

  • Suspending all land sales by auction and by public tender for the next nine months

  • Increasing substantially the quota of families eligible for the Home Purchase Loan Scheme and expanding the Home Starter Loan Scheme

  • Reducing duty on diesel oil by 30 per cent to provide relief to more than 22,000 taxi and light bus drivers

  • Freezing the adjustment of salaries of senior government officials for this financial year


Mr Tong, however, stressed that in spite of the economic phenomena, Hong Kong will continue to ensure that the linked exchange system will remain intact; strictly adhere to market practices and follow the long-established financial management principle.

In his announcement the Chief Executive warned that if the SAR Government did not maintain the US$-HK$ peg, the economic consequences would be unthinkable.

In his statement, Mr Tung said: "If we do not have a comprehensive package to maintain the confidence of overseas investors, repeated pressure will be exerted on the Hong Kong dollar. Then the efforts we have made to relieve our economic difficulties will be in vain."

During his dinner address, Mr Tong also told the audience how wrong the pessimists were when, before the handover of Hong Kong, they predicted the failure of the "One country, two systems" concept and that the territory would lose its position as an economic powerhouse of Asia.

Mr Tong added that there is now universal recognition that the concept of "One country, two systems" is truly being implemented and realised.This has been acknowledged by the British Government, the co-signatory of the Joint Declaration, and most positively in the recent US State Department reports to the US Congress.

"In a nutshell, everything remained the same during the period, Mr Tong said, adding: "the names which were used before July 1997 such as Queen Elizabeth Hospital, Victoria Harbour, King's Road, etc are still listed in official maps and directories."

The media are still very vocal and reports considered sensitive on the mainland of China are still being reported and commented on.

Emphasizing that the pessimists have been proven wrong, Mr. Tong said that as promised the SAR carried out its first elections to the legislature "freely, openly and fairly".

"The elections on May 24 was also a hallmark event of the year because 53 per cent of the registered voters took part in the balloting despite heavy rainfall," he said.

"We believe that the enthusiasm of Hong Kong citizens who went to the polls to vote for the candidates of their choice reflects the very strong support for the Basic Law and the spirit of Hong Kong people ruling Hong Kong."

On Hong Kong's economy, Mr. Tong said the economic adjustment will continue for a few quarters and will see very slow rate of growth in the near future.

"This is a painful adjustment process but we have experienced similar situations before - once in 1974/75 and another one in 1985. And, each time, we emerged much stronger and became even more competitive than before. I am confident that we will do it again this time."

In conclusion, Mr. Tong remarked: "I would say that as far as the political transition is concerned, Hong Kong has gone much better than most people expected. The financial turmoil has brought pain to everyone in Hong Kong but we understand that this economic adjustment is necessary if Hong Kong is to remain competitive in the long run."

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