There are indications that many wide-ranging measures introduced by the Special Administrative Region (SAR) Government in the past few months are succeeding in cushioning the effects of the economic downturn and helping to facilitate economic recovery, the Director of the Hong Kong Economic and Trade Office of the Hong Kong SAR Government in Canada, Mr Donald Tong, said today (Oct. 30).

Speaking to businessmen and the academia at the David Lam Centre of Simon Fraser University in Vancouver, Mr Tong said the measures introduced had boosted not only the confidence of Hong Kong residents, but that of the international community.

He pointed out that despite the impact of the Asian economic turmoil, foreign businessmen, including Americans, Canadians, Japanese and Germans, had not abandoned Hong Kong in droves, because they remained optimistic about the future of Hong Kong.

Mr Tong said, earlier in the year, the SAR Government introduced very generous tax breaks for individuals and businesses, such as putting more money back into the hands of 99 per cent of taxpayers and reducing profits tax from 16.5 per cent to 16 per cent.

In addition, he continued, a new credit guarantee scheme to help small and medium enterprises to obtain loans from lending institutions had been established. Incentives put in place to boost tourism and other related trades were showing signs of improvement.

He added that wages were now softening and property prices and rentals had fallen substantially by about 50 per cent and the stock market was around 40 per cent below its peak in 1997.

"These measures, helped by a drop of 2.5 per cent in the inflation rate recently, have certainly made Hong Kong much more attractive to those Canadian companies which previously had avoided Hong Kong because of the high cost involved," Mr Tong said.

"We expect the economy will continue to adjust in the rest of the year, and 1999 will continue to be a difficult year. However, the International Monetary Fund has predicted that our economy will bottom out in mid-1999 and start picking up towards the last two quarters.

"But, we are confident that these difficult but necessary economic adjustments will ultimately lead to the emergence of a much leaner and more competitive Hong Kong."

Mr Tong stressed that in spite of the downturn, the SAR Government was pushing ahead with its C$47 billion infrastructure projects in the next five years, which he added, would create some 100,000 jobs for Hong Kong people. These include new railway and subway extensions, housing, major high-speed roads.

Furthermore, the SAR Government has started planning on other highway projects to cope with the population growth and economic development of Hong Kong beyond the next five years. Plans are also being drawn up to transform the old Kai Tak airport site into a self-contained "Garden City" which would house 320,000 people by the year 2016.

Mr Tong went on to point out that the Chief Executive, Mr Tung Chee Hwa, in his recent policy speech had outlined new initiatives to implement without delay ambitious plans for innovation and technology development in the territory so as to remain competitive.

• Strengthening technological infrastructure and promote technological entrepreneurship
• Building up human capital to meet the needs of a fast changing, knowledge-based economy
• Enhancing technological collaboration with China
• Fostering university-business partnership
• Lowering information, financing and regulatory barriers.

"To achieve this, we will establish an Innovation and Technology Fund to finance projects which will contribute to innovation and technological upgrading in the manufacturing and service industries.

"We will also set up an Applied Science and Technology Research Institute to provide "mid-stream" research.

"We will take steps to promote university-business collaboration and Hong Kong-Mainland collaboration and build up a cluster of expertise in Hong Kong to achieve this goal," he said.

The SAR Government also has plans to boost in particular the development of information technology and telecommunications.

To maintain Hong Kong as the pre-eminent telecommunications centre in Asia, the territory will further open up the external telecommunications services market in January 1999. Consideration is also being given to open up the external telecommunications facilities market from January 2000.

"We have also announced a range of proposals to liberalize the TV market to provide more choices for viewers to optimise the use of cable TV and telecommunications network, and to construct a world-class teleport to provide the best global satellite communication links.

"We plan to take the lead to deliver government services on-line or what we call the Electronic Service Delivery Scheme within the year 2000. Tenders for the scheme will be called by end of this year."

In conclusion, Mr Tong said that although Hong Kong's economic recovery depended very much on regional factors, he was confident that the implementation of the various measures, together with Hong Kong's excellent economic fundamentals, the territory will be among the first to bounce back.

For further information please contact Chief Information Officer, Frank Chuan at telephone (416) 924-5544.