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Press Release - June 28 1998

Bold Economic Measures to Sustain Competitiveness

The special measures introduced by the Hong Kong Special Administrative Region (SAR) Government to facilitate economic adjustment currently in progress will enable the territory to sustain its competitiveness, the Director of the Hong Kong Economic and Trade Office of the Hong Kong SAR Government, Mr Donald Tong, said today (June 28).

Speaking at a Hong Kong SAR first anniversary forum in Montreal, Quebec province, Mr Tong said the bold measures announced by the Chief Executive, Mr Tung Chee Hwa, on June 22 were quite well received in Hong Kong.

The event, organised by the Sino-Canadian Association of Culture, Technology and Commerce was attended by some 150 influential business and community leaders.

"We realise that Hong Kong cannot stay immuned to the economic and financial crisis sweeping Asia, and that is why Mr Tung has taken the initiative by announcing the bold measures so as to address the present problems and to smooth the adjustment to the economy now in progress," Mr Tong explained.

Mr Tong also warned that if the SAR Government did not maintain the US$-HK$ peg, the economic consequences would be unthinkable.

"Our policies to stick to the linked exchange rate system and prudent fiscal management will remain unchanged. Given this, and coupled with the strong economic development in the Mainland, Hong Kong will ride through the economic adjustments with success," he said.

The package of measures announced by Mr. Tung 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


During his dinner address, Mr. Tong also told the audience the SAR's achievements during the past 12 months after July 1, 1997. These include, he said, Hong Kong's position as the world's busiest container port, the 8th largest trading economy and its per capita standing at C$38,000.

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

"In the past 12 months, the institutions of civil society, e.g. the rule of law, an independent judiciary, an elected legislature, a free press, churches and non-government organisations remain not just intact but vibrant," he said.

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

"This shows that the pessimists, who before the handover predicted the failure of the "One country, two systems", are utterly wrong."

In conclusion, Mr. Tong added: "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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