SCMP Thursday, September 27, 2001
Even before the terrorist attacks on New York and Washington on September 11, the SAR's economy was in pretty grim shape, and Chief Executive Tung Chee-hwa was expected to unveil measures in his Policy Address next month to stimulate growth.
Now that sentiment across the world has dipped further, the public should be realistic about what the Government could do to steer the economy out of the doldrums. The fact is that whatever Mr Tung is going to announce, Hong Kong's fortune ultimately depends on the state of our major markets and trading partners.
Legislators yesterday offered a number of proposals to spur growth and ease the pain of our small businessmen and workers. They ranged from suspending contributions to the Mandatory Provident Fund, giving rate rebates, setting up a fund to help home-buyers stuck in the negative-equity pit and putting off further plans to trim the civil service.
All proposals deserve to be considered. But Financial Secretary Antony Leung Kam-chung was right to caution against running down the fiscal reserves, as it would convey the wrong signals to the world and affect the SAR's credit worthiness. With revenues expected to fall far short of the budget, and things not looking rosy next year, Hong Kong's more than $400 billion reserves suddenly do not look so huge. Those hard-earned savings should only be used on projects that generate real social or economic returns.
Worldwide consumer confidence is being dragged down by the prospects of war between the United States and the Taleban in Afghanistan. Hopefully, before Mr Tung addresses the Legislative Council on October 10, any war will have come to a speedy end, with suspected terrorist leader Osama bin Laden caught and the Taleban government overthrown.
Such a happy outcome may not completely rid the world of terrorism, but would be the best stimulus for growth.