SCMP Tuesday, August 21, 2001
Dark days ahead with no change at the top
Although the long, hot summer is drawing to a close, there is no end in sight to Hong Kong's economic woes. With the SAR's trading partners in recession, the people must brace themselves for another bout of severe economic downturn.
This is a bitter pill to swallow, as the SAR has not fully recovered from the turmoil of the 1997-8 Asian financial crisis, which saw property prices tumbling and many people either losing their jobs or having their salaries slashed. Since then the city has been filled with gloom and despondency.
Chief Executive Tung Chee-hwa delivered the bad news last Friday. He warned the economy would slow further and the jobless rate would rise. Yesterday, the Government announced that the unemployment rate has risen to 4.7 per cent.
In March, the administration forecast annual economic growth of four per cent. Two months later, that was reduced to three per cent. Mr Tung is preparing the community for further bad news when the latest forecast is announced on August 31. Apparently things will get worse before they get better.
Unlike the Asian financial crisis, when the United States and Europe shored up global commerce, now all the world's largest economic regions have stumbled as a result of US weakness. Last Friday, the US Commerce Department announced the value of exports and imports had shrunk over the 12 months to June at the fastest pace in more than eight years. Since Hong Kong is heavily reliant on sales to the US, the damaging impact is obvious.
Last Friday also saw Taiwan reporting its worst fall in gross domestic product in 25 years. Taiwan's second-quarter gross domestic product contracted by 2.35 per cent and the central bank responded by making its fifth cut in key interest rates this year.
The slowdown of the US economy has been foreshadowed by the Federal Reserve, which has repeatedly cut interest rates. But the abrupt deterioration is a nasty shock and the SAR must find ways to alleviate the community's suffering.
In times of adversity, the people blame the Government. After running the SAR for more than four years, Mr Tung gives the impression that his administration's top priority is to look after the interests of businessmen, particularly a handful of property tycoons. Such perception has alienated the masses and generated discontent.
Ironically many business and professional people are also exasperated with Mr Tung, and are appalled at the prospect of him being given a second term next year when the "election" of the Chief Executive will be carried out by an 800-member committee.
During the Asian financial turmoil, members of the newly elected Legco set aside their political differences and proposed a package to stimulate the economy. The recommendations, including cutting taxes and boosting expenditure on infrastructure projects, were quickly accepted by the administration.
Since there is concern the current situation would be more serious than in 1998, the political parties in Legco should try to work out a plan to deal with the problems. However, they may not find it easy to reach a consensus.
One question the SAR should address is the linked exchange rate.
Many business people have complained that pegging the Hong Kong dollar to the US dollar has led to high costs of doing business. It has also put off overseas investors and made things more difficult for local entrepreneurs wanting to start a business.
There are pros and cons to maintaining the peg, but if the price to the community is too high, a responsible government must tackle the problem by taking bold initiatives.
Another conundrum is how to enhance productivity and efficiency without sacrificing the welfare of the workers. I appreciate the need for "fat-trimming" in private organisations as well as public bodies, but the employers must have consideration for their staff. Abuse and exploitation have no place in the SAR, which aspires to be Asia's World City.
The Census and Statistics Department last week revealed that 204,000 people earn less than $5,000 a month. Of these, 110,000 work more than 35 hours a week. A recent survey found that, compared to other Asian countries, Hong Kong workers are the least loyal to their employers. Surely this is nothing to brag about.
As Hong Kong undergoes economic restructuring, the gap between the rich and the poor continues to widen. If this problem is not addressed, it could have dire consequences for social stability. Thus in an effort to cut costs, we must ensure there is a safety net to provide a cushion for the less fortunate.
In order to make Hong Kong more competitive, productive and business friendly, the administration must first trim the bureaucracy and cut red tape. We must provide high quality education and training for the people, and should do more to attract talents and investors from overseas, including the mainland.
Although many Hong Kong people are poor, the Government is rich. The Exchange Fund has more than $1,000 billion, of which more than $400 billion belongs to the fiscal reserves.
Within Legco, there is broad agreement that the administration should dip into the reserves to see Hong Kong through these rainy days. Besides additional spending to upgrade the quality of education and to clean up and beautify the environment, the political parties should try to reach agreement on other ways of using the money.
Buffeted by the US economic slowdown and continuous economic restructuring, Hong Kong's people will inevitably be asked to further tighten their belts in order to weather the storm. However, such pleas from the administration cut little ice with the disenchanted populace. Mr Tung was not elected by the people and is not accountable to them. He has neither the vision nor the charisma to galvanise the community in these trying times.
But it is almost a foregone conclusion that he will lead the SAR for another five years. And the so-called election next March is just the icing on the cake.
We cannot blame the Tung administration for the global economic downturn, but the Chief Executive must be held responsible for his lack of vision and leadership to steer the SAR through troubled waters. Because of the lack of democratic elections, the community is forced to suffer another five years of misrule.
Emily Lau Wai-hing is a legislator and member of The Frontier.