MR CHAN KIN-POR (in Cantonese): President, over the past year Hong Kong has come under the impact of the trade war between China and the United States, social turmoil and the novel coronavirus one after another, and our society and economy have been seriously affected. These days quite a number of companies are already on the brink of bankruptcy or even closure, and many members of the public are unemployed or in a state of semi-unemployment. Even if they still have a job, they do not know whether they will be laid off tomorrow. During such difficult times, the Government has rolled out two rounds of anti-epidemic support measures to assist enterprises and members of the public affected. Though there is much room for improvement, these measures have come as timely help to the public.
The Budget this time around was announced in late February. For the purpose of supporting enterprises, safeguarding jobs and relieving people’s burden, the Financial Secretary decided to implement counter-cyclical measures of a massive scale worth over $120 billion, including a cash payout of $10,000 to members of the public. This, together with the $30 billion and $137.5 billion committed under the two rounds of Anti-epidemic Fund respectively, means that $287.5 billion from the Treasury have been spent on disaster relief. Given a worsening economy and the need to plug gaps, I look forward to a third round of measures. A highlight of the Budget is certainly the cash payout of $10,000 to permanent residents aged 18 or above. Hong Kong people very much welcome this. The Financial Secretary has explained that the payout of $10,000 aims at encouraging local consumption and relieving people’s financial pressure. This is actually an important disaster-relief measure.
Many members of the community accused the Government of being a miser in the past, but I believe people will be thankful nowadays that by spending within our means and refraining from squandering money in the halcyon days, we now have sufficient reserves to cope with disaster-relief expenditure. The Financial Secretary has already estimated that the Treasury will record an unprecedented deficit of $276.6 billion, and we will continue to see deficits in the coming five years. However, due to the severity of the outbreak, the Government still needs to use its reserves for disaster relief. The most important thing is that when the outbreak is over, we will be able to revitalize the economy and increase our revenue expeditiously. In fact, the focal point of the Budget this year is supporting enterprises, safeguarding jobs and relieving people’s burden. People certainly understand and agree to this. But when the outbreak is over and there is much to recover, the revitalization of the economy will be an important task of ours.
Hong Kong has experienced the Asian Financial Crisis and the Global Financial Tsunami. As pointed out in the Budget, to ensure financial security, under the Financial Secretary’s steer, financial regulators have taken great efforts on shock-resistance and market surveillance for the operation of a stable and orderly financial market. Besides, quite a number of financial elites in the Legislative Council can also help the Hong Kong Government weather a financial crisis. I am therefore not too worried about financial issues. In fact, what I am most concerned about is how to put the Hong Kong economy back on the growth track. Nowadays, soaring unemployment rate, a wave of business closures, lack of orders for firms and cashflow problems of enterprises have dragged our economy into a full recession. Meanwhile, we have also noted that there will be great changes in international relations, and such changes will certainly affect Hong Kong’s trade. As such, when the outbreak is over, how Hong Kong can attract overseas investors and customers to keep on doing business and shopping here will be a pressing priority.
I think it is important to change our traditional mindset by changing our role from a facilitator and regulator to a leader that actively promotes business opportunities and development. We must take the initiative to create business opportunities, solicit investors in the international market, and provide investors with assistance on all fronts. In terms of headquarters economy, the Government has actually done quite a good job. In recent years, some 9 000 foreign companies have set up offices and created 500 000 jobs in Hong Kong. Certainly, we do not want them to be driven away from Hong Kong by the problem of “black terror”. The Government should find ways to retain them, enhance the appeal of working in Hong Kong to foreign investors, and provide more opportunities.
Now I would like to talk about the circumstances surrounding the insurance industry. I hope that the Government will expeditiously lend a helping hand to the industry, including insurance companies and all practitioners, for surviving the cold winter. Many members of the industry have relayed to me that riots have already dealt them a serious blow and now they have further come under the impact of the outbreak. Their income or commission has thus plummeted. The outbreak will subside one day, but our economy and business environment have been badly hurt, and the prospect of the industry is indeed worrisome. The Government and the Insurance Authority (“IA”) must adopt appropriate measures to revitalize the local insurance industry when the outbreak is over.
In fact, during the Budget consultation in January, I had already relayed to the Government that due to the ramifications of riots, Mainland people had reduced their purchase of insurance products in Hong Kong. This, coupled with the economic recession, meant that the insurance industry would encounter a cold winter and be in need of government support, including the provision of various types of temporary support to insurance companies and practitioners. As the outbreak continued, I further relayed to the Government the plight of the insurance sector, particularly insurance intermediaries. There are currently some 120 000 licensed insurance intermediaries, and some 80 000 of them are self-employed persons. A big drop in sales has dealt a heavy blow to their commission income, and most of them have their income cut by over 50%. Even if they are entitled to a one-off subsidy of $7,500 for self-employed persons, this can hardly tide them over this difficult period. For this reason, the Government should expeditiously provide self-employed persons, including insurance intermediaries, with ongoing support, and the exact amount is certainly subject to the fiscal surplus of the Government and practical computations. I will later submit a proposal on behalf of various insurance organizations and practitioners and hope that the Government will consider it seriously.
In addition, I would also like to request IA to adopt certain concrete measures to tide the insurance sector over this extraordinarily difficult period. Such measures include: first, to review the implementation timetables for various compliance requirements to reduce compliance costs and thus alleviate the pressure of insurance companies in terms of capital costs and operation, including, specifically, conducting a review afresh on the timetable for implementing capital requirements. In addition, regarding the timetable for introducing enterprise risk management, International Financial Reporting Standard 17 Insurance Contracts, etc., it is desirable for the authorities to inform the industry of the actual circumstances after making clarifications, so that the industry can commit resources in phases to achieve savings.
Second, more importantly, given the trend of negative interest rates, the modes of operation previously adopted by insurance companies which relied on purchasing bonds may no longer be opportune and feasible. The various operational modes of insurance companies need to be reviewed, such as raising the limit of share purchase or relaxing the restriction on asset holding, so that insurance companies can operate in a new international economic environment. Third, as the insurance industry of Hong Kong offers a variety of products that allow for flexibility while catering to a comprehensive range of wealth management needs, Mainland customers prefer purchasing insurance products in Hong Kong. I hope that IA can join hands with the insurance sector to study how to make it easier for Mainland customers to purchase insurance products, including the adoption of technology to lift requirements on face-to-face sales. Fourth, I hope that fees to be levied on insurance companies and intermediaries can be reduced for the benefit of small and medium-sized agents and broker companies.
All of the above are short and medium-term measures, but they can all target the existing problems of the sector. In the long run, the Government still needs to consider my proposals concerning the Budget, including striving to open up the market of the Greater Bay Area, and particularly insurance after-sale centres, Health Insurance Connect and Life Insurance Connect, which we have long been talking about. In addition, we also need to implement the various proposals of the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area. I am also very keen to strive for national treatment for insurance companies, so that they can set up business on the Mainland under the same conditions accorded to their Mainland peers, thus expanding the sales market of the Hong Kong insurance industry, and providing insurance companies and intermediaries with more opportunities.
Another point is to strive to make Hong Kong an international insurance hub, and assist the Hong Kong insurance industry in expanding their insurance business to marine insurance, aviation, agriculture, catastrophe, political risk, war risk, trade credit and the Belt and Road Initiative. However, due to a rapidly changing international situation, it is still uncertain whether Hong Kong’s plan to open up the international market will be affected. However, regardless of how rugged the way forward is, we must persist in developing new key products in the industry. If Hong Kong is stuck in the old ways, it can hardly cope with the challenges in the new era.
In addition, I would also like to talk about tax deductions for annuity premiums. Since the introduction of an aggregate tax deductible limit for annuity premiums and Mandatory Provident Fund (“MPF”) voluntary contributions last year, the relevant schemes have been well received by the public, particularly annuity schemes. According to the latest information, the sector has sold 130 000 deferred annuity policies, involving $9.4 billion. This reflects the earnest demand for such products in the market and the fact that a product which provides a better retirement arrangement for Hong Kong people has been given the right boost by the Government. However, the average amount of each of the some 100 000 deferred annuity policies just sold is $71,000, but the existing tax deductible limit, which is only $60,000 and needs to be shared with MPF, is obviously inadequate. For this reason, the sector proposes to increase the tax deductible limit to $120,000, so as to encourage people with the means to be well prepared for their retirement and thus reduce their reliance on public resources. At the same time, we also advise the Government to review the implementation of the existing Voluntary Health Insurance Scheme, so as to enhance the scheme on all fronts expeditiously, attract more people with the means to join the scheme, and alleviate the pressure on public hospitals. I hope the Financial Secretary will further consider our proposals later.
In general, as the measures proposed in the Budget, including the cash payout of $10,000 that the entire city is looking forward to, can address the pressing needs of the public, I will render my support.
President, just now Mr CHU Hoi-dick has mentioned my name and talked about a new international situation. I would like to use the remaining several minutes to express my views. I personally very much appreciate Mr CHU Hoi-dick’s perspectives on issues―regrettably he has just left his seat. Members may know that he used to work as a journalist in Iran, and he therefore has an international outlook and is capable of doing deep analysis. He has his convictions, and he is particularly enthusiastic about environmental protection. He once said to me that we should put aside politics, and only focus on environmental protection. I agreed with him. I appreciate his international outlook on the one hand, but, on the other hand, I disagree with his solution to the problem. President, would you please do not mind. As the new international situation is related to Hong Kong, please allow me to continue with my speech.
In fact, the novel coronavirus will really change the general international situation. This is what the Financial Secretary needs to note. What Mr CHU Hoi-dick has referred to just now is correct. When the issue has waned, many people or companies in foreign countries may initiate class action lawsuits and demand compensation from China. As we can see from many papers, this is certainly not reasonable. In the case of the Bankruptcy of Lehman Brothers, for example, who should be held responsible? Or in the case of Ebola virus, who should be held responsible? If the origin of the virus is to be identified and lawsuits are to be initiated against a country, who dares to purchase American assets in the future? It is absolutely unjust to target a country and confiscate the American Treasury bonds it holds. But this risk does exist. The reason is that the amount of American Treasury bonds is so enormous that no solution may possibly be found. An economic war or a physical war is not impossible.
For this reason, I am personally very much concerned. What should we do? I think Mr CHU Hoi-dick should not have repeatedly referred to “Wuhan pneumonia” just now, for we are Chinese nationals, ethnic Chinese or Asians. Sinophobia or discrimination against the Chinese has occurred worldwide, and some people have been verbally abused or beaten up. The situation is so frightening that some people in the United States have to buy guns to protect themselves. This will certainly deal a blow to people with Asian countenance. Even if you claim to be a Hongkonger, foreign citizens may not be able to tell the difference. They will regard us all as Chinese, and we are indeed Chinese. Chinese or Koreans will be regardlessly affected.
Insisting on using the term “Wuhan pneumonia” in a Chinese territory rather than the standard name accepted by the international community is really hurting Hong Kong people and ethnic Chinese. In the end, we or even our future generations will be stigmatized in the years to come. This will be a heinous crime. I think he should refrain from doing so. In such an international situation, we should certainly not act like someone who has travelled to the United States calling for sanctions on Hong Kong, for this will actually do great harm to Hong Kong. No matter how great their ultimate aim is, no matter how they claim to be doing that for the sake of Hong Kong, the actual outcome will invariably be Hong Kong people being bitterly victimized. Many people who support democracy will likewise be victimized. This will do greater harm to people like me, who treat Hong Kong as our home and hold only Hong Kong SAR passports, for the reason that we will go nowhere but only stay in Hong Kong.
In Hong Kong people hold different political views. I often say that Hong Kong is multi-coloured, so why does one have to become yellow? I am truly baffled. In fact, any circle, even the so-called “yellow economic circle”, will be doomed to failure if the overall economy of Hong Kong is poor. For this reason, it is important that there shall be no colour divide. It is an agony to dine and shop with a colour divide in mind. I think this simply does not work. The most important thing is that the overall economy of Hong Kong is good and everyone can make a living.
As such, regarding Mr CHU Hoi-dick’s question just now, I think he has seen the big picture, but his solution to the problem is all wrong. We should show our country that the existence of “one country, two systems” in Hong Kong is meaningful, that is, it brings mutual benefits to our country and Hong Kong. I believe if we can do this, “one country, two systems” in Hong Kong will naturally be extended. However, if Hong Kong brings no good to our country but only makes our country feel threatened or even hurt, “one country, two systems” will soon disappear. Certainly, it is Hong Kong people’s choice as to whether to make Hong Kong beneficial to our country and ourselves or to make it a threat to our country.
Some people have made it clear that they will resort to mutual destruction once they have obtained 35 seats of the Legislative Council. They will oppose all proposals. For example, even if the Financial Secretary proposes a cash payout of $20,000 to everyone, they will oppose it. Even if they do not know what proposal the Government will put forward, they have made it clear that they will oppose it. Are these people worthy of our support? I hope members of the public will think twice. Thank you, President.