Speech of the Hon KP Chan on Motion on Industrial Policy at the Legislative Council Meeting on 8 February 2012
• As Hong Kong is facing the ramifications of Euro debt crisis, it is timely and meaningful for the Legislative Council to debate on industrial policy. Our economy is tilted to financial and properties sectors structurally. It is susceptible to economic changes. If the financial sector were under undue pressure, the entire economy would immediately be entrapped.
• Our financial sector is outstanding in the international arena but it is rather fragile. Our comparative advantages are being eroded. We are also facing the challenge of Shanghai. To a large extent, we do owe much to support of the Mainland for our global position. Many people are convinced that Hong Kong is being marginalized. Admittedly, the financial sector is a pillar industry, but we should not neglect other industries, in particular manufacturing. It is crucial for Hong Kong to return to a diversified economy in meeting challenges ahead.
• Hong Kong is also having demographic imbalance. Since reunification, resettlement of Mainlanders has increased the supply of grass root labour. Unfortunately, there are inadequate grass root jobs in a knowledge-based economy to absorb such labour supply. At the times of boom, mismatch is not too problematic. At the times of downturn, surplus labour would become the unemployed. Revival of manufacturing industry would be effective means of both absorbing surplus labour and resolving unemployment.
• Critics are condemning the Government for its passive attitude in industrial policy. Industrial development needs official support as well as policy on concessionary and competitive terms in tax, technical training and land. In Asia Pacific region, successful industrial developments are well supported by local Government. In this regard, the SAR Government should reconsider its guiding policy of “big market, small government”. The Government has been reluctant to take the lead in the six pillar industries and their developments to date have been languid.
• Many people think that Hong Kong is disadvantageous in industrial development. Cost is high and land is expensive. However, Hong Kong is not uncompetitive in many respects. We are strong in developing high-end and new technologies, interfacing with global production skills, sharing new information, controlling quality and breeding expertise in science and technology. It is a matter of rediscovery. The Government is studying redevelopment of the border and there must be suitable land for industrial redevelopment.
• The Mainland economy is catching up. Hong Kong will come across new opportunities in economic development as well as uncertainties. I ask the Government, particularly the new Administration, to renew industrial policy for Hong Kong from a longer term perspective with a view to rebalancing the economy.