MR CHAN KIN-POR (in Cantonese): Thank you, President. One of the priority tasks of this Policy Address is to “Continue to Create Strong Impetus for Growth”, which actually means improving our ability to “earn money” in the future. This has a direct bearing on the well-being of more than 7 million people, so it is of paramount importance. In recent years, Hong Kong has been hit by natural and man-made disasters one after another. Although we have a good foundation, our vitality has been severely dented, and the Treasury has recently been running a deficit. While we are confident of a full recovery, Hong Kong must promote the upgrading and development of industries. Development is of overriding importance.
This year’s Policy Address has proposed a number of measures to promote development, including developing the “headquarters economy”, enhancing the development of the “eight centres”, publishing the Action Agenda for the Northern Metropolis, and so on, all of which are very important for Hong Kong. First of all, I would like to talk about the Committee on the Financing of Major Development Projects. The Government will harness market forces to finance major projects, including the development of the Northern Metropolis and the Kau Yi Chau Artificial Islands. There is a precedent for the Government’s approach. The construction of the Three‑Runway System at the airport required funding of over $100 billion, which was raised mainly through syndicated loans and bond issuance. This approach has the advantage of not only avoiding the need to use government reserves but also providing flexibility and transparency. Moreover, leveraging Hong Kong’s credit rating to raise funds will result in lower interest costs.
However, due to the recent deficit in the Treasury, many people are concerned about the Government’s bond issuance. In fact, we have to distinguish clearly the purposes of bond issuance. Some countries do issue bonds because they are “overspending”, i.e. their recurrent expenditures have exceeded their revenues. In order to fill the gap, they have to constantly issue new debt to repay existing debt. On the other hand, there are countries that have issued bonds for development and investment purposes. The government of Singapore, for example, has a debt-to-GDP ratio of 140%, and its bonds are issued primarily for investment rather than to cover its recurrent expenditure. Such bond issuance is absolutely a normal public financing practice that Hong Kong can emulate. In fact, Hong Kong is one of the economies with the lowest debt-to-GDP ratios, with the current debt ratio standing at only 4.5%. Although it may rise to 10% by 2027, many developed economies have had debt-to-GDP ratios in excess of 100%. Hong Kong’s finances are absolutely robust. Therefore, it is reasonable to issue bonds to promote Hong Kong’s sustainable development. The insurance industry very much hopes that the Government can issue medium and long‑term bonds in Hong Kong dollars or Renminbi so that it can invest the nearly $100 billion in government or national bonds every year.
In addition, the Policy Address proposes the development of the “headquarters economy”, which is actually a project that I have been pursuing for more than 10 years. I am very pleased that the Government has adopted it. The Government will facilitate foreign enterprises to tap into the Mainland market, and will assist Mainland enterprises in expanding abroad, so as to explore the opportunities created by the country’s “dual circulation” strategy. In fact, the Government set up the Office for Attracting Strategic Enterprises last year, but it only targets designated high-end industries. At that time, I pointed out that we should also promote the “headquarters economy” to attract businesses from various trades and industries to set up operations in Hong Kong, so that Hong Kong’s economy can develop on all fronts. Therefore, the Government’s decision today is absolutely right. One of the benefits of the “headquarters economy” is the creation of quality employment opportunities for young people. In the future, the Government should require enterprises coming to Hong Kong to employ more Hong Kong people.
Finally, I would like to talk about the issues related to the insurance industry. The insurance industry is now awaiting the launch of the “after-sales service centres” and hopes that the institutions in the two places will commence the study on the “Insurance Connect” at an early date in order to serve the residents of the Greater Bay Area as soon as possible. We look forward to hearing good news in the near future.
Recently, I have received feedback from the industry that the compliance requirements for Hong Kong’s insurance industry have been increasing in recent years. New requirements include IFRS 17, the Risk-based Capital Framework, and the policy holders’ protection scheme. It is believed that new regulations are coming one after another, leading to rising compliance costs for the insurance industry and making business operations increasingly difficult. If things go on like this, even if the market in the Greater Bay Area is successfully opened up, the insurance industry will not be able to develop it due to over-regulation. Therefore, I hope that the Government will conduct a detailed review of this issue and remove the barriers and restrictions for the industry. The aim should be to ensure that compliance work meets international requirements but is also appropriately relaxed so that the insurance industry can develop sustainably.
The insurance industry also hopes that mutual recognition of qualifications with the Mainland insurance regulatory authorities can be promoted as soon as possible. The insurance industry players have been striving to enter the Mainland market in order to seize the enormous opportunities created by the country’s “dual circulation” strategy. At present, however, the regulatory systems and requirements of the insurance industries of the two places are not yet mutually recognizable. If the regulatory requirements can be mutually recognized, insurance companies will not have to operate at double cost in the Mainland and Hong Kong. I hope that the Government can strive for mutual recognition of regulatory requirements with the Mainland for various trades and industries, including the insurance industry, so as to achieve real interconnectivity.
In respect of the insurance industry, I still hope that the Government will seriously consider making use of Hong Kong’s advantage as an international risk management centre to develop reinsurance business, with a view to closing the risk loopholes for Mainland institutions that need to take out overseas insurance.
President, I would also like to talk about land development. Land development has always been a top priority issue in Hong Kong. This year’s Policy Address has brought us good news. Thanks to the Government’s efforts to create land at full throttle, the amount of land for both public and private housing has increased significantly compared with last year. There is already enough land to meet the housing needs for the next 10 years, especially for public housing. About 310 000 units are needed in the coming 10-year period, and land has been identified to accommodate 410 000 units. This means that the target has been exceeded by 100 000 units, which is 50 000 more than that of last year. It is no wonder that the Government is confident of “capping” the waiting time for public rental housing (“PRH”) and has boldly proposed to solve the problem of subdivided units to eliminate a “time bomb” in Hong Kong.
The Government has delivered results to all of us, demonstrating its new style of governance, which is proactive and bold, and deserves the public’s praise. Currently, the waiting time for PRH has fallen from a peak of six years to 5.3 years. The Government’s target is to reduce it to 4.5 years in 2026-2027. Given the Government’s current momentum to enhance quality and speed, this target is attainable. I hope that the Government will continue to strive for the well-being of the Hong Kong people and bring joy to all.
As for private housing, the supply of spade‑ready sites will reach 3 370 ha over the next 10 years, which is 90 ha more than that of last year. Progress is very satisfactory. In terms of long-term development, this year’s Policy Address proposes the Action Agenda for the Northern Metropolis and also gives an account of the progress of the Kau Yi Chau Artificial Islands. With the recent deficit in the Treasury, some people are concerned that large-scale infrastructure projects will strain the Government’s finances, as the capital involved is quite substantial. I think there is no need to worry too much about this because these projects have a development period of over 20 years and will be developed in phases. Once the land is formed, it can be auctioned off, and the funds will be “recouped”. Construction costs will not be paid in a lump sum. Moreover, the Government has decided to set up a Committee on the Financing of Major Development Projects in order to harness market forces to handle large-scale financing projects, so there is no need to worry about financing problems anymore. I think the Government should promote infrastructure development at full speed and increase the land reserve for Hong Kong.
The low fertility rate has been a long-standing, grave and thorny problem in Hong Kong. In the Policy Address, there are many measures introduced to address the problems of low fertility and population ageing in Hong Kong, including raising the deduction ceiling for home loan interest or domestic rents to $120,000 for families with newborn children, launching the “Families with Newborns Flat Selection Priority Scheme”, reducing the waiting time for PRH flats by one year, and handing out Newborn Baby Bonus. Although many people focus on the $20,000 “big red pocket”, if we look at it carefully, this package of fertility-friendly policies can really make the public feel the Government’s determination and strength in raising the fertility rate.
Apart from that, it is very important for middle-class families to put down roots in Hong Kong. One of the main reasons why Hong Kong people are reluctant to have children is that it is difficult to buy a home. Young people and the middle class also find it difficult to afford their own homes. According to the 2021 Population Census, 30% of Hong Kong people live in PRH flats, 15% in Home Ownership Scheme flats and over 50% in private flats. As the housing problem is gradually resolved, Hong Kong will have a clear housing ladder. Moreover, with an adequate supply of private housing, young people and the middle class will be able to work their way up the new housing ladder. This will also encourage the middle class to stay in Hong Kong to buy their homes and put down roots.
In addition, middle-class families attach the greatest importance to their children’s education environment. Hong Kong boasts high-quality international educational resources, with a large number of education institutions, five of which are ranked among the world’s top 100 universities. Some of the subjects taught in these universities are also ranked among the best in the world. In addition, there are many internationally recognized senior secondary school programmes that offer pathways to universities worldwide. As a place where Eastern and Western cultures meet, Hong Kong’s education system instils in young people a sense of national identity, an affection for Hong Kong and an international perspective. This makes many middle-class families feel at ease to have their children staying in Hong Kong to pursue their studies, thus nurturing more local talents for Hong Kong in the future.
Thank you, President.