by Alex Fok
HarbourTimesYesterday, 10:11
The upcoming Policy Address will be the last chance for CY Leung and his cabinet to outline an annual plan to fulfil the outstanding promises he made in the past four years to improve Hong Kong’s business environment. It had better be good if he is to secure a second term in office.
Four isn’t a lucky number in Cantonese, nor 13 for the Western world, but it will have to do for our Chief Executive. The business community will be watching his fourth policy address on January 13 especially closely.
This policy address will be his last chance to realise outstanding promises he made during the CE election in 2012. This policy address and the execution on that plan will be the yardstick by which he is measured for re-election in 2017. He seems to understand this; last year’s Policy Address was mostly making the case about how he much had been accomplished in the previous year with much less verbiage devoted to his plan for 2015. Expect more of the same as he seeks to prove his worth for 2017 and beyond.
While Leung does not necessarily need to appeal to the entire Hong Kong public to seek another term in office, reclaiming some of his lost popularity and showing to the 1,200-strong Election Committee (EC) that he is an able leader would do him no harm.
An important constituency is the business community, worth 300 EC votes in the industry, commercial and financial sectors, and many of the business oriented professions (perhaps another 150 votes). Stamp duties, export restrictions, restrictions on tourists and parallel traders and more have all hit business interests. However, aggressive pursuit of major infrastructure projects, albeit with mixed results, can only please the various building related constituencies. Based on previous policy papers and recent developments, here are some of the elements that will likely appear in the 2016 Policy Address.
Economic: Hong Kong’s role as ‘super-connector’
Our Chief Executive has been quick to adopt some of the rhetoric of his Beijing superiors. Generously described as high-level, the less generous may describe some of this rhetoric as vacuous. An example of this is the concept of Hong Kong as a ‘super-connector,’ linking up mainland China and the world.
Another high level rhetorical meme frequently bandied about of late is the mainland’s ‘One Belt, One Road’. It is hard to find anyone clear on the details, but is loosely defined as a wide range of initiatives to promote infrastructure, finance and trade connections to China throughout Asia, the Middle East and onwards to Europe.
Hong Kong’s role is as ill-defined as China’s actual plans. The Chief Executive will be beholden to the rhetoric and adapt current plans to fit under the ‘One Belt, One Road’ initiative and promote Hong Kong as a ‘super-connector.’
In this sense, measures to strengthen Hong Kong’s position as an international trading, shipping and financial centre, as well as the world’s Renminbi offshore business hub will likely be featured in the policy address. A surprise move that would please the business community would be a promise to pursue entrance into the Trans-Pacific Partnership. Such a promise could only be made with Beijing’s blessing. Successfully pursuing it would be another matter, but it would also show up localists by indicating Hong Kong’s ability to pursue a self-serving trade policy independent of Beijing.
On infrastructure, commitment to the controversial Third Runway project and the Airport Authority’s Master Plan 2030 as elements of supporting the ‘One Belt, One Road’ plan will indicate his commitment to ensure it happens in the face of local or legislative opposition.
Another likely promise will be to promote Hong Kong as an Intellectual Property (IP) trading hub, including his commitment to passing the “Article 23 of the Internet”, the amendments to the Copyright Ordinance, currently mired in LegCo filibusters. This would please creative industries, the software industry and international investors in entertainment and pharmaceutical industries.
Retail and tourism have taken a hit recently – mostly by design. Many Hong Kongers wanted fewer parallel day traders buying in Hong Kong and they’ve got it, much of it from CY’s policies. He will now have to mollify those in full panic mode as tourism and retail numbers take a vertiginous plunge.
He may tout the creation of the Travel Industry Authority, pending lawmakers’ approval, as his answer to the drop in tourism, by providing protections against so-called forced shopping. He’ll also likely talk up programs that are repeated annually, like the Jetso shopping promotion campaign launched last year. New measures will likely be absent unless someone has had another not very original idea about another shopping festival style promotion. Some of the greats of Hong Kong tourism, like Allan Zeman, have been sidelined in recent years, leaving lesser lights to feed ideas to the CE.
On innovation and technology, look for him to revel in the final approval of the Innovation and Technology Bureau and cite their major objectives (
click here) as part of his on-going commitment in this area. No new plans will be unveiled here – just enacting previously stated goals.
Development & Housing: Increasing supply and flexibility to meet demand
Leung’s ambitious plan to increase land and housing supplies have so far been less successful. Only 46 out of 150 sites mentioned in his 2014 Policy Address had been rezoned, with more than half of the sites yet to be processed. Plans regarding underground commercial space, Lantau development and reclamations are either still in preliminary stages of conversion or stuck in LegCo’s queue for funding. Meanwhile, the supply of public flats is lagging behind the yearly target of
28,200 flats per annum in the coming 10 years, with only 97,100 units scheduled for completion in five years’ time (averaging 19,420 per annum).
It is predictable that Leung will continue to eye the city’s green belt and brownfield lands, together with development plans in North Lantau, Kowloon East, Hung Shui Kiu, Yuen Long and North New Territories in this year’s policy address. This will come shortly ahead of the LegCo’s Panel on Development meeting on the overall situation of land supply in late January.
The North Lantau development plan, in particular, will be linked to the Third Runway project as the Tung Chung New Town was proposed to support the Hong Kong International Airport in the first place. The Airport Authority clients struggle with staffing due to the expense of bringing employees to work. More affordable housing in the area could alleviate some staffing pressure.
In Kowloon East, the concept of a ‘Smart City’, with the use of technology to “enhance pedestrian and vehicular accessibility, manage the facilities in the area, and disseminate information to the public in digital format for better enjoyment of city life”, will once again be raised.
To add flexibility to the scarce supply, Leung may well adopt a suggestion by the Long Term Housing Strategy Steering Committee in 2013 to re-introduce temporary or transitional housing flats to address an increasing issue of subdivided housing. The Long Term Housing Strategy Annual Progress Report will be discussed by lawmakers in the Panel on Housing in February.
As for the so-called ‘sandwich class’, there will likely be continued focus and extension of the Home Ownership Scheme (HOS), with a possible further liberalisation of the HOS flats market.
On top of land management, the proposed establishment of the Harbourfront Authority to enhance harbourfront areas is expected to be gazetted for LegCo discussion following the end of phase two public consultation in December, 2014.
Population, Welfare & Labour: Facing the challenge of an aging population
If the current administration still has much to do in the development front, then the outstanding hurdles in Leung’s previous proposals in the arena of labour and welfare are anything but easily surmountable.
In light of the relaxation of One-Child policy in the mainland, Leung is expected to follow the line and put an emphasis on population policies. The according initiatives will likely centre around providing support to families, especially women, and will be presented in a way that encourages child-bearing.
A notable accomplishment among Leung’s welfare initiatives is the implementation of the Low-Income Working Family Allowance. An ageing society, a favourite talking point of the FS John Tsang, suggests that Leung will put forward policy incentives to encourage senior citizens who are able and willing to work to stay in the workforce by extending the Low-Income Working Allowance to working seniors.
That being said, there is hardly any way out for the three most significant welfare and labour measures, namely the universal pension scheme, the MPF offsetting mechanism and the standard working hours (SWH) legislation amid strong oppositions in the public.
The consultation for the pension scheme was launched in December, 2015, but the government has been widely criticised for lacking the sincerity to introduce a genuinely universal programme. Indeed, a recent
government briefing document clearly states:
“In a nutshell, the Government has reservations over any options that are not means-tested and apply equally to all the elderly regardless of being rich or poor.”
In other words, the Universal Pension Scheme is a dead letter. Move on.
Neither employers’ nor employees’ representatives are showing any sign of compromise regarding abandoning the MPF offsetting mechanism or enacting SWH legislation. In addition, an automatic mechanism for adjusting the minimum and maximum levels of relevant income for MPF mandatory contributions was halted owing to a last-minute bombardment of objections approaching the end of the consultation period. Leung will probably raise the topics again in the policy address, but expectation on the government truly delivering something would remain low. Consultation and study will be the non-plan for now.
Transport: Promoting a smart, rail-first transportation system
The government announced a consultation regarding the enactment of Electronic Road Pricing by the end of 2015, which will likely feature in the policy address as a new road management measure.
Another major issue will be the Public Transport Strategy Study which will provide, by mid-2017, a policy framework relating to various public transport modes in the wake of an expanding railway network. One of the more fierce debates surrounding the issue is the role and positioning review on premium taxis in the face of an earlier crackdown on Uber’s operations in Hong Kong. This particular issue will be discussed in the LegCo Panel on Transport in June this year. Leung would be wise to address this in his policy address ahead of the debate.
Environment: Carbon emissions & waste management
When hosting a Hong Kong session at the China Pavilion at the United Nations Framework Convention on Climate Change (COP21) in Paris, Secretary for the Environment Wong Kam-sing presented a new target for reducing Hong Kong’s energy intensity by 40% by 2025. Following the conclusion of COP21 with a non-binding agreement on carbon emissions (to be distinguished from carbon intensity), Wong may advise Leung on what to incorporate into the policy address in this regard.
Regardless of the content, it is almost certain that Hongkong Electric and CLP will have a role to play, most probably through rearranging the fuel mix in the new Scheme of Control agreement as negotiations between the government and the two power companies progresses.
Building energy efficiency is Wong’s personal speciality. The recent announcement of new editions of Codes of Practice for Energy Efficiency of Building Services Installation and Building Energy Audit, which will be implemented in the second half of this year with a target energy savings of five billion kilowatt hours from all new buildings in Hong Kong, will be merit mention in the paper.
Leung will also likely reiterate his commitment to promoting recycling and waste management as the LegCo Public Accounts Committee’s public hearings on reduction and recycling of food waste and the government’s efforts in managing municipal solid waste continue. In October last year, the government launched a HKD$1 billion Recycling Fund, but Asia’s World City still lags far behind its regional counterparts in this area.
Last but not least, the construction of a HKD$19.2 billion incinerator in Shek Kwu Chau, to be tendered in this year, will be presented as a government effort to promote waste-to-energy initiatives, along with the Sludge Treatment Facility in Tuen Mun, which is expected to open in early 2016.
Politics still matter
The business community will not only have to weigh the intentionality behind the CE’s plans to improve Hong Kong’s competitiveness and business environment, but also his ability to execute. That means being able to push a significant number of his initiatives through LegCo, like the Copyright Ordinance amendments – or bypass LegCo, like financing for the Third Runway. This article is looking at the business dimension of the policy address – but it doesn’t mean the politics don’t matter.
As our recent article shows, the international business community recognises this and has even stressed the importance to elements like freedom of speech and considers political structure important. CY will have to get it at least major elements of both business and politics right to see off contenders for the business community votes in the 2017 CE election.
ALEX FOK
Alex Fok is a Harbour Times journalist monitoring the HK daily political scene and diplomatic updates. He obtained his bachelor’s degree in Economics, Politics and International Studies from University of Warwick and his master’s degree in International Relations from the London School of Economics and Political Science. He is a former committee member of the Warwick-based Hong Kong Public Affairs and Social Service Society (WHKPASS) and was the chief editor of the society’s magazine – PASSTIMES.
http://harbourtimes.com/2016/01/07/cys-last-call-business-looks-at-the-policy-address-2016/
