12
Thursday, March 16, 1972
Commenting on borrowing externally to finance Hong Kong's
desalting plant, Mr. Lee said the action taken by Government to raise
money from the Asian Development Bank was economically and politically sound
and should be supported.
The loan from the Asian Development Bank would be long term
and the interest rate was lower than what Hong Kong was getting from its
reserves, he said.
Cther advantages associated with external borrowing which he
would like to mention briefly were:-
* Hong Kong does not have to draw on its reserves thereby
further strengthening its reserves position to meet contingencies;
E3
Hong Kong's internal liquidity will be increased;
* External borrowing will counteract inflationary
depreciation on the future purchasing power of reserves;
* External borrowing will create international presence
and attention thereby bringing about psychological political stability.
On the proposal to refund only one half of the rate charged on
unoccupied premises, Mr. Leo said that a charge of 7 per cent on the
rateable value of unoccupied premises would not effectively deter landlords
or developers from keeping their premises vacant or unsold in a seller's
market when demand exceeds supply.
On the other hand, this charge would be an unfair burden on the
landlords and developers in a buyer's market when supply exceeds demand
and premises were difficult to let or to sell, he added.
"The rates are basically charged on the occupation of premises;
therefore to levy charge on unoccupied premises would turn out to be a departure from the concept for which it was originally intended."
/Mr. Lee