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THURSDAY, MARCH 20, 1975
POSITIVE POLICY ON RESERVES URGED
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THE GOVERNMENT SHOULD ADOPT A POSITIVE POLICY+ TO MANAGE HONG KONG'S RESERVES AND SHOULD CLOSELY INVESTIGATE THE MANAGEMENT OF ITS FOREIGN CURRENCY ASSETS, THE HON. LI FOOK-WO SAID TODAY.
SPEAKING IN THE BUDGET DEBATE, HE NOTED THAT HONG KONG'S FISCAL RESERVES HAD BEEN ERODED TO A DANGEROUSLY LOW FIGURE OF ONLY $2,371 MILLION, AND IN VIEW OF THE PRESENT WORLD-WIDE ECONOMIC RECESSION + IT IS ESSENTIAL FOR GOVERNMENT TO ADOPT A POSITIVE POLICY TO MANAGE OUR RESERVES RATHER THAN TO WAIT PASSIVELY HOPING THAT THE WORST IS OVER.
MR. LI EXPRESSED SHOCK THAT TAX ARREARS HAD GROWN BIGGER AND SAID THAT +SOMEWHERE ALONG THE LINE, THE SYSTEM OF TAX COLLECTION REQUIRES GREATER CONTROL.>
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HE WAS SURPRISED THAT ONLY 85,790 PERSONS PAID SALARIES TAX IN 1973/74 JUST OVER TWO PERCENT OF THE POPULATION. I FEEL THAT IT IS EXTREMELY NECESSARY FOR GOVERNMENT TO STRENGTHEN ITS TAX COLLECTION SYSTEM EVEN FURTHER, WITH A VIEW TO INCREASING REVENUE AND PREVENTING TAX EVASION, HE SAID.
NOTING THAT MANY PLANNED PUBLIC PROJECTS HAD TO BE POSTPONED OR SLOWED DOWN DUE TO FINANCIAL FACTORS, MR. LI URGED THE GOVERNMENT TO GIVE AN ASSURANCE THAT ONCE FUNDS BECAME MORE READILY AVAILABLE THE PROJECTS WOULD BE RESTORED TO A REASONABLE PRIORITY. WHILE THE PEOPLE'S BASIC NEEDS OF HOUSING, EDUCATION, SOCIAL AND MEDICAL SERVICES MUST HAVE AN OBVIOUS PRIORITY, HE SAID, WE MUST ENSURE THAT OUR IDEALISM AND PLANNING DOES NOT OUTSTRIP FINANCIAL COMMONSENSE.+
HOWEVER, THE MONEY MUST BE FOUND TO CARRY OUT THE PLANS FOR A BETTER LIFE FOR ALL, AND IN THIS REGARD HE COMMENDED THE FINANCIAL SECRETARY'S BOLD INITIATIVE TO RESORT TO LOAN FINANCING.
MR. LI HIMSELF WAS IN FAVOUR OF OFFSHORE FINANCING AS AGAINST LOCAL FINANCING BECAUSE THE FORMER WOULD INCREASE THE MONEY BASE. +IT IS MORE EXPANSIONARY IN THAT OUR EXPORT AND EMPLOYMENT POSITION WILL NOT BE AFFECTED BY CAPITAL INFLOWS,+ HE SAID.
HE FELT THAT LOCAL FINANCING WOULD CAUSE THE INTEREST RATE TO RISE, WITH THE RESULT THAT INTERNATIONAL CAPITAL FLOW, BEING INTEREST-SENSITIVE, WOULD KEEP THE EXCHANGE RATE OF THE HONG KONG DOLLAR AT AN UNFAVOURABLE LEVEL. →IN OTHER WORDS, MUCH OF THE EXPANSIONARY EFFECTS WILL BE DAMPENED BY THE ADJUSTMENT OF THE EXCHANGE RATE.+
/MR. LI AGREED
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