6
That's all true, and all well and good, but what about costs? High costs of land and labour do erode competitive advantage. Since the peg with the US dollar must be maintained and the Government is constrained in using all the conventional monetary mechanisms to address inflation, what are we going to do to help you cope with rising costs?
The first thing to do is to help keep things in perspective. Costs may have gone up here, but they are going up in our competitors too. The labour cost indicators for Hong Kong and for Singapore experienced the same rate of increase over the period between 1989 and 1993, and the differential between average wages is slight. Rents may be higher here, but in Singapore, as the Economist pointed out last year, phone bills are higher - 90% higher to Vietnam, 80% more to France or Italy - company car costs are 79% higher, and air fares average 35% higher. You will also pay 27% in corporate taxes compared to 16.5% here.
We don't just talk, we act. A key area of activity is dealing with bottlenecks in the economy. Hong Kong faces physical bottlenecks as well as mismatches between the supply and the demand for labour. To address the physical constraints, we have massive programmes of investment in transport infrastructure, both for road and rail on land and in maritime and aviation facilities. We are making huge investments in the supply of serviced land for development.
On the labour and employment front, we are investing increasingly large amounts in the training and retraining of our workforce and encouraging the development of new industry and technology. This year the Vocational Training Council will spend $1.4 billion, providing full-time courses for 43,000 people and part-time courses for another 66,000. By the end of this financial year, the Employees Retraining Board will have provided courses for over 50,000 displaced workers. The Hong Kong Productivity Council will be running over 600 training courses and giving consultancy support to over 1,000 projects. The Industrial Support Fund will be providing over $200 million in assistance this year, and it's already contributed nearly $500 million to develop over 100 projects. The UPGC is providing $260 million in funding for research projects in our tertiary education sector this year, and the Applied Research Council has just come into operation. All that all that without undermining the principle of minimum interference in the economy - all that amounts to a serious attempt to help Hong Kong adjust to the demands of a competitive world; to ensure that new jobs can be created in new industries; and to ensure that those who are unemployed, or are displaced by changes in the economy, can find new skills and new opportunities.
-
We are also facing up to artificial bottlenecks in the economy, created where inadequate competition fails to give customers choice, so fails to provide incentives to keep costs down.