XN000022-1974-03-14 — Page 3

Thursday, March 14, 1974

Turning to the problem now being faced by the manufacturers,

Mr. Ann said the raw material stocks acquired at advantageous price

levels were diminishing.

"To replenish stocks at the present unprecedented high level

makes any sensible enterpreneur shiver, because some raw materials have

already gone up by 150 per cent, some 200 per cent and some 300 per cent

since 1972," he added.

"In the pricing of primary commodities or so to say their market

habit, after a straight uptrend the next stage is often not a plateau.

It could be an accelerated upward movement or turn to a continuous downtrend.

Both are horrible and daunting."

He pointed out that for some staple items, at the present mcment

raw material prices were higher than manufacturers could allow for their

raw material cost, or their lowest selling prices of the manufactured

goods would be higher than overseas buyers were willing or ready to pay.

This is a serious problem for Hong Kong, said Mr. Ann, because

the manufacturing industry is the largest employer and bread earner in

the first degree.

:

"When inflation hurts manufacturers those of them nearest to the

direct consumers feel the pinch first. People will buy things which they

think still relatively cheap but when they start to resist rising prices,

recossion is in the making."

On the approved housing plans, Mr. Ann said it must go ahead at

full steam despite all difficulties and in view of the slowdown of

buildings in the private sector.

Mr. Ann