XN000022-1979-01-24 — Page 13

WEDNESDAY, JANUARY 24, 1979

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HE SAID HONG KONG WAS FORTUNATE AT THE MOMENT TO HAVE LOW UNEMPLOYMENT, BUT WITH THE LARGE NUMBER OF IMMIGRANTS COMING

IN AND THE DRIVE FOR INDUSTRIALISATION GATHERING MOMENTUM IN CHINA, THE ECONOMIC AND INDUSTRIAL SITUATION IN HONG KONG FOUR OR FIVE YEARS FROM NOW WAS UNCERTAIN.

HE WANTED TO KNOW WHAT THE GOVERNMENT THINKING AND PLANS WERE TO SUSTAIN AND ENHANCE THE SMALL-SCALE INDUSTRIAL SECTOR WHICH, RELATIVELY SPEAKING, HAD BEEN NEGLECTED.

ACCORDING TO THE REPORT BY DR. SIT, THE INDUSTRY MADE UP 92.1 PER CENT OF TOTAL MANUFACTURING ESTABLISHMENTS IN 1977 AND CONTRIBUTED 303,553 JOBS (40.2 PER CENT OF TOTAL MANUFACTURING EMPLOYMENT OR 18.1 PER CENT OF TOTAL EMPLOYMENT IN ALL SECTORS).

THE HON. JAMES WU AND THE HON. S. L. CHEN SPOKE IN SUPPORT OF MR. CHEONG-LEEN.

MR. WU SAID APPREHENSION WAS GROWING AS TO WHETHER THE GOVERNMENT'S ONCE GREAT TRADITIONAL ECONOMIC POLICY HAS OUTLIVED ITS USEFULNESS.

+IT WOULD APPEAR THAT THE GOVERNMENT MUST INCREASE ITS INPUT AND PARTICIPATION IN THE DEVELOPMENT OF OUR INDUSTRIES SO THAT THESE PRODUCTIVE AND WEALTH-CREATING VENTURES CAN PROSPER FOR THE GENERAL GOOD, HE SAID.

HE REMINDED THE COUNCIL THAT DUE TO INCREASED INTERNAL DEMAND AND SLUGGISH REAL EXPORT GROWTH, THE TRADE DEFICIT IN 1978 INCREASED BY MORE THAN 130 PER CENT OVER 1977 AND THE NEAR 20 PER CENT REDUCTION IN THE PURCHASING VALUE OF THE HONG KONG DOLLAR DURING THE LAST TWO YEARS HAD OBVIOUSLY RESULTED FROM THIS WORRYING SITUATION.

AS CHAIRMAN OF THE FEDERATION OF HONG KONG INDUSTRIES, HE WAS GRATEFUL TO MR. CHEONG-LEEN FOR DRAWING ATTENTION TO DIFFICULTIES AND PLIGHT OF SMALL INDUSTRIES IN HONG KONG.

ON THE PROBLEM OF FACTORY ACCOMMODATION, MR. WU SAID FAIR MARKET PRICES IN HONG KONG WERE A MOCKERY AND A SYNONYM OF INFLATED RENTAL AND PREMIUM BEYOND VIABILITY. AS A RESULT, + INVESTMENT IN PRODUCTIVE CAPACITY SLACKENS AS MONEY IS DRAWN TO THE MORE SPECULATIVE FIELDS THAT APPEAR TO OFFER MORE LUCRATIVE AND QUICKER RETURNS.+

SMALL INDUSTRIALISTS WERE ALSO GENERALLY OF MODEST BEGINNING AND USUALLY HARD PRESSED, SO THAT IF LEFT TO THEIR OWN, THEY WERE POORLY EQUIPPED AND ILL-PREPARED TO SOLVE THEIR LABOUR PROBLEMS AND PROBLEMS ARISING FROM INSUFFICIENT TECHNICAL AND MANAGEMENT ASSISTANCE AND FINANCIAL WORRIES.

IN TODAY'S CIRCUMSTANCES OF HIGH INFLATION, RAPIDLY RISING MATERIAL COSTS, AND TIGHT LABOUR SITUATION, THE SITUATION HAD BECOME ÉVEN MORE UNTENABLE.

FOR EXAMPLE, HE SAID, HIGH OVERHEADS DICTATED

LARGER PRODUCTION VOLUMES AND ORDERS, BUT RAPIDLY RISING MATERIAL AND LABOUR COSTS COULD UPSET EARLIER COSTINGS UPON WHICH ORDERS WERE NEGOTIATED AND ACCEPTED.

/FOR THOSE