XN000022-1980-02-13 — Page 6

WEDNESDAY, FEBRUARY 13, 1980

THE RAPID INCREASE IN RENT HAS ALSO RESULTED IN A TRANSFER OF INCOME FROM TENANTS TO LANDLORDS A DIRECTION OF INCOME REDISTRIBUTION THAT IS SOCIALLY UNDESIRABLE FROM THE EQUITY POINT OF VIEW, HE SAID.

ALTHOUGH HE AGREED THAT RENT CONTROL SHOULD ONLY BE A TEMPORARY MEASURE, HE WONDERED WHETHER HONG KONG WOULD BE IN A POSITION TO TAKE OFF ALL CONTROL IN TWO YEARS' TIME.

HE SAID INCREASING THE SUPPLY OF HOUSING WAS A SLOW PROCESS AND NO ONE WOULD IMAGINE THAT IN TWO YEARS' TIME THE IMBALANCE IN SUPPLY AND DEMAND WOULD BE COMPLETELY ERADICATED.

+NEVERTHELESS, IF GOVERNMENT WOULD TAKE IMMEDIATE STEPS TO IMPROVE THE SUPPLY SITUATION SHORTAGE SHOULD BE EASED CONSIDER- ABLY BY THE END OF TWO YEARS, AND THE MEASURES NOW PROPOSED COULD THEN BE MADE LESS RESTRICTIVE,+ HE ADDED.

DR HUANG DID NOT AGREE WITH THOSE WHO ARGUED THAT THE PROPOSED EXTENSION OF RENT CONTROL WOULD BRING ABOUT THE SAME DAMAGING EFFECTS ON THE ECONOMY AS THE BANKING CRISIS DID IN 1965.

HE SAID WITH THE BANKING ORDINANCE NOW IN FORCE, BANK LOANS AND ADVANCES MADE TO INDIVIDUALS AS AT SEPTEMBER 1979 FOR THE PURCHASE OF RESIDENTIAL PROPERTY CONSTITUTED ONLY ABOUT TEN PER CENT OF TOTAL BANK LOANS.

MOREOVER, THE LEVEL OF RENT WAS NOT THE ONLY FACTOR WHICH INDUCED PURCHASE OF PROPERTY, EQUALLY IMPORTANT FACTORS WERE THE CAPITAL GAIN AND THE HEDGE AGAINST INFLATION.

UNDER THE PRESENT CIRCUMSTANCES, HE SAID, IT IS MOST UNLIKELY THAT RENT CONTROL WILL LEAD TO MORTGAGE DEFAULT AND DIFFICULTIES OVER THE RECOVERY OF LOANS BY FINANCIAL HOUSES, THEREBY PLUNGING HONG KONG INTO ECONOMIC RECESSION.

DR HUANG SUPPORTED CONTROLLING LUXURY FLATS AND PREMISES RENTED BY CORPORATIONS AND GOVERNMENTS BECAUSE IF THEY WERE NOT CONTROLLED, THERE WOULD BE A FILTERING EFFECT PRODUCING GREATER PRESSURE ON THE DEMAND FOR MEDIUM AND SMALL FLATS.

+ THE ARGUMENT THAT FOREIGN CORPORATIONS AND GOVERNMENTS SHOULD NOT BE PROTECTED BECAUSE THEY ARE NOT HONG KONG BELONGERS SEEMS TO ME UNTENABLE.

+ IN THE HIGHLY INTERDEPENDENT WORLD ECONOMY TODAY, IT IS BAD POLICY TO ADOPT A BEGGAR-THY-NEIGHBOUR ATTITUDE.

+BESIDES, WHY SHOULD FOREIGN CORPORATIONS AND GOVERNMENTS SUBS IDISE LANDLORDS IN HONG KONG MANY OF WHOM ARE INCIDENTALLY NOT HONG KONG BELONGERS?+ HE ASKED.

DR HUANG SAID IF CORPORATIONS HAD TO PAY EXCESSIVELY HIGH RENTS THIS EXPENDITURE MIGHT WELL BE PASSED ON TO THE CONSUMERS RESULTING IN HIGHER PRICES AND HENCE THE GENERAL PUBLIC SUBS ID IS ING THE LANDLORDS.

/SIMILARLY,