XN000022-1983-02-23 — Page 9

WEDNESDAY, FEBRUARY 23, 1983

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THERE MUST BE GROUND RULES TO ENSURE FAIR MARKET OPERATION

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WHILE HONG KONG'S ECONOMY DEPENDS MAINLY ON MARKET FORCES, IT IS THE GOVERNMENT'S RESPONSIBILITY TO SEE THAT THERE EXIST ADEQUATE GROUND RULES TO ENSURE THAT MARKET FORCES OPERATE FAIRLY, THE FINANCIAL SECRETARY, THE HON JOHN BREMRIDGE, SAID IN HIS BUDGET SPEECH AT THE LEGISLATIVE COUNCIL TODAY,

MR BREMRIDGE EXPRESSED CONCERN ABOUT THE EXCESSES THAT HAD COME TO LIGHT AS A RESULT OF THE COLLAPSE OF THE PROPERTY MARKET.

THE CONDUCT OF SOME DIRECTORS OR MANAGERS IN CONTROL OF A FEW DEPOSIT-TAKING INSTITUTIONS HAD CLEARLY BEEN OPEN TO SEVERE CRITICISM, AND THIS CRITICISM MUST EXTEND ALSO TO SOME ACTIVITIES IN OTHER AREAS OF THE FINANCIAL MARKETS, HE STATED.

+I AM THEREFORE ENGAGING IN DISCUSSIONS WITH THE SECRETARY FOR MONETARY AFFAIRS, THE SECRETARY FOR ECONOMIC SERVICES, THE COMMISSIONER OF BANKING AND THE COMMISSIONER FOR SECURITIES AMONG OTHERS TO ENSURE THAT LEGISLATION IN HONG KONG IN THEIR AREAS OF RESPONSIBILITY CONTINUES TO PROVIDE AN APPROPRIATE

AND INDEED DEGREE OF PROTECTION FOR DEPOSITORS AND INVESTORS -- FOR THE WHOLE COMMUNITY, MR BREMRIDGE SAID.

+THIS TASK RAISES DIFFICULT AND CONTENTIOUS ISSUES. BECAUSE I DO NOT PROPOSE TO REPLACE FREE MARKET MANAGEMENT WITH THAT OF CIVIL SERVANTS. NOR IS PERFECTION POSSIBLE,+ HE SAID.

HE ADDED, HOWEVER, THAT WHERE INADEQUACIES HAD BECOME

APPARENT, THERE MUST BE IMPROVEMENT.

+BUT THIS MUST BE A STEADY PROCESS WITHOUT SUDDEN SHOCKS. WE ALL KNOW ANYWAY THAT FREEDOM CANNOT MEAN LICENCE, + MR BREMRIDGE SAID.

TURNING TO OTHER MONETARY ISSUES MR BREMRIDGE SAID THAT DESPITE HONG KONG'S KNOWN PROBLEMS, ITS POSITION AS AN INTERNATIONAL FINANCIAL CENTRE HAD REMAINED STRONG.

FOREIGN CURRENCY DEPOSITS INCREASED BY HK$69 BILLION IN 1982, HELPED BY THE INTEREST TAX EXEMPTION INTRODUCED A YEAR AGO ON SUCH DEPOSITS, HE SAID,

WHILE THE RAPID INCREASE IN FOREIGN CURRENCY DEPOSITS MIGHT BE DUE TO A PROPORTION OF HONG KONG'S EXPORT EARNINGS BEING RETAINED IN FOREIGN CURRENCIES, HONG KONG DOLLAR DEPOSITS ALSO INCREASED, THOUGH MARGINALLY, HE SAID.

AMONG THE REASONS FOR THIS OUTCOME, HE CITED ANTICIPATION OF FURTHER ADVERSE MOVEMENTS IN THE EXCHANGE RATE AND THE 10 PER CENT INTEREST TAX ON HONG KONG DOLLAR DEPOSITS.

/THE FALL