XN000022-1984-03-28 — Page 5

WEDNESDAY, MARCH 28, 1984

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DR FANG ALSO SUGGESTED THAT GOVERNMENT SHOULD CONSIDER SETTING UP A CENTRAL PROVIDENT FUND.

HE POINTED OUT THAT ALTHOUGH A LARGE NUMBER OF BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL INSTITUTIONS WERE OFFERING A VARIETY OF PROVIDENT FUND SCHEMES, THEY HAD BY AND LARGE NOT BEEN VERY POPULAR WITH EMPLOYERS AND EMPLOYEES.

IT WAS ESTIMATED THAT OUTSIDE GOVERNMENT, LESS THAN TEN PER CENT OF THE WORKERS IN HONG KONG PARTICIPATED IN ANY KIND OF PROTECTION SCHEMES COVERING RETIREMENT, SICKNESS, DISABILITY AND DEATH (NOT WORK RELATED), DR FANG OBSERVED.

NOTING THAT THE GOVERNMENT'S STANCE IS THAT IT WILL CONCENTRATE +ON THOSE LEAST ABLE TO HELP THEMSELVES+, DR FANG SAID, +IN MY OPINION THIS OBJECTIVE IS MORE EFFECTIVELY ACHIEVED IF THOSE PEOPLE WHO BECAUSE OF RETIREMENT, SICKNESS OR LOSS OF A CHIEF BREADWINNER COULD BE HELPED BY BEING ENCOURAGED TO INSURE AGAINST THEM BY CONTRIBUTING TO A CENTRAL PROVIDENT FUND.+

HE POINTED OUT THAT ONE OF THE MAJOR BANKS IN HONG KONG HAD INDICATED THAT IT WAS WILLING AND ABLE TO DEVELOP AND ADMINISTER AN INDIVIDUAL ACCOUNT ORIENTED RETIREMENT SCHEME WHEREBY THE WORKER COULD CARRY THE BENEFITS WITH HIM WHEREVER HE GOES.

+DEPENDING ON THE CONTRIBUTION FROM THE WORKER AND THE EMPLOYER THE SCHEME WOULD CARRY WITH IT AN INSURANCE ELEMENT SUCH THAT THERE WOULD BE BENEFITS PAYABLE FOR UNEMPLOYMENT DUE TO ILLNESS, DISABILITY OR DEATH,

+SUCH A SCHEME WOULD BE OPERATED ON A COMMERCIAL BASIS AND INCOME FROM FEES AND INVESTMENT WOULD HOPEFULLY SUSTAIN THE OPERATION ON AN ON-GOING BASIS, THAT IS IF WORKERS IN SIGNIFICANT NUMBERS WOULD JOIN, DR FANG EXPLAINED.

HIS OTHER ARGUMENT FOR SETTING UP SUCH A FUND WAS THAT A RESPONSIBLE ORGANISATION OF WORKERS' UNION HAD INFORMED HIM THAT IT HAD BEEN ESTABLISHED BY A SURVEY AMONG OVER 100 WORKERS' ORGANISATIONS THAT A CENTRAL PROVIDENT FUND, WITH CONTRIBUTIONS FROM BOTH EMPLOYERS AND EMPLOYEES, WOULD BE ACCEPTED BY THE WORKERS.

+WHAT WE NEED NOW IS THE INITIAL MOMENTUM, + DR FANG SAID.

+THE LONG TERM SUCCESS OF A CENTRAL PROVIDENT FUND MUST DEPEND ON THE GOVERNMENT EITHER MAKING IT COMPULSORY, OR AT LEAST PROVIDING STRONG SUPPORT FOR SUCH SCHEMES BY OFFERING INCENTIVES SUCH AS TAX EXEMPTION FOR CONTRIBUTIONS FROM EMPLOYERS AND EMPLOYEES,+ HE ADDED.

TURNING TO SALARIES TAX, DR FANG SUGGESTED THAT DIFFERENTIAL STANDARD TAX STRUCTURE, BASED ON HOUSEHOLD INCOME, SHOULD BE SET.

HE SAID, +I AGREE ENTIRELY THAT THE MORE WELL-OFF SHOULD BE ASKED TO SHOULDER A LARGER SHARE OF THE TAX INCREASE IN THE LIGHT OF THE BUDGET DEFICIT AND THE OBJECTIVE OF MAINTAINING VIGOROUS INVESTMENT BY THE GOVERNMENT. +

/+BUT I