XN000022-1987-01-20 — Page 2

TUESDAY, JANUARY 20, 1987

RIGHT OBJECTIVES PURSUED FOR INDUSTRIAL POLICIES

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THE CYNICS ARE WRONG IN SAYING THAT THE GOVERNMENT DOES NOT CARE THAT HONG KONG'S INDUSTRIAL POLICIES HAVE EVOLVED IN A RATIONAL AND PRAGMATIC MANNER, THE DIRECTOR OF INDUSTRY, MR K.Y. YEUNG, SAID TODAY (TUESDAY).

SPEAKING AT THE LUNCHEON MEETING OF THE ROTARY CLUB OF HONG KONG, HE SAID THAT HONG KONG HAD AN EFFICIENT MECHANISM FOR FORMULATING AND REVIEWING THOSE POLICIES AND THAT, IN SEEKING TO DO MORE TO SUPPORT INDUSTRIES, +WE ARE PURSUING THE RIGHT OBJECTIVES, WHICH ARE CENTRED UPON FOSTERING AND REMOVING THE OBSTACLES TO GROWTH+.

MR YEUNG SAID THE GOVERNMENT TOOK THE VIEW THAT, BECAUSE OF THE EXTERNAL ORIENTATION OF THE ECONOMY AND THE NEED TO PROTECT ITS ABILITY TO ADJUST EFFICIENTLY, THE PERFORMANCE OF THE ECONOMY WOULD BE DAMAGED IF THE GOVERNMENT ATTEMPTED TO FRUSTRATE MARKET FORCES OR TO PLAN THE ALLOCATION OF RESOURCES.

+WHILE THIS DOES NOT RULE OUT INTERVENTION IT CLEARLY MEANS THAT INTERVENTION SHOULD BE UNDERTAKEN ONLY WHEN IT IS IN THE LONG-TERM INTERESTS OF THE ECONOMY.

+IN PRACTICE THIS GENERAL APPROACH MEANS THAT, APART FROM ENSURING THE PROVISION OF THE PHYSICAL AND LEGAL FRAMEWORK WITHIN WHICH PRIVATE ENTERPRISE CAN OPERATE SUCCESSFULLY

THE GOVERNMENT'S MAIN CONCERN IS TO AVOID FRUSTRATING INDIVIDUAL ENTERPRISE AND TO SEEK TO MAINTAIN INCENTIVES.

+TO THIS END, THE SIZE OF THE PUBLIC SECTOR HAS BEEN CONSTRAINED AND THE TAX BURDEN KEPT LOW. DIRECT SUBSIDIES TO BUSINESS ARE AVOIDED AND MARKET FACTORS DETERMINE ENTREPRENEURIAL DECISIONS, HE SAID.

IN RELATION TO MANUFACTURING, THE GENERAL APPROACH HAD HAD THE EFFECT OF LIMITING THE SCOPE FOR THE GOVERNMENT'S INDUSTRIAL POLICIES TO PROVIDING SUPPORT FOR HONG KONG'S MANUFACTURING INDUSTRIES, AS OPPOSED TO THE EXERCISE OF DIRECT INFLUENCE OVER BUSINESS AND INVESTMENT DECISIONS SO OFTEN ASSOCIATED WITH PUBLIC POLICIES THAT ATTEMPT TO PICK SO-CALLED DESERVING AND PIONEERING INDUSTRIES.

+ THE SUPPORT WE PROVIDE IS PARTLY INFRASTRUCTUAL - AS REPRESENTED BY OUR EDUCATIONAL PROGRAMMES, THE PROVISION OF INDUSTRIAL LAND AND OTHER PUBLIC WORKS, AND A VARIETY OF PUBLICITY FUNDED BUSINESS SERVICES (INCLUDING THOSE OF THE TRADE DEVELOPMENT COUNCIL, THE EXPORT CREDIT INSURANCE CORPORATION) - AND PARTLY DEVELOPMENT - AS REPRESENTED BY SPECIFIC SCHEMES OF INDUSTRIAL TRAINING, THE PRODUCTIVITY ENHANCEMENT SERVICES OF THE HONG KONG PRODUCTIVITY COUNCIL, AND THE QUALITY PROMOTION AND INWARD INVESTMENT SERVICES OF THE INDUSTRY DEPARTMENT, HE SAID.

/+WHEN WE