XN000022-1987-09-21 — Page 4

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MONDAY, SEPTEMBER 21, 1987

BUT MR JACOBS SAID

PROTECTIONISM

SENTIMENTS IN HONG KONG'S MAJOR MARKET, THE UNITED STATES, CONTINUE TO GIVE CAUSE FOR CONCERN.

HE SAID HONG KONG HAS ALWAYS BEEN A STAUNCH SUPPORTER OF A STRONG AND FREE MULTILATERAL TRADING SYSTEM. "WE ARE ENGAGED IN THE URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS, AND WILL CONTINUE TO DO ALL WE CAN TO PROMOTE THE CAUSE OF FREE AND OPEN TRADE, MR JACOBS ADDED.

DOMESTICALLY, MR JACOBS SAID THERE IS A GROWING ACCEPTANCE OF THE VIEW THAT EVEN THE PROVISION OF THE NECESSARY PHYSICAL INFRASTRUCTURE AND PROPERLY EDUCATED AND TRAINED MANPOWER MAY NOT BE SUFFICIENT.

HE SAID EFFORTS ARE BEING MADE ON SEVERAL FRONTS TO PROVIDE SUPPORT SERVICES TO THE MANUFACTURING INDUSTRIES IN ORDER TO MAKE THEM MORE COMPETITIVE.

ON THE WORKING

"THERE IS STILL MUCH TO BE DONE, BUT I BELIEVE WE ARE RIGHT PATH. THROUGH THE INDUSTRY DEVELOPMENT BOARD WE ARE WITH INDUSTRIALISTS ΤΟ DESIGN WAYS ΤΟ IMPROVE HONG KONG'S COMPETITIVENESS, HE ADDED.

ON THE LABOUR FRONT, MR JACOBS SAID THE LABOUR MARKET HAS BEEN VERY TIGHT AND THIS HAS LED TO INCREASES IN WAGES AND SALARIES.

HE SAID THE GOVERNMENT HAS RESISTED THE SUGGESTIONS OF IMPORTING LABOUR FROM CHINA. "WE DO NOT BELIEVE THAT HONG KONG'S LABOUR FORCE SHOULD BE DENIED THE OPPORTUNITY OF REAPING THE BENEFIT OF GOOD TIMES THROUGH INCREASE IN WAGES, HE ADDED.

TURNING TO THE DOLLAR LINK, MR JACOBS SAID THE EFFECTIVE EXCHANGE RATE INDEX OF THE HONG KONG DOLLAR DECLINED BY SEVEN PER CENT IN THE FIRST EIGHT MONTHS OF THIS YEAR BECAUSE OF THE LINK.

WHILE THE GREATER DEPRECIATION OF THE HONG KONG DOLLAR AGAINST MOST OTHER MAJOR CURRENCIES HAS ENHANCED THE COMPETITIVENESS OF HONG KONG PRODUCTS, MR JACOBS SAID THE LINKED EXCHANGE RATE SYSTEM PROVIDES STABILITY. "IT IS NOT DESIGNED TO ENHANCE HONG KONG'S COMPETITIVENESS, HE ADDED.

*

THE FINANCIAL SECRETARY DISCLOSED THAT A RECENT RECALCULATION OF THE EFFECTIVE EXCHANGE RATE INDEX USING MORE UP-TO-DATE WEIGHTS AND IMPROVED AVERAGING PROCEDURE HAS FOUND THAT THE HONG KONG DOLLAR HAS ACTUALLY APPRECIATED SLIGHTLY, IMPLYING A SLIGHT LOSS OF COMPETITIVENESS FROM THIS SOURCE SINCE OCTOBER 1983.

IN OTHER AREAS, MR JACOBS SAID THE GOVERNMENT HAS TAKEN STEPS TO IMPROVE THE REGULATION OF THE FINANCIAL MARKETS, PARTICULARLY THE STOCK MARKET.

/HE SAID