XN000022-1990-04-26 — Page 5

THURSDAY, APRIL 26, 1990

CALL TO STRENGTHEN ECONOMIC LINK WITH CHINA

THE DIRECTION AND

BUDGET ARE

STRATEGY LAID OUT IN THE MARTIN BARROW, SAID IN THE LEGISLATIVE COUNCIL BUDGET DEBATE THIS (THURSDAY) AFTERNOON.

GENERALLY SOUND, THE HON

MR BARROW URGED THAT THE GOVERNMENT MUST CONTINUE TO CREATE AN ENVIRONMENT IN WHICH OUR OWN PEOPLE COULD HAVE CONFIDENCE OF SUCCEEDING WITHIN HONG KONG, AS WE DEVELOPED OUR ECONOMIC INTERDEPENDENCE WITH SOUTHERN CHINA.

"IT MUST BE SENSITIVE ΤΟ THE WAY OTHERS SEE US SO THAT OUTSIDERS WILL WANT TO TRADE WITH US, AND TO COME HERE AND WORK WITH US, HE SAID.

TT

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STRATEGY IF SUCH

IN HIS VIEW, THE BUDGET IS THE PRODUCT OF AN ECONOMIC WHICH NEEDED FURTHER ADJUSTMENT WITH REGARD TO INFLATION AIMS WERE TO BE REALISED.

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NOTING THAT THE INDIRECT TAX INCREASES IN THIS BUDGET HAD PROVOKED PUBLIC CRITICISM FOR BEING INFLATIONARY AND FOR AFFECTING THE LOWER INCOME GROUPS DISPROPORTIONATELY, HE SAID THAT THE CURRENT DIRECT/INDIRECT TAXATION BALANCE HAD PROBABLY MOVED AS FAR AS IT COULD AND IT WAS THE RIGHT DECISION NOT TO PROCEED WITH THE WHOLESALE TAX.

STRIVE TO ABLE FOR THOSE BASE IN GUANGDONG, MR

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TO COUNTER INFLATION, HONG KONG'S INDUSTRIES SHOULD REMAIN COMPETITIVE BY EVERY POSSIBLE MEANS INCLUDING TO DO SO - MAKING GOOD USE OF THE PRODUCTION BARROW SAID.

BUT SUCH LOW-COST CUSHIONING IS WHOSE OPERATIONS ARE CONFINED TO HONG KONG. SUFFERING AS A RESULT OF THE HIGH WAGES AND

NOT AVAILABLE TO THOSE THE SERVICE INDUSTRIES ARE STAFF SHORTAGES, HE SAID.

...

"BESIDES FUELLING INFLATION THIS IS HAVING UNDESIRABLE CONSEQUENCES FOR HONG KONG AS A WHOLE FOR EXAMPLE, BY DECREASING OUR ATTRACTIVENESS AS A BASE FOR FOREIGN MULTINATIONAL HEADQUARTERS OPERATIONS AND BY ENDANGERING OUR REPUTATION FOR SERVICE IN TOURISM AND OTHER SECTORS," HE ADDED.

HOLDING THE VIEW THAT THE HEART OF THE SOLUTION IS THE REPLENISHMENT OF THE LABOUR SUPPLY, WHICH WOULD HAVE A DEFLATIONARY EFFECT BY LESSENING THE WIDE GAP THAT STILL EXISTS BETWEEN SUPPLY AND DEMAND, MR BARROW CALLED ON THE ADMINISTRATION TO ALLOW THE LIMITED IMPORTATION OF UNSKILLED AND SEMI-SKILLED LABOUR.

HE REITERATED THAT WHAT THE PRIVATE SECTOR HAD BEEN PROPOSING WAS A STRICTLY CONTROLLED SCHEME FOR IMPORTED LABOUR. "NO ONE WAS SUGGESTING MASS IMPORTATION TO MATCH EVERY VACANCY," HE ADDED.

/AGREEING WITH