XN000022-1995-10-19 — Page 3

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Governor: We all know that at the heart of any enterprise economy like ours are small and medium enterprises, and that in order to become a large enterprise you've got to first of all get through the small and medium stage. So the well-being and the health of small and medium enterprises should be of the greatest concern to all of us.

Now, you mentioned all the issues which touch on competitiveness. Touch on competitiveness in a way that concerns people in Hong Kong, and understandably concerns them. Not, perhaps, concerns as much the international audience which still regards Hong Kong, according to the World Economic Forum, as the third most competitive economy in the world. We've gone ahead of Japan over the last year, according to them. It is important that wherever we are directly in control of events, we should do everything we possibly can to bear down on costs. One thing that we can continue to do is to ensure that business and individuals enjoy pretty well the lowest tax regime anywhere in the world. People sometimes say to me, but look at this or that economy which offers tax holidays. We don't need to offer tax holidays in Hong Kong. You only offer tax holidays if at the end of the holiday, people are going to be paying pretty high tax.

You mentioned office rentals and prices. I notice that we're now being criticised for the measures that we took last year for deflating property prices without I think we bringing the whole property sector tumbling down around our ears. actually managed that operation remarkably successfully. Getting property prices. back to the 1993 level before that big boom later in the year and into 1994. You mention wages. Well, above all, an issue for employers themselves. I don't make this point out of any spirit of fiscal envy. You can't do that for a number of reasons if you are Governor of Hong Kong. But the last time - the last time people came to talk to me about wages being too high was the day after the South China Morning Post had produced an article on what had happened to directors' remuneration over the previous year in relation to profits. There is something called leadership when we look at issues like that.

You mention the regulation of business. Donald is quite deliberately going to ask every business organisation in Hong Kong to tell us where you think we could genuinely get rid of red tape and excessive regulation. But in a more sophisticated economy like Hong Kong's, is it unreasonable that we find ourselves in the financial sector, in quality control, in health and safety, pushing for higher standards?