CODE
18-77
CONFIDENTIAL
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12. Page 14: The absence of a contributory national insurance type/surely, associated, in part, with Hong Kong's longer-term political status and, perhaps, the preference, in these circumstances, for Chinese families to provide, for various contingencies privately.
13. Page 15: In the context of sums raised for the Community Chest, again, no reference is made to the role of private savings (yet Marjorie Topley's work at Hong Kong University surely provides a basis for at least:considering this)
14. Page 15:. Again wage rates, again in the region.
15. Page 16: The acceptance of truth in the claim that industry is no longer competitive with Taiwan, the Philippines, South Korea and Indonesia (the limita- tions of the data notwithstanding) on account of high wages (and, not mentioned, high rents save on page 17 in regard to school closures and no industrial incentives),
should, I would have thought, be linked with the low rate of taxa- tion. Is it so very obvious, for example, given also the possibility of continu- ing unemployment, that the impact of increases in taxation (page 27) to meet a -significantly more ambitious programme of social reform can be as lightly dis-
missed as on page 26 (see 26, below)?
16. Page 18: Bearing in mind that the 14-year olds can be employed in industry legally, it is by no means clear (other than for purposes of dramatisation) why the figures of employment in the 10-14 age bracket are given such prominence.
17. Page 20: The question of domestic water facilities needs to be considered in the context of Hong Kong's persistent water shortage arising from its geogra- phic and climatic circumstances. Quoting again from Mr Haddon-Cave's speech (6; above): 'a continuous supply has been the exception, not only in the 1950's, but also in the 1960's ... in 1960, for. example, there were only-39 days when there was a 24-hour supply ... indeed, we were again reminded of our vulnerability to a dry summer only last year'.
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18: Page 20: The fact that only 140,000 can afford to pay tax (at a maximum of 15%) could be taken as at least an indication of the difficulties involved in raising revenue.
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19. Page 21: It is not now the case that dividends escape tax: they are effectively caught by the 10% surcharge on profits tax (bringing the rate up to 161%). And habitual dealing on the stock market may also attract liability to tax.
20. Page 21: The author might care to reflect that it is essential for the net inward movement of funds through Hong Kong's foreign exchange market to con- tinue and that this could be jeopardised by the imposition of exchange controls designed to prevent outflows.
..21. Page 21: In referring to the Hongkong Bank's profits, the author does not mention that the 1974 results really refer to 1973, with the figures being influenced by record world trade, record rates of inflation and a record demand for advances and loans on account of an unprecedented boom in the stock market in which a large proportion of the Hong Kong public is thought to have partici- pated.
22. Page 21: The reference to Slater Walker would, surely, have been libellous had, say, the term 'Hong Kong Stock Exchange Ltd' been used instead of 'Hong Kong stock market'.
23. Page 22: I suspect the 'lower than market rate' prices charged by China did not, in fact, keep the pressure on wages down: this is more likely to have been a consequence of the relative slackness of the labour market over much of /the period
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