TNAG-2515-FCO40-3669-Future-of-Hong-Kong-International-Rights-and-Obligations-Sub-1992 — Page 16

CONFIDENTIAL

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foreign workers admitted under the general scheme for labor imports,

amounting to almost 1 percent of the total labor force, has contributed

significantly to the easing in labor market tightness since 1990. This

positive result argues for allowing a further expansion in labor imports,

With regard to land management policies, the tax and regulatory measures

taken to discourage speculative property activities, and the tightening of

real estate lending policies by banks, appears to have contributed to a

cooling of activity in the residential property market. The increased sale

of public lands in the last two years has been a welcome step, and further

increases in this regard would be helpful.

We welcome the recent decision to establish a central monetary

authority. This step will allow a strengthening of technical expertise and

analytical capabilities and, thereby, enhance the effectiveness of monetary

management. It is also important that the central monetary authority works

closely with the fiscal authorities so as to ensure that there is close

coordination in the formulation of financial policies. In the area of money

market operations, the introduction of the liquidity adjustment facility has

assisted banks in making late adjustments to their liquidity positions and

Improved the Exchange Fund's ability to control interbank interest rates.

We also commend the recent release of information on the assets and

liabilities of the Exchange Fund. We continue to believe that more complete

data on the balance of payments would enhance the analysis of Hong Kong's

economy, and welcome the recent decision to proceed with preparatory work on

compiling data on external investment income flows.