Submission on Chief Executive’s Policy Address 2017 and 2017-18 Budget Consultation

 

Representing a broad spectrum of Australian, Hong Kong and international companies, The Australian Chamber of Commerce (AustCham) has endeavored to make contributions to the economic, social and sustainable development of Hong Kong over the past three decades. AustCham has been representing views, values and interests of members to the Hong Kong SAR Government to facilitate the growth and advancement of the city. AustCham congratulates the success of the HKSAR in its 20th anniversary year and appreciates the opportunity to provide our recommendations to the Chief Executive’s Policy Address 2017 and The 2017-18 Budget.

We set out below our recommendations for the areas of focus for the coming year.  


Smart City Development
AustCham appreciates all the initiatives that HKSAR has launched to take the city forward for smart development. We look forward to more financial support and tougher standards to develop smarter and greener buildings as well as increasing focus on energy efficiency in support of the recently published Energy Saving Plan. Generally, smarter traffic systems are needed, such as the Electronic Road Pricing (ERP), and smart meters for the city’s three million electricity customers empowering them to reduce their demand and better understand their energy consumption. The electrification of transport should be continued to expand – more support should be raised for electric buses and commercial vehicles such as tax incentives. The Government also needs to develop and implement green labelling, green project accreditation schemes, and public listing for green sector companies, adding climate and environmental risks to the consideration of investment portfolios.

AustCham submits that the Government should make a more holistic approach with top-down policy framework to facilitate integration at the implementation level across different bureaus and departments.

Innovation and technology
The importance of innovation and technology is being recognized by the HKSAR Government, and regulations have a critical role in catering for innovation and new products and services which will ultimately benefit the public. We encourage the Government to lead Hong Kong towards a Smart City, by using evidence-based techniques to justify the best regulation, promote a truly positive environment for innovation, protect foreign investment, and ensure our people have the right to benefit from innovation in a free market.

We hope that Hong Kong will become a world leader in the regulation of innovative and disruptive products, not through prohibition, but through world-class regulation based on sound science.

Technological innovation is transforming a broad range of industries including finance, transportation and consumption. One of the examples is in the tobacco industry where a wide range of non-combustible tobacco products are becoming available which have the potential to significantly reduce health risks and healthcare spending when compared to cigarette smoking. High end technological innovation has played a key role in gaining, at a large scale, acceptance and adoption to this type of new product category. Innovative, scientifically substantiated, safer alternatives to cigarettes for smokers who do not quit can hugely complement current efforts to discourage smoking and reduce community impact.

Services and products that have benefits to the society, economy and public health should be overseen by the Government with appropriate regulations, therefore enhancing innovation and improving the quality of Hong Kong people’s lives.

Education and Talent
AustCham always welcomes continued investment in the education sector as we see the importance of a well-educated, trained and skilled talent pool for the city’s sustainable development. We encourage the Government to continue to work with overseas investors and education providers to establish their presence in Hong Kong. For the international communities, AustCham applauds more affordable international school places and for the local community, an improvement in students’ English proficiency will help maintain graduates to better build the city as an international metropolis.

Hong Kong’s regional competitors are building sustainable pools of talent through tertiary institutions - often in partnership with overseas universities or corporates. Australia has a great record in tertiary education and AustCham encourages the promotion of talent exchanges and partnerships between Hong Kong and Australia.

The Australia Government’s New Colombo Plan, a signature initiative supporting Australian undergraduates to live, study and undertake internships in the Indo-Pacific region, has encouraged a two-way flow of talent between the county and the rest of the region. Hong Kong is one of the host locations of the Plan, with around 15 scholars coming to Hong Kong every year. The Plan has deepened the bonds of friendship and understanding between Australia and Hong Kong for several years, and will continue to contribute to improving both countries’ education standards.

We look forward to more similar programs in the future, which encourage diversity and benefit societies in both countries. We believe more government support is needed from the policy perspective, say, reviewing the application requirements for different visa types for overseas talent and the ongoing restrictions of changing visa types.

Environment
AustCham sees a clear need for proactive policies in environmental protection in Hong Kong. With the community’s buy-in to the costs involved, there needs to be a focus on energy, building, transportation and waste-to-energy, supported by a long-term stable policy framework, to enable action and forward planning by business.

We urge the adoption of a 2030 Carbon Intensity Target for Hong Kong and to lower carbon fuel mix for the electricity grid with more gas and nuclear power, coupled with incentives for locally distributed renewable energy in line with the community’s willingness to pay, as well as for
optimising the use of energy generated from waste.  For example, the waste heat from industrial processes could be used for desalination at power plants.

As Hong Kong stands to run out of land fill space within a short time and pollution is at record highs, more transparent and aggressive waste management strategies should be adopted, including incineration with latest plasma technologies, recycling, redesigning charging schemes and regional collaboration.

Hong Kong’s per capita water usage is unsustainably high. We believe there is a direct correlation between low water charges and high consumption and believe with some directed policies and initiatives the situation could be reversed. AustCham reiterates its call to consider implementing more realistic price signals and water consumption levels.

Biodiversity in Hong Kong remains one of the key concerns of Austcham. The Government had a public consultation regarding this, for which AustCham made a submission, and is drafting a strategic action plan to sustain and improve biodiversity in the city. However, the business sector remains lukewarm at best and still does not seem to make the connection or appreciate this rather-difficult-to-understand area. Much more education, specifically in helping companies appreciate the connection between business and effective biodiversity is needed.

Housing Availability and Property Affordability
Owning their own home is now an unaffordable dream for many people in Hong Kong, which may breed disillusionment with our city and our traditional values. Hong Kong’s average wage to house price ratio (x 15) is almost double the next highest in the world (Vancouver) and figures suggest that even a 40-year old highly qualified professional who is born in the city is not able to afford to buy his/her own home due to the high property prices. Furthermore, the size of units being planned is not sustainable for family life.

AustCham encourages the Government to bring forward proposals to increase the supply of both public and private housing and to assist the many thousands living in sub-divided flats and cage homes. We also suggest increasing the availability of private sector properties for rent, noting that Singapore has removed the property tax concession for vacant properties in 2014, but we understand this still applies in Hong Kong.

Moderate prices and rents for housing and property would also benefit the business prosperity of the city. Hong Kong’s high land price and high rent may strongly discourage start-ups and innovation, and they are one of the biggest concerns in the decisions of relocating talent to Hong Kong as housing for staff consumes most of the operative capital of an SME. AustCham fully supports a series of government measures to cool the property market.

Land Use
Availability and affordability of land are continued major constraints for business in the city. A new set of initiatives should be announced in 2017 to expedite the re-zoning of former industrial land and to bring forward the provision of brownfield rather than greenfield developments.

Commercial and Business Development
Regional rivals and fast-growing competitors have invested heavily in building capability in areas in which Hong Kong has traditionally taken the lead, including financial services (Shanghai and Singapore) and government’s support and help for small business start-ups (Singapore and Shenzhen especially).

To strengthen Hong Kong’s position as an international financial hub, the Government needs to further develop the local bond market and develop opportunities for the city as a part of the ‘Belt and Road’ initiative with practical support and guidance on how local companies can enter these new markets in Central and South-eastern Asia. AustCham fully supports the establishment of the steering committee for the Belt and Road and the Belt and Road Office. We believe Hong Kong can make full use of the dual advantages of 'one country' and 'two systems' to seize the historic opportunity of the Belt and Road.

To further promote social and economic development of the city and enhance our competitiveness, AustCham also supports Hong Kong to become a member of the Asian Infrastructure Investment Bank (AIIB). It is estimated that in the next decade, the need for investments in infrastructure across Asia will amount to US$10,000 billion, including those devoted to fields of power generation, highways, railways, ports, transport, telecommunication, and agriculture. Given the AIIB
s prospect and plans, and with its advantage of One Country, Two Systems, Hong Kong can leverage its sophisticated financial and professional services and its regional network to make the best possible use of the enormous opportunities ahead.

Central to Hong Kong’s economic prospects is our ability to nurture a new generation of enterprises. SMEs are the lifeblood of thriving economies. The Government must continually focus on the ease of establishing new and growing existing businesses, and provide the right policies that are conducive to success. For example, the Government should avoid the temptation to over-regulate. Dedicated support is also needed to cut red tape, avoid the huge difficulties in issues like setting up a first time bank account, broadening the tax base, double taxation agreements, and changes to the tax regime to encourage more start-ups.

AustCham will continue to work closely with all Government bureaus and departments and support Hong Kong’s sustainable development and prosperity. We appreciate HKSAR Government’s continuous efforts to better the city we are living in. We are grateful for the opportunity to submit our ideas and suggestions in the Chief Executive’s Policy Address 2017 and 2017-18 Budget Consultation.

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