RESOURCE CENTER
Press Release
Keynote Address By Mr. Tung Chee Hwa At The World Economic Forum Europe/ East Asia Economic Summit Hong Kong
1996.11.19
Professors, distinguished guests, ladies & gentlemen,
I am greatly honored to be invited to speak at this gathering of the World Economic Forum. I, after a great deal of thought, decided that I have had enough of shipping. I also thought having been in shipping, one of the most difficult businesses in the world, I can do anything. But the truth is very different. Over the past couple of months, I have found politics really really tough going. I have slept an average of five hours everyday. I have so far lost five pounds. I have seldom had the opportunity to see my two granddaughters who are great sources of joy for me because all the time I involved in the process of politics, and more importantly, in the process of learning about Hong Kong.
I have looked at the agenda of this gathering and I noted that all speakers are distinguished leaders form Asia Pacific and Europe. I hope that through this Summit, friends from Europe will be able to form a better understanding of the opportunities in Asia, and more importantly, better appreciate the changes, whether political, economical or social, that is taking place in Asia.
As a Europe/East Asia Economic Summit, it is most appropriate that this is being held in Hong Kong, a city that has been positioned as a bridge between the East and the West. As Asia continues to prosper and take on a larger role on the world stage, Hong Kong contribution to Asia continued growth and prosperity cannot be overlooked.
This is an interesting time for Hong Kong. With 1997 fast approaching, Hong Kong is ready to take on the challenges of the 21st Century with a new identity.
Confidence
What will happen in 1997? Hong Kong will become a Special Administrative Region of the People Republic of China.
Hong Kong will remain largely unchanged under the unique concept of One Country, Two Systems?and continue to play an important role as China and Asia at large moves to the centre of the world stage in the coming Century.
I have lived here most of my life. My family all reside and work in Hong Kong. I am deeply committed to Hong Kong for the long term. I have utmost confidence in the continued growth and prosperity of Hong Kong as we move forward.
Myths and Facts
Over the past few years, many have raised the question of Hong Kong future after 1997.
For those who do not truly grasp the realities of the situation, they may express doubt of Hong Kong post 1997. They point to the continued decline of Hong Kong well-being, and believe that this is the beginning of the demise of Hong Kong. For those who thoroughly examine the issue, the picture suggests otherwise.
I will take three examples and address the myth and reality of this situation.
The myth is that there is a massive flight of capital from Hong Kong. There are those who argue that confidence in Hong Kong has been lowered to such a level that local and foreign funds have been leaving Hong Kong in search of other homes. The reality is quite the opposite. The average growth rate of Hong Kong deposits in banks increased by 12.5% per annum during the period 1991-1995. During the same period, Hong Kong foreign exchange reserves grew at 17.6% per annum.
The myth is that a brain drain?would strip Hong Kong of its educated work force and mass emigration would materialize in the run-up to the 1997 changeover. The net result will be a decline of Hong Kong skilled workforce. The reality is that our population continues to increase in the years between 1991-1995. In 1995 alone, net population increased by 120,000 people. Indeed, there are those who left Hong Kong to secure passport elsewhere. But I will point out that there were 50,000 returnees from overseas alone.
The myth is that confidence in Hong Kong has completely eroded; that Hong Kong will cease to be a commercial focal point in Asia. The reality is again the opposite. The Heritage Foundation rated Hong Kong as the most liberal economy in the world, and the World Economic Forum rated Hong Kong as the second most attractive international economy. In fact, Hong Kong continues to serve as regional headquarters to more than 700 major multinational corporations and 85 of the top 100 international banks. As a further sign of investor confidence, there is underway several major infrastructural projects, including that of a US$20 billion airport, several roadway, railway and reclamation projects, a new container terminal and a new river trade terminal. Indeed, fixed capital formation grew at 19.6% per annum during 1991-1995.
Recently, people have commented that compared with a few months ago, the level of confidence has increased. However, the truth is that for many of us who are committed to Hong Kong and who knows what is going on here, confidence has never left us. As you can see, these are the facts. Over the past 50 years, Hong Kong has faced many crises, Indeed, Hong Kong has been written off many times. But each time, ladies and gentlemen, we have come back stronger and better. Nobody has bet against Hong Kong and won.
Basic Law, Joint Declaration
What will happen after 1997? Most of you who have not followed the events here closely do not realize the extent to which the future, our future, has been conceptualized, discussed, and documented.
Hong Kong future is governed by two significant documents, namely the Sino-British Joint Declaration, signed by Great Britain and China, and the Basic Law, a mini-constitution for Hong Kong. The Basic Law was drafted after 4 years of consultation between people of Hong Kong and the Mainland, and was passed into law by China National People Congress on 4 April, 1990.
The Basic Law ensures the unique concept of One Country, Two Systems?and sets forth the principle of Hong Kong people governing Hong Kong?with a high degree of autonomy?that safeguards the stability, prosperity and the way of life of Hong Kong.
The thoroughness and comprehensiveness of the Basic Law is remarkable. For those of you who are unfamiliar with them, I will highlight some interesting sections.
Under the Basic Law, Hong Kong SAR retains separate and independent executive, legislative and judicial powers, including that of final adjudication.
According to the Basic Law, the judicial system previously practiced in Hong Kong will continue except for the establishment of a Court of Final Appeal in Hong Kong. Previously, this function, under the Privy Council, was performed in London.
The Basic Law specifically sets forth that Hong Kong shall have independent finances and tax structure. Hong Kong monetary authority will be independent. Hong Kong SAR Government financial revenues will remain exclusively for its own use. The Central Government will not levy taxes on the Hong Kong SAR Government. It is specifically stated that the Hong Kong dollar will remain as the legal tender of Hong Kong, and shall continue to circulate and be converted freely without exchange controls. The authority to issue the currency is vested in the Hong Kong SAR Government.
The Basic Law sets forth that Hong Kong SAR may on its own conclude and implement agreements with foreign states, regions, and international organizations in the fields of economic, trade, financial, monetary, shipping, communications, tourism, cultural and sports. Specifically, Hong Kong will maintain its status as a member of the organization of GATT and WTO after the changeover.
Another unique aspect with regards to the Basic Law is the framework that will permit Hong Kong to move towards greater democratisation and to realize the principle of Hong Kong people governing Hong Kong?
With regards to the post of the Chief Executive, the Basic Law provides for the following I quote, The Chief Executive of the Hong Kong Special Administrative Region shall be selected by election or through consultations held locally and be appointed by the Central Government. The method for selecting the Chief Executive shall be specified in the light of the actual situation in the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress. The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures.?
The Basic Law further provides that the first Chief Executive, who will serve for a term of five years, shall be selected by a Selection Committee of 400. The 400 comprises of 100 from the industrial/financial/commercial sectors, 100 from the professional sector, 100 from the labour/social services/religious sectors and 100 from the political sector. It is specifically pointed out that the 400 must all be permanent residents of Hong Kong.
The Basic Law also provides that the second Chief Executive shall be elected by a 800-strong Selection Committee composed by 200 from each of the 4 sectors as described above.
The Basic Law further provides that, and here I quote If there is a need to amend the method for selecting the Chief Executives for the terms subsequent to the year 2007, such amendments must be made with the endorsement of a two-thirds majority of all the members of the Legislative Council and the consent of the Chief Executive, and they shall be reported to the Standing Committee of the National People Congress for approval? So in so far as the selection of the Chief Executive is concerned, the first and second terms are set. Beyond the second term, that is, from the third term onwards, it would really depend on how Hong Kong is developing and how we feel we should go forward. But there is the provision for universal suffrage.
With regards to the Legislature, the Basic Law provides, and here I quote The Legislative Council of the Hong Kong Special Administrative Region shall be constituted by election. The method for forming the Legislative Council shall be specified in the light of actual situation in the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress. The ultimate aim is the election of all the members of the Legislature by universal suffrage.?
| The composition of the first term legislature shall be as follows: | |||
| Members returned by functional constituencies | 30 | ||
| Members returned by the Election Committee | 10 | ||
| Members returned by geographical constituencies through direct elections | 20 | ||
| The composition of the second term legislature shall be as follows: | |||
| Members returned by functional constituencies | 30 | ||
| Members returned by the Election Committee | 6 | ||
| Members returned by geographical constituencies through direct elections | 24 | ||
| The term of service is 4 years | |||
| The composition of the third term legislature shall be as follows: | |||
| Members returned by functional constituencies | 30 | ||
| Members returned by geographical constituencies through direct elections | 30 | ||
| The term of service is 4 years. | |||
The Basic Law further provides that for subsequent legislature, if there is a need for amendments, such amendments must be made with the endorsement of a two-thirds majority of all the members of the Council and the consent of the Chief Executive, and they shall be reported to the Standing Committee of the National People Congress for the record.
I thought this is important because there is very specific framework that is laid out in the Basic Law as to how we move ahead in the future. It is not as though everything is up in the air. They are very specific. They are clearly written down. And they have been enacted into law by the National People Congress of China.
You can see from the above there is a gradual move towards wider representation. As we move forward, some will say the speed is too slow. Others will say the speed of change is too fast. I believe the Basic Law had struck the right balance. The point I want to emphasize here is that the future political development has been clearly conceptualized, thoroughly discussed, and totally and properly documented.
Now the question is asked – why is there a Provisional Legislature? This is the issue that has particularly captured international attention.
To understand this issue, one has to go back into the past. During the final stage in the drafting of the Basic Law, the concept of Through Train?was introduced for smooth transition.
This idea, subsequently accepted by the Chinese Government, is to allow sitting members of the last Legislative Council under present government to continue as members of the first legislature of Hong Kong SAR after the transfer date. This is of course provided that China and Britain was able to agree on the composition, methodology and other detailed arrangements for this Legislature.
This original proposal was to have the election for this Legislature held in September 1995 and to have this Legislature to go on the Through Train?and to serve until 1999. Unfortunately, China and Britain were not able to agree on the composition, methodology and detailed arrangements for this Legislature. Therefore, the current Legislature which began its life in September 1995 will have to come to an end as we come to 30 June 1997.
It is unfortunate that there was no agreement between Britain and China. The first Legislature of the SAR will not have to be formed as soon as possible but because of the time required to prepare for the election, this Legislature will probably only come into being during the first half of 1998. The composition of the first legislature will be as stipulated in the Basic Law as I have here illustrated before:
Members returned by functional constituencies 30 Members returned by the Election Committee 10 Members returned by geographical constituencies through direct elections 20 This will be the composition of the first SAR Legislature.
But the first Legislature of the SAR cannot possibly come into being on the day of 1 July 1997 because of the time required for organising the election. As a result, in order to prevent legal vacuum between the termination of the existing Legislature and the formation of the first Legislature, the Provisional Legislature becomes a necessity.
In fact, the Provisional Legislature has some specific functions to perform. These include:
Amending the existing Immigration Ordinance to enable the SAR Government to issue SAR Passports, and to ensure the permanent residency status of Hong Kong people to be in line with the Basic Law. These issues of passport and right of abode are close to the hearts of many Hong Kong residents. These matters need to be dealt with before 1 July 1997, and indeed should be announced as soon as possible and become effective on 1 July 1997.
Other issues include the laws governing the use and format of the SAR flag and emblem. These issues need to be dealt with so that they can be used in an appropriate manner on 1 July 1997 and thereafter.
It has been suggested that a number of recently amended laws is in contravention of the Basic Law. If these amendments are repealed, new laws need to be made by the Provisional Legislature to avoid legal vacuum.
Endorsement of the appointment of the judges of the Court of Final Appeal and the Chief Judge of the High Court so that these courts can start working immediately after the establishment of HKSAR.
The Provisional Legislature will consist of 60 people. They will be chosen by the Selection Committee of 400, who has also the task of choosing the Chief Executive. I have a strong feeling that more than half of the present Legislative Council will in fact go through on to the Provisional Legislature.
Well, so much for politics. Let me talk about Hong Kong today. Originally, I had prepared about 2 pages on Hong Kong today. But I realize that I would only be repeating what the Chief Secretary said to you last night. So I will only mention in passing that we have indeed been successful in the past.
Past successes?however, are no guarantee for our future. In fact, these very successes have brought upon us a new set of challenges.
Hong Kong socio-political realities have been undergoing changes; new sets of rules and regulations have been in the making. Recently, some policy decisions have been made based on short-term political expediency that distorts our sense of direction and purpose.
I believe our civil service is too bogged down in the politics of our legislative processes. They need to be devoting more time and energy to the formulation and implementation of polices.
Will Hong Kong fall victim to its own success? Years of inflation and negative interest rate have eroded our purchasing power and raised our cost of doing business. While Hong Kong has successfully transformed itself from a predominantly manufacturing economy to a service economy, there has now emerged a lack of industrial focus and an obvious mismatch between available skill sets and labour requirements.
Hong Kong competitors are becoming more focused and are targeting areas of activity where Hong Kong has traditionally been strong. How can Hong Kong maintain a competitive edge with respect to its regional competitors?
According to Hong Kong Government planning parameters, Hong Kong population could grow to 8.1 million by the year 2011. If such population growth is not accompanied by proper long-term policy planning and efficient implementation, it will erode our wealth and create severe dislocations in our community.
While we are proud of our achievements as an international and cosmopolitan city, we seem to have become less aware of Chinese culture, values and history. All of these are important to foster better understanding with the Mainland as we become a Special Administrative Region.
We are a wealthy society. However, because of our rapid economic transformation, the moving of our industrial base across to the Mainland, the rapid increase in population, and the aging of our society, an increasing number of people are now living under poverty line.
Therefore in addition to the challenges in managing the transition, that itself already an enormous challenge, there are some other real issues that we need to overcome successfully. I am sure we can overcome them. We have a good foundation to work on.
Getting it right the first year is essential. We must establish the authority of a strong executive-led government by winning the confidence of the people of Hong Kong. We must also win the confidence of the international community. At the same time, we must build a working relationship with the leadership in Beijing at all levels based on mutual trust and shared vision for the future.
The challenge facing us is how to persuade a portion of our society that our disagreement is in the speed of democracy and not democracy itself. We need to persuade them that they should participate in the on-going political process in a constructive manner. They must be persuaded that this is in the long term interest of Hong Kong people and that we must put aside our differences and work together. Unfortunately our efforts have not been successful so far.
Furthermore, the SAR Government must deal resolutely with any organization at provincial and city level who will be seeking special favors in establishing themselves in Hong Kong. There cannot be any special favors to anyone. With the resolute support of the central government and continual education of the Basic Law at various level in the Mainland, I believe we will be successful in our efforts.
People will ask whether there will be disagreement between Hong Kong and the Central Government in Beijing? What would the SAR Government do? Undoubtedly there will be. After all, the One Country, Two Systems?concept has never been practised anywhere else in the world. There will be questions that needs interpretation and better understanding. Indeed it is not uncommon for central authority and local authorities to have different views as to what needs to be done. These are caused by different priorities as seen from different perspectives. In these situations, the SAR Government needs to resolutely protect the interest of the Hong Kong people. Of course there are many ways of saying no. Quiet negotiation does not mean weakness. Achieving your aim needs not to be through open confrontation and street demonstrations. Indeed results achieved through quiet consultation tends to be much more long lasting and effective.
If you look at it another way, the long term interest of China and Hong Kong are the same. The more successful Hong Kong is, the more China will benefit. The more successful China is, Hong Kong will benefit even more. Because of the commonality of interest, I am sure our differences can be resolved. In any case, the Basic Law provides us with a high degree of autonomy. This will give us the adequate protection that we are looking for.
The continued creation of wealth and improvement in the quality of life enjoyed by all Hong Kong people must be the priority of the SAR Government. These can only be achieved through sustained economic growth.
Hong Kong must compete successfully in an increasingly competitive world if it is to reach the next plateau of economic growth. It must become an even more sophisticated service centre, and it must upgrade its own industries to become the industrial headquarters of the region. To do this, economic freedom and entrepreneurial dynamism are essential. These can only be ensured with the most advanced infrastructure and a highly educated population possessing the relevant skill sets and knowledge.
Hong Kong only natural resource is its wealth of human talent. This is our competitive edge, and we need to nurture it. It is critical that we improve the quality of education at all levels and upgrade the skills of our people so that we are sufficiently equipped to take on the new challenges.
Hong Kong is already a successful financial centre. In a time when much of the world capital is being accumulated in Asia, we now have the opportunity to further enhance our role by broadening and deepening the scope of financial services.
We need to further expand our ability to provide the full range of services as a packager, integrator and logistics provider for China, Asia and the rest of the world. We also need to renew our focus on our industry.
There is no doubt that Hong Kong benefits directly from China successful economic development. The SAR Government should encourage businesses in Hong Kong to actively take part in the Mainland development, which in turn will create a win-win situation for all of us.
What do I see for Hong Kong in the 21st Century?
I hope to see an stable, equitable, compassionate and democratic society with clarity of direction and unity of purpose based on equal opportunities and fair competition; and a social welfare system that promotes self-reliance while protecting the aged, disadvantaged and the unfortunate.
I see an increasingly affluent and well-educated population, proud of our new identity, proud of our Chinese heritage, confident in our destiny and global in outlook.
A truly international and cosmopolitan city capitalizing on its Asian location but focusing globally on the world of opportunities.
I see an economy that is one of the most important in the world. Hong Kong will be the most important international financial, commercial, trade, transportation, communication, education and entertainment centre. Concurrently, it will be the industrial centre in the region. High value-added activities, including management, finance, design, marketing and technology development will be done in Hong Kong, coordinating the manufacturing activities in Hong Kong, China and South East Asia.
International investors and multinational corporations will work closely and compete fairly with their counterparts from Hong Kong and China. They will fully utilise the advantages of Hong Kong geographical location, and the One Country, Two Systems?principle to create jobs and wealth for Hong Kong.
I see Hong Kong, as a Special Administrative Region of China and with our status and identity, will continue to make significant contributions to the modernisation of China who, by early 21st century, will be amongst the leaders within the community of nations.
I am confident about Hong Kong future. Ladies and gentlemen, perhaps I am biased, but I have every reason to be confident and there are 6.5 million people out there sharing this confidence with me.
Thank you very much.