Hong Kong's New Financial Secretary Pledges To Restructure Economy But There Will Be Few Tax Cuts

by Mary Swire, Tax-news.com, Hong Kong

04 May 2001

Hong Kong's new Financial Secretary, Antony Leung Kam-chung, this week held his first press conference since his appointment to confirm his plans to foster economic growth and deny any rumours of tax cuts in the near future.

Mr Leung said his immediate priority as Financial Secretary is to help Chief Executive, Tung Chee-hwa, to 'restructure the economy [and] provide opportunities for each and everybody in Hong Kong.' He admitted that there was some concern over the economic slowdown of Hong Kong's major trading partners, the US and Japan. However when asked about the economic forecast he said: 'Hong Kong's economy and its business cycle are also closely influenced by that of the Mainland and the Mainland is growing fairly robustly this year. So whether the economic forecast needs to be adjusted, I think that we have to study the situation and then we will come up with a number.'

Mr Leung explained that there were two issues for him to take into consideration. Firstly the Hong Kong economy is shifting from an industrial one to a knowledge-based economy which is an issue for all economies to come to terms with worldwide and with this, he claimed, 'we are seeing a lot of challenges as well as opportunities for each and every sector and for every citizen in Hong Kong.'

Secondly, the economy is undergoing a huge change in that it is rapidly merging with that of mainland China. While it presents many opportunities and Hong Kong is currently doing very well from the Chinese economy, there are some challenges to face because China's market is very large. Mr Leung said: 'It is also a market with a very low cost base. As we all know, Hong Kong's cost base is relatively high.' This raises the question of how Hong Kong can compete but Mr Leung thinks the answer lies in 'having creative ideas' and a quick and effective implementation of those ideas.

Mr Leung declared that these two issues will 'cause a lot of changes to each and every sector.' He suggested: 'I would indeed hope that through the discussion in the media and in the other forums, we can discuss with the community how these changes would bring opportunities to each and everybody as well as somehow meet the challenges of these paradigm shifts.'

When asked about his first budget, Mr Leung refused to comment on any particular issues but indicated that major tax cuts were unlikely. He confirmed the budget would go some way towards restructuring the economy but said he felt optimistic that Hong Kong's economic future would not present 'a very gloomy situation.'

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