New mind­sets needed to cope with the chal­lenges

China Daily (Hong Kong) - - COMMENT - PETER LIANG

The Re­port on the Work of the Fourth-term Govern­ment of the Hong Kong Spe­cial Ad­min­is­tra­tive Re­gion, pub­lished in June, has not only given a de­tailed ac­count of past achieve­ments but, more im­por­tantly, set the tone for the new ad­min­is­tra­tion by iden­ti­fy­ing the un­fin­ished work that needs to be done and out­stand­ing is­sues that need to be ad­dressed.

Most ob­vi­ous of these is hous­ing. The past ad­min­is­tra­tion dis­tin­guished it­self by mak­ing af­ford­able hous­ing its pri­mary ob­jec­tive for ob­vi­ous rea­sons. To achieve that ob­jec­tive, it had spared no effort and re­sources in in­creas­ing the sup­ply of homes by mak­ing avail­able large tracts of land for de­vel­op­ment by both the pub­lic and pri­vate sec­tors.

These ef­forts have pro­duced im­pres­sive re­sults, ac­cord­ing to the re­port. Data pro­vided in the re­port show that the pro­jected sup­ply of res­i­den­tial prop­er­ties in the com­ing three to four years stood at about 96,000 units — up 48 per­cent from the es­ti­mate made five years ago. What’s more, var­i­ous mea­sures were in­tro­duced to com­bat spec­u­la­tion, dis­cour­age over­seas buyers and curb in­vest­ment de­mand.

Re­sump­tion of the Home Own­er­ship Scheme had re­sulted in the sale of nearly 5,000 units to the so-called “sand­wich” class homes buyers who couldn’t af­ford homes at mar­ket prices, while their in­comes were too high to qual­ify for govern­ment-built low cost hous­ing.

De­spite all these ef­forts, hous­ing prices have con­tin­ued to rise. Lat­est govern­ment fig­ures show that av­er­age homes prices soared to a new record high in June with the widely fol­lowed monthly price in­dex climb­ing 2.6 per­cent from May. Ob­vi­ously, some­thing more needs to be done to achieve the lofty goal of mak­ing hous­ing “af­ford­able” to more Hong Kong peo­ple.

Ad­dress­ing the prob­lem from the sup­ply side makes em­i­nent eco­nomic sense. But cir­cum­stances have proved that a mas­sive in­crease in sup­ply would be needed to make a dent on prices, which have been sup­ported by al­most in­sa­tiable de­mand.

The cre­ation of de­vel­op­ment land in Hong Kong’s moun­tain­ous land­scape can be pro­hib­i­tively costly and time-con­sum­ing. Even that may not be the hard­est part.

To make it work, the govern­ment would need to get de­vel­op­ers to buy the land it cre­ated to build apart­ments for sale to the pub­lic, at a profit. The idea of in­creas­ing sup­ply to de­press prices is never go­ing to be part of the de­vel­op­ers’ business plan.

With lit­tle hope of break­ing the de­vel­op­ers’ stran­gle­hold on hous­ing sup­ply, the govern­ment’s only op­tion is to build more pub­lic hous­ing for sale or rent at sub­si­dized prices to qual­i­fied ap­pli­cants in dif­fer­ent in­come strata who can­not af­ford pri­vate-sec­tor hous­ing. Past ex­pe­ri­ence has shown that the govern­ment can save cap­i­tal costs by re­quir­ing de­vel­op­ers to build pub­lic hous­ing on part of the land they bought as a con­di­tion for sale.

To ad­dress Hong Kong’s short­com­ings in in­no­va­tion and cre­ativ­ity, the govern­ment es­tab­lished the In­no­va­tion and Tech­nol­ogy Bureau in 2015. Much has been done since, as the long list of ac­tions and ini­tia­tives in the re­port show. But the re­port made hardly any men­tion of the re­sults from these var­i­ous ini­tia­tives.

All it said was that since 2012, more than 5,000 se­nior cit­i­zens have learned to use mo­bile de­vices to gain in­ter­net ac­cess. Ap­par­ently, the govern­ment will need to ex­ert greater ef­forts, or stream­line its schemes, to raise the in­ter­est of the young en­trepreneurs it’s try­ing so hard to en­gage.

Some econ­o­mists ques­tion whether the govern­ment is putting too much em­pha­sis on re-bal­anc­ing the econ­omy by de­vel­op­ing the tech­nol­ogy in­dus­try. They ar­gue that the econ­omy, as it is, has been do­ing fine un­der try­ing times as pre­sented by the re­port.

An av­er­age eco­nomic growth of 2.4 per­cent a year in the past five years puts Hong Kong ahead of many de­vel­oped economies reg­is­ter­ing an av­er­age growth rate of an ane­mic 1.7 per­cent. The rel­a­tive high growth rate was ac­com­pa­nied by a per­sis­tently low un­em­ploy­ment rate of un­der 3 per­cent.

But, the overde­pen­dence on fi­nance and prop­erty to drive growth has been widely blamed for the widen­ing in­come gap which, ac­cord­ing to var­i­ous sur­veys, ranks the high­est among the de­vel­oped economies. The re­port gave a de­tailed ac­count of the in­creases in govern­ment ex­pen­di­ture on so­cial wel­fare for the re­lief of the poor and el­derly.

The new ad­min­is­tra­tion has promised that more will be done in the com­ing years. There has been talk of a re­view of the tax struc­ture to pave the way for greater govern­ment in­ter­ven­tion in in­come dis­tri­bu­tion.

Hong Kong is fac­ing many new chal­lenges that call for fresh think­ing and an un­con­ven­tional ap­proach to deal with them over the next five years.

The govern­ment will need to ex­ert greater ef­forts ... to raise the in­ter­est of the young...

The au­thor is a vet­eran cur­rent affairs com­men­ta­tor.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.