Speech on the Budget (2015/04/15)

Deputy President, generally speaking, the Budget this year is relatively pragmatic, in the sense that when compared with the previous Budgets, it has introduced benefits of a wider scope for the grassroots and the middle class, along with a greater number of measures for supporting enterprises and small and medium enterprises (SMEs).

A public opinion survey conducted after the announcement of the Budget showed that 45% of the respondents expressed satisfaction with the Budget, a record high over the past five years. Certainly, it is a good thing to hand out so many "candies", but then we can also see that Hong Kong's future economic prospects are uncertain. The Budget estimates that the GDP will grow by 1% to 3% in 2015, but our total expenditure will also increase by 11%, or around $400 billion. As our expenditure increase will far exceed our economic growth, in case of a persistent slowdown in our economic growth, coupled with the shrinkage of our labour force and the continued increase in our social welfare commitment due to population ageing, Hong Kong will inevitably be plunged into a structural deficit. Therefore, I agree that the Government must adopt a prudent fiscal management policy.

I wish to thank Financial Secretary John TSANG, as his Budget this year has answered certain demands of the tourism industry and mine, and also recognized the importance of the tourism industry to the economy. Statistics show that the tourism industry has experienced the fastest growth over the past 10 years among the four major pillar industries in Hong Kong. Its annual growth rate is 10.2% on average, and its contribution to Hong Kong's GDP also increased from 2.9% 10 years ago to 5% last year. The industry now directly employs 270 000 people, and in estimation, it also indirectly employs as many as 600 000 people. One third of Hong Kong's retail sales is contributed by inbound visitors. Therefore, the thriving or otherwise of the tourism industry will directly affect the Hong Kong economy. The contents on the tourism industry in the Budget this year is more extensive than those in the previous Budgets. In particular, it has proposed some initiatives to support those industries which sustained greater impacts than other industries during Occupy Central. Such initiatives should be helpful to those industries.

As Members are aware, various tourism-related industries have sustained huge losses following the Occupy Central movement. Towards the end of October last year, I conducted a survey by issuing questionnaires to travel agencies. Seventy eight percent of the respondents replied that due to the impacts of the Occupy movement, they sustained losses in their business, and their original income and expenditure estimates were upset; 46% said that their turnovers dropped significantly over the previous year; and 75% reflected that if the Occupy movement persisted, they would consider cutting expenses and seeking assistance, which might affect their employees' incomes. The Budget proposes to waive the licence fees for those affected industries such as hotels, guesthouses, travel agencies and restaurants for a period of six months. While the amount of money involved is not very substantial, this can still provide a stimulus to the industries concerned. As the series of irrational activities against parallel traders before the Chinese Lunar New Year have come to affect the desire of Mainland and overseas tourists to visit Hong Kong, the industry has generally reflected that their business has shrunk noticeably, and they are facing imminent difficulties again. For these reasons, those industries hope that the Government can extend the licence fee waiver from half a year to one year. In fact, the amount of money incurred by this measure is not large, so we hope that the Government can actively consider the idea.

Deputy President, the Budget also puts forth a series of measures for supporting SMEs, including extending the application period for the SME Financing Guarantee Scheme, increasing the maximum amount of funding support under the SME Development Fund, and expanding the scope of the SME Export Marketing Fund. Extending the application period and increasing the amount of funding support are helpful to SMEs. But enterprises hope most eagerly that the Government can walk its talk by streamlining the application procedures and lowering the application thresholds, so as to truly benefit SMEs. Let me talk about the annual International Travel Expo Hong Kong (ITE) as an example. In the past, as long as any participating small and medium travel agencies met the application requirements, they might receive government subsidies under the SME Export Marketing Fund. But as a new policy requirement, the total period open to the public in an event shall not exceed one-third of its duration. Since the period open to the public in the ITE accounts for 50% of its duration, small and medium travel agencies are ineligible for any subsidies under the above SME Export Marketing Fund, very much to the disappointment of those small and medium travel agencies intending to participate in the ITE. As the Government's policy aims to provide support for SMEs, I suggest that the Government should flexibly adjust the application thresholds having regard to the features of various industries and the nature of exhibitions, or waive this requirement for those exhibitions which received subsidies under the old policy, so as to avoid any impacts on SMEs' proactivity in developing markets, as in the present case.

Deputy President, another major issue of concern to the industry in the Budget is how to restore the confidence of the tourism industry. The Government will increase funding for the Hong Kong Tourism Board (HKTB) and the Information Services Department (ISD) for the purposes of stepping up external publicity and enhancing Hong Kong's external image. The industry welcomes this initiative. After Occupy Central, the number of overseas visitors once registered a noticeable decline. And, the unlawful behaviours against parallel traders before the Chinese Lunar New Year have directly undermined the desire of visitors, especially those middle-class visitors with spending power, to stay overnight in Hong Kong. As can be seen from the figures released by the authorities, the overall number of visitors we received dropped by 8.7% in March, and the numbers of Mainland visitors and overseas visitors both registered a decline. And, according to the figures we have obtained, the numbers of inbound tour groups during the Ching Ming Festival and recent days have likewise recorded enlarged decreases. Some tourism-related industries, such as the hotel industry, the retail industry, the catering industry and tourist attraction operators, are invariably concerned about the onset of a cold winter for tourist consumption. The Budget proposes to earmark an additional $80 million for the HKTB for promotion purposes, and $26 million for the ISD for rebuilding Hong Kong's image and opening up markets. These are all pragmatic arrangements. I hope the HKTB will not confine this sum only to advertisement and publicity uses. Rather, I think they should offer more incentives to encourage the joint participation of various industries. An example is the organization of a creativity competition on tourist product design. The winner of the competition can visit overseas countries free of charge with the HKTB to promote the sales of his product. I propose to give an extra reward to the unit or individual whose sales promotion measures can help to increase the number of visitors to Hong Kong.

Besides, the HKTB should take the initiative to encourage more operators of hotels, tourist attractions and retail shops to capitalize on the advantages of their products and jointly commit resources for the purpose of enhancing the selling points of their products, so as to induce spending from local and also overseas visitors. Such form of co-operation will not incur substantial expenses, but it can effectively mobilize the proactivity of travel agencies and product suppliers both within and outside the territory and encourage them to put their sales emphasis on places of tourist origin and consumers. I hope the authorities can consider the idea.

Moreover, in order to expand the scope of overseas visitors, Hong Kong have joint hands with the Mainland and Macao tourism departments for a few years to promote multi-destination travel involving Guangdong, Hong Kong and Macao to overseas markets. But since visitors may need to wait two or three hours during peak seasons due to prolonged immigration clearance, people's feedback is just so-so. Having regard to the future decline in the number of Mainland visitors, I suggest that in order to increase the number of overseas visitors, the HKTB should initiate co-ordination with Macao and Guangdong for the purpose of jointly formulating objectives of receiving visitors to Guangdong, Hong Kong and Macao under multi-destination travel. Afterwards, the three sides can seek supplementary estimates to conduct promotion. On the part of the Government, it can assist in shortening the customs clearance time at various border control points, and consider the idea of setting up priority clearance channels for tour groups. This can comprehensively enhance the arrangements in the three places for receiving visitors while enabling overseas visitors, especially those from Europe and the United States, to visit certain tourist attractions in the three places within a short space of one week and to experience the local enjoyable services. This can also build up our own tourism brand with local features.

Deputy President, the Budget proposes to increase the number of business facilities in the future and make preparations for constructing a convention centre above a station of the Shatin to Central Link. At present, the Hong Kong Convention and Exhibition Centre in Wan Chai has already become saturated, so it is reasonable and necessary to build another convention centre in the urban area. But we must also note that the AsiaWorld-Expo near the airport is not yet saturated, and its nearby lands can be used for future expansion purpose.  Therefore, I hope that while undertaking proper preparations for its new planning, the Government can also optimize the existing resources and avoid vicious competition.
 
In respect of increasing the number of tourism facilities, the Government proposes to discuss the Phase 2 development plan with the Walt Disney Company. In the face of the forthcoming commencement of the Shanghai Disney Resort, we hope that the Government can approach the Walt Disney Company as soon as possible to discuss the investment details, budget estimates and timetable with it. In order to avoid competition with Shanghai for visitors, the authorities should approach the Walt Disney Company and strive for its reservation of certain facilities exclusive to the Hong Kong Disneyland Resort, so as to equip the Disney resorts in both places with their own features, provide overseas and Mainland visitors with more choices, and in turn bring forth positive competition.

Deputy President, we have noticed that many events have been held at the New Central Harbourfront lately. Along with a newly-erected Ferris wheel, there have also been an amusement rides carnival, a sales exhibition and also a circus show. All are welcome by the locals and visitors. We all know that many cities now introduce various permanent performances with different features in order to increase their appeal. Some examples are The House of Dancing Water in Macao, the grand circus show in Zhuhai of Guangzhou, and the Dancing with Dragon and Phoenix in the China Folk Culture Villages in Shenzhen. All these performances are invariably marked by huge investment, strong appeal and positive feedback. As Hong Kong is not equipped with any such large-scale performances for the time being, the seasonal activities held at the New Central Harbourfront can fulfil a complementary function. But currently, the rental of venues falls within the portfolio of the Lands Department (LandsD). In case an event is to be held, the Tourism Commission and the HKTB will be utterly unable to offer any promotion and publicity proposals if the organizer does not initiate any such requests. Owing to problems in the communication and co-operation mechanism, the New Central Harbourfront has failed to fulfil its functions of serving people and increasing Hong Kong's appeal to visitors. We hope that the Government can set up a permanent mechanism whereby the LandsD, upon receipt of any venue rental application from an event organizer, must advise the organizer to approach the HKTB and engage it in joint promotion and publicity. And, when the organizer raises its requests, the HKTB should ask the organizer to strike up co-operation with travel agencies. I hope that the industry can benefit from this precious site, and people can receive more concessions through the relevant activities.

Deputy President, Hong Kong has seen a stable growth in the number of new hotels in recent years. In estimation, Hong Kong will have as many as 82 000 hotel rooms by 2017. This should be able to satisfy the needs arising from the increase in the number of visitors in the next few years. The Budget last year granted six hotel sites. And, it is expected that the supply of hotel sites will still be available in the future. It is estimated that the number of hotel rooms will continue to rise after 2017. Recently, however, we have noticed that the number of overnight visitors has begun to show a downward trend, along with a noticeable decline in the occupancy rates of hotels and guesthouses. The authorities should make timely and appropriate adjustments to the supply arrangements for hotel sites with regard to changes in the tourism trend, so as to avoid any supply-demand imbalance.

Deputy President, the Budget has also expressed the hope that the works concerning the third-runway system (3RS) at the airport can be launched in 2016. Recently, the Airport Authority (AA) announced the financing proposals for the 3RS works at the airport. Hong Kong needs a third runway in order to maintain its position as an international aviation hub and foster the long-term development of the tourism industry. For these reasons, I support the construction of a third runway. But I wish to point out that the 3RS works are complicated, and there are also many controversies over issues such as financing, environmental protection and also airspace management. Among others, the proposals on levying an Airport Construction Fee of $180 on visitors and substantially increasing airlines' parking fees have aroused relatively negative responses. I hope that the Government and the AA can pay heed to the views of different stakeholders more often and make appropriate adjustments, while seeking to convince people with objective and scientific analyses, so as to allay the concerns of people and various industries, and in turn enable the 3RS works to launch smoothly, complete as scheduled and commence service.

Deputy President, we have yet to recover from the repercussions of Occupy Central, and recently, there have been irrational protests against parallel traders. All this has aggravated the difficulties faced by the industry. Not long ago, a website found that Hong Kong ranked fourth among the "unfriendliest" cities in the world, and it even topped the list for Asia. Therefore, I hope they can stop their vigorous actions. Instead, I think they should rebuild the image of Hong Kong as a hospitable city.

Deputy President, I so submit