Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Tuesday, March 4:
Hong Kong may face public debt problems similar to Japan, advisors warn
Hong Kong may become debt-laden like the Japanese government as some HK$900 billion (US$115.95 billion) worth of fiscal reserves will run out in 14 years, assuming the city’s public expenses grow at an average 3 percent each year, matching the pace since 1997, a government-appointed working group on long-term fiscal planning said. Government debt may amount to HK$11 trillion by 2041, given an aging population and potential structural deficits, the group warned. Former government advisor at the Executive Council Franklin Lam, however, criticized the working group’s estimates on public spending control, saying they were too conservative.
Misuse of exchange reserves may hurt Hong Kong dollar
Foreign exchange reserves worth some HK$600 billion in net assets should be kept intact to protect the Hong Kong dollar from speculation of devaluation, despite potential structural deficits that may exist in 10 years, said Liu Pak-wai, economics professor at The Chinese University of Hong Kong and member of the government-appointed working group on long-term fiscal planning. The exchange reserves serve as a line of defense for crises, Liu noted, adding that any inappropriate use of the reserves may bring adverse impact on the local currency in a scale similar to what was witnessed in 1997 and 1998.
Directors need more training amid increased duties under new law
Training on directors’ duties has to be strengthened in view of increased potential for liability under the new Companies Ordinance that has put more emphasis on both duties of care and duties of skills of company directors, said Kelvin Wong, chairman of The Hong Kong Institute of Directors and member of the standing committee on company law reform. The new law, which takes effect this month, is likely to boost demand for qualified directors.
People’s Daily calls for daily quota of mainland visitors to Hong Kong
The official People’s Daily yesterday joined calls for limiting the number of mainland visitors to Hong Kong. Compared with Taiwan, Hong Kong has been “too open” for mainland visitors, the newspaper’s overseas edition said in an article, adding that people’s grievances over the influx of visitors should be addressed. The policy of daily quota adopted in Taiwan should be considered in Hong Kong, it added. Hong Kong commerce minister Greg So said the government will not consider a quota at this stage. The city would not close its door for visitors, he said.
Carrie Lam warns of uncertainty if 2017 universal suffrage fails
Chief Secretary Carrie Lam has warned that Hong Kong will head to a cul-de-sac if it tries to deny the role of the central government in the city’s political reform and ignores the Basic Law. She said Beijing has only set 2017 as the time for universal suffrage for the chief executive. If that does not happen, it would become unclear when universal suffrage could happen, Lam said. The National People’s Congress standing committee, she said, would only restart the reform process after a long period of time.
HK should boost transparency on coffers for discussion on relief measures
A government task force yesterday outlined a scenario of Hong Kong with structural deficit and possible depletion of its reserves. The most positive aspect of the task force’s report is that it has provided a rational basis for people to discuss welfare spending. The government’s decision on economic sweeteners will hinge on the city’s surplus in capital account. In order to meet people’s aspiration for participation in budget-drafting process, the government should publish its capital account and operating account to enhance transparency.
Beijing, Hong Kong media urged to forge talks on press freedom
Hong Kong media should put aside their differences to form a grand coalition, similar to the anti-violence alliance in the Sunday march, to forge dialogue with mainland authorities on the issue of press freedom, HKEJ founder Lam Hang-chi wrote. Both sides, he said, should discuss a set of rules that are based on mutual respect and cooperation for the media to follow. This could prevent controversies such as the alleged boycott of advertisements by mainland-funded companies in Hong Kong media. It remains unclear whether the knife attack against former Ming Pao chief editor Kevin Lau was related to politics. The attack would not be attributed to mainland interference if there is dialogue between media and the mainland authorities.
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