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HK must re-focus on economic matters

Updated: 2014-12-03 07:49

By Zhou Bajun(HK Edition)

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The latest report by the Commission on Poverty (CoP) was released on Nov 29. It revealed that in 2013 Hong Kong made considerable progress in reducing poverty compared with the previous year. Because of increases in government spending, welfare and other initiatives, the number of poor people decreased from 1.02 million in 2012 to 970,000 in 2013. The poverty rate dropped from 15.2 percent to 14.5 percent - both were record-low levels for the last five years.

Alongside subsidies and welfare schemes, a public rental housing policy is also important for tackling financial hardship. Taking into account the many benefits of public rental housing, the overall poverty rate dropped further - from 14.5 percent to 9.8 percent. The number of poor people fell to 660,000. The government has pledged to build more public rental housing in the future.

The report also praised other social welfare schemes such as the Old Age Living Allowance, the Comprehensive Social Security Assistance and the Old Age Allowance, as noted that these helped reduce the rate of poverty, particularly among the elderly. However, there can be no further increases in public spending without an increase in GDP. The government has to encourage economic development before it can spend more on social welfare.

Shortly before the Nov 14 publication of the CoP report the government also unveiled the latest economic statistics. Although the economy grew by 2.7 percent - faster than expected in the third quarter - there is still considerable economic uncertainty in the city because of the "Occupy Central" campaign. The protests have forced the government to revise its full-year forecasts. An index compiled by the Census and Statistics Department based on a survey of 400 small- and medium-sized enterprises (SMEs) in October fell to its lowest level since it was first published in November 2008. This index was 41 and revealed that business conditions remain gloomy. The index reported that the logistics sector suffered the biggest fall, followed by restaurants and shops. These industries and SMEs as a whole have been badly affected by "Occupy".

Despite this, some commentators argue that the property market is improving and the negative impact of "Occupy" is now diminishing. According to the latest Centa-City Leading Index (CCL index) released on Nov 28, the overall CCL index recorded a monthly increase of 0.60 percent, reaching a high of 130.16. Meanwhile, the Hong Kong Monetary Authority (HKMA) announced the results of the residential mortgage survey for October 2014. Compared with September, the number of mortgage applications increased by 5.2 percent with those mortgages ultimately approved rising by 6.8 percent.

HK must re-focus on economic matters

Perhaps, the property market can now ignore the impact of "Occupy". But the protests began on Sept 28. They have developed into a protracted struggle between the opposition and the government. Sept 28 was a watershed for Hong Kong. From that day on, the opposition camp has tried to seize political control of Hong Kong with illegal protests in the streets and unnecessary filibustering in the Legislative Council.

Nevertheless, the government should stop the occupation - the sooner, the better. Student protesters on Nov 30 warned the authorities to prepare for more demonstrations when they attempt to clear the occupied areas. These protests may continue for some time. This should not be used as an excuse not to take decisive action to uphold the rule of law.

More importantly, the government has to shift the focus in Hong Kong back onto the economy, away from politics. The news that Hong Kong has lowered its poverty rate is a step in the right direction. Despite the number of poor people falling to under one million, about 14.3 percent of Hong Kong's population still faces financial hardship. The elderly need help. The government still needs to provide more public rental housing.

Hong Kong's economy has to reposition itself. Since the early 1980s, the city has been a conduit between the West and the mainland for overseas investors anxious to enter the mainland market. With mainland leaders embarking on a bold new global economic strategy, Hong Kong has a great opportunity to show that it can play a vital role in this.

The author is a veteran current affairs commentator.

(HK Edition 12/03/2014 page10)

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