Speeches and Presentations




LCQ17: Improving ease of doing business and promoting development of diversified economy

Following is a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, to a question by the Dr Hon Elizabeth Quat in the Legislative Council today (December 19):

Question:

It has been reported that the report "Doing Business 2013" published by the World Bank indicates that, among the 185 economies compared in the report, Hong Kong has been ranked second, for seven consecutive years lagging behind Singapore which has been ranked first, on the overall ease of doing business. In respect of the ranking on starting a business, Hong Kong has slipped from the fifth to the sixth. The report points out that the costs for choosing a company name and obtaining the required certificates account for 1.9 per cent of the costs for starting a business in Hong Kong, which is more than two times higher than the 0.6 per cent in Singapore. According to the results of a public opinion survey conducted by a local newspaper, about 25 per cent and 23 per cent of the respondents respectively considered that the reasons for Hong Kong's ranking on ease of doing business lagging behind Singapore included the high costs for starting and closing a business and the shortage of talents. There have been comments that, in the past, Hong Kong was famous for providing ample opportunities for starting business, and attracted quite a number of talents to start business in Hong Kong. However, the current high costs for starting business in Hong Kong have led to low motivation for starting business, few people starting business and thus a drop in jobs created. Such situation has far-reaching implications for Hong Kong's future development. On the other hand, the Chief Executive stated in his election platform that "[w]e need to formulate comprehensive policies to promote and support the pillar industries that are important to our economic development", and that "a diversified economy will give rise to a stronger middle class and better employment opportunities for our grass roots". In this connection, will the Government inform this Council:

(a) whether the authorities have plans to introduce short, medium and long term measures for improving the ease of doing business in Hong Kong, so as to encourage the starting of business, attract talents to work in Hong Kong as well as step up training for local talents, thereby enhancing Hong Kong's competitiveness; if they have, of the details; if not, the reasons for that; and

(b) whether the authorities have formulated any short, medium and long term comprehensive policies on industries and measures, so as to boost and develop industries (particularly industries on technology), and promote the development of a diversified economy; if they have, of the details; if not, the reasons for that?

Reply:

President,

We have followed up with the Economic Analysis and Business Facilitation Unit, the Financial Services and the Treasury Bureau, the Labour and Welfare Bureau and the Security Bureau in respect of the question raised by Member. A consolidated reply is provided below.

The Government is committed to improving the business environment. According to the World Bank's "Doing Business 2013 Report" published in October 2012, Hong Kong remains as the second best place for the ease of doing business in the world. Our global ranking has been up three places from the fifth since the "Doing Business 2007 Report" published six years ago.

It has been the Government's policy to provide an environment conducive to conducting businesses and rendering suitable assistance for the commercial and industrial sectors. From the macro point of view, Hong Kong's simple tax regime, low tax rate and excellent infrastructure, etc. facilitate the development of our commercial and industrial sectors and maintain our competitiveness in the world.

Reducing the cost of starting business and improving company-related legislation to facilitate business development
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With effect from June 1, 2012, the Government has abolished the capital duty levied on local companies under the Companies Ordinance, thereby reducing the cost of starting a business. On the other hand, the Legislative Council passed the new Companies Ordinance in July 2012 to provide a modernised legal framework for the incorporation and operation of companies and introduce a host of new measures to cater for the needs of small and medium enterprises (e.g. streamlining the incorporation procedures and making the use of a common seal optional). The Government is making active preparations for the implementation of the new Ordinance in early 2014.

The Government will also continue to implement various business facilitation measures and programmes (e.g. "Be the Smart Regulator" programme) on the advice of the Business Facilitation Advisory Committee and its task forces, with a view to further enhancing Hong Kong's overall business environment and long-term competitiveness.

Encouraging the starting of businesses
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As regards encouraging the starting of businesses, in accordance with the request of the Financial Secretary in the 2012-13 Budget, the Hong Kong Mortgage Corporation Limited launched in June 2012 a Microfinance Scheme in collaboration with banks and non-governmental organisations. The Scheme includes providing business starters with a Micro Business Start-up Loan. The maximum loan amount is $300,000 and the maximum loan tenor is five years. A principal repayment holiday for up to 12 months is available. In addition, subject to the needs of the business starters, the Scheme will provide them with supporting services such as mentorship and entrepreneurial training, so as to enhance their business skills and help them tackle problems in their daily business operations. As at December 7, the Microfinance Scheme has approved about 40 Micro Business Start-up Loans with a total loan amount of more than $10 million, providing substantial support to business starters.

Attracting talents to Hong Kong and stepping up training for local talents
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The Government agrees that talents are important to the sustainable development of Hong Kong's industrial and commercial sectors. It is the Government's established policy objective to attract talents to Hong Kong. There are various existing talent admission schemes, including the General Employment Policy, Admission Scheme for Mainland Talents and Professionals, Quality Migrant Admission Scheme and Immigration Arrangements for Non-local Graduates, which attract professionals and talents from around the world to come to Hong Kong.

On training local talents, the Labour Department operates two youth employment resource centres called "Youth Employment Start" (Y.E.S.) to provide a series of support services to young people aged 18 to 29 with business aspirations or interests in pursuing self-employment. Apart from organising regular training programmes on starting businesses or self-employment and offering free legal and accounting consultation services, Y.E.S. also provides fully-equipped workstations for use by young people starting their own businesses or engaged in self-employment.

In addition, the launch of the Qualifications Framework, the training programmes offered by the Vocational Training Council and the Employees' Retraining Board (ERB), and the funding support for manpower training programmes provided by the Small and Medium Enterprises Development Fund, the Internship Programme under the Innovation and Technology Fund (ITF) and Create Hong Kong are all conducive to increasing the competitiveness of manpower as well as the relevant industries. In particular, ERB mainly provides eligible employees (aged 15 or above and with education at the sub-degree or below level) with market-driven and employment-oriented courses covering some 30 industries. ERB also provides dedicated courses for target groups including non-engaged youth, ethnic minorities, the disabled, people recovered from work injuries and occupational diseases, rehabilitated ex-offenders as well as new arrivals. ERB has been designing its courses with reference to the Qualifications Framework, providing courses at Levels 1 to 4 with a view to assisting trainees to obtain recognised and professional qualifications, thereby offering them a progression pathway.

Boosting the development of technology industry
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For the technology industry, the Government strives to create a conducive environment for the development of innovation and technology by enhancing the relevant hardware, policy and resources, with a view to facilitating the collaboration among the Government, industry, academic and research sectors. Latest support measures include the increase in funding ceiling and expansion of scope of ITF, the enhancement to the Small Entrepreneur Research Assistance Programme under ITF, the increase in the rebate level under the Research and Development (R&D) Cash Rebate Scheme, the extension of operating periods of four R&D Centres, and the commencement of Science Park Phase 3 project.

Policy on industries
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We will continue to promote Hong Kong's existing industries and also explore new advantages and develop new strengths. As the Chief Executive (CE) has stated clearly in his Manifesto, we would draw up an overall industry policy with a view to creating jobs and improving people's livelihood. As announced by the CE, an Economic Development Commission (EDC) would be established to provide visionary direction and advice to the Government on the overall strategy and policy to broaden Hong Kong's economic base and to enhance Hong Kong's economic growth and development, and in particular, to explore and identify growth sectors or clusters of sectors which present opportunities for Hong Kong's further economic growth, and recommend possible policy and other support for these industries. The EDC will be led by the CE. The preparatory work for the establishment of the EDC has commenced and it is envisaged that the EDC would be set up shortly.

Wednesday, December 19, 2012

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