Archive for 三月, 2011

Fund to back policyholders on the cards

Govt proposes a plan to protect consumers from insurer losses

The Hong Kong government plans to set up a fund that will protect insurance policy holders from losses arising from the insolvency of insurers, according to Financial Services and the Treasury Bureau, which launched a consultation on the proposal Friday.

The proposed establishment of a policyholders’ protection fund – to be set at 100 percent compensation for the first HK$100,000 plus 80 percent of the balance of the claim – will pay up to a total of HK$1 million to policyholders whose policies were written in Hong Kong in case an insurer becomes insolvent, according to the proposal.

The fund will comprise of two separate and independent schemes that will cover all individual life and non-life insurance policies. The government has targeted for an initial fund size of HK$1.2 billion for the life scheme and HK$75 million for the non-life scheme. It also plans to build up the initial target fund in 15 years.

The entire levy will be collected from the city’s insurers and the initial rates for both schemes were set at 0.07 percent of the applicable premiums, according to the paper.

Commissioner of Insurance Annie Choi said that since the levy rate has been established at a very low level, it is unlikely that the city’s insurers will pass on the costs to their customers.

“Given that the number of insurance companies operating in Hong Kong is so large, fierce competition will prevent them from raising premium levels,” Choi added.

The Hong Kong insurance market has grown very rapidly over the past few years. According to provisional government figures, gross insurance premiums received in 2010 amounted to HK$207.2 billion, a 33 percent increase compared with HK$156 billion in 2006.

One Hong Kong-based insurance analyst who spoke to China Daily on condition of anonymity said that the plan wouldn’t be very effective if one of the big international players in town found itself in financial trouble. Citing insurers such as AIA, Manulife Financial and Prudential – which dominate the life insurance product market – the analyst said that the HK$1.2 billion salvage money would be a nominal amount since annual premiums in the city amounts to hundreds of billions of dollars.

However, the city’s regulators believe that the compensation fund is necessary to enhance public confidence as well as the competitiveness of the insurance industry in Hong Kong.

Based on industry data as of end-2009, the HK$1 million compensation cap will be able to meet more than 80 percent of the claims arising from life policies, and will entirely meet some 96 percent of non-life policies, according to the government.

Owing to the long-term nature of life insurance products, it will be in the interest of policyholders to continue their life policies, therefore the liquidator will seek to transfer the policies to another insurer, the government added. Such a transfer would also be subject to a compensation limit of HK$1 million per policy.

A non-transferable insurance product will either be settled on any claims arising upon its continuation until expiry, or be paid the losses arising from the premature termination of the policy, capped to the same compensation limit per policy, according to the consultation paper.

Large commercial entities will not be included in the scheme, however. The government said it will take into account public views on whether small and medium enterprises should also be included.

The public review will wind up on June 24. The fund is projected to be put into practice in 2014 or 2015, according to the government.

China Daily

(HK Edition 03/26/2011 page2)

http://www.chinadaily.com.cn/hkedition/2011-03/26/content_12230217.htm

2011
03/26
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Feb exports surge a surprising 25%

Feb exports surge a surprising 25%

A view of Stonecutters Bridge from the Modern Terminals area of the Hong Kong container port. The city’s exports rose to HK$227.8 billion last month compared with HK$182.5 billion a year earlier. Daniel J. Groshong / Bloomberg

Feb exports surge a surprising 25%

Govt says figures supported by strong demand from regional markets

Hong Kong’s total exports unexpectedly surged 24.9 percent in February from a year ago, supported by strong demand from regional markets.

According to figures released by the Census and Statistics Department on Thursday, the city’s exports rose to HK$227.8 billion last month from HK$182.5 billion a year earlier, compared with a year-on-year increase of 27.6 percent in January.

It beat the 10.3 percent median estimate of 12 economists in a Bloomberg survey, where not even one of them had forecast such a large gain.

Meanwhile, total imports increased 25.2 percent year-on-year to HK$253.0 billion from HK$202.1 billion in 2010, leaving a visible trade deficit of HK$25.1 billion, according to the government.

The difference in the timing of the lunar new year can distort trade figures notably. Combining January and February figures as a way of neutralizing the volatility, the value of total exports of goods nevertheless rose by 26.4 percent while imports grew by 21.7 percent over the same period in 2010, according to the government.

Merchandise exports remained strong in the first two months of 2011, with the Asian markets continuing to be the main growth driver, a government spokesman said.

Total exports to Asia grew by 33.0 percent in February compared with the same period last year, with a 57.6 percent rise to Vietnam, along with 43.6 percent and 40.7 percent increases to India and Thailand respectively.

The mainland also saw a 37.7 percent rise to HK$126.7 billion last month.

However, although increases in exports were seen to most major destinations in other regions – including Germany which recorded a 10.4 percent rise – decreases were also registered, in particular to the United Kingdom and the United States where exports were down by 14.8 percent and 4.4 percent respectively.

Hong Kong’s exports should continue to benefit from the vibrant economic conditions in Asia and further recovery in the US and European Union, said the government spokesman.

But he also said that uncertainties in the external environment would remain, including geopolitical tensions in the Middle East and North Africa as well as possible repercussions from the earthquake in Japan.

Paul Tang, chief economist with Bank of East Asia, said the outstanding February export figures showed that there was a strong regional economic performance in tandem with global economic recovery.

He nevertheless projected that exports are like to see a slowdown by May, when Japan’s devastating earthquake will start to have an effect on the figures.

“Hong Kong’s exports to Japan account for about 4.2 percent of its total value and imports scores 9.2 percent. The earthquake impact will be notable and it will depend on how long Japan takes to recover from the disaster,” said Tang.

China Daily

(HK Edition 03/25/2011 page2)

http://www.chinadaily.com.cn/hkedition/2011-03/25/content_12224364.htm

2011
03/25
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Local inflation rate reaches 30-month high

Local inflation rate reaches 30-month high

CPI increases to 3.7% YoY in Feb from 3.6% in Jan

Rising food and rent prices in Hong Kong led the city’s consumer prices to climb at the fastest pace in 30 months with the inflation rate accelerating to 3.7 percent in February from 3.6 percent in January.

The underlying inflation rate, which nets out the effects of the government’s one-off measures including electricity subsidies, waivers of property rates and public housing rents, climbed to 3.6 percent during the month. This was higher than the 3.5 percent rise in January, figures released by the Census and Statistics Department on Tuesday showed.

The February CPI data was above the median 3.2 percent rise forecast by seven economists surveyed by Dow Jones Newswires and the 3.6 percent median estimate of 13 economists surveyed by Bloomberg.

Irina Fan, senior economist at Hang Seng Bank said that as the comparison base during the same period last year was high due to the lunar new year, economists had believed that the February figures would have seen deceleration rather than acceleration.

She said unlike in 2010 when the Chinese New Year was in mid-February, the festival this year took place in early February – which should have a bigger impact on January data rather than February.

“The latest figure shows that the city’s inflation these days is indeed high,” said Fan.

Food prices increased 5 percent last month while housing prices rose 3.9 percent compared with the same period in 2010, in comparison with readings of 5.3 percent and 3 percent in January.

Taking the first two months of 2011 together, consumer prices have risen by 3.7 percent compared with a year earlier.

A government spokesman said that combining January and February removes any potential distortion due to the timing of the lunar new year.

The spokesman added that inflationary pressure in the economy is likely to increase in the coming months, as global food and commodity prices remain expensive and the feed-through from the earlier rapid increase in private housing rents continues.

Inflation is also being “fuelled by a spillover impact from rising food prices” on the mainland, HSBC economist Donna Kwok told Bloomberg. Food prices on the mainland soared 11 percent last month, boosting prices in the city which sources much of its fresh food from mainland.

Hang Seng Bank’s Fan added that food prices are climbing globally. In particular, the effects of the recent earthquake in Japan will also cause imported food prices to surge in the next few months.

Last month, Financial Secretary John Tsang said the government expects the city’s consumer prices to rise 4.5 percent this year, more than the 2.4 percent increase in 2010 due to higher rents and import prices.

Tsang also brought down a third consecutive budget heavily laden with so-called sweeteners to help citizens combat inflation, including short-term measures such as electricity subsidies of up to HK$1,800 and waivers on government rates of up to HK$1,500 every quarter for 82 percent of private property owners in Hong Kong.

China Daily

(HK Edition 03/23/2011 page3)

http://www.chinadaily.com.cn/hkedition/2011-03/23/content_12211765.htm

2011
03/23
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PCCW aiming at new plan to spin off its assets

PCCW aiming at new plan to spin off its assets

A pedestrian walks past a row of PCCW phone booths in Central, Hong Kong. The company plans to form the first listed business trust in the city. Daniel J. Groshong / Bloomberg

Telecommunications group PCCW Ltd said Monday it is studying a plan to spin off its telecommunications assets and form the first listed business trust in the city.

Hong Kong’s dominant fixed-line operator is “in the preliminary stages of exploring the feasibility of a spin-off and separate listing of its telecommunications business in the form of a listed business trust”, PCCW wrote in a statement to the city’s exchange, adding it has been discussing related regulatory issues with the Securities and Futures Commission (SFC) in Hong Kong.

PCCW shares rose 4.57 percent on Monday after the news, compared with the 1.73 percent gain on the city’s bench market Hang Seng Index.

“This new attempt is very likely to bear fruit this time,” said Alvin Chung, associate director at Prudential Brokerage. “After several past failures, PCCW has eventually sorted out a viable way to split its telecommunications business.”

As early as 2006, Richard Li, PCCW’s chairman had tried to sell his controlling holding in the company to former Citigroup Inc. banker Francis Leung, but the attempt fell out as Li failed to secure minority shareholder approval.

Following several unsuccessful bids to sell its main telecommunications assets in 2006 and 2008, Li scrapped a $2.1 billion deal to take the company private in 2009, after the SFC alleged that hundreds of people in the company were given shares to boost support for the transaction.

Listing as a business trust would allow a company to raise capital without relinquishing control to shareholders as the trustee manager controls the business, which is usually an affiliate of the company establishing the trust.

Although PCCW said in the statement that it was in talks with the city’s regulator on the spin-off plan, Hong Kong’s current listing rules do not allow publicly traded business trusts outside of real-estate trusts.

“It is not clear where the company is going to list the telecommunications assets separately, but regulatory barriers in Hong Kong may drive the company to mull a listing somewhere else,” said Chung.

Last week, the city’s container-terminal operator Hutchison Whampoa Ltd, controlled by Li Ka-shing spun off some of its business – in the form of business trusts in Singapore, where there is a far more liberal regulatory regime for business trusts.

That $5.5 billion initial public offering was the biggest IPO ever undertaken in Singapore, for which some investors in Hong Kong were very critical, saying that the city had lost out due to the lack of a business-trust structure.

Meanwhile, PCCW has lost more than 90 percent of its value since Richard Li – son of tycoon Li Ka-shing – acquired Hong Kong’s dominant phone company in a deal valued at $28 billion in 2000.

Its market value has shrunken to about HK$24.9 billion now, due to the fact that PCCW has been facing fierce competition over the past few years amid a flood of new operators saturating the market.

PCCW’s key rivals in the city, SmarTone Telecommunications Holdings Ltd and Hutchison Telecommunications Hong Kong Holdings Ltd, have both outperformed the city’s benchmark Hang Seng Index this year. They gained 84.14 percent and 9.29 percent in 2010, respectively.

PCCW has fallen 0.29 percent so far this year.

China Daily

(HK Edition 03/22/2011 page2)

http://www.chinadaily.com.cn/hkedition/2011-03/22/content_12205544.htm

2011
03/22
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China State Construction to raise HK$3.58b via rights issue to expand affordable homes biz

China State Construction to raise HK$3.58b via rights issue to expand affordable homes biz

The China State Construction infrastructure project site at Choi Wan Road and Jordan Valley in Hong Kong. The company said on Friday that it plans to issue 597.4 million rights shares in the city. Provided to China Daily

China State Construction to raise HK$3.58b via rights issue to expand affordable homes biz

Hong Kong-listed China State Construction International Holdings Ltd (CSCI) plans to raise as much as HK$3.58 billion via a rights issue to expand its affordable housing business on the mainland.

It plans to issue 597.4 million rights shares on the basis of one rights share for every five existing shares at HK$6.0 each, the company told the Hong Kong Stock Exchange on Friday. The offered price represents a discount of 16.7 percent to Thursday’s closing price of HK$7.20.

Shares of the company dropped 2.8 percent to close at HK$7.0 per share in Hong Kong trading Friday after the news was announced.

The rights issue is aimed at raising capital for the company’s affordable housing business on the mainland this year, Zhou Yong, chief executive officer of CSCI, told reporters at a press conference on Friday.

He said the company has planned a HK$3 billion capital expenditure in 2011, in which HK$1.5 billion will be used for affordable housing projects.

The construction firm earned HK$1.04 billion for the year ended December 31, up 53.7 percent from the HK$674.1 million net profit in 2009, according to a statement it filed to the city’s bourse on Friday.

Revenue increased 23.5 percent to HK$12 billion in 2010 from HK$9.7 billion a year earlier, while its gross profit margin increased 3.26 percentage points to 10.98 percent from 7.72 percent in 2009.

Zhou said that unlike ordinary housing contract projects, where the gross profit margin stands at around only 5 to 8 percent, affordable housing projects will provide them with an up to 15 percent gross profit margin through build-operate-transfer protocols. This dictates that a company first build up and operate the low-cost homes in the first instance, after which local governments will gradually purchase them back through concession.

In February, CSCI sealed two affordable housing projects in Chongqing with a contract value of HK$2 billion, including a relocation housing project with a gross-floor-area of 375,000 square meters and a public rental housing project of 400,000 square meters.

Around HK$2 billion will be put into the two projects in Chongqing, according to Zhou. He added that the company is currently in contact with several local governments on the mainland regarding the affordable housing projects and he estimated the company will snatch five to six projects in the year, for a total of at least 300 million square meters of gross floor area.

“Engaging in the affordable housing business is definitely rewarding to CSCI as the central government is dedicated to building affordable homes,” said Kenny Tang, an executive director at AMTD Financial Planning Ltd. “Compared with construction works, getting involved in public housing projects is essentially an investment which will yield much higher profits to the company.”

China will spend about 1.3 trillion yuan to build 10 million units of government-subsidized housing this year, Qi Ji, vice-minister of housing and urban-rural development, told a news conference on March 9.

The nation will build 10 million units more subsidized housing next year and 16 million from 2013 to 2015, in order to cover 20 percent of the country’s total housing supply when the program ends.

China Daily

(HK Edition 03/19/2011 page2)

http://www.chinadaily.com.cn/hkedition/2011-03/19/content_12195357.htm

2011
03/19
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Economic reform won’t damage Taiwan interests

By Zhao Yinan and Li Tao

BEIJING – Premier Wen Jiabao gave an assurance on Monday that Taiwan-funded businesses on the mainland will not be marginalized by economic restructuring.

Wen told a news conference that the mainland’s efforts to transform its economic development pattern will create a better investment environment and bring more favorable opportunities to Taiwan companies.

“They will enjoy greater potential for development,” he said in response to a question about concerns in Taiwan that the mainland economy’s shift to a more environment-friendly pattern could adversely affect some Taiwan-invested businesses that are mainly labor- and resource-intensive.

The mainland has become a major destination for Taiwan investment, with 9 percent of total overseas investment on the mainland coming from the island, he said.

At present, there are more than 80,000 Taiwan-invested businesses on the mainland, with total investment surpassing $90 billion.

Wen said the “early harvest” program of cross-Straits Economic Cooperation Framework Agreement has produced positive results since it took effect on Jan 1.

Noting the existence of problems in the implementation of the agreement, Wen pledged to pursue follow-up negotiations.

The trade volume between the mainland and Taiwan exceeded $140 billion in 2010, with Taiwan’s surplus reaching $86 billion, Wen said, adding that trade volume grew 30 percent in January.

“I anticipate Taiwan businesses will enjoy greater development on the mainland,” he said.

Chiang Yung-Hsiung, owner of a Beijing-based Taiwan suitcase manufacturing company with more than 3,000 employees, told China Daily on Monday that he does not worry about the pressure caused by increased labor costs, saying the mainland long ago lost its advantage in that area.

“The current mainland-Taiwan ratio of labor cost is 1:2.5, while in the past it was 1:12 or even higher,” he said.

“Favorable policies, the same language and similar customs – all this add to the investment appeal here, compared with cheaper labor costs in some Southeast Asian countries.”

At the news conference, Wen also said Hong Kong is capable of dealing with both regional and international competition and risks, saying its advantage as an international financial center has not changed.

He stressed that the central government’s 12th Five-Year Plan (2011-2015) will in no way replace Hong Kong’s own plan.

A chapter about Hong Kong and Macao in the five-year plan was intended to support their development, not to be imposed on them, he said.

It was the first time the central government had mapped out an independent chapter about the two special administrative regions in its five-year blueprint.

Yuen Mo, chief of Hong Kong’s delegation to the National People’s Congress, said government bodies in Hong Kong usually made plans for the following few years separately and without sufficient coordination.

“An integrated plan for Hong Kong’s overall development was absent in the past, since these departments were only busy with their own jobs. The five-year blueprint, which maps out the city’s long-term development, is crucial to its prosperity in the long run,” Yuen said.

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China Daily

(China Daily 03/15/2011 page4)

http://www.chinadaily.com.cn/cndy/2011-03/15/content_12171285.htm

2011
03/15
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Wen stresses public well-being

Premier urges city to create more jobs for its people

Premier Wen Jiabao has called on Hong Kong to concentrate on creating more jobs in small, innovative high-tech enterprises, to place greater emphasis on improving education and to do more to bridge the widening wealth gap in the city.

“Hong Kong needs to further develop its service sector including financial services and tourism, in the light of Hong Kong’s actual conditions,” Wen told a news conference Monday.

The premier stressed the complexity of issues facing Hong Kong, attaching special importance to addressing the city’s economic and social difficulties to improve the well-being of the people.

His prescription for achieving these aims was for the SAR to make the most of its opportunities and meet the challenges head on through the guidance of a long-term and scientific development plan.

Wen added that it is important for Hong Kong to pay closer attention to the development of education and science and technology, so as to sustain its momentum of future development.

“Hong Kong has sufficient government revenues and ample foreign exchange reserves. It needs to make the most of its favorable conditions to improve the social safety net and in particular take good care of vulnerable groups so that people in Hong Kong will lead a much better life,” Wen added.

He said the city’s traditional advantages still exist and its status as an international financial center remains unchanged.

“With the strong backing of the motherland and facing the world, Hong Kong has an open and free economy, a full-fledged legal system that is consistent with international practises, and a large pool of managers and personnel of various kinds.

“Hong Kong has experienced two financial crises, and has withstood both tests. So I believe Hong Kong’s traditional advantage as the international financial center has not changed,” Wen told a media conference after the conclusion of the annual parliamentary session.

The premier expressed confidence that the city’s traditional advantages remain strong since the nation’s Five-Year Program has also set out to support the city in developing itself into an offshore renminbi business center, and an international asset management center.

“Many of the pilot programs we have taken in the reform in the financial sector in recent years have also been first conducted in Hong Kong,” said Wen.

He spoke of the pilot program to settle cross-border trade with yuan in Hong Kong, the cooperation between Hong Kong and the mainland, especially the Pearl River Delta Region and joint infrastructure projects. These, he said, will “facilitate the freer flow of goods and personnel between the two sides” and these measures will “help consolidate and develop Hong Kong’s status as an international financial center”.

Wen said he also believes that Hong Kong has the ability to cope with both the regional and international competition and risks.

Wen said a separate chapter devoted to Hong Kong and Macao in the 12th Five-Year Program has shown the central government’s firm support for the long-term stability in the two special administrative regions, which not only meets demands of the SAR governments and the people, but also serves the interests of the long-term development of Hong Kong and Macao.

The central government will adhere to the principle of “One Country, Two Systems”, and act in strict accordance with the Basic Law to support Hong Kong’s development. The arrangements related to the city in the Five-Year Program will in no way replace Hong Kong’s own planning, said Wen.

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China Daily

(HK Edition 03/15/2011 page1)

http://www.chinadaily.com.cn/hkedition/2011-03/15/content_12170885.htm

2011
03/15
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Ex-regulator sees red-chip paradise on the mainland

BEIJING – The launch of an international board in Shanghai will not diminish Hong Kong’s attractiveness to the mainland and foreign listings in the near term, said a former stock market regulator who used to serve on both sides.

Laura Cha, a Hong Kong deputy to the National People’s Congress (NPC), told China Daily that the international board, which will allow foreign companies to list on the Chinese mainland, will become a paradise for foreign-registered Chinese companies – the red chips – first.

“Investors on the two exchanges are basically different,” Cha said. “Since the yuan is yet not fully convertible, the international board will look for ways for mainland investors to invest in these leading Chinese enterprises, a number of which had IPOs in Hong Kong several years ago.”

Several Hong Kong-listed Chinese companies have expressed interest in a Shanghai listing, including China Mobile and CNOOC Ltd. Cha said that as these companies operate their main business on the mainland, yuan-denominated listings would definitely be appealing.

Cha, 61, was appointed as a non-executive director with HSBC Holdings Plc this month, becoming the fourth woman on the board. She said that although HSBC also wants to trade its shares in Shanghai, the red chips are still likely to go first.

“We aim to become the first international company on the international board in Shanghai,” said Cha, adding that a Shanghai listing would be HSBC’s sixth.

The former vice-chairwoman of Hong Kong’s Securities and Futures Commission, from 1991 to early 2001, was the first person from outside the mainland to be invited to serve in the Chinese central government, as vice-chairwoman of the China Securities Regulatory Commission from 2001 to 2004.

Cha believes there will be no collision as the two exchanges’ aggressively pursue yuan-denominated listings – but she concedes that Hong Kong’s buoyant stock market in the past few years has been largely supported by mainland enterprises.

Hong Kong has been the world’s biggest IPO market for the past two years. In 2010, it saw a 79 percent increase in fundraising and a 55 percent rise in new listings, compared with the previous year. Cha attributes these accomplishments to some giant IPOs from the mainland, such as Agricultural Bank of China.

“Many mainland companies are eager for a listing, and a large number of mainland investors with sufficient funds are keen on finding ways to use their money, because the market doesn’t lack liquidity, but sufficient investment products. This will all support a prosperous future for the long-discussed international board,” Cha said.

“Hong Kong, on the other hand, is a mature market with simple and transparent trading procedures as well as a sound set of laws. It may have lagged in developing new investment products, compared with the mainland bourses, but its advantages will continue to attract both mainland and foreign capital,” she said.

Hong Kong is also considering a platform to allow companies to issue yuan-denominated shares. In October, Charles Li, chief executive officer of Hong Kong Exchanges & Clearing Ltd, expressed a desire to see the first yuan-denominated IPO in the city happen in 2011.

However, yuan deposits in Hong Kong, though surging at a faster-than-ever pace, reached only 370.6 billion yuan ($56.4 billion) in January, according to data released by the Hong Kong Monetary Authority on March 1.

These deposits may be depleted immediately after a few yuan IPOs in the city, Cha said, adding that the yuan pool in Hong Kong is still not big enough to support mass yuan-denominated listings.

Meanwhile, the fact that the yuan is not yet being freely traded in overseas markets will initially also impede the international board’s ability to attract companies.

“However, the yuan will trade freely some day, and Shanghai will become Hong Kong’s major competitor regardless of the international board,” Cha said. “Hong Kong’s future will rely on maintaining its own strengths, and the same applies to Shanghai. Its unique strength will eventually emerge.”

Cha said she is still proud of the corporate governance reforms she brought to the mainland when she was in office in Beijing, including the appointment of at least three independent directors on a board of a listed company, which also earned her the nickname of an “iron lady”.

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China Daily

(China Daily 03/10/2011 page14)

http://www.chinadaily.com.cn/cndy/2011-03/10/content_12146369.htm

2011
03/10
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Blueprint highlights city’s future

Plan shows strong support under ‘One Country, Two Systems’: Peng

The emphasis on Hong Kong’s place in the nation’s blueprint for the next five years reflects the importance attached to the city by the central government and the support it intends to provide, officials said Monday.

Director of the Liaison Office of the Central Government in Hong Kong Peng Qinghua noted that the plan places strong emphasis on the support for Hong Kong under the policy of “One Country, Two Systems”.

“The word that appeared most in the 12th Five-Year Program regarding Hong Kong is ‘support’, rather than ‘supersede’, which demonstrates the city still owns a high degree of autonomy,” said Peng.

“The Five-Year Program is well based on the principle of ‘One Country, Two Systems’, so the central government will not replace nor supersede the functions of the SAR government. So there is no issue of the central government’s setting out plans for Hong Kong,” Peng said. He spoke at a meeting with the Hong Kong delegation at the National People’s Congress (NPC) in Beijing Monday.

The blueprint unveiled Saturday highlights Hong Kong’s economic role in the nation for the next half decade starting 2011.

“We will support Hong Kong in consolidating and elevating its position as an international financial, trade and shipping center,” Premier Wen Jiabao said when delivering the Government Work Report Saturday.

Wen said the central government will unwaveringly implement the principle of “One Country, Two Systems” and fully support the Hong Kong and Macao special administrative regions in developing their economies and improving their people’s well-being.

According to the plan, the central government in the next five years will continually support Hong Kong to develop finance, shipping, logistics, tourism, professional services, information and other high value-added services.

It will also back the city’s development into a yuan offshore center and international asset management center, as well as a high-end storage management and regional distribution center.

In the newly released plan, there is a separate chapter articulating support for sustaining the two special administrative regions’ long-term prosperity and stability.

The country will support Hong Kong’s development of priority industries in which it enjoys clear advantages, including environmental industries, medical services, education services, testing and certification, innovation and technology, cultural and creative industries. Cooperation between Guangdong, Hong Kong and Macao will be broadened to build up a regional financial cooperation area led by Hong Kong’s financial system and supported by the financial resources and services in the Pearl River Delta cities, said the Five-Year Program.

“The central government has been very supportive to Hong Kong’s development since the handover. Hong Kong’s strengthening role in the country’s overall development strategy this time brings great economic opportunities for us,” said Yuen Mo, chief of Hong Kong NPC delegation.

“On the other hand, Hong Kong will also play out its advantages, such as its rich resource of professionals and its sound legal system to contribute to the country’s overall development strategy,” Yuen said.

Rita Fan Hsu Lai-Tai, deputy to the NPC and former president of the Legislative Council, said it stands as a mark of success that the city has been embraced so closely in the development of national strategies.

See commentary, New opportunities for city page 11

China Daily

(HK Edition 03/08/2011 page1)

http://www.chinadaily.com.cn/hkedition/2011-03/08/content_12131822.htm

2011
03/08
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Official: Tour agencies should pay deposits

BEIJING – A leader in the Hong Kong tourism industry has proposed that travel agencies pay deposit fees that will be set aside to compensate tourists harmed by abuses such as forced shopping, which subjects travelers to high-pressure sales techniques.

Lo Sui-on, executive director with China Travel Service (Holdings) Hong Kong Ltd, said recent disputes between Hong Kong tour guides and mainland travelers have roused concerns over the growth of the tourism industry.

“It is definitely a blow to Hong Kong’s tourism brand, but we think the scandal also has a good side, since we need ways to deal with these cheap tours,” said Lo, who is in Beijing for the annual session of the National People’s Congress (NPC).

Last month, a Hong Kong tour guide fought with tourists in Hong Kong, four of whom suffered injuries bad enough that they were sent to a hospital. That followed a July 2010 case, in which a Hong Kong tour guide was caught on video berating a busload of mainland tourists.

Both altercations came about for the same reason: The travelers had declined to spend money at Hong Kong jewelry shops.

Before 2001, only four travel agencies in the mainland were permitted to arrange trips to Hong Kong for mainlanders, Lo said. But as the mainlanders grow wealthier, an increasing number of businesses have appeared to cater to their wanderlust.

Lo estimated that there are now more than 100 travel agencies in the same business. He said the resulting competition has led to lower prices for trips to Hong Kong. The current offerings include free-of-charge tours or even negative-charge tours.

“As a result, these businesses cannot make a profit on these low-charge tours unless some shopping occurs,” Lo said. “Some agencies have even built their own shopping malls in Hong Kong. The commission rates can reach up to 60 percent for tour guides.”

He said the proposed deposit fees, which would be charged to travel agencies, would act as a restraint on both the behavior of trip organizers and tour guides.

Hong Kong welcomed a record 36 million visitors in 2010, 21.8 percent more than in the previous year. Nearly 26 million of the travelers hailed from the mainland, the Hong Kong Tourism Board (HKTB) announced in January.

But only 2 million of those mainland visitors were taken on their trips by representatives of travel agencies, according to Lo. He noted that the Individual Visit Scheme , which allows mainland travelers to visit Hong Kong on their own, was introduced in 2003. Since then, travel agencies have become less important to the Hong Kong tourism industry.

“In the long run, it is Hong Kong’s business reputation, shopping environment and service quality that will keep the city’s travel industry vigorous,” said Lo.

http://www.chinadaily.com.cn/bizchina/2011-03/07/content_12130324.htm

2011
03/07
POSTED BY
CATEGORY
China Daily HK
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