THE CONSULATE GENERAL OF SWITZERLAND IN HONG KONG

Domestic politics
Tax-cut call with surplus $10b up on forecast: Pressure mounted on the financial secretary to increase welfare benefits and tax rebates after the government announced a $14 billion surplus for the last financial year - nearly $10 billion more than estimated in the budget nearly two months ago. Some lawmakers accused the government of deliberately under-reporting the surplus to deflect calls for tax concessions, but Financial Secretary Henry Tang, in an uncharacteristically prompt response, rejected such criticisms and refused to promise any tax cuts for next year.
Unions demand better pay and shorter hours: More than 500 unionists and lawmakers flocked to the Central Government Offices in Central to demand a minimum wage and maximum working hours.
Cheung lashes out at Tsang: Civic Party lawmaker Fernando Cheung has lashed out at Chief Executive Donald Tsang for being manipulative and politically narrow-minded, saying HK's leader will lose Beijing's support if he consistently ignores the will of the people. "If Donald Tsang thinks that 'strong governance' means bulldozing his way through opposition with the massive powers he possesses, he is definitely wrong," Cheung said.
Public trust in Beijing and HK government surges: The central government's non-intervention in HK affairs has helped boost public trust in the SAR government and Beijing to post-handover highs. In a survey conducted by the HK University's Public Opinion Programme, 68.8% said they had full trust in the SAR government.
June 4 vote lost, for the ninth time: A motion calling for the commemoration and vindication of the 1989 Tiananmen Square protest was defeated in the Legislative Council for the ninth time since the handover.
Tsang's the man for me, says Beijing envoy to HK: Foreign Ministry Commissioner Lu Xinhua openly backed Chief Executive Donald Tsang's bid for a second term - the first mainland official to do so. "I support him serving for five more years," Mr Lu said after a media reception at the Office of the Foreign Ministry Commissioner in HK. Mr Lu, who became commissioner in February, said he had a good impression of Mr Tsang, who, he said, enjoyed high popularity.
Tsang urged to bolster alliance: The chief executive should build a wider policy coalition among allies to help smooth governance, the Liberal Party leader said. James Tien said he believed such a move would speed the implementation of universal suffrage in HK. The business-affiliated party chief said the city was economically advanced, but politically handicapped.
Anger grows over suffrage: The government has not drafted any universal suffrage proposals, lawmakers were told, even though a mainland legal expert last month spelled out six preconditions before full democracy could be introduced to HK. Wang Zhenmin, the deputy dean of Tsinghua University Law School in Beijing, listed the preconditions at a forum organized by the State Council's HK and Macau Research Institute late last month. Wang said HK is not ready for universal suffrage because there is no national security legislation, no territory-wide consensus on universal suffrage and a lack of civic education.
Broadside by Tsang turns up heat on opposition: Donald Tsang launched his fiercest attack yet on opposition parties, accusing them of undermining his government's authority and warning the public would turn against those who "oppose for opposition's sake". Speaking in the Legislative Council, he said: “Some oppose to undermine the government's authority and popularity, for fulfilling their self-image, for media publicity. To them, it doesn't matter whether their actions are underpinned by any values of belief.” Donald Tsang's attack was meant for the ears of Beijing, according to a veteran politician.
'Welfarism' dangers seen on the path to democracy: Members of a government-appointed panel exploring the path to universal suffrage agree HK should maintain its capitalist system while evolving to full democracy, with some warning of the danger of "welfarism" during the process. Members agreed to take into account the implications of attaining full democracy on HK's economic development and financial position.

International affairs
Vatican ties «at risk» over bishop: The unauthorized ordination of a new Catholic bishop in China will only delay the establishment of formal diplomatic ties between China and the Vatican, HK Catholic church head Cardinal Joseph Zen said. The state-backed Chinese Patriotic Catholic Association ignored a request from the Vatican for a delay and ordained Father Ma Yinglin, 41, as the new bishop of Kunming in Yunnan province.
Recognise Beijing and we can settle row, Vatican told: “Religious conflicts with the Vatican can only be addressed after diplomatic ties are resumed with Beijing”. These comments by Anthony Liu Bainian, vice-chairman of the Chinese Catholic Patriotic Association, were the first official response to the Vatican's strong condemnation of Beijing's move to appoint two bishops without its approval.
Zen urged to act as “courier”: Cardinal Joseph Zen has a duty as a HK resident to help convince the Vatican to accept China's views on how to put relations back on an even keel, the mainland's most senior official in the SAR (Lu Xinhua, commissioner of the Foreign Ministry) said.

Legal affairs and human rights
Spousal visa rule scrapped: Spouses of expatriate professionals and capital investors in HK will no longer be required to apply for separate work visas to take up employment. The department decided to lift the restrictions, imposed in July 2003, to "enhance HK's edge in attracting professionals and investors", an Immigration Department spokesman said.
China moves towards HK accounting standards: China-listed firms moved one step closer to international accounting standards after signing an agreement to converge Chinese practices with those in HK. At present, Chinese firms listed in HK have to prepare two sets of financial statements - one to meet HK standards and one to meet Chinese laws. HK has been in compliance with international accounting standards since last year.

Economy
Talent gap hits businesses: It is boom time for HK's economy - but without the sufficient manpower resources to capitalize on surging demand, local businesses say they risk seeing business opportunities slip right through their fingers. "HK needs to make itself a more attractive location ... Accommodation is small and expensive, the air pollution is bad and education costs may be higher than people are used to elsewhere."
Mainland investment in HK forecast to continue rising: Mainland investment in HK will continue to rise in the next few years as businesses over the border capitalise on the city's international marketplace to gain overseas exposure, InvestHK director-general Mike Rowse said.
Jobless rate drops back to levels before Sars: HK's jobless rate has dropped back to pre-Sars levels, reaching a 56-month low of 5.1%. However, unionists and an analyst said further improvement would depend on the government's ability to resolve inequalities in the job market where there was overwhelming demand for skilled workers, and few opportunities for unskilled ones.
Home rentals driving up consumer prices: Rising rentals for housing will continue to be the main factor driving up consumer prices, which rose by 1.9% year on year in April and are expected to climb steadily in the coming months, economists say.
Nobel laureate warns against pegging HK dollar to yuan: HK risks losing its status as an international financial center if it links its currency to the yuan instead of the US dollar, said Nobel Prize winning economist Robert Mundell. He said the pegging of the HK dollar to the US dollar in 1983 allowed HK to ride out the worst of the Asian financial crisis and gave the local unit special prominence in the region.
HK widens its lead over Shanghai: HK's economic revival and closer economic integration with neighbouring mainland provinces have increased its competitive advantage over Shanghai, a survey of business leaders in both cities shows. But academics warn that the mainland's economic powerhouse will catch up quickly in sustainable economic growth in the next five years.
Exports lift GDP-growth to surprising 8.2%: HK's economy powered ahead in the first quarter, growing at a faster than expected 8.2% compared to a year ago, driven by surging exports and a pick-up in consumer demand. But analysts and the SAR government expect the growth to taper off the rest of the year, due to uncertainties over interest rates and oil prices, and a less exciting stock market.
Tsang sets summit on China challenges: HK will host an economic summit in a bid to avoid being overshadowed by the mainland's robust economic development. The summit will be held in September to gather views on short-term strategies for HK to better integrate with the mainland's economy, Chief Executive Donald Tsang said. He warned that despite HK's strengths in areas such as service industries and ports, it could be overtaken by mainland cities such as Shanghai in the longer term because of mainland China's rapid development.
Dollar peg stays until yuan convertibility, says Tsang: Chief Executive Donald Tsang reiterated the yuan will need to be fully convertible before HK considers replacing its currency peg to the US dollar, even as the SAR works to further enhance its links with the mainland.
IPOs tipped to hit US$27b: Capital raised in the Greater China region through initial public offerings is expected to reach up to US$27 billion this year, of which 90% will be raised in HK, said a financial specialist.
Market capitalisation climbs to record $10 trillion but adjustment follows: The stock market made a double breakthrough with the Hang Seng Index breaching the 17,000-point barrier for the first time in almost six years and the market capitalisation hitting a record high of HK$10 trillion. The index then adjusted to below 16,000 at the end of May, amid falling commodities prices and fear of rising US interest rate.
Economic growth seen to be at risk: Rising oil prices, interest rates and austerity measures aimed at reining in the mainland economy are the main risks threatening local trade and economic growth in the near future, the government says. "Some of these risks, in fact, have intensified recently from the situation a few months earlier. How these various risk factors will play out is critical to HK's trade performance, and hence HK's overall economic growth in the coming quarters," Financial Secretary Henry Tang writes in a paper to be presented to the Legislative Council.

Environment
HK's hard and soft options for clearing the air: Restricting the use of vehicles on high-pollution days and imposing an energy tax during periods of peak power use are among measures to reduce air pollution proposed by a government body headed by the chief secretary. Foreign chambers of commerce would also be encouraged to name and shame members who source goods from polluting suppliers. The proposals are among 23 shortlisted by an air-quality study group under the Council for Sustainable Development.
Wetland Park seen promoting HK as leading eco-destination: The HK$520 million Wetland Park will open this month, with hopes that it will attract 500,000 visitors in its first year and position the city as a world-class ecotourism destination.
Stock exchange urged to push environmental protection: The stock exchange should encourage local companies to embrace environmental protection and social responsibility, says Philips Electronics Asia-Pacific chief executive Andreas Wente. “Investors should not only consider if they can make money. If they are investing in profitable companies which are polluting the world, the investors themselves will suffer in the end because of the poor living environment," said Mr Wente.
Firms urged to join air pollution battle: Faced with worsening air quality in the SAR as a result of rapid industrial development in the Pearl River Delta, a HK business group has invited its mainland counterparts to sign a voluntary charter to combat air pollution. A total of 206 organizations and companies, including power firms HK Electric and CLP Power - which the SAR government claims is the major source of local air pollution - have signed the Clear Air Charter, HK Business Coalition on the Environment convenor James Graham said.
Expats join campaign on “danger” air: More than 6,500 expatriates in HK have signed a petition to lobby the government to combat the worsening pollution in the SAR. Together with local policy think- tank Civic Exchange, the HK branch of Asiaxpat.com, a guide for expatriates relocating to and living in Asia, has launched a campaign to put pressure on the authorities to take action on the "dangerous" polluted air.
HK's smog costs $1.7b in losses every year: Economic losses as a result of air pollution have been estimated at HK$1.7 billion a year, Secretary for the Environment, Transport and Works Sarah Liao told the Legislative Council. In the past few weeks, Time magazine's Asia edition published two articles on the subject - "While Seoul cleans up, air pollution in HK only worsens.

Macao
Protesters, police clash in Macao labour rally: More than 5,000 Macao residents took their grievances over government labour policies to the streets, staging the largest protest since the restoration of Chinese rule in 1999. Demonstrators clashed with police near Senado Square and outside the government headquarters. Twenty-five officers and at least two female protesters were injured. Three men and a woman were arrested.
Rapid change spurs Macao unrest: Long before a May Day demonstration turned violent, Macao Chief Executive Edmund Ho had warned about a time bomb of social unrest ticking away due to economic transformations and contradictions that have turned the former Portuguese colony from a tiny fishing village with gambling dens into a well-established tourist spot with modern casinos. Ho last month told visitors that because of the severe shortage of skilled and unskilled manpower, the importation of labor had become a necessity.
Macau leader vows to settle labour dispute: In his first public comments since the violent demonstration, Macau's chief executive promised to mediate fairly in labour disputes. But Edmund Ho’s comments were immediately dismissed by critics as "evasive" and "disappointing". "The government has always attached great importance to the labour issue. It is now working to solve the problems of illegal workers and abnormal labour import," Mr Ho said. Demonstrators "must not affect the life of the general public and the business environment", he added.

Varia
Crime rate jumps, but HK remains a safe city: HK remains one of the safest cities in the world, despite more crimes being recorded between January and March than during the same period a year ago, the security chief said.
Five-day week 'to lift civil service morale': With workplace stress in HK pushing family life and sleep to the margins, the government has outlined plans to give most of the territory's 163,000 civil servants Saturdays off. "We believe that the initiative will bolster civil service morale, promote social harmony and have a positive impact on the community," said Denise Yue, secretary for the civil service. Workers will still put in 44 hours of work every week, but will shift their Saturday hours to the working week by coming in earlier or leaving later. Fears that the government's five-day week would damage the economy were dismissed by Ms Yue.
More than half of HK software illegal: A study by the Business Software Alliance found 54% of software running on computers in HK last year was pirated, up from 52% in 2004.
Talks over raising of retirement age: The government's Commission on Strategic Development is expected to begin discussions on a possible extension of the civil servants' retirement age, according to a government source. The move comes amidst concerns of an aging population and a "brain drain" from the civil service.

Press articles related to Switzerland
Credit Suisse tops forecasts with profit surge (SCMP, 3.5.2006): Credit Suisse has beaten the most optimistic forecasts with a first-quarter net profit of 2.6 billion Swiss francs, led by its investment banking and wealth management businesses. The bank also reported a net inflow of 14.5 billion Swiss francs into its wealth management business, beating analysts' consensus forecast of a 10 billion Swiss franc inflow.
UBS makes record gain (The Standard, 4.5.2006): UBS, the world's largest wealth manager, reported a 33 in first-quarter net profit to 3.5 billion Swiss francs, beating expectations in the bank's best ever performance.
Revolutionary movement (SCMP, 4.5.2006): Every spring in Switzerland, BaselWorld: the World Watch, Clock and Jewellery Show, is held in the historic city of Basel, which straddles the Rhine. This year the river was high, matching the expectations of the buyers and sellers who made it a record year for the show. This is the most important watch and jewellery exhibition anywhere in the world and for this reason, most watch manufacturers launch their important new products during the eight days of the show. Its importance can be gauged by its size: this year it attracted 2,127 exhibiting companies, covered a gross surface area of 160,000 sq m and attracted 94,200 visitors from more than 100 countries, a new record for the exhibition and an increase of 5% over the previous year.
Federer on top of the world (The Standard + SCMP, 24.5.2006): Roger Federer reasserted his status on top of the sporting world by again winning the Sportsman of the Year title at the Laureus World Sports awards on a big night for tennis.
Swiss don't mind paying to see boys from Brazil (The Standard, 24.+25.5.2006): World champion Brazil arrived in the Swiss lakeside resort of Weggis to begin its training camp ahead of the World Cup. A 5,000-capacity arena has been built - 1,000 more than the population of the village - and organizers say tickets for all the planned training sessions have already been sold. Brazil may keep the public from attending its training sessions if the hysteria surrounding the national team begins interfering with its World Cup preparations, coach Carlos Alberto Parreira said.

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