CONSULATE GENERAL OF SWITZERLAND IN HONG KONG
|A condensed press review prepared
the Consulate General of Switzerland in Hong Kong
Economy + Finance
Flat buyers back off as tough new property tax hits home in HK: A surprise property tax hit home as fast as it came - within 24 hours of the introduction of a higher stamp duty, people were shunning flat sales across the city. Ministers rallied behind the tax and other new measures. They expressed confidence they would cool HK's super-hot property market; if not, they had plenty more initiatives "up their sleeves”. On Oct. 26, Financial Secretary John Tsang imposed a 15 per cent stamp duty on home purchases by non-permanent residents and companies, extended the special stamp duty on quick resales and raised the rates for the duty.
High rents force consulates out of Central district: The high cost of renting an office in HK is forcing more consulates out of core districts. At least three have relocated recently or are planning to do so. HK remains the priciest office market in the world. Estimates based on GDP growth projections show the city could face a big shortage of grade A office space by the end of the decade.
Foreign, mainland Chinese firms in HK hit record high, says InvestHK: The number of foreign and mainland companies that have set up offices in HK has hit an all-time high of 7,250, but global economic uncertainties may have a short term negative impact on the multinationals' overseas expansion, says InvestHK. As of June, the number of overseas firms in the city had risen 4.3 per cent from a year ago, according to an annual survey jointly announced by InvestHK and the Census and Statistics Department.
HKMA steps in to market to defend HK dollar peg: The HK Monetary Authority (HKMA) said on Oct. 30 that it had stepped into the market by selling HK$2.7 billion (US$348.38 million) as the currency repeatedly hit the top end of its trading range. This is the fifth time in the past two weeks that the HKMA, the city's de facto central bank, had stepped in as "hot money" continues to flow into the city. The authority had to intervene significantly after the 2008 global financial crisis to manage an inflow of capital between October 2008 and the end of 2009 that the authority has estimated at HK$640 billion.
HK trumps Singapore in yuan hub race with Hopewell IPO: HK widened its lead over Singapore in the race to be the leading offshore yuan hub. Toll road operator Hopewell Highway Infrastructure began its yuan-denominated initial public offering here - the second in the city - while a real estate investment trust backed by Li Ka-shing paused its planned yuan IPO in the island state. It is also expected to widen HK's offer of yuan products to foreign investors. Though Singapore has been trying to emerge as an alternative, HK continues to be the world's largest offshore yuan centre, processing 80 per cent of yuan payments last month.
Hong Kong exchange's IPO ranking hit by slowing China and lack of investors: After three consecutive years of being the No1 destination for companies raising funds through initial public offerings, the HK stock exchange looks likely to fall out of the top 10 this year. Skittish investors, a slowdown in the Chinese economy and a weak global economic outlook have combined to smother demand for IPOs, which have powered the growth of the local exchange.
Suspected money-laundering cases in HK surge 29pc: The number of suspicious financial transactions reported to law enforcers surged 29 per cent in the first half of the year, following the enactment of an anti-money-laundering law in April. Police said there had been an upward trend of proceeds of overseas fraud or deception being remitted into bank accounts in HK and eventually transferred to third parties or cashed out. Police said that the surge resulted from greater awareness since the Anti-Money Laundering and Counter-Terrorist Financing Ordinance was enacted on April 1, making the reporting of such transactions a legal obligation.
Less pessimism as hopes grow for a rebound: Business sentiment among HK's small- and medium-sized enterprises (SMEs) has improved this quarter from the third quarter but remains pessimistic, the Standard Chartered Hong Kong SME leading business index shows. Growth in the city's gross domestic product will rebound significantly next year, Standard Chartered senior economist Kelvin Lau predicted.
Jobs of private bankers in HK are at risk: Global banks that hoped to turn HK into a platform to serve wealthy mainland Chinese clients are finding it tough going as markets have soured, and some have even begun to lay off staff to reduce costs. The dismal investment environment, which has led to much lower than usual trading activities, and the fragmented market - exacerbated by increasing competition from newcomers - has made this year especially tough for private banks to make money.
Nearly half of MPF investments lose money in last five years, study shows: Nearly half of the Mandatory Provident Fund investments ended up in the red in the past five years and employees - far from building up a retirement nest egg - could lose up to 14 per cent of the money they contributed in that period, according to the Consumer Council.
C.Y. targets four most urgent problems facing HK: Chief Executive Leung Chun-ying took aim at what he termed four deep-rooted problems plaguing HK, in a speech to Legco that amounted to a mini policy address. Identifying the issues as housing, the environment, poverty and the elderly, he said sustained and higher economic growth was needed to provide the resources to tackle them. He spelled out his governing philosophy, such as a more proactive role in economic development, and elaborated on his positions on such thorny issues as the relationship between HK and the mainland.
Chief executive Leung reflects on first 100 days in office: HK will suffer a serious blow if mainlanders no longer feel they are welcome in the city amid growing anti-mainland sentiment, Chief Executive Leung Chun-ying warns. Leung also vowed to be "thick-skinned" as he seeks to build his relationship with lawmakers. Recent months have seen mainlanders blamed for everything from soaring property prices to packed maternity wards, and clashes between Hongkongers and visitors from across the border have drawn international attention. The British flag and the colonial-era HK flag have become a fixture at recent demonstrations amid what appears to be an upsurge in nostalgia for the days of colonial rule. But Leung said: "We have to be mindful of how the mainland looks at HK. " While reiterating the importance of what he called "internal diplomacy" - relations between HK and the central government - Leung also reiterated the value he places on his relationship with Legco.
Vote on old-age allowance put off; lawmakers critical of government: A Legco committee (Oct. 30) put off a vote on the government's proposal to introduce a HK$2,200-a-month old-age living allowance, meaning the intended beneficiaries will not be paid the allowance this month. The government says everyone aged 65 and over would be eligible for the allowance - an improvement on the current HK$1,090-a-month allowance - but would have to undergo a means test. At least 30 of the 69 lawmakers on the committee back the plan, with 24 pan-democrats opposed. Radical pan-democrats want the means test scrapped, while the Beijing-loyalist Federation of Trade Unions and the Democratic Party wanted those aged 70 and over exempted from the test. Lawmakers criticised the government for its poor handling of the issue and for polarising society. Industrial-sector representative Lam Tai-fai, seen as a government ally, said: "You are holding the elderly hostage … You are well aware that lawmakers do not oppose the allowance ... They are just saying your policy is not comprehensive."
Chief executive to scrap government revamp to prioritise poverty and housing: Leung Chun-ying's administration was preparing to sweep its embattled restructuring plan under the carpet for the time being as it seeks to deal with pressing livelihood issues such as poverty and housing. It means the existing government structure, which the chief executive was once so keen to revamp, even before he took office, will remain.
Pan-democrats lose out in battle for Legco panel power: The pro-establishment camp secured 16 out of 20 chairmanships on Legislative Council panels and subcommittees. The outcome was a blow for the pan-democratic camp, whose four chairmanships fell short of the seven it occupied in the last four-year term. The refusal of Beijing-loyalist lawmakers - who form the majority in Legco - to grant more chairmanships to the pan-democrats sets the stage for an escalating tussle between the two sides.
Regina Ip, Jeffrey Lam appointed to Exco: New People's Party chairwoman Regina Ip and a pro-business legislator Jeffrey Lam were appointed members of the Executive Council - the government's top advisory body. With the two new members, the Exco comprises 31 members, including 15 principal officials appointed under the accountability system and 16 non-official members. Chief Executive CY Leung said: “Mr Jeffrey Lam and Mrs Regina Ip have rich experience in the Legislative Council and public service, and are committed to fostering the development of HK.
New pro-business Legco alliance vows to reconnect with HK: Seven pro-business lawmakers - accounting for a tenth of the Legislative Council - formed a new alliance on Oct. 7. The alliance - yet to have an English-language name pending the completion of company registration - has vowed to bridge the gap between the business and professional sectors with the rest of HK. All the members are from functional constituencies, except for Dr Priscilla Leung, who represents Kowloon West. These trade-based seats would have narrow electorates in the lead-up to the universal suffrage which could be seen in the 2020 Legco election.
Relations HK - Mainland China
Hong Kong-mainland integration is 'inevitable and essential', Leung says: Increasing integration with the mainland could boost Hong Kong's economy and help solve the city's social problems, Chief Executive Leung Chun-ying said on Oct. 1 in a speech marking the National Day holiday. Leung, who has been battling governance issues and public concerns over the influx of mainlanders since taking office in July, said such integration was inevitable. His remarks came as the government stepped up efforts to crack down on parallel goods traders and block pregnant mainland women without bookings at local hospitals from entering the city. At HK's request mainland authorities also suspended an earlier plan to relax visa application procedures which would have allowed non-residents in six key cities easier access to HK.
Leung Chun-ying denies Beijing official took charge: The mainland authorities' response to the ferry crash on Oct. 1, including the deployment of salvage ships, has raised questions, given that the government showed it was more than capable of handling the disaster on its own. Chief Executive Leung Chun-ying, in particular, was criticised for allowing a senior figure from the central government's liaison office to play a key role. But Leung Chun-ying insisted he had taken full charge of the rescue operation, dismissing suggestions he was overshadowed by a Beijing liaison official during a hospital visit. Political commentator Li Pang-kwong, of Lingnan University, described Beijing's high-profile response as "an over-expression of concern", considering "it was not an accident with tens of thousands of casualties".
Beijing will use tighter rein on HK, says analyst: Beijing will impose tighter control on HK regardless of the personnel reshuffle at the top next month, according to a veteran China watcher. HK-based political commentator Johnny Lau said the central government was losing patience with the city, 15 years after it returned to Chinese sovereignty in 1997. Politburo leaders had an "antagonistic mentality", he said, predicting there would be persistent pressure to introduce national education despite immense local opposition and to strip the press of its freedom.
Beijing's Global Times labels HK autonomy group 'pro-independence': The state-run Global Times newspaper (Oct. 30) accused a group promoting HK autonomy as being "pro-independence", in another attack against organisations in the city who oppose mainland interference in local affairs. The label apparently equated the HK City-State Autonomy Movement (HKAM) with separatist groups in some of China's more restive regions, including Tibet and Xinjiang, and also in Taiwan. It implied the group was potentially secessionist. The HKAM's spokesman Vincent Lau said HKAM was asking only for mainland authorities to stop interfering in the city's affairs. "We have never regarded ourselves as advocating independence for HK." Ma Ngok, a political scientist at Chinese University, said: "[Beijing loyalists] want to destroy at infancy voices asking for de-Sinofication, separating Hongkongers and [mainland] Chinese."
Cross-border trade essential to HK growth, governor says: Guangdong Governor Zhu Xiaodan has urged Hongkongers to consider how economic reform on the mainland has affected the city's development. Zhu also presented a development blueprint for Guangzhou's Nansha district which describes it as a new national strategic development zone to transform the delta region and deepen cross-border collaboration. The nation's 12th five-year plan sees Nansha, Qianhai in Shenzhen and Zhuhai's Hengqin island, adjoining Macau, as three keys to upgrading Guangdong's economy and turning the major cities of the Pearl River Delta into a globally competitive cluster.
Legal affairs and human rights
Law groups fight back after Elsie Leung attack: Two legal bodies issued strong defences of HK's independent judiciary, with the Law Society warning the government to "act cautiously" before seeking any interpretation of the Basic Law from Beijing. The society and the Bar Association were defending the judiciary against a scathing attack by a former justice minister, Elsie Leung. Leung said the legal profession, including judges, lacked an understanding of the relationship between Beijing and HK. This had led to mistakes in previous rulings in which the top court had superseded the central government's power. Leung urged the government to seek an interpretation of the Basic law from the National People's Congress Standing Committee to solve the issues surrounding mainland women giving birth in the city. The Bar Association said that while it had consistently acknowledged the NPC's power to interpret the Basic Law, HK's common-law system had to be defended. At the centre of the debate is granting permanent residency to children born in HK to mothers from the mainland.
Law change to plug loophole in new stamp duty: A legal clause will be introduced soon to plug a loophole that allows homebuyers to evade the new 15 per cent stamp duty on purchases, the government announced on Oct. 30. The announcement came on the back of news spreading among real estate agents that a Happy Valley project developer was planning to set up a subsidiary company to hold its flats before selling them by transferring the subsidiary's shares to the buyers. The government said it would extend a clause in the Stamp Duty Ordinance. Under the existing ordinance, stamp duty doesn't have to be paid when a company transfers a unit to a subsidiary. Under the change, if the company ceases to hold 90 per cent of its subsidiary's shares within two years, the flat buyer will have to pay the 15 per cent stamp duty. The new clause to plug the loophole is expected to be introduced retrospectively in January 2013.
'Sars-like virus could hit HK despite false alarm': HK should not lower its guard against a deadly Sars-like virus despite the city's first suspected case being a false alarm, a microbiologist warned. Dr Ho Pak-leung, of the University of HK, spoke out after a four-year-old boy tested negative for novel coronavirus, which has killed one Middle Eastern man and left another seriously ill. But Ho said HK, like many major cities with busy traffic, was vulnerable to the spread of any contagious diseases.
Air pollution in HK from ships and vehicles gets worse: Roadside air quality and marine-related air pollution have worsened even though the city has achieved its overall clean-air targets under a joint scheme with Guangdong province. According to the 2010 pollution inventory released by the Environmental Protection Department, the level of emissions for four pollutants - sulphur dioxide, nitrogen oxide (NOx), respirable suspended particulates and volatile organic compounds - in 2010 were reduced by 30 to 59 per cent, compared to 1997. However, the other sources - vehicles and ships - have created more pollution than before.
Culture and Education
Controversial guidelines on national education shelved: Chief Executive Leung Chun-ying says the controversial guidelines for national education will be shelved - but not scrapped outright. He made the announcement on Oct. 8. Controversy over the subject, aimed at instilling in pupils a sense of belonging towards the motherland, had polarised society and hindered school operations, Leung admitted. Critics branded the subject a move to indoctrinate future generations in HK, with topics presenting a biased view of mainland China.
Legco motion calling for education minister to quit is vetoed: The Legislative Council voted down a motion calling on the education minister to step down in a lengthy meeting that also reignited debate over national education. The non-binding motion put forward by education-sector lawmaker Ip Kin-yuen was vetoed by functional constituency legislators despite winning majority support from directly elected members.
HK's top two universities lose ground in latest global rankings: The city's top two universities have lost ground in the latest global university league table. But two mainland institutions have moved up, narrowing the cross-border gap, according to the new rankings released on Oct. 3. In the Times Higher Education World University Rankings 2012-2013, the University of HK slipped from 34 to 35, and HK University of Science and Technology dipped from 62 to 65. The survey predicts that mainland universities are set to advance further in the coming years, as institutions in the West are hit by government austerity measures.
Thousands apply for schools as mainland kids born in HK return: Thousands of applications from mainland parents are expected by Sheung Shui kindergartens as children born in HK to parents from across the border in recent years return to be educated. The pressure on northern kindergartens is expected to grow as more children born in HK to mainland parents reach school age. The number of children born in HK to mainland parents rose to 33,000 in 2010 and to 35,000 last year, after which the government imposed new rules at borders and hospitals.
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