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Economy + Finance
HK is world's third largest recipient of FDI, UN survey finds: HK became the world's third largest recipient of foreign direct investment (FDI) last year, according to the latest World Investment Report published by the United Nations. Last year, FDI in HK reached an all-time high of US$68.9 billion (HK$536 billion) inflow – a 31.5 per cent increase over 2009. It made the territory the second largest recipient of foreign investment in Asia after the mainland. Simon Galpin, director general of InvestHK – the government department responsible for FDI, said: ―HK's status within the global economy is reflected in its record high ranking.‖ HK reached the fourth place in 2009 and the ninth place in 2008.
HK holders of H-shares to pay 10pc dividend tax: HK investors will have to pay a 10 per cent dividend tax on shares in the 300-plus mainland companies listed in the city under a new taxation regime brought in by Beijing. Although the mainland has always taxed domestic investors 20 per cent of their dividends, it has until recently granted an exemption to HK shareholders. HK does not impose a dividend tax. The HK Financial Services and the Treasury Bureau said the State Administration of Taxation had confirmed HK residents would only pay a 10 per cent dividend tax after taking into account the double taxation agreement between the city and the mainland. 
Lump-sum rail site bids to boost flat supply: Bidders for West Rail sites will no longer have to negotiate separately with the government over land premiums. The change, approved by the chief executive and Executive Council, is expected to expedite land and flat supplies. At present, developers who bid for sites along the 34-kilometre railway from Hung Hom to Tuen Mun must stump up the land price and then negotiate with the government over the market-value land premium. Under the new scheme, bidders will propose an upfront lump-sum cash payment, including the premium when submitting a tender. 
Jobless rate stable at 3.5pc:  HK's unemployment rate stood at 3.5 per cent of the workforce in June — the same level as in May, the Census and Statistics Department said. A department spokesman also said total employment hit an all-time high of 3.61 million last month. Most new jobs created last month were in the construction and insurance sectors, while most job losses were reported in the wholesale, accommodation and food service sectors, the spokesman said. 
Inflation at three-year high due to rent, food: Inflation in the city is running at a three-year high of 5.6 per cent, with little sign of it falling any time soon, according to the experts. Private housing rentals and food prices were the two major driving forces, accounting for about 70 per cent of the year-on-year rate of increase," a government spokesman said. The economy would continue to see upward pressure on prices in the coming months, he added. "While global food and commodity prices are likely to stay elevated, domestic cost pressures may also increase as a result of the brisk expansion of the local economy since early 2010," the spokesman said.

Domestic politics
Turnout breaks 7-year record: Hongkongers staged their biggest show of discontent with the government in seven years, taking to the streets in the largest numbers for the annual July 1 march since 2004. With organisers claiming a turnout of 218,000 people - and police putting the number at 54,000 - the march raised the pressure on the government to postpone or withdraw its controversial bill to scrap Legislative Council Legco by-elections. "The people who took part in the march have expressed their demands loud and clear," said the front's convenor, Gary Fan. "The government should withdraw the bill for filling mid-term Legco vacancies." In the rally that started in mid-afternoon, marchers had more on their minds than the ban on by-elections. They chanted "Down with property hegemony" and "Donald Tsang (Chief Executive) step down" - pleas against high property prices and the administration of the chief executive. 
By-election bid put on hold in latest U-turn: Chief Secretary Henry Tang emerged after a hastily arranged meeting with 21 government-friendly lawmakers to announce a delay in voting on the controversial bill, which was scheduled for July 13. Instead, the government will launch a two-month public consultation this month, and resume the process in the 2011-12 Legislative Council session. The U-turn came three days after the annual July 1 march, which drew the biggest turnout since 2004. Dr Ma Ngok, a political scientist at Chinese University, said he believed the delay was aimed at avoiding undermining the prospects of government-friendly parties in November's district council elections and next year's Legislative Council poll. Chief Executive Donald Tsang still defended the bill's intent, insisting the public was "strongly opposed" to lawmakers resigning to trigger by-elections as a means to achieve so-called referendums. 
By-elections bill stokes public anger, poll finds: The city's level of anger has risen, according to the latest opinion poll conducted by the University of HK, fuelled by events such as the government's controversial proposal to scrap by-elections for the Legislative Council. The findings came after the latest July 1 march, which drew the biggest turnout since 2004. Poll director Dr Robert Chung said the findings should be a cause for concern. "The various figures all reached new heights. Other than the controversial proposal to scrap by-elections, livelihood issues including housing, financial budget and inflation are still the focus of citizens' anger." 
Options for by-elections bill 'don't breach Basic Law': Secretary for Constitutional and Mainland Affairs Stephen Lam declared that the government's four options for filling midterm vacancies in the Legislative Council Legco were not in breach of the Basic Law. "Although the pan-democrats said all four proposals are unconstitutional, you can see some legal scholars - including Professor Albert Chen - saying all the options have no apparent constitutional issues," Lam said. The government is asking the public whether the practice of holding by-elections to fill Legco's vacancies resulting from resignations should continue or ought to be closed. The government sees the current mechanism as a loophole after the resignations last year of five lawmakers, who hoped the subsequent by-elections would be a de facto referendum on democracy. The four options are to: give the seat to a running mate in the previous election of the legislator who stepped down; prevent a legislator who resigns from standing in any by-election in the same Legco term; hold a by-election only in the event of death or serious illness; or leave the seat vacant if all candidates from the departed lawmaker's party in the previous election will not serve.
Chief Executive pledges to address housing and ecomonic issues in final year: Chief Executive Donald Tsang admitted some of his government's policies were unpopular – but pledged to do more to address key issues concerning HK people. Tsang, speaking during a question-and-answer session before the summer recess, vowed to do more to tackle housing, the problems of a growing ageing population, economic uncertainty and the recent controversy over by-elections. In recent opinion surveys, the popularity of Tsang and his administration has hit its lowest point since he became chief executive in 2005.

Relations HK-Mainland China
Top official says next chief should have wide support: The mainland official in charge of HK affairs says the next chief executive should have a high degree of acceptance among the general public - a criteria rarely stressed by Beijing since the handover. Observers said the comment by Wang Guangya reflects the central government's concerns over the current administration's governance, following several embarrassing policy U-turns that make it appear increasingly out of touch with the public. Wang, director of the HK and Macau Affairs Office, spelled out the criteria for the next chief executive. Apart from the standard "love-the-motherland and love-HK" requirement, Wang stressed the importance of having a strong governing ability and wide support from the public, but he did not mention how to measure the public acceptance level of a candidate without a full direct election. Executive Council convenor Leung Chun-ying, Chief Secretary Henry Tang and Rita Fan, a member of the National People's Congress Standing Committee, have all been widely tipped as the main candidates for next year's chief executive election. So far, none of them has confirmed an intention to run. 
Civil Servants hit back at Wang: Civil servants, under fire from Wang Guangya, Beijing's top man on HK affairs, who says they lack the ability to take command and plan for the long term, have hit back. They say the criticism should have been directed at their political masters. So Ping-chi, Chairman of Senior Government Officers Association, said that Wang should have referred to politically appointed officials rather than civil servants. Former chief secretary Anson Chan said Wang's remarks were groundless and "gross interference in HK's autonomy". "His remarks show a total ignorance of how the civil service actually functioned before 1997 and afterwards. It was after the introduction of the political appointment system in 2002 that the responsibility of policy formulation was removed from civil servants and given to political appointees. Mr Wang's remarks are unfair to both the civil service and the previous colonial power." Under the political appointments system, permanent secretaries are  no longer tasked with policy formulation. A government spokesman declined to comment on Wang's remarks, saying it was unsuitable to comment on quotes in the press.

International affairs
Clinton lauds SAR as 'perfect example' of an open economy: US Secretary of State Hillary Clinton said HK is "a perfect example" of an open, transparent, free and fair economy, and urged Asian countries to spend more domestically to help stabilize the global economy.  "The US is in the middle of a transition," Clinton told the American Chamber of Commerce at a luncheon in HK. Before the speech, Clinton met Chief Executive Donald Tsang. She followed that with a 40-minute discussion with four HK lawmakers. After the Amcham address, Clinton was whisked off to Shenzhen for talks with her mainland counterpart, state councillor Dai Bingguo. Clinton's visit was the first by a US secretary of state to HK since Madeleine Albright attended the handover ceremony in July 1997.

Transborder affairs
Private beds for mainland wives: Several private hospitals will reserve obstetric services for the mainland wives of HK men as pressure mounts on the government to take care of cross-border families affected by a recently announced cap on baby deliveries in the city. The government has capped the total number of deliveries for mainland mothers at 34,400 next year - 31,000 at private hospitals and 3,400 at public hospitals. Health officials had rejected calls to give priority in using public services to women married to HK residents, fearing it could lead to legal challenges. However, the decision angered cross-border families, with the government now turning to the private sector for help.
Skies set to open for new runway: A major obstacle to the proposed new third runway at Chek Lap Kok could be about to be removed with the opening up of airspace over the Pearl River Delta. The Civil Aviation Department said officials from HK, Shenzhen and Macau had finally reached a consensus on relaxing airspace boundaries after three years of talks. No formal agreement has yet been signed, but it is seen as a vital step if the three cities are to meet the demands of growing air traffic in the region in the next two decades. Airlines in the greater Pearl River Delta are expected to be carrying 240 million passengers a year by 2030. But the move could also be a deciding factor in winning approval for the new runway at HK International Airport. Without such an agreement, it would be impossible to fully utilise the HK$136.2 billion runway - a fact pointed out by the Airport Authority in its technical report.
HKU teaching hospital in Shenzhen will be big draw: A new teaching hospital in Shenzhen will create an "overwhelming demand" from both mainland and HK patients. Leong Che-hung, council chairman of the University of HK, was speaking about the new 2,000-bed University of HK Shenzhen Hospital, due to open by the end of this year. The hospital is being built and funded by the Shenzhen government and it will be HKU's second teaching hospital after Queen Mary Hospital in Pok Fu Lam. The project is supported by the Ministry of Health and is seen as a groundbreaking move that will be at the forefront of the mainland's health care reform. HKU is in the final stages of working out details of the collaboration with the Shenzhen authorities. Talks will be held on the governance of the hospital, its financing and the appointment of senior management. Leong said the hospital would be governed by a board that will include members from both the university and Shenzhen hospitals. HKU has the authority to appoint the hospital chief and senior managers, including department heads. About 60 per cent of beds will be set aside for the public, with the rest for private patients.

Legal affairs and human rights
Test case for helper's bid to live in HK could prompt an interpretation of the Basic Law: The first of three cases claiming HK right of abode for overseas domestic helpers won't go to the Court of First Instance until next month. Yet already some interested parties are talking about the possibility of Beijing either stepping in or being asked to interpret the Basic Law - something that has happened only four times since the handover. Evangeline Banao Vallejos, a Filipina domestic helper who has worked in HK for 25 years, will argue in the Court of First Instance on August 22 that she should be given permanent residency. Article 24 of the Basic Law says foreigners with valid travel documents, who have been "ordinarily resident" in the city for seven years, and have taken HK as their place of permanent residence are eligible. However, section two of the Immigration Ordinance says "a person shall not be treated as ordinarily resident in HK ... while employed as a domestic helper who is from outside HK". Mark Daly, human rights lawyer and solicitor for Vallejos, said he would argue that the immigration provision was unconstitutional. "If they rule in favour of the maids, I will ask the HK government to seek an interpretation of the Basic Law from China," Joseph Law, chairman of the HK Employers of Domestic Helpers Association, said. "We cannot accommodate such a large influx into the population." Likewise, legislator Paul Tse feared that a rush of domestic helpers with permanent residency would drain welfare programmes and squeeze the labour market. "If the worst comes to the worst, I think we need to ask for an interpretation of the Basic Law," he said. HK's mini-constitution allows the National People's Congress to decide on how the Basic Law should be interpreted. The chief executive or Court of Final Appeal can also request an interpretation from the NPC. This would then be binding on the territory.

Legislative Council queries HK$50b aid fund: Lawmakers debating the government's proposed voluntary health insurance scheme expressed fears that the HK$50 billion fund will benefit insurers and private medical services rather than patients. The Legislative Council's health services panel began debating the plan after Secretary for Food and Health Dr York Chow tabled a report for implementing the government-regulated Health Protection Scheme by 2015. The government wants to use the HK$50 billion over 20 years to subsidise premiums for high-risk groups such as the elderly and people with pre-existing conditions. The scheme will also cover hospital services, offer guaranteed renewal and portability among different insurers. Several panel members expressed concern that taxpayers' money should not be used to subsidies private insurance. Public hospitals have been suffering from a severe manpower shortage, and some doctors worry that the opening of four new private hospitals, as the government has planned, would further draw manpower to the private sector. But Chow rejected these reservations, saying that the reforms can help control the prices and premiums by giving the government better regulation of the market.

Bag levy has made things worse, industry says: The plastic-bag levy introduced two years ago has not helped protect the environment - in fact, the overall use of plastic has risen because of it, according to a manufacturers' group. Although the use of conventional plastic bags had been on the decline, that of reusable bags, wrongly thought to have less plastic, had soared, said the HK Plastic Bags Manufacturers' Association. The association's vice-president Eric Lau said the increase in garbage bags was probably due to people no longer using plastic shopping bags for their trash.
Green law has limited impact: The Environmental Protection Department has rejected only 7 out of 196 environmental impact assessment EIA studies on major construction projects over the past 13 years, prompting critics to question the effectiveness of the law and call for reforms. Details of the seven rejected reports are scarce, but the government is clearly the biggest beneficiary of the low rejection rate, as government projects account for roughly two-thirds of the 196 cases. A spokesman for the Environment Protection Department said the EIA process was strictly governed by law, and stressed that the operation is objective and transparent.
Ban on idling engines delayed: A Legislative Council panel has accused environmental officials of "cheating" by postponing for three months the law meant to ban idling engines. Adding to lawmakers' anger, a one-month grace period will be granted to offenders after the law takes effect on December 15. Carlson Chan, the deputy director of environmental protection, told Legislative Council's environment affairs panel that the ban had been delayed out of consideration for drivers in the hot weather. The law, which has 20 exemptions, was passed in early March after 10 years of debate over the desirability of such a policy. Man Chi-sum, of Green Power, said the delay was a political consideration to avoid strong reaction from the transport industry but was at the expense of pedestrians, street vendors and workers

Culture and Education
'No immediate plans' to cut English Schools Foundation ESF's subsidy: The government has no intention to cut the subsidy of the English Schools Foundation ESF immediately, officials said. Undersecretary for Education Kenneth Chen gave an assurance that any decision on ESF would not be carried out hastily. His promise came days after the government submitted a paper to the lawmakers, suggesting a gradual shift in the ESF's funding towards "eventual self-financing". ESF subsequently warned that schooling fees would have to go up by at least 20 per cent if government funding was removed. Legislators said the suggestion had sparked "outrage" among some parents and demanded that the government clarify its stance.

Reciprocity 'never an issue in ties': Taiwan's mainland affairs minister, in HK to mark a milestone in the forging of official contacts, said reciprocity was not an issue in relations between the two sides. Dr Lai Shin-yuan, chairwoman of the Mainland Affairs Council, made the remarks as she unveiled the new nameplates for Taiwan's top office in the city. The former Chung Hwa Travel Service is now the Taipei Economic and Cultural Office. In a corresponding move, the HK government has announced plans to open the HK Economic, Trade and Cultural Office in Taiwan later this year, to be headed by a ranking civil servant. Lai, who was on the second visit to HK of her tenure, said she hoped HK could waive visa requirements for Taiwanese travellers. The name of Taiwan's top office in the city had long been a sensitive issue, because neither the former British colonial government nor the special administrative region government wanted to give official recognition to Taiwan.

This is a review of the Hong Kong media and does not necessarly represent the opinion of the Consulate General of Switzerland. The Consulate General of Switzerland in Hong Kong does not bear any responsibility for the topicality, correctness, completeness or quality of the information provided. Liability claims regarding damage caused by the use of any information provided, including any kind of information which might be incomplete or incorrect, will therefore be rejected.


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