Promote Upward Social Mobility

Speech of the Hon KPChan, JP at the Legislative Council on 17 March 2010, Motion Debate On Increasing Dynamics for Upward Social Mobility
MR PRESIDENT: Today’s Motion on “Increasing dynamics for upward social mobility” proposed by fellow colleague Mrs Sophia Leung is particularly meaningful. I fully agree that we should endeavour to provide more room and opportunities in social mobility for the next generation.

Hong Kong today is a matured economy. Comparing to early years of growth, there are much less chances of job promotion nowadays for the younger generation of workers. Additionally, with rising pressure in workplace, they are having lots of frustration in both life and work. This in turn has given rise to various social problems. It is also one of the causes of social conflicts.

Last December, I proposed a motion on “Urging the Government to promote a new occupational culture campaign for work-life balance”. It is proposed with a particular intent of helping young workers that might lack upward mobility to relieve work pressure. It is hoped that the practice of new culture would help defuse their grievances.

Meanwhile, the new campaign would teach them how to build up proper values of life and to develop more diversified living. Also, it would help realize that there are more goals to pursue than work in life, like harmonized family, benevolent community and broader knowledge, etc.

In the Motion proper, it states that (quote) “apart from personal factors like abilities and attitudes etc, Government support is indispensable for upward social mobility” (unquote). I fully agree.

I have been working for private business for years. In recent years, I have noticed that more multinational enterprises are setting up regional headquarters in Singapore or even Shanghai and Beijing instead of Hong Kong. It is a cause for concern and unfavourable to the long-term development of the territory.

In the age of globalization and economic integration, metropolises are competing for regional headquarters of multinational enterprises. Many nations are pursuing “economics of the headquarters” for its wealth effects in five areas including taxation, industry-multiplier, consumptions, labour and employment, and social capital. Therefore, many advanced cities are focusing on such development.

It is essential for the Government to put more efforts in raising the competitiveness of Hong Kong in attracting more multinational enterprises to set up regional headquarters. Otherwise, Hong Kong would lose out not only in its appeal to new foreign investments but also in the retention of residing regional headquarters. If we were losing out at both fronts, our younger generation would find even less room for personal development.

Therefore, I propose an Amendment to the original Motion, asking the Government to provide tax concessions and other operational incentives as means of attracting large businesses around the world to choose Hong Kong as the location for regional headquarters. They would bring more job opportunities to the territory. Our younger generation would benefit also from broader career developments, more room for upward mobility and more international exposures.

Mr President, I would like to share with fellow Members the experiences of selected Mainland cities and Singapore in attracting foreign enterprises to set up regional headquarters. I find that they are aggressive in policy and appealing in terms. Take Shanghai as an example. Office of the Municipal People’s Government has issued a Notice on the practice of Regulations of Shanghai Municipality on Encouraging the Establishment of Regional Headquarters by Foreign Enterprises. This Notice spells out four key policies of the Municipal Government as encouragement.

Under these policies, regional headquarters in the form of an investment company that is newly incorporated in and relocated to Shanghai is eligible for a start-up subsidy of RMB5 million. It is payable by three annual installments: 40 percent in the first year of incorporation or relocation, and 30 percent each in subsequent years.

Upon incorporation and relocation, the regional headquarters is also eligible for office rental subsidy for three years. The subsidy is calculated on the standard rental of a 1,000-square-metre office at the unit rate of RMB8 per square metre per day. The amount payable each year is 30 percent of the standard rental. Companies that purchase offices instead are also eligible, and the same standard and terms also apply.

Moreover, if the aggregate turnover of regional headquarters of such multinational company reaches RMB1 billion after establishment, the Municipal Government will offer a one-off cash incentive of RMB10 million. If the aggregate turnover reaches RMB5 billion, the Government will offer another one-off incentive of RMB50 million. Again, these incentives are payable by three annual installments of 40 percent, 30 percent and 30 percent respectively.Similar incentives are also provided by Beijing to attract multinational enterprises to set up regional headquarters at the national Capital.

Singapore, Hong Kong’s main rival, is even more explicit in positioning for the pursuit of “economics of the headquarters”. In attracting more multinationals to come and set up headquarters, the Singaporean Government provides different incentives to different headquarters of different businesses, such as very attractive tax concessions.

“Regional headquarters” of multinational enterprises established in Singapore are eligible for the concessionary tax rate of 15 percent for the first five years already. If they become “international headquarters” instead, the concessionary rate will be even as low as 10 percent, much less than Hong Kong’s 16.5 percent.

Latest figures released by InvestHK show that there were 1,252 regional headquarters located in Hong Kong as at the middle of last year (2009), a decrease of 3.5 percent over the year before (2007).

An old Chinese proverb says, “One who does not progress will regress”. I ask the Government to make renewed and substantial efforts in pursuing “economics of the headquarters” as well as sustaining and strengthening the role of Hong Kong as an international financial centre. They will provide more room and opportunities of upward mobility to the benefit of our younger generation.

On the other hand, I would like to say a few words in response to the Amendment proposed by the Hon Wong Sing-chi related to promoting universal suffrage and scrapping functional constituencies.

Mr President, Functional Constituencies aims at allowing voices of different sectors and professions to be heard in this Council, thereby providing the Government, the Legislature and the people with alternative views from different perspectives including professionals.

In my view, Functional Constituencies have their merits in concept and significance in practice. It also serves the purpose of achieving balanced representation in the Legislature.

Actually, Members representing Functional Constituencies in this Council, irrespective of their affiliation to pan-democrats or pro-establishment, are mostly dedicated to serve the people of Hong Kong. One should not discredit Functional Constituencies simply on personal difference in political affiliation. Instead, we should reflect on the underlying cause for their existence and ensure that voices of professionals, businessmen and indeed all sectors of society are duly represented in the Legislature.

Having said that, I do not dispute some comments on their election process and do not disagree that there is room for improvement. For instance, the electorate might be expanded progressively to resemble the mode of universal suffrage.

Also, I am aware of proposals in other Amendments to delete from the original Motion the following phrase: “… thereby avoiding the psychology of reliance …”. The original Motion reads: “… to encourage young people in endeavouring, thereby avoiding the psychology of reliance …”

I fully appreciate and share the unrelenting confidence of fellow Members in our next generation. They have faith in independence and self-discipline of our young people. Yet, apart from encouragement and supports, we should also give them timely reminders and share with them our personal experiences. No matter in work or social life, one has to count on oneself rather than help from others. A psychology of dependence is unrealistic.

Mr President, views expressed by fellow Members in this debate are comprehensive. I wish that the Government would take them seriously and help our young people continue moving upward.

With these observations, I conclude my remarks.

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