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26/05/2011

RECENTLY some who are likely to stand for Chief Executive (CE) have appeared in public, made comments and given media interviews. They have invariably focused on the property market and such questions as whether the Home Ownership Scheme should be revived, and their views on such matters have made the headlines. Now property prices are rising uncontrollably and homes are unaffordable, it is totally natural for the public and the media to focus on such issues.
 
The government's land policy has everything to do with Hong Kong's economic and social development.
 
Since Donald Tsang took over as CE, the government has left it to the market (or developers) to dictate its land policy. For example, no land auctions were triggered in a 21-month period, but the government did not think that mattered. That is why new flats have been in extremely short supply. It is generally agreed that it is thanks to the Tsang administration's misguided land policy that property prices have in recent years soared beyond what most citizens can afford.
 
Property prices have reached and will reach new highs. There is now a property bubble. If the laws of the market hold, it is only a matter of time before it bursts. When it does, society will against taste the bitter fruit of the government's wrong land policy. What concrete policy measures would the next CE take to deal with the dangerous situation in the property market he would inherit from Donald Tsang and minimise the economic and social impact the burst of the property bubble might have on the SAR? This question would put his ability to the test.
 
Would his administration revive the HOS? By how much would it increase supply? How would it look at mainlanders' property purchases here? None of these questions should any CE aspirant evade. They must answer them clearly and definitely.
 
The next CE must not only defuse the property time bomb but also examine the relationship between the government's land policy and Hong Kong's overall development from the perspective of strategy. All land-related aspects (such as the government's revenue and the symbiosis between the property industry and the financial industry) point to the importance of the government's land policy.
 
That will remain the case. However, since Hong Kong was under British rule, the government has relied heavily on land auctions for its revenue. It "hesitates to pelt a rat for fear of smashing the dishes beside it". That is the underlying reason why it does little when its land policy's adverse effects sap businesses' vitality and make it hard for people to earn their living. Because land premia are high, rents are so high that many small and medium enterprises have slim chance of survival. Social mobility has been low, and society as a whole has moved downwards. Such symptoms are considered consequent upon the amassment of wealth in the property sector. Many social phenomena (the wide rich-poor gap, people's hatred for big business and the rich, social antagonism and social disharmony) are attributed to policies favourable to developers.
 
How can the government frame its land policy so that it will positively foster Hong Kong's economic development and social progress? This is a big question the next CE will be faced with. The property sector is of great importance. The government must think hard before it should try to bring about any changes in it. It must not make any rash move. In our view, it should begin by improving Hong Kong's economic "constitution" (fostering its economic restructuring and developing new industries in the SAR and creating growth areas). It should gradually decrease the economy's reliance on the property sector. We believe that, if the government moves in the right direction, makes meticulous plans and vigorously carries them out, it is possible to do away with the dominance of Hong Kong's property sector in its economy.

SOURCE: MINGPAO



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