Generation 40s – 四十世代

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Despite its challenges, the European Union remains a key partner for Hong Kong

South China Morning Post
Comment›Insight & Opinion
2016-05-10

Vincent Piket

Vincent Piket outlines the key tasks for the union, 59 years after its birth, and says a reforming Europe will further cement its relations with Hong Kong – and wider China – in diverse fields of cooperation

On May 9, we celebrate Europe Day, the EU’s “national day”. We consider 1957, the year when our founding Treaty of Rome was signed, the European Union’s year of birth. So we are now 59. The past year was a tough one, with EU crisis summits almost every month. While we have booked considerable results, some major challenges remain for the coming year.

What are those challenges? First, our economy. Growth in gross domestic product is projected to be a very decent 1.6 per cent in both 2016 and 2017. Unemployment is down to 10.2 per cent, its lowest level since 2010, although still too high. Other macro indicators are likewise moving in the right direction, including budget deficits, and government debt levels. Investment in the real economy is picking up from abroad and from small and medium-sized enterprises.

These good results are thanks to our structural reforms, fiscal discipline and financial sector measures over the past five years. We can be proud of this. Yet, we know that we benefitted from the economic tailwinds of low energy prices and the cheap euro. For 2016 and after, there will instead be headwinds coming from the slowing global economy, including China. More structural reforms are needed in our labour markets, pension systems and social safety nets. Furthermore, we need to complete the liberalisation of the EU’s internal market, especially in key sectors like energy and the digital economy.

Those are complex reforms. Hence, it is clear that our further economic rebound will be marked by more political bumps and potholes, but the reform progress achieved up to now should help sustain the momentum to overcome them.

Our second key challenge is, without doubt, the refugee crisis [3]. Let me first make it clear that the EU will stay true to its values and will give shelter to refugees whose lives are at risk in war-torn regions. But the massive flows of refugees last year and early this year overwhelmed our processing mechanisms, under which the country of first entry has to process the asylum requests. The agreement reached with Turkey shows that workable solutions can be found to ease the migrant pressures while giving shelter to those with a genuine need.
Europe will have to debate how to respond to the needs of its citizens

We now have to go further by reforming our asylum system to relieve member states on our external border when an excessive flow of refugees lands on their shores. And we need to find an equitable way to relocate refugees among member states. That debate will happen over the coming weeks.

The EU’s third key challenge is not climate action; we are on track to cutting carbon dioxide emissions by 40 per cent by 2030 compared to 1990. Nor is it external trade; the EU remained the world’s largest and most open trading bloc despite our economic slowdown. Instead, the EU’s challenge is to reconnect with its 508 million citizens. Support for the EU among its citizens is low, ranging from 30-60 per cent depending on the country, and eurosceptic parties have been voted into the parliaments of many member states. The UK’s EU referendum is a case in itself. Europe will have to debate how to respond to the needs of its citizens, about what the EU’s responsibilities are and how these should be accomplished.

What does this mean for relations with Hong Kong? A lot. Because a dynamic EU is a vital partner for Hong Kong. Naturally, the economic crisis caused a dip in our bilateral trade, with lower EU imports. But we have overcome that, and 2015 bilateral trade between Hong Kong and the EU increased to the all-time high of €71 billion (HK$629 billion), covering both goods and services. We remained Hong Kong’s second largest trade partner, after only mainland China, and Hong Kong ranks 15th on the EU’s trade partners list, ahead of much larger economies. In 2015, the number of EU firms in Hong Kong rose to a new high of 2,030, a quarter of the total of mainland and foreign firms based here. This is testimony to Hong Kong’s continuing appeal as a business hub in Asia. The number of EU temporary residents in Hong Kong continues to rise.

Hong Kong firms and citizens have a myriad of interests in Europe: for business, education or leisure. At the government-to-government level, we are working on a dynamic agenda of trade facilitation, financial services, customs cooperation, tax cooperation, intellectual property rights, research and innovation, and the environment. Moreover, we will explore the scope for launching negotiations for a bilateral investment agreement, similar to the one being negotiated between the EU and mainland China.

The relations between EU and Hong Kong are wide-ranging and diverse, and they are based on interconnectedness and interdependence. They are embedded in the EU’s overall relations with China, which saw their 40th anniversary last year. But within EU-China relations, EU-Hong Kong ties have a distinct identity, thanks to the unique “one country, two systems” principle. In our recent report on Hong Kong [6], we commented on the functioning of “one country, two systems” in 2015. The report notes that last year had challenges, on account of the failed electoral reform and of the case of the five booksellers who disappeared. But aside from these two aspects, we note that Hong Kong continued its strong record on judicial independence, the rule of law, high anti-corruption standards and freedom of speech.

The EU is confident about its relations with Hong Kong. We are confident we can resolve the challenges that face the EU and that our relations can continue to rest on the “one country, two systems” principle.

As is true for the EU, Hong Kong’s assets and strengths need to be nurtured, protected and developed, through cooperation and compromise among all stakeholders. Having lived and worked in Hong Kong for four years now, I am convinced that the common interest exists to make that task a success.

Vincent Piket is head of the European Union Office to Hong Kong and Macau


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Why electric cars aren’t the best route to truly sustainable transport in Hong Kong

South China Morning Post
Comment›Insight & Opinion
2016-05-05

Evan Auyang

Evan Auyang says a green transport policy must include steps to curb the huge growth in vehicle numbers, adopt more technology, and promote walking and cycling

Hail the adoption of electric cars in Hong Kong! Already a bestseller in the city, electric car maker Tesla recently announced it will soon launch a more affordable model. Crowds lined up at Tesla’s three showrooms across Hong Kong, even though the car won’t be ready until 2017. “It is very important to accelerate the transition to sustainable transport,” declared Telsa’s chief executive officer Elon Musk.

Is Hong Kong finally moving towards a more sustainable transport system? The government is certainly doing its share to promote the adoption of electric vehicles, having built more than 1,000 charging points across the city and offering tax incentives for the purchase of the cars. Indeed, Financial Secretary John Tsang Chun-wah personally leads the Steering Committee on the Promotion of Electric Vehicles, which includes six other secretaries (or their representatives), including the environment, transport and development secretaries, as well as business leaders in the sector. This indicates the importance the government places on the issue.

And let’s not forget, Hong Kong is No 1 in the world in terms of adoption of public transport. Ninety per cent of motorised journeys are made on public transport such as railways, buses and minibuses. This, coupled with the continued building of railways and the introduction of electric buses, plus increasing adoption of private electric cars, must mean Hong Kong is heading towards having the most sustainable transport system in the world, right? Not quite.

Hong Kong lags significantly behind the rest of the world in at least three areas of sustainable transport policymaking: road space and congestion management; adoption of technology; and embracing cycling and walking as a popular means of longer-distance transport.

First, Hong Kong does not have a good vision of road space usage. This is clear from the worsening congestion on our roads, which is spreading beyond the traditionally busy areas such as Central. Now, traffic jams are common in Kowloon East (supposedly the emerging second central business district), Sha Tin, Tseung Kwan O, Tuen Mun and even Yuen Long.

The cause is the unprecedented rise in the number of vehicles on the roads in recent years, particularly private cars. From 2006 to 2016, the number of private cars has increased by 46 per cent, from 390,000 to 570,000, while the population has risen by less than 7 per cent. This alone accounts for 95 per cent of the increase in the total number of vehicles over the past 10 years. Hong Kong’s road building averages less than 1 per cent (in kilometre terms) per year. This means the number of vehicles is growing much faster than our roads can accommodate.

The impact of uncontrolled vehicle growth cannot be underestimated. As congestion mounts, the road-based public transport system (that is, buses and minibuses), which carries 50 per cent of public transport users, deteriorates in performance. Indeed, average bus speeds have fallen significantly in recent years. Because railways cannot reach all areas of Hong Kong and are generally deemed uncomfortable during peak hours, this would spur the increasing adoption of private cars. A vicious cycle is then produced, of even more vehicles on the road and even more desire to own a car for comfort and convenience. In fact, this is precisely what has been happening in the past few years.

Roads are like the blood vessels of a city – when they clog, economic activity slows. It’s possible to think of a handful of cities that have never lived up to their potential, such as Beijing, Bangkok and Mumbai, as the best international talent does not wish to live in severely congested cities.

Second, Hong Kong has been slow to adopt many sustainable transport and “smart city” practices. While it is truly world-class in its ability to build infrastructure, the city is not at the forefront in the adoption of IT-enabled demand-management tools. For example, many cities have heavily invested in smart information technology systems to control traffic flows, with major roads managed by sensors and cameras.

Illegally parked cars are ticketed from traffic control rooms rather than relying on physical enforcement. In Hong Kong, illegal parking takes up 60 per cent of traffic police time.

In congestion-conscious cities like London, smart systems have been implemented to automatically manage traffic flows along major corridors on a real-time basis. Where traffic flows are determined to be less than optimal, algorithms automatically adjust the phases of traffic signals.

Singapore has already established working groups to look into driverless vehicles. By utilising the research and development know-how of the private sector, it is on the cusp of launching a pilot driverless bus service as well as on-demand private driverless car services and shuttles. For Hong Kong to be a truly world-class city, we need to get to the cutting edge of technological adoption, and research and development.

Third, Hong Kong has yet to embrace the truly green options of walking and cycling. Globally, international cities have implemented new policies to promote these non-motorised forms of transport. Cities are now increasingly aware that walking is actually the most efficient and greenest way to travel short distances and, as a result, have invested heavily in widening pavements and closing off vehicle lanes to create green space.

Pedestrianisation around New York’s Times Square has led to a dramatic fall in motorised traffic, while also cleaning up the air and allowing more tourists to take a pleasant stroll and shop in the area. Politically, this was very difficult initially, but citizens embraced the idea soon after it was implemented.

We must recognise that true sustainable transport goes well beyond just applauding the increased adoption of private electric vehicles and upgrading the city’s bus fleet and polluting diesel trucks. A more holistic approach is needed to imagine, then create, greener urban spaces for our future. It takes planning and execution. Moreover, it takes vision, knowledge and political courage to generate the right discussions to enable even small steps to be taken.

Evan Auyang is a board director of the independent think tank Civic Exchange


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Hong Kong taxpayers have a right to know all the details about Polytechnic University’s secretive offshore ventures

South China Morning Post
Comment›Insight & Opinion
2016-05-03

Stuart Lau

Stuart Lau says management at the publicly funded university, which had already come under fire previously for its financial dealings, must come clean about its two joint ventures with BVI registrations, following the Panama Papers revelations

Transparency is a concern for all public institutions.“There is more info.” A few weeks ago, within an hour of hearing those four words, I found myself sitting across from two people who were about to divulge reams of data that would link the explosive “Panama Papers” to the rich and powerful in Hong Kong.

Before the meeting ended, I had thousands of files transferred to a memory stick, the best part of which was to end up in the South China Morning Post.

The two sources connected to the International Consortium of Investigative Journalists and I sat that morning drinking coffee at a top-floor restaurant overlooking Victoria Harbour. As I surveyed the citadels of commerce that define our city’s iconic skyline, I wondered what kind of people behind those gleaming windows in this affluent city would try so hard to hide in far-flung tax havens.

Were they some businessmen with money to hide or even a few politicians, perhaps? The revelation, however, was more startling.

The so-called Panama Papers are leaked documents detailing the secretive financial dealing of the world’s rich and powerful. Hong Kong’s Polytechnic University, as the documents showed, was found to be the ultimate owner of two firms registered in the British Virgin Islands. The evidence: a signature of Secretary for Innovation and Technology Nicholas Yang Wei-hsiung, who was PolyU’s executive vice-president when the firms were set up in 2012 and 2013.
Taxpayers have a right to know what their tax money is being spent on, and where

PolyU was advised in 2010 to close down its tangled web of companies that was not just losing money, but was slipping past the oversight of management and risked all manner of issues involving conflict of interest.

Yet, the publicly funded institution went on to set up two joint ventures with BVI registrations – known for their opacity – adding to the absurdity of the situation it pledged to clean up.

PolyU explained that the move was a “last alternative” to carry out the “exit strategy” – in an oblique reference presumably to the business partners’ unwillingness to wind up the companies so that they could continue to make use of the university’s brand name for their own commercial purposes.

Transparency is a concern for all public institutions. Taxpayers have a right to know what their tax money is being spent on, and where. Even if PolyU insisted it did not inject a cent of its public funding into these BVI firms, legitimate questions are being asked about whether it is appropriate at all for it to venture into tax havens and deal with the kind of business partners it has taken on.

PolyU has indicated that it has nothing to hide – indeed, no one is alleging illegal wrongdoing. But the way it has conducted itself has been less than reassuring.

While the University of Hong Kong and the Chinese University were later found to have also opened BVI firms, they at least disclosed their existence one way or another – as opposed to PolyU, which upheld complete secrecy. Its defence that its accounting mechanism complied with professional standards – by meeting just the bare minimum requirements – has been criticised as complacency.

The public relations teams of the different institutions involved also exhibited different attitudes. An HKU public relations officer called the Panama Papers reports a “timely reminder”. “I think it’s good for us in the sense that we are now aware of the problem and the need to clear up those offshore companies that are already dormant,” she told me. Her PolyU counterpart, on the other hand, reminded me to produce “balanced” reporting, and issued its response close to our printing deadline.

Her former boss was even less subtle. When approached by a fellow Post reporter about the issue, Yang declined outright to engage, questioning why he should face media questions when PolyU had already given a statement.

His press secretary was similarly blunt. After saying three times that it was a matter for PolyU rather than the bureau, she simply hung up the phone.

Shutting out the media is not the answer to fair questions. Why would Yang, the one in charge of the BVI deals, choose not to report them in PolyU’s annual reports? Is there no obligation for universities to disclose secret dealings of this sort to the University Grants Committee? Is the Education Bureau at all happy that it was uninformed about these offshore moves intended not just for ease of business, but for potential tax avoidance?

If things that happened before one comes to office are no public matter, Britain’s Prime Minister David Cameron wouldn’t have been busy addressing questions about an offshore fund created by his late father and sold before he walked into 10 Downing Street.

“There is more info” – it’s now the turn of the universities, and Yang, to reveal it.

Stuart Lau is a political reporter and the only journalist in the English-language media in Hong Kong to be given access to the “Panama Papers” database of the International Consortium of Investigative Journalists


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How a simple change could keep fringe candidates out of Hong Kong’s legislature, and ease political tensions

South China Morning Post
Comment›Insight & Opinion
2016-04-19

Gary Cheung

Gary Cheung says the ‘largest-remaining’ method, which allocates seats in our election system, needs revamping to avoid an increasingly debilitating division in the Legislative Council

In his 1970 best-selling book, Future Shock, American futurist Alvin Toffler argued that our problem in the future may not be the lack of choice but rather one of “having too many choices”. This is certainly the case for Hong Kong voters in September’s Legislative Council election.

Demosisto, a new youth-led party, plans to field two lists of candidates while a coalition of six post-Occupy groups is also considering fielding four lists in all geographical constituencies except New Territories East. Then there are six localists – including Edward Leung Tin-kei, who clinched 15.4 per cent of the vote in the New Territories East by-election in February – who plan to vie for seats.

There were a record 67 lists of candidates scrambling for 35 directly elected seats in the 2012 election. That record is almost certain to be broken this year.

In 1997, the Preparatory Committee, the Beijing-appointed body which oversaw Hong Kong’s handover, ruled out the single-seat, single-vote system under which the Democratic Party won 12 out of 20 directly elected seats in the 1995 Legco election.

The “first past the post” system was replaced by the proportional representation system. A candidate’s chance of winning a seat is based on a “quota” – obtained by dividing the number of valid votes cast for that constituency by the number of available seats. For example, a party which received 36,000 votes will get one seat straight away if the quota is 30,000. The top candidate on its list will have won.

The remaining seats are then allocated according to the “largest remainder method”. Parties are ranked according to their remaining votes (6,000 for the party cited in the example above). The seats will go to the parties with the highest number of remaining votes.

This system makes it difficult for more than one candidate from a list to win, particularly one from a major party. Thus, like-minded candidates are tempted to run on separate slates to maximise their chances of winning.

While the current system succeeds in preventing a monopoly of seats for the major parties, it has produced a fragmented legislature and nurtured radical voices. Having a small but fervent support base is enough to win a seat, and a party has little incentive to appeal to mainstream public opinion. Worse, the system discourages parties from crossing the political aisle to win over voters outside its pool of hardcore supporters. It is very likely that a candidate will win a seat in New Territories West or New Territories East in September, where there are nine seats up for grabs in each, with a vote share of below 5 per cent.

It’s time to review the current electoral system. Even if it is politically impractical to abolish the proportional representation system, we should improve it.

One option is to replace the largest-remainder method with the D’Hondt method adopted in many European countries.

Under this system, the number of votes taken by each list are divided first by 1, then 2, then 3, up to the number of seats available. If there are nine seats up for grabs, each party’s votes will be divided by 1, 2, 3, 4, 5, 6, 7, 8, and 9. The nine highest entries will win the seats.

This system increases the winning chances of the second-placed candidate in a list. In the 2012 election, none of the 67 slates in direct elections was able to win two seats. If this method had been in place, four lists would have won two seats in 2012, and one list would have won three seats, thus helping to mitigate the fragmentation of the legislature.

But the key question is: are political groups, which benefit from the current system in varying degrees, willing to step outside their comfort zone?

Gary Cheung is the Post’s political editor