Tung speech a real fizzer for investors - Brief Article

Business Asia, Oct 31, 1999

In a move which has disappointed investors, Hong Kong Chief Executive Tung Chee Hwa has failed to unveil new economic initiatives in his third annual state-of-the-city address, focusing instead on environmental issues.

Tung has vowed to clean up one of the world's most polluted cities, banning diesel taxis within six years and unveiling plans to turn congested districts into pedestrian zones.

He said the government would set aside HK$1.4 billion (US$180.6 million) for grants to pay for the conversion of diesel engines to cleaner-burning fuels and to install catalytic converters.

Analysts have criticised the lack of new initiatives.

Meryl Phang, an analyst at Standard & Poor's MMS International in Hong Kong, said there was no breakthrough in this policy address.

"The main emphasis in the next 10 years is technology, yet no solid measures were mentioned ... There is no specific sense of how Hong Kong should grow," she said.

Aaron Pong, a director at RBC Investment Management (Asia) Ltd in Hong Kong, said "this is typical of Tung".

"He tries to address issues on a skin-deep level and that's about as far as he's gone. People are disappointed," he said.

Investors had hoped the government would cut its housing production target of 85,000 apartments a year, a move which would have boosted private real estate developers. Their margins have slumped to 20 to 30 per cent after property prices fell by more than half in 1998.

Among Tung's proposals to cut pollution, diesel taxi imports will be banned starting in 2001 and then phased out gradually between 2003 and 2006 in favour of propane-fuelled vehicles.