LegCo Panel on Manpower
Job Opportunities created by
Proposals in the 1999-2000 Budget

Introduction

The Budget speech delivered by the Financial Secretary on 3 March 1999 proposed a number of measures which would help to create jobs and boost the economy. This paper outlines the major job creation and tax concession proposals, summarises the new employment opportunities they bring as well as the positive impact they have on the general economy.

2. Some of the proposals may require funding approval from the Finance Committee and others may require legislative amendments. The Administration will seek the necessary approval as appropriate.

Job creation proposals

3. Many of the proposals announced in the Budget speech would lead to the creation of new jobs in the local labour market. The major ones, the Cyberport development and the package of measures to reduce ship registration fees, would give rise to some 32,000 new jobs in the near to medium term. The others, such as the Disney project now under negotiations, the proposals to revive tourism, the initiative to review the policies on attracting investment etc., have tremendous potential in bringing about further substantial employment opportunities.

1. The Cyberport Development

   To meet the challenges of the 21st Century, Hong Kong must adapt to the new forces of the Information Age. Our sophisticated telecommunications network, strong intellectual property rights protection regime, and the progress we have made in making electronic transactions secure are all our strengths in developing information services.

   The Government proposes to develop a *Cyberport* in Hong Kong in Telegraph Bay, Pok Fu Lam. The Cyberport, $13 billion joint government and private sector development, will be an ultra-modern intelligent building complex, equipped with state-of-the-art telecommunication and information backbone to meet the needs of leading multi-national and local information services companies. In particular, it will provide a range of shared facilities for tenants, including a multi-media based network, telecommunication links, media laboratory, cyber library and other information technology and services support facilities. It will provide the essential infrastructure for the formation of a strategic cluster of information services companies which apply the latest information technology in the multi-media, and content creation fields. The products Cyberport companies create will in turn support businesses and industries ranging from financial services, through trading, advertising and entertainment to communications.

   The Cyberport development has already attracted eight multi-national companies to sign letters of intent to become its anchor tenants. It will be able to accommodate over 30 large to medium sized companies and about 100 smaller companies in the multi-media and content creation fields, from film production, 3-D graphics and animation, to development of software applications and provision of services.

   The design feasibility study of the Cyberport project is currently in process. Construction is planned to commence in 2000, and will be completed in stages from 2002 to 2007.

   The Cyberport is expected to bring tremendous economic benefits. It will generate some 16,000 jobs -

   • some 12,000 jobs would be employed by the Cyberport and its companies. These jobs will be in the information and technology related fields, and other supporting services; and

   • some 4,000 jobs in the construction industry would be created while the Cyberport is being built during 2000 and mid-2007. The demand for construction workers would reach its peak in 2002-03.

2. Reduction of ship registration fees to promote the Hong Kong shipping industry

   The shipping industry accounts for 1.7 per cent of Hong Kong*s GDP and employs over 50,000 people. At present, the total tonnage of ships registered in Hong Kong amounts to over 6.2 million tons. To strengthen Hong Kong*s status as an international shipping centre and enhance our regional competitiveness, it is proposed in the Budget that merchant shipping registration and related fees should be reduced substantially. The maximum first registration fees will be reduced from $100,000 to $15,000. The maximum level of annual tonnage charges will be reduced from $180,000 to $100,000. The 21 fee items for other types of registration-related services, such as changing the registered name or tonnage of a ship and registering a change in address of a ship owner, will be abolished or substantially reduced.

   With the abolition or reduction of the merchant shipping registration and related fees, more local, Mainland and overseas shipping companies are expected to come to Hong Kong to register their ships and set up companies to manage their ships, and the tonnage of Hong Kong registered ships is expected to increase from the current level of $6.2 million tons to $10 million tons in three years* time.

   These measures will help promote Hong Kong as an international shipping centre and is estimated to create 15,800 job opportunities in the following areas in three years -

   • 6,000 jobs in the core shipping industry, including sailors, captains, ship management supporting staff, ship agents, etc.;

   • 2,800 jobs in the shipping-related industries, including in industries related to ship maintenance, supply of equipment, transportation, etc.; and

   • 7,000 jobs in other supporting services, including banking, finance, insurance, law and shipping brokerage, communications, etc.

3. Walt Disney Theme Park

   Intensive negotiations are now in progress between the Government and the Walt Disney Company over a possible development of a Disney theme park. If the outcome of the negotiations is positive, it is expected that the project would commence in 2000 to bring the first phase of the development to completion by the middle of the decade.

   The development of a Disney theme park in Hong Kong would breathe new life into our tourism industry and bring substantial economic benefits. It will also create thousands of new jobs within the Park itself. Many of these new jobs would be well suited to young people just starting work, or the middle-aged left unemployed by economic restructuring.

   The development will also facilitate job creation in a host of tourism-related sectors including the hotel, aviation, retail and restaurant sectors, etc..

4. Others

   There are others proposals in the Budget which will lead to the creation of new job opportunities in the immediate to medium term, such as the various initiatives to revive tourism, measures to develop the local debt market, tax proposals to promote the local financial markets, reform of the securities and futures markets, reviewing the strategy and policies for attracting foreign investment into Hong Kong, simplifying the recruitment procedures for non civil service staff, increasing inspections in the workplace to combat illegal employment etc..

Special relief measures

4. The Budget also provides immediate relief to the community through a number of tax concessions and other measures to help the business.

5. The one-off special concessions proposed include -

• an immediate 10% refund of the 1997-98 final assessments for salaries tax, profits tax and property tax at a cost of $8.5 billion;

• a 50% reduction in the rates payable in the July to September quarter saving ratepayers $1.8 billion;

• an extension for a further year of the reduction in diesel duty from $2.89 to $2.00 first introduced last June; and

• an extension of the freeze on government fees and charges for a further six months.

6. The measures to help business include -

• an option to take out a three-year Business Registration Certificate at a cost of $5,200 compared to the present annual renewal cost of $2,000;

• a halving of the declaration charge for re-exports from 0.05% to 0.025%;

• a substantial reduction in merchant shipping registration and related fees;

• the exemption from air passenger departure tax of transit passengers departing on the same day;

• the exemption from estate duty of the proceeds of life insurance policies paid in Hong Kong; and

• concessions to assist the development of financial markets.

7. The few revenue raising measures were also carefully selected to avoid possible adverse impact on businesses and individuals.

Manpower Forecasting, training and retraining

8. The Government will continue to strengthen its efforts in manpower forecasting, training and retraining, so as to ensure that Hong Kong has a well-trained workforce equipped to meet the demands of a dynamic economy, and to seize the emerging employment opportunities.

9. We must have a clear picture of the manpower requirements of key industries and identify potential gaps in the skills of the local workforce. To achieve this, the Government is undertaking a study of the best overseas practices in manpower forecasting and will consider a manpower forecasting model best suited to Hong Kong for the next ten years. The study will be completed before the end of this year. We are also carrying out consultancies to study the manpower requirements of the major industries in Hong Kong. The one on tourism has just been completed and its results are being examined. A manpower study on the IT industry is currently being carried out. It will take into account the needs of the recently announced Cyberport development.

10. The Government will continue to invest in training and retraining in the coming financial year. The Employees Retraining Board will spend a total of $430 million on retraining in 1999-2000, which represents an increase of 16% over the budget for 1998-99. The number of retraining places it provides will reach 95,000, which represents an increase of 23% over the number of places in 1998-99. The Vocational Training Council has made provision of $560 million for providing vocational training courses in 1999-2000, representing an increase of 4.3%, and will provide 60,000 training places.

Education and Manpower Bureau
March 1999