Hong Kong warns of sanctions on Philippines over hostage tragedy

HONG KONG (REUTERS) - Hong Kong threatened on Tuesday to impose unspecified economic sanctions on the Philippines if substantial progress was not made within a month in talks demanding Manila's apology and compensation for a hostage tragedy three years ago.

Hong Kong and the Philippines have close economic ties, from tourism to more than 100,000 Filipino domestic helpers working in the city, but tension continues over a 2010 incident in which eight Hong Kong tourists were killed in Manila by a sacked police officer.

Speaking ahead of a debate by lawmakers calling for sanctions against the Philippines, Hong Kong leader Leung Chun-ying urged the Philippine government for a "concrete and timely response".

"I declare that unless we obtain steady progress within a month, the (Hong Kong) government will take necessary sanctions action," said Leung.

Leung did not specify what the sanctions might be.

Hong Kong has sought an apology and compensation to the victims' families.

Philippine foreign ministry spokesman Raul Hernandez said Manila hoped the hostage row would not be linked to visa-free arrangements for Filipinos travelling to Hong Kong.

"We look forward to the continued healthy exchange of travellers from both sides," he said.

Another possibility could be a freeze on domestic helpers, similar to a move by Taiwan this year following the fatal shooting of a Taiwan fisherman by the Philippine coastguard.

The Taiwan sanctions were dropped in August, however, after Manila gave a formal apology for the fisherman's death.

Leung, who took office last July and has since seen his ratings plummet over contentious policies and scandals engulfing his ruling team, was criticised last month for not taking a stronger stance with Manila.

Philippine President Benigno Aquino has so far ruled out apologising for the tragedy or a day-long rescue operation that left several injured besides the dead tourists.

Manila could not apologise for the crimes of one person, he reportedly said at the time.

Manila City Councillor Bernardito Ang, a representative of Manila mayor Joseph Estrada, was also recently in Hong Kong seeking to defuse the row.

The tragedy occurred in 2010 when a coachload of Hong Kong tourists in Manila were taken hostage by disgruntled former policeman Rolando Mendoza who had just been fired.

Following a prolonged standoff and negotiations, watched on live television by thousands in Hong Kong, the gunman opened fire after what the victims' families maintain was a bungled rescue effort.