Carrie Lam's policy speech to focus on housing in bid to regain support

Hong Kong leader Carrie Lam is under pressure to regain trust and quell unrest that has plunged the city into a political crisis. PHOTO: AGENCE FRANCE-PRESSE
Hong Kong leader Carrie Lam is under pressure to regain trust and quell unrest that has plunged the city into a political crisis. PHOTO: AGENCE FRANCE-PRESSE

Some economists also expect measures to support retail sector

HONG KONG • Hong Kong's embattled leader Carrie Lam will focus on land and housing initiatives in her annual Policy Address today, seeking to restore confidence in the city's future amid four months of sometimes violent anti-government protests.

The Beijing-backed Chief Executive is under immense pressure to regain trust and quell unrest that has plunged the Asian financial centre into its biggest political crisis in decades.

Protests over a now-withdrawn extradition Bill that would have allowed people to be sent to mainland China for trial in courts - viewed by many as opaque and politicised - have evolved into calls for greater democracy, and revived grievances over housing in one of the world's most expensive property markets.

Mrs Lam said yesterday that her annual address will focus on land and housing, although she did not elaborate. Some economists also expect measures to support the retail sector, which has been battered as the protests scared away tourists.

"It (policy support) will mainly come from increasing the housing stock. Housing seems to be the big issue at the moment," said Ms Carie Li, an economist at OCBC Wing Hang Bank. "There may also be relief for retailers, the tourism and catering sectors, which have been most affected."

Hong Kong's August retail sales were the worst on record as the protests at times forced stores and shopping malls to close, often during peak periods such as weekends and public holidays.

The retail, accommodation and food-service sectors employed about 16.3 per cent of workers based on 2018 statistics, according to Bank of America Merrill Lynch.

The protests also pose a grave challenge for Beijing, which has singled out Hong Kong developers for not doing enough to alleviate housing problems at a time when the former British colony is facing its first recession in a decade.

WHAT'S EXPECTED

It (policy support) will mainly come from increasing the housing stock... There may also be relief for retailers, the tourism and catering sectors, which have been most affected.

MS CARIE LI, an economist at OCBC Wing Hang Bank.

 
 
 

Property developer New World Development said last month that it would donate three million sq ft (278,710 sq m) of its farmland reserves for social housing, while Henderson Land said it would donate land in Yuen Long to build youth and other subsidised housing.

The Democratic Party and the pro-establishment Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) said the government should make use of a regulation to take back agricultural land from developers to build public housing.

"The housing shortage is getting more serious, especially after the government changed the public-to-private housing ratio to 70:30. The need for public housing is more eminent but the land supply remains the same," DAB lawmaker Lau Kwok Fan said.

Economists said the government, which has fiscal reserves of HK$1.16 trillion (S$203 billion), was also likely to roll out measures to support households as well as small and medium-sized enterprises, and promote Hong Kong on the international stage.

"Additional resources may be allocated to the Hong Kong Tourism Board for running overseas promotions, organising shopping festivals, and offering merchandise concessions and discount coupons in collaboration with the retail sector," Bank of America Merrill Lynch said in a report.

Mrs Lam's annual address comes as Hong Kong is also grappling with the impact of a prolonged US-China trade war and a broader economic slowdown that has seen a significant drop in exports. The protests have also unnerved investors.

Goldman Sachs estimated this month that Hong Kong may have lost as much as US$4 billion (S$5.5 billion) in deposits to rival Asian financial hub Singapore between June and August. While Goldman's report did not make any mention of the protests, the period during which the flows took place coincided with the demonstrations.

In August, the government unveiled a HK$19.1 billion package to support the slowing economy, including subsidies for the underprivileged and business enterprises, as well as somewhat higher salary tax rebates.

Local media said that Mrs Lam could deliver her annual speech in a pre-recorded message if protesters besieged the Legislative Council when it reconvenes today.

A version of this article appeared in the print edition of The Straits Times on October 16, 2019, with the headline 'Lam's policy speech to focus on housing in bid to regain support'. Print Edition | Subscribe