Bloomberg News

Hong Kong’s Leung Retains John Tsang as Finance Secretary

June 28, 2012

Hong Kong Chief Executive-elect Leung Chun-ying retained John Tsang as financial secretary in his government, which takes office on July 1, as he seeks to ensure a stable transition amid global economic uncertainty.

“In the coming years, our globalized economy will be undoubtedly clouded by uncertainties and we in Hong Kong face unprecedented challenges,” Tsang said at a press conference. “I shall abide by the principle of prudent financial management.”

Carrie Lam, currently in charge of land policy, will be promoted to chief secretary, the second-highest position in the city’s government. Anthony Cheung, a government adviser who chairs a committee on subsidized homes, will take over housing policy, according to a statement on the government website.

Leung’s new government needs to provide more public housing, as property prices soar, and alleviate poverty in a city whose wealth gap is at the widest level in 40 years. The new leader’s inauguration on the 15th anniversary of Hong Kong’s handover to China may be marred by protests, with activists threatening to take to the streets in a march against government policies.

“C.Y. and Beijing need highly credible and experienced officials to help boost the chief executive’s popularity,” said Dixon Sing, a Hong Kong University of Science and Technology political scientist. The appointments of Lam and Tsang will ensure the city is in a position to deal with unexpected crises, whether they are “economic or political,” he said.

Key Issues

Tsang said he would focus on the key issues of housing and land in his next term.

“I shall continue to refine our strategies on land supply to help carry out the chief executive’s platform,” he said. “I shall spare no effort to maintain a stable and health property market.”

Tsang, 61, a bureaucrat for 30 years who took over as financial secretary in 2007, presided over an 80 percent increase in home prices during his term. He introduced a special 15 percent tax on property transactions in November 2010 to curb speculation.

Hong Kong’s property prices rose this month to the highest level since the previous peak in 1997, according to data compiled by the Centaline Property Agency.

The current government said it will supply enough land to build 30,000 private homes this fiscal year. About 75,000 public housing units are scheduled to be built in the next five years.

Cash Handouts

Tsang gave away HK$62.2 billion ($8 billion) in cash handouts of HK$6,000 to each Hong Kong resident last year in a last-minute reversal on the government.

Hong Kong’s Gini coefficient, an income inequality measure, gained to 0.537 in 2011, from 0.525 in 2001, the Census and Statistics Department said last week. The gap is wider than in Canada, the U.K., the U.S., Australia and Singapore, the department said.

The city’s divide between rich and poor is at its worst level since it was first recorded in 1971, when it was 0.43.

The Gini coefficient index ranges from zero to one, with a reading of zero meaning income equality, and one indicating complete inequality. Singapore’s coefficient rose to 0.482 in 2011 from 0.456 in 2001, according to the report.

Lam, 55, will become the second woman to hold the city’s second most senior political appointment after Anson Chan, who was chief secretary before and after the handover from Britain in 1997.

Lam is at present in charge of the city’s land policy and allowed the demolition of historic architecture in the city’s prime waterfront location to make way for reclamation in 2007.

Revamp Blocked

Leung’s plan to revamp the government was blocked by lawmakers this month when they voted down a proposal to fast- track approval of his proposed government reorganization. The chief executive-elect had sought to increase the size of the 15-member cabinet by adding four ministers, including two deputies to both the chief secretary and financial secretary.

“We will continue to try very hard to get the reorganization proposal through the Legislative Council, because the package in many respects reflects the aspirations of the people,” Lam said at the press conference. “Our utmost priority is to persuade the Legislative Council and to work with members to get the package through.”

Lawmakers staged a filibuster in the city’s Legislative Council to delay the reorganization plan, which would cost an extra HK$63 million a year to implement. Leung said the new government structure would be more efficient in tackling social and economic problems.

Illegal Structures

Leung’s legitimacy has increasingly been called into question, after it was revealed that there were at least five illegal structures on his property, an issue that tarnished the image of Henry Tang, his main rival in the election. Tang’s popularity plummeted after illegal additions were found at a property owned by his wife.

The Democratic Party plans to challenge Leung’s election in court because he made misleading statements to the public, party chairman Albert Ho said.

Cheung, 59, will be in charge of implementing Leung’s campaign platform to increase land supply, build more public accommodation and help middle-class families buy properties.

K.C. Chan was retained as secretary for financial services and the treasury, Rimsky Yuen was appointed secretary for justice and Wong Kam-sing was named secretary for the environment.

To contact the reporter on this story: Simon Lee in Hong Kong at slee936@bloomberg.net

To contact the editor responsible for this story: Hwee Ann Tan at hatan@bloomberg.net


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