Annual Report 2014-15

18 FHKI Annual Report 2014-15 Operational Review Advocacy for the Industries • Measures should be put in place to assist Hong Kong-funded manufacturing enterprises in exploring the Mainland and other emerging markets; and • Hong Kong’s fiscal, land, manpower and environmental policies should be enhanced to strengthen the territory’s competitive edge. In particular, we advocate for more progressive tax rebate for R&D and a lower profits tax rate for enterprises with low profitability. It is encouraging that the Government has adopted a number of the FHKI’s recommendations in the 2015 Policy Address and the 2015-16 Budget. These included: • increasing funding support for R&D activities of private companies, and injecting new money into the Innovation and Technology Fund; • extending the special concessionary measures under the SME Financing Guarantee Scheme and enhancing the SME Export Marketing and Development Funds through extending their scope and injection of new money; • earmarking resources for offering free IP consultation services to SMEs and supporting IP-related manpower training; and • proposing a multiple-pronged strategy to optimise Hong Kong’s population with the aim of nurturing local manpower, unleashing the potential of the local labour force and attracting talent from outside Hong Kong. Labour Issues The FHKI is concerned that increasing regulatory requirements in recent years have raised operating costs of enterprises, hence eroding Hong Kong’s comparative advantages. Take wages as an example, the statutory minimum wage was introduced in 2011 at an hourly rate of $28 and the rate will be increased for a second time to $32.5 fromMay in 2015. We will closely monitor its impact on enterprises and inflation. Another issue of concern is the proposal to legislate on standard working hours. Unlike the minimum wage which affects front-line workers, standard working hours potentially affect the entire workforce. If applied across the board, there will be grave and devastating implications on the flexibility of the workforce, business costs and service standards. The FHKI objects legislating on standard working hours and considers that pragmatic solutions should be worked out to tackle specific problematic areas. For example, consideration may be given to requiring employers and employees to specify hours of work, overtime arrangements and overtime compensation in employment contracts. Any solution should take into account Hong Kong’s competitiveness, manpower supply, labour flexibility and other pertinent factors. A submission has been sent to the Standard Working Hours Committee to express our views.