I feel that the Policy Address has been generally well received, although it's impossible to please all the people all of the time. As they say, that's politics. I'll just keep on trying to forge a consensus.

I certainly don't underestimate the huge amount of work ahead of us over the next 20 months for our term. But we're determined to push ahead with our agenda for action.

This agenda has been shaped largely by what I have heard from our legislators and district leaders, as well as the average man and woman on the street. So I am confident we are moving in the right direction.

At the heart of what I'm trying to do is build confidence in our future by making government more responsive and inclusive, by fostering a sense of harmony, and by playing to our strengths on the economic front.

Tripartite interplay

One area that we are looking at is the issue of fair competition, which does involve the interplay between governance, harmony and economic development. If small and medium-sized businesses feel they are being squeezed out or denied entry by bigger players, this will cause resentment and have a negative impact on our competitiveness and market diversity.

If consumers feel they are being shoe-horned into choosing a dominant market player, they will rightly complain about a lack of choice or price fixing. Ultimately, the public and business sector will look to the Government to strike a balance to ensure our free market is also a fair and open market. 

Up to now, we have relied on a sector-by-sector approach, whether by opening up a sector for more competition, or by introducing regulations or laws to facilitate market development or prevent market distortions.

Current approach working

The deregulation of the telecommunications sector has been a resounding success, and our phone bills are much lighter as a result.

The opening up of competition for bus and ferry services a number of years ago led to more business opportunities and greatly enhanced levels of comfort and service quality for commuters. I do believe this approach has worked well up until now.

But, I also feel the time is right to take a closer look at whether our current approach fits with the times, and serves the best long-term interests of our society and economy.

We have set up an independent Competition Policy Review Committee to do just that, and are keeping an open mind on whether we need a comprehensive, cross-sector fair competition law.

Right time

Why now you might ask? One reason is that the economy is in the best shape it has been for years, and certainly since the Asian financial crisis back in 1997 and 1998. So, we are operating on a firm economic foundation for change, if change is necessary.

Another reason is that our economy is moving further up the value chain as we leverage our strengths and advantages to make the most of our country's rapid development and enormous potential.

More big international companies are using Hong Kong as a regional base to manage their Mainland and Asian operations. Some of our own home-grown conglomerates are becoming big global players.

On the other hand, we also have to recognise there are a much larger number of small and medium-sized enterprises in Hong Kong, which account for over 98% of our businesses and employ 60% of the private sector workforce.

Level playing field

We need to ensure they have adequate opportunity and the right environment in which to thrive and excel. So, we must ensure the integrity of our level playing field. We do not want to see a situation where a few big companies, whether local or international, can corner the market, fix prices or engage in bid rigging. 

We don't believe that such harmful practices exist in any prominent way in Hong Kong, but we must do our best to avoid them.

One other reason I have decided to look more closely at a fair competition law is that there is now a wealth of international experience on which to draw.

Fair competition laws have become an integral and welcome part of many advanced economies. We can see what has worked and what has not, and avoid the pitfalls that have emerged in other economies that have introduced similar laws. 

Concerns addressed

I know that some in Hong Kong fear an omnibus fair competition law would hamper, rather than facilitate, market development; or would lead to an increase in legal actions. These are understandable concerns, and ones that will be addressed in our review.

What I would say is that our starting point is not to intervene in the market, but to protect market order and fair competition.

I want to be sure we have an environment where small and medium players have an equal opportunity to boost the vitality and scope of our market, as much as the big guns of the corporate world.

Hong Kong people are well known for their work ethic and entrepreneurial flair. They don't want special treatment. They just want to be able to compete fairly. I strongly believe we owe it to them to take a closer look at whether our current approach is right for Hong Kong's future.

Chief Executive Donald Tsang gave this address on RTHK's Letter to Hong Kong programme October 16.