Setting the context

1. It is unfortunate that Hong Kong has not been able to come out of the Asian economic turmoil unscathed, and has had to experience first-hand some of the pains of adjustment in the form of a shrinking economy, rising unemployment, falling asset prices and tighter liquidity.
2. Among many other things, the Asian crisis has highlighted the importance of accurate and transparent economic data. Figures on such matters as employment, growth, business performance, efficiency and productivity have become not just lifeless data, but something the community can relate to. In times of economic turbulence it has become clear that numbers and statistics have an important role, not only in reflecting what is happening, but also as input into good planning and policy making.

　

The concept of relevance

3. Hong Kong has been well served by a robust and comprehensive statistical system, thanks to the good work of the Census and Statistics Department. Yet in statistics and in many other matters, perfection is never reached and there is always plenty of room for further improvement. A compromise needs to be struck between precision on the one hand, and breadth and timeliness on the other.
4. In our view, one lesson from the economic downturn is that government needs to develop policies that are relevant to Hong Kong. This concept of relevance is as applicable to policy on statistics development as it is to housing, banking, industrial development and so on. In other words, in continually improving statistics, one should be guided by the need to provide not just good-quality, but relevant statistics. This means one needs to constantly review how relevant to Hong Kong the various elements of the current statistical systems are, and to divert resources from those that are less relevant to areas of greater interest to Hong Kong. In broad-brush terms, Hong Kong is a service economy and yet the amount of resources devoted to services statistics is not commensurate with the place of the service sector in the economy.

　

The wider picture

The SDDS

5. The Census and Statistics Department is currently undertaking an exercise in relation to compliance with the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF). We strongly support this effort. Although the SDDS may not be readily appreciated by the Hong Kong public, compliance with the standard is, in our view, a statistical development that is highly relevant to Hong Kong as an externally-oriented, international service centre.
6. In meeting SDDS requirements there are two specific areas which the HKCSI would highlight as being particularly noteworthy in light of the continual upgrading of Hong Kong's statistical system. One is the improvement in major economic indicators such as GDP, output and earnings statistics. This will call for an enhancement of current quarterly economic surveys. The other is the compilation and dissemination of balance of payment statistics hitherto not available in Hong Kong. Both are now being undertaken and they will require additional resources which we believe are well justified. We would, in addition, support a SDDS-plus (that is, more than the minimum requirement) regime especially in respect of GDP and production-related statistics. As a developed service economy, Hong Kong should aim to achieve best practices rather than merely meeting minimum standards.

　

Trade in services

7. Another aspect of statistical development which we believe should be enhanced is trade in services. We acknowledge that steady progress is being made with the enlargement of sample size of related statistical surveys. This has enabled more detailed trade in services statistics to be provided with more elaborate breakdown by sector and country.
8. While such progress is welcomed, we are mindful that another round of negotiations on liberalisation of trade in services has been mandated by the WTO to begin no later than the year 2000. We are reminded that Article XIX of the General Agreement on Trade in Services stipulates that for each negotiating round “the Council for Trade in Services shall carry out an assessment of trade in services in overall terms and on a sectoral basis.” Clearly this implies a greater demand for reliable statistics on trade in services. The development of more elaborate services trade statistics must therefore be considered highly relevant for such a trade-dependent territory as Hong Kong, where exports of services exceed that of domestic exports.
9. In this regard we would draw attention to the need for more interaction between trade and statistical authorities. We support the formation of a Statistics Committee within the WTO, which would imply the need for a greater degree of cooperation between trade negotiators and statisticians, both at the multilateral level such as between the WTO secretariat and the Voorburg group, and for individual member economies of the WTO. We suggest that Hong Kong, through the Trade Department, also support the establishment of such a committee within the WTO. Naturally, this would require that Trade Department be backed solidly by Census and Statistics Department.

　

Literacy and dissemination

10. For statistical practitioners, the economic turmoil has highlighted the simple fact that “statistics” is more than Hong Kong government statistics. One needs to pay equal attention to official statistics produced by other countries, as well as figures and analysis by the private sector. In the latter case, an example of the most oft-quoted non-official statistics is probably the Hang Seng index, one which is of obvious relevance to Hong Kong. In the wider context, several sources of economic data are of great interest to Hong Kong policy makers, such as the index of economic freedom by the Heritage Foundation, the World Competitiveness Report of the World Economic Forum, and the Free Market Index of the Hong Kong Policy Research Institute.
11. A wider dissemination of such figures will be helpful in improving public awareness and literacy about economic data, and to foster informed discussion on economic analysis. Hitherto most of these figures are privately produced and distributed, but with the coming of the electronic age, they can be disseminated much faster and to a wider audience. For example, a compilation of sites on the Internet containing economic data relevant to Hong Kong would serve a very useful function. This is perhaps a task which could be considered as a tripartite effort between government, the business sector and professional institutes such as the Statistics Society.

　

Specific comments

12. We would like also to take the opportunity of this fourth position paper to comment on a few particular areas of statistical development arising from our previous position papers as well as from recent development in the economy. Specifically, we would like to comment on the subject of economic indicators, economic studies, and promotion of services.

　

Price statistics and other economic indicators

13. From January 1997 the Consumer Services Price Index reports produced by the HKCSI also contains figures for the composite index. For the purpose of reflecting the picture of the economy as a whole, we would recommend that the composite figure should be used. Hence we suggest the composite CPI index should be a much better “overall” indicator of general inflation than CPI(A).
14. In the course of developing the CSPI the HKCSI has adopted a conservative approach in dealing with “hybrid” items, principally outside meals, by excluding them from the calculation. Ideally the service element (restaurant service) should be separated from the goods (food items), thus enabling them to be accounted for in the CSPI calculation. In reality this cannot be done as it is not practicable to disaggregate the two elements in the course of the survey, especially in view of the range and diversity of different eating establishments. However, if some alternative method could be developed of estimating the proportion of the service element in an outside meal, then it might become possible to single out the service element from the overall price. Perhaps a possible way is to make an attempt to draw some inferences from production-based studies related to this sector.
15. This brings us to the issue of developing producer price indices. In that regard the first report on PPI for the manufacturing sector has already been published in April 1998 and is very much welcomed.
16. As to PPI for services, we appreciate the conceptual problems in developing such indices and we commend the Census and Statistics Department for taking this on despite the difficulties. Building upon the concept of relevance and accepting the need to compromise, we suggest that some exploratory studies on the cost of doing business be conducted. That could take account of such factors as rents, wages, fees and charges, import prices (as reflected in currency fluctuations), etc., with a view to identifying or developing a set of leading indicators of the economy, which would be very relevant to the needs of statistical users. It would also help shed light on the desirability or otherwise of development a more general “business cost index”. Such studies should, again, be a joint effort between government and the private sector.

　

Economic studies

17. We congratulate the Census and Statistics Department for publishing many useful feature articles in the Hong Kong Monthly Digest of Statistics. Some of these articles come from data collected during regular surveys such as the General Household Survey, while others may be the result of special studies on individual themes or sectors.
18. One area we would like to highlight is the information technology and telecommunications sector. We are encouraged by the establishment within government of a new Information Technology and Broadcasting Bureau. It is also clear to us that the Census and Statistics Department appreciates the importance of related statistics, as demonstrated, for example, by the special reports published in the Monthly Digest (the communications industry in February 1998, the electronics industry in November 1997, and EDI services in relation to import/export declarations in May 1997). As we enter into the information age, one can envisage rapid development in IT and telecommunications and in this regard we would encourage even more attention to be given to this sector, which is highly relevant to Hong Kong's economic future.
19. Another area where greater attention is needed is that of the small and medium enterprises (SMEs). What are the SMEs? Do they have something in particular? Are they more prone to some problems? Do they need government support and in which specific areas? Given the diversity of SMEs, is it an economic sector at all? These questions are being seriously considered by the business community, government and politicians. Yet there has been very little information about the SMEs, all that is available being anecdotal and impressionistic such as that SMEs occupy 98% of establishments and employ 70% of the labour force. Since this is becoming a major policy issue, there should be more informed discussion which will surely benefit from more and better statistics. It is high time therefore for some relevant information and figures to be developed.
20. An third area to draw attention to is that of employment statistics especially in relation to the restructuring of the economy. Of particular interest is a comparison of job-creating versus job-losing sectors, as well as the change in the occupational structure of those that are unemployed.

　

Promotion of services

21. One item in the 1997-98 services promotion programme was the publication, by the HKCSI, of a tripartite newsletter entitled “The Servicing Economy”. A quartely publication, the Newsletter contains a regular statistical column with key figures on the service economy of Hong Kong provided by the Census and Statistics Department. The Coalition would like, through this position paper, to register its thanks and appreciation to the Census and Statistics Department for its support.
22. We note that in the 1998-99 Action Agenda for Promotion of Services one of the initiatives is to produce a regular statistical digest of the service sector, the first issue of which has already been published. This is warmly welcomed.

(Ends)