On November 16, five ministerial agencies from the Central Government including the Ministry of Finance, State Administration of Taxation, State Development and Reform Commission and State Custom Administration held a roundtable discussion on the implementation of the new measures regarding processing trade. Hong Kong manufacturers were invited there to express their views on the issue.

Mr Stanly Lau, deputy chairman of the Federation of Hong Kong Industries, attended the roundtable and acknowledged the Central Government’s prompt response to Hong Kong manufacturers’ views by implementing quick remedies.

At the roundtable, Ma Lin, Director-General of the Export and Import Tax Department at the State Administration of Taxation explained to the audience that the government’s new measures of modifying export tax only intended to target those commodities that are resource intensive, have high-energy consumption and hazardous to the environment. The new measures were made to restrict the export of such commodities, not to change the overall policy regarding processing trade. Mr Ma said the government has no plans to make significant changes to the current processing trade policy, nor does it intend to phase out the processing trade of supplied materials. Commenting on the rumors that the government may add another 1,000 or more commodities to the restricted list, Mr Ma said as far as he knew, the government has no such plans at the moment.

Mr Ma added that it was very difficult for the government’s macro economic policy to differentiate different industries and commodities. Sometimes, policies made to target certain commodities may affect other unintended commodities. In the future, the government would made further adjustment to the existing policy from time to time, which means that if the government finds out some commodities are wrongfully affected, then they may be removed from the prohibited list. He emphasized that future amendments of the policy would be the correction of the existing policy, not the extension of the policy.

Representatives from the Chinese Manufactures Association of Hong Kong, Hong Kong Diecasting Association, Hong Kong Screw and Fastener Council and Hong Kong Electro-plating Trade Merchant Association, as well as those from apparel, paper products, fur products, toy and furniture businesses also voiced their concerns during the discussion. While they welcomed the clarification from the Central Government, many were still worried about the stability of the policy and asked for more detailed policy orientation.

Mr Stanley Lau pointed out that the implementation of the Directives No139 and No 145 was too hasty, thus has caused a great deal of confusion among the manufactures as well as some government agencies. He hoped that in the future the government could consult the manufacturers before implementing new policy measures and allow sufficient transition time for the affected enterprises to make changes to their business plan. Mr Ma said he had taken note of this suggestion and the government would seek new channels to communicating with the Hong Kong manufacturers, may be through major trade associations. 

Officials from the five ministerial agencies also asked about how each individual business was affected by the new measures. They said the government would try to find solutions to those problems related to the Directives 139 and 145.