The SAR government should adopt extraordinary measures in such an extraordinary time to restore the confidence of the market and people as the impact of the financial tsunami further deepens, chairman of the Hong Kong General Chamber of Commerce (HKGCC) said yesterday.

Speaking to the media ahead of Chief Executive's policy address, Andrew Brandler urged the government to take decisive action even if it means it has to use taxpayers' money to back up the market.

The chairman added that it is very clear that the whole world is going into a recession and the government should be ready to throw "moral hazard" out of the window by using taxpayers' money to bail out the market and investors in this once-in-a-lifetime financial crisis.

The situation will continue for several years and Hong Kong is not immune to that, he said. As small and medium enterprises (SMEs) form a very big part of Hong Kong's economy and will suffer, the government must help them by asking banks not to cut down on lending. If banks continue to provide credit, SMEs can continue with their businesses.

He also asked the government to raise the deposit insurance limit to bolster depositors' confidence, saying: "This costs the government nothing but it is a very important step to boost confidence".

Brandler also envisaged that unemployment will go high up although he could not tell how many people exactly would be affected. He said the government must help them by creating more job opportunities before the problem gets out of hand.

The level of fiscal reserves is also expected to deteriorate and the government can no longer return wealth to the people as it did last year. The government therefore needs to reduce expenditure and broaden the tax base. It missed out on the best opportunity to introduce goods and services tax to broaden the tax base when economy was sound a couple of years ago, he commented.

He also touched on the competition law and minimum wage issues that Chief Executive Donald Tsang would probably shed more light on the way forward tomorrow.

Brandler said the chamber is not opposed to the competition law, provided it tackles only seven anti-competitive behaviors such as price-fixing and collusion but does not interfere with the market. The government is under great pressure to make law for minimum wage but the chamber hopes it will be a cross-sector enactment and the wage level will not be too high.

"The government must handle these issues carefully and cautiously and make sure not to do things for the sake of short-term political expediencies," he stressed.

(HK Edition 10/14/2008 page1)