Betty Yuen (PHOTO / HKGCC WEBSITE)

Chair of the Hong Kong General Chamber of Commerce, Mrs. Betty Yuen, is on the show this week.

Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Betty Yuen. 

Chan: Welcome to Straight Talk with Eugene Chan. We have the Chair of the Hong Kong General Chamber of Commerce, Betty Yuen as our guest this evening to give us her perspective on the recovery of Hong Kong's economy amidst the pandemic. Yuen is also the Vice Chair of CLP Power Hong Kong and has been the managing director there for seven years. She is a chartered accountant, and has extensive experience in business, management and finance. She has also been a member of the election committee of the last four chief executive elections. Welcome, Betty, to the show!

Yuen: Thank you, Eugene.

Chan: So many things are happening in the world right now. We have the Russia-Ukraine conflict, we have the energy crisis, extreme weather, many things are happening, and how do all these energy costs, how to solve this affecting energy costs? And how does it relate to the economy and you being a person in the power industry for a long time? Maybe you can let the viewers know how all this are interrelated.

Yuen: Yes. The energy sector is really going through a crisis now and as all of us know that the Ukraine crisis since February this year has caused a big disruption to the energy market around the world. And you have, you know, Europe have been getting supply from Russia for many years. And with that disruption, it caused a lot of scrambling around the world for replacement energy supply to Europe. And lately, we also have the OPEC countries reducing the production of oil and at the same time when many countries are emerging from the pandemic with the higher demand for energy. So, both the supply side and the demand side are causing pressure. And that's why you're seeing a huge surge in energy prices around the world. And in particular, in Europe, many governments are having difficulties and with all the increased prices, and therefore have to give relief to their citizens.

Chan: Would you say that the Ukraine conflict is the major cause of this energy crisis?

Yuen: I think it's a major cause because Russia has been supplying a lot of natural gas to Europe for many years. And with all the sanctions, European countries are not buying from Russia. That replacement energy has to come from other parts of the world. But also, because as I mentioned, the higher demand as the world is emerging from the pandemic is also causing rising demand.

Chan: I mean, just for the… I mean something we don't want it to happen just in case, if the conflict gets worse, or more widespread, that means this crisis is going to be even worse.

Yuen: I think we all hope that it doesn't happen that way. But then destabilization is actually causing a lot of repositioning. For example, Europe, in particular, has been trying to replace fossil fuels with cleaner energy. But now you're seeing Germany, they are extending the life of the nuclear power station, and some are also restarting their coal units that have been moth-balled. So, it also will have an impact on the path to decarbonization, hopefully, these short term measures as they try to stabilize the situation, but could become an impetus for even faster installation of renewable energy in order to replace fossil fuel over the long term. But the short term, there are indeed challenges.

Chan: Right, Betty as we just said the winter … you know, winter is coming for both the UK and Europe? And will this crisis get worse? And if it does get worse? How bad would it be? I mean, we know that we hear stories about in the UK and a lot of the energy costs has increased a lot. So, how bad would it be?

Yuen: I think this winter is going to be particularly difficult for many countries in Europe. And we've heard in the UK that there are warnings about even blackouts during the peak period in order to save the natural gas for home heating. So, I think it's going to be a very rough winter, in particular for Europe, and also for the rest of the world. Energy markets you know, they are interconnected around the world, they are not isolated. And all the prices for coal or natural gas around the world have risen significantly. And, so, we're all on the same boat, unfortunately.

Chan: So, seeing this energy crisis come when the world is just recovering from the pandemic.

Yuen: Exactly, yes.

Chan: And I mean, we're facing rising inflation as well as rising interest rates, and do you think our world’s economy is actually going towards a recession?

Yuen: I think that is the scenario that many big economies are looking at it with commodity prices surging, higher interest rates. As a result, a major economy is trying to stop the easing, financial easing. So, I think it's going to be rough. A tough period next year still.

Chan: Right. So, let's come back to Hong Kong, where we are all in. How is Hong Kong going to be affected by this energy crisis? I mean, is it going to impact a lot on our livelihood, as well as the economy? In your view.

Yuen: I think Hong Kong will not be going through as rough a situation as the European countries. And I think part of it is because of a lot of the hard work that we've done over the years to diversify our fuel supplies. So, for example, using CLPs case, we have 1/3 of our energy coming from nuclear that is relatively stable in terms of costs and supply, and about half is natural gas. And then remaining 20 percent is coal. And we have been using long-term supply contracts. So, in terms of supply security, we are okay. But unfortunately, on the pricing side, our contracts are tied to international fuel prices. So, there is no escape that we will also be suffering from higher energy prices.

Chan: Yuen, your Chairman in August said that this is CLP’s biggest ever loss, of $620 million, and said Hong Kong people themselves should brace for higher electricity bills. So, being in Hong Kong for over 100 years, I'm sure you've been trying to save costs for us. So, does it mean this time we have to bear the costs of this energy crisis?

Yuen: Maybe to give you an example … you know, this year, we are looking at energy bill for Hong Kong for CLP’s customers. It's going to cost us about $20 billion, just for the fuel and we have been trying to absorb some of the shock so that the customers do not have to face too big of a fuel increase. But then the company is actually financing part of it. And we're running deficits of about $2 billion in our fuel account, basically costs that we haven't yet passed through to customers. But there's a limit to how much the company can tolerate. So, unfortunately, energy bills will increase next year.

Chan: Right. Something I have to ask you, because some viewers know that you're coming to the show. People are I mean, they look at CLP as a very important utility provider for Hong Kong. And we know that you have been diversifying your investments and say for example, in Australia, which apparently doesn't, it didn't happen to be having a very good result. So, does it mean our Hong Kong people will have to partly bear some of the losses that was incurred elsewhere?

Yuen: No, absolutely not. The system is very clearly separated. You know, the Hong Kong customers will not be exposed in any way to CLPs investment in other countries. So, rest assured it won't, it won't happen. 

Yeah.

Chan: Right. So, when you say next year, we are going to brace for sort of a high energy costs. I mean, say we’ve been hearing stories from people from the UK that it's gone up tremendously.

Yuen: Yes.

Chan: What percentage can we anticipate that we can start planning for the future?

Yuen: I think we have to reveal the situation with government towards the end of the year. But to give you a feel that I think Hong Kong compared with many other countries, we are already in a better place using our tariff. For example, in the UK tariff is more than double our level, and you've heard figures like 100 percent increase over the last 18 months. And it's not only European countries, even in Asia, you know, Singapore, Tokyo, their tariffs are 40-50 percent higher than Hong Kong. So, I think, you know, the whole world, as I mentioned earlier, is interconnected, as far as energy is concerned. But Hong Kong, I think, the security of supply is no problem. Pricing, there's some kind of indexation with international energy prices. But I think we will still fare better than almost most countries in not only Europe, but even in Asia we will do better.

Chan: Let’s coming to Hong Kong again. I mean, Hong Kong has had nearly three years of fighting the pandemic and now we are finally having a society free of quarantine for overseas travels, the social distancing rules have been relaxed, and we have received a lot of consumption vouchers. So, do you think our economy is finally on the way of recovery? That's the title of the show tonight.

Yuen: I think obviously, very welcome moves by the current administration in terms of the relaxation of travel, quarantine measures, and even the sentiment and also the local social distancing rules. So, I think the local sentiment has picked up. But I think we still have some way to go, you know, tourists are not coming still, and business travelers are still very limited. And very importantly, our border with the mainland is so important for the livelihood of Hong Kong, not only for business, but also for tourism. So, I think we still need big moves in terms of whether it's, of course, with the international borders moving to zero plus zero. And very urgently, if we can have the border open with the mainland, even on a phased basis, then our economy will be on the road to full recovery.

Chan: Right. So, Yuen, we have to take a break now, and viewers don't go away, we will be right back.

Chan: Welcome back. With us this evening is Betty Yuen, and she has been talking about how the global energy crisis is affecting the recovery of our economy here in Hong Kong. So, Betty, in the first half, you have explained to us how all these energy factors are interrelated to the economy, how it has been affecting, and Hong Kong is not alone, but we are fortunate that we are not the hardest hit, compared to many cities. So, let’s come back to Hong Kong again, where you are the chairman of the Hong Kong General Chamber of Commerce. So, business in Hong Kong has been very tough for the last 3 years, and now we are facing with all this energy crisis, and increasing interest rates. And we hear all these long-standing F&B establishments being closed down, so what is the biggest challenge to the business sector right now? I mean we are now, hopefully, at the end of the pandemic, why am I still hearing all these sort of sad news of all these long-time establishments are closing down in different districts? What do you think?

Yuen: Well, Hong Kong has always been an open economy. Our lifeline is a lot of flows between Hong Kong and the mainland, and we are the super connecter, and we are also a place for people to do business, and for tourists to come and have a good time. And being an isolated island for the last 3 years really got the business sector suffering big time. And we are now starting to see some light at the end of the tunnel with the international border being relaxed, but it’s still not fully opening. And, so, we still need to make further relaxation. And as I mentioned earlier, the border with the mainland is also critical for our economy’s recovery.

Chan: If I am going to ask you – what can the government do to help businesses to regain the momentum? 

Yuen: I think actually once the border is open, I think the business sector…you know, we are a very versatile economy, if we can, again, do all those major exhibitions to invite business people here. And if we can have all these major international events, like the Rugby 7s and other major sports and entertainment, you bring people here. And then because they have … Hong Kong’s reputation for the last 3 years has been tarnished significantly. And for people to come here, and actually seeing is believing, they will see that Hong Kong still has all the energy and the resilience, and it's a place to get business done. Then I think a lot of business people, they will be able to reconnect with the customers, and then with the Greater Bay Area vision, I think our energy will come back very quickly.

Chan: Right. Betty, you mentioned earlier that we know that there are although the relaxation of the quarantine measures overseas travel, we have seen more people going out than people coming in…

Yuen: Yes.

Chan: …because it allows…many of our friends are actually going overseas. If you give them a call, you will know. This is still worrying for the tourism industry.

Yuen: Yes.

Chan: So, as an important business chamber in Hong Kong, what will be your one word of advice to the government? What can we do? What should they do?

Yuen: Really expedite the reopening, the full reopening, of our border. And also have more…for the tourism industry, for example, we also have to really reinvent ourselves. So new products, new services, for tourists to make Hong Kong an attractive place to visit again. And we do have many things to offer, you know, we have all these new facilities in West Kowloon. And we have all these, you know, a lot of connectivity has been made available over the last few years. We have the third runway, we have the big bridge. So, the infrastructure is there to facilitate more people to come. We just have to have the border open; that’s is the most fundamental thing to get the economy again.

Chan: Right. Betty, the reason why I asked categorically what the government should do is because we know that a lot of people from the government administration do watch our show, and hopefully they hear our voice. And I must congratulate the government as well because I was with one of the Caucasian veterinary surgeons over the weekend. He said to me that many of his customers are considering even coming back because of relaxation. So, that is a good way forward. 

Yuen: Yes.

Chan: So, you mention also just now that let people see it for themselves.

Yuen: Yes.

Chan: I mean there has been so much misconceptions.

Yuen: Exactly.

Chan: And we must try to make it happen again.

Yuen: Yes.

Chan: So, rather than just asking the government, what shall the business community, like the Chamber of Commerce that you are leading, how shall we work together with the government and make this even more effective?

Yuen: I think, as I said, once the border is open, and Hong Kong has always been very strong in doing exhibitions and bring business people here, and then if we can have synergies with the Greater Bay Area…you know innovation and technology is an important area that…I know discussions are ongoing about having Hong Kong being a data interconnector. You know if we can share data, biotech is a growth area definitely. And also the finance sector, of course, Hong Kong is an international financial center. If we can expand our product offerings, our service offerings, make Hong Kong even more the international…the offshore RMB center, wealth management center. I think there's a lot going on for our industries in Hong Kong, and our competitive strength, say versus Singapore, is because we have the mainland as our big supporter. And with the big market and the big area for growth and synergy.

Chan: Right. And I've also read in the news that there have been rumors, hopefully that will become a reality in a couple weeks’ time when Mr John Lee delivers his first policy address, that there have been talks of giving away even airline tickets for people to come.

Yuen: Right, yeah.

Chan: Do you think initiating flights will be something that we should really push?

Yuen: I think it would be of very help if we reopen Hong Kong and, as I said, we have to bring people here, seeing is believing. And then those air tickets that the Airport Authority had purchased a couple years ago would be a very good way to expedite and provide the incentives for people to come. 

Chan: Right. Another thing that I have found when I was preparing your interview with you is that we realize Hong Kong dollar is pegged to the US dollar.

Yuen: Right.

Chan: The US dollar is very strong against other major currencies. So, that means Hong Kong not as attractive as a tourist destination. 

Yuen: Yes.

Chan: Will you be worried because of that?

Yuen: I think a strong US dollar with our peg…some competitiveness will be affected. But the peg is so important for the stability of Hong Kong. So, I think, definitely it is something that we should continue to maintain. And as I said, cost is only one factor for tourists to consider, our attraction also lies in new services and products that we can offer to customers. 

Chan: So, Betty, when we go forward, I am sure we all wanted to have a positive outlook for Hong Kong.

Yuen: Of course.

Chan: But recently your CEO, Mr George Leung, has said our city is facing a very critical situation, with 30 percent of the large enterprises either having moved out of Hong Kong or are considering to doing so. And about 10 percent have already pulled out for good.

Yuen: Yes.

Chan: He went on to say that faced with the local epidemic restrictions, external economic environment, and then the possibility of war, Hong Kong has no chance to deploy in improving the current economy. So, definitely not a very good outlook. So, what can we do then?

Yuen: I think in the near term outlook we do have challenges, as we just discussed. But medium to long term, I am still very optimistic about the prospect of Hong Kong because our fundamentals are still strong, with the mainland at our backyard as our key supporter, and it’s a…many areas, as I mentioned, innovation and technology, the green finance, and all these sectors, and energy transition, we discussed about energy situation earlier. There are challenges but at the same time, there are opportunities, that if we can capitalize these opportunities, I think Hong Kong will find a way to reinvent ourselves. Of course, a lot has happened over the last 3 years and the geopolitical tensions, the energy crisis, the inflation. It will not be business as usual, we have to find a new way of doing things, but I think our fundamentals are still very strong.

Chan: Right. Betty, George also went on to say that Singapore is now a really an equal rival to Hong Kong, but Hong Kong has more disadvantages due to our COVID policies. But our government has to balance between protecting the vulnerable groups in the community, which we all agree, and also against interest of the business sectors. You, being a representative of the business sector, what will you say to the government? How can they balance this very very fine line of protecting the vulnerable and the businesses in Hong Kong?

Yuen: I think the vulnerable sector, we of course have to protect, but then when we say it’s the business sector, it’s not really just the business sector, it’s the whole economy that is being affected if we are continuing to have all these poor economic situation, and the employment is also significantly hampered. So, I think we are in this together, and I think it is very important that the vaccination has to be big push again for those who are still reluctant to do. And also the balance on how the hospital systems will not be overwhelmed, then I think there are ways that we can do to really enable the economy to reopen again.

Chan: Right. Betty, before the end of the show, I am going to ask you one direct question. We know that we had this term “brain drain” many years ago in 1997.

Yuen: Yes.

Chan: And looks like we are going to have that recently because experts of companies of both local and some expats are not returning. Firstly, do you think our government is aware of this? And secondly, if they are going to attract talents to coming back, which particular area do you think we are most short on?

Yuen: I think the government is definitely aware of this and I understand that they are working on this, hopefully with big initiatives coming from the Policy Address shortly. I think in many areas, we have talent brain drain, and it is true. It is almost across the board, whether it is in finance field, in the innovation and technology field, which we are always short of talents. And even in our engineering field. So, I think today a lot of the policies are rather piece meal. We need a holistic approach.

Chan: Yuen, thank you very much for sharing with us your years of experience and thoughts on how the energy crisis is affecting us here, as well as your suggestions for the government on how to lead Hong Kong of this critical period in our economy. We look forward to the CE’s upcoming Policy Address. And have a good week ahead, and good night!