With the United States and European Union holding fast to tariffs on mainland textiles and clothing until the end of 2008, Hong Kong has a "golden opportunity" to redevelop its local industry and boost employment, the government's top labor chief told lawmakers.
Matthew Cheung, permanent secretary for economic development and labor, Thursday presented a proposal before the Legislative Council that he said will encourage Hong Kong-based manufacturers to relocate operations from the mainland back to the territory.
"Many factories want to return to Hong Kong, and we have a golden opportunity to promote development of the industry," Cheung said.
Under current World Trade Organization agreements, garment exports from Hong Kong are not subject to the same tariffs as mainland garments.
But Hong Kong, which has seen its textiles jobs migrate to the mainland and Southeast Asia over the decades, lacks the necessary supply of skilled labor.
The government's proposal, Cheung said, will create a training and recruitment center to teach local workers on sewing and knitting machines, and later match them up with willing employers.
It will also allow for more flexible importation of overseas skilled workers, though Cheung stressed that the government will use a complex ratio formula to ensure a certain percentage of jobs go to locals.
Cheung said that a reinvigorated garment industry will have a spillover effect into other sectors, such as logistics, procurement and shipping, and said textile manufacturers could serve the upper-end fashion market after tariffs on mainland textiles are abolished in 2008.
But legislators were skeptical of the plan, warning that the proposal will trigger a flood of cheap overseas labor into Hong Kong. Several lawmakers referred to reports in the Chinese- language press that factories have already begun laying off local garment workers in anticipation of this package, and urged the government to impose more stringent restrictions on foreign labor.
But Cheung said the carefully- crafted ratio of imported and local labor will suffice, adding that factories firing local laborers in the hopes of replacing them with cheaper overseas workers later "are doing it all wrong."
He said: "We're watching for hiring and firing irregularities, and we'll reject their application.
"Don't think we're giving factories a free pass to import laborers."
Pro-labor legislators offered tentative approval for the plan but remained guarded.
