Whether the Construction Industry Is the ‘Pillar’ Industry in Hong Kong?

BRE216ECONOMICS FOR CONSTRUCTION AND REAL ESTATE Kwan Tsz Him (11168188D) Kwan Cheuk Pui (11055717D) Cheng Ming Xian (11704592D) Introduction Although Hong Kong has little land, there are always verbalism projects happening everywhere in Hong Kong, for example, West Kowloon Cultural District development, Kwun Tong redevelopment project, etc. However, workers and capital composite in the turn of events patience have been decreasing.In this underwrite, we will discuss whether the spin industry is the pillar industry in Hong Kong and we disagree with it. Focused industries As proposed by the Government decades ago, there are four pillar industries in Hong Kong, namely, financial services, trading and logistics, tourism and producer and professional services. They account for intimately 60% of gross domestic product and nearly half of the total workforce, in which edifice industry is counted in the producer and professional services.In the 21st century, the Government wants to interpret forward and follow the trend of technological and forward-looking world, they proposed another sixer new pillar industries, concerning testing and certification, medical services, innovation technology, culture and imaginative industries, environmental industry and program line services, in which construction industry is not counted in any pillar industry and no longer tempered as important by the Government. Features of local construction industry in that location are several gambols for local construction industry in Hong Kong, with severe on the commerce(p) environment being the major one.Without doubt, accidents happen all the snip in Hong Kong when you simply flip through the newspaper. Some of the accidents are inevitable while some happened due to care littleness. For example, the workers may not be aware of the recourse regulations, accidents always happen while the workers do not adapt the safety regulations as well as not to follow the working regu lations. Besides, controversy between oversea contractors is keen. Nowadays, a lot of construction projects in Hong Kong are outsourced to overseas contractors. It is because the technology is more advanced in overseas countries such as in Germany, the United States, France, etc.With reasonable price and advanced technology, the other countries sometimes are more competitive. Moreover, labor intensive is too the label of construction industry in Hong Kong. Limited land with mellow population is a characteristic for Hong Kong. Labor can be slowly found, however, is only applicable in the past. This will be examined in the report later. Concerning the environment, pollution is in line with the construction industry to a heavy(p) extent. Since construction work will inevitably pose noise, air and sometimes water pollution.The pollution extent depends on the casing of the project. Basically, the larger scale of a construction project, the greater the pollution will be resulted. R easons of excluding construction industry as pillar an industry in Hong Kong As mentioned before, the feature of labor intensive can only be described in old historic period due to the transformation of economy. In late 80s, the HKSAR has been transforming the integral economy from labor intensive industry to commercial industry which is outlined as tertiary services as finance and accounting, investing, banking and so on.In such knowledge-based society, the unemployment rate for those with low education level could be especially high. Also, there is no new blood to enter such industry. This can rattling be explained by the above phenomenon. Nowadays, most of the workers are 50 years old or above and the industry faces the aging problem. As this cannot be fixed, construction industry will decline gradually. Nowadays, the opportunity of receiving proper education is higher, thus the citizens do not willing to enter to an industry with grubby future. Diagram showing the percentag e of population distribution in diverse working sectorsAs for the construction industry, we may see that the percentages are actually move throughout the years and increased from 5. 4% to 6. 8% in 1971 and 2006 respectively. provided a light increase in population is resulted and also, it just accounts for a little percentage. Frankly speaking, a lot of buildings are, nowadays, built for different uses for stinting development and social settlement. However, the problem of aging of such industry is sightly more serious and we can barely see how the government has implemented any scheme to cope with such problem.Total building and construction sidetrack and annual percentage change (Census and Statistics plane section) Total construction as % of gross national product Current value 2006 25. 1 14. 2 2007 23. 7 -0. 1 2008 21. 1 -15. 6 2009 13. 8 -44. 6 2010 9. 2 -35. 0 Direct and substantiative employment construction (Census and Statistics department) As the diagram above sug gests that the direct and verificatory employment in construction is shrinking from 2004 to 2010. Also, the total output as well as the total construction as percentage of gross national product is decreasing from 25. 1% to 9. 2% in 2004 and 2010 respectively.This data has indicated that the economic go down and contribution to Hong Kong is contracting to a large extent. Construction distribution to gross domestic product Gross Domestic Product (GDP) by Economic Activity helping Contribution to GDP at Basic Prices (Census and Statistics part) 2006 2007 2008 2009 2010 Construction 2. 7 2. 6 3. 0 3. 2 3. 3 Services 91. 7 92. 8 92. 5 92. 6 92. 9 GDP refers to the market value of all lowest goods and services produced within a country in a give period. From the table above, we can find that from 2006 to 2010, the construction industry only contributed just about 3% to GDP.To compare with other industries, construction industry seems has not devolve the standard of becoming a p illar in Hong Kong. The problem of construction industry in Hong Kong Building contractors in Hong Kong are usually small. The competition between domestic and foreign building contractors is keen, because our building technology is labour-intensive and traditional. They compete on price, and cut costs, and sometimes, very unfortunately, corner as well. Consequently, the problems of safety and lack of technology development happened. Besides, the building cost in Hong Kong is among the highest in advanced economies.As a result of low profitability, most industry participants buy up a short-term view on business development. Complex theme projects have been undertaken by international contractors most of the time. According to Labour Department accident statistics for 2005, the accident rates per 1,000 workers in the construction industry is 59. 9, these figures were higher than the overall accident rate of 30. 6 per 1,000 workers in all industries. due to the risk is higher than other industries, lack of graduates over the next devil/three years will associate with construction.The potential danger has trim the possibility to attract leaving certificate students into the construction professions, it increases the difficulty to touch on and expand the construction industry. Number distribution of workers in construction industry (Labour Department) End of 2000 Beginning of 2009 Total workers 83924 51944 Public 44355 20825 Private 32704 31119 Building 61676 40772 civil 22248 11172 Conclusion To conclude, we do agree that construction is very important in Hong Kong. Real estate is closely linked with the economy and it creates many job opportunities.During the financial tsunami, government even earmarked large amounts of public money on construction projects to stimulate the economy. However, the distribution from construction industry to GDP becomes less and less while compare with the past, it only holds about 3% of GDP every year. Besides, with many p roblems in this industries, it is not easy for the Government to advert it as a pillar industry. We suggest that the Government still call for to put focus on construction industry but it convey not to be the pillar industry in Hong Kong. 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