AN export lobby says there is urgent need for a corporate tax cut and an expansion of the labour importation scheme because inflation has eaten away more than 50 per cent of export profits in the past 10 years. Hong Kong Exporters' Association chairman Willy Lin said gross profits earned by local exporters were continuing to plummet. He said margins had diminished to a record low of about six to seven per cent from the more promising 10 to 15 per cent a decade ago. Spiralling inflation was blamed for huge cuts in profit margins while soaring rent and labour costs had undermined Hong Kong's competitiveness, Mr Lin said. The association urged the Government to reduce corporate tax by 1.5 per cent, to 15 per cent, to enable export industries to weather the difficult times. The Taxation Institute of Hong Kong made a similar suggestion earlier this week. 'Exporters are struggling to survive under the six to seven per cent profit margins and the figures represent an even slimmer net profit,' Mr Lin said. The association called for the restoration of the labour importation scheme to ensure a constant supply of cheap foreign labour in the face of vehement opposition bolstered by unionists and the labour sector. Mr Lin said Hong Kong should imitate Singapore by maintaining a five-to-one ratio between local and imported workers. The proposal, if accepted, meant that about 16.67 per cent of the total workforce in the territory would be imported. The labour importation scheme was recently frozen by the Government, meaning no renewed contracts would be granted after existing contracts expired. A new Supplementary Labour Scheme has been proposed by the administration, imposing a 5,000 cap on the imported labour quota due to be decided in January. Mr Lin said employers were not simply poaching for cheap labour when they pushed for a larger-scale labour importation scheme. 'It is not cheap to import labour because we are not paying minimum wages,' he said. 'We are paying a medium wage as well as the workers' accommodation and benefits.' He said the association did not believe wages should be automatically linked to inflation. There should a flexible scale of pay rises that took into account what the market could bear and the well-being of the business sectors involved, Mr Lin said. 'We think that the eight per cent rise recommended by the Hong Kong Chamber of Commerce is no more than a guiding figure, and wages should be adjusted according to the labour market situation in various sectors,' he said.