And it would see ultimate responsibility for financial protection in retirement moved from the individual to the state.

But the biggest initial impact on employees would be financial.

If a CPF were based on the recently issued government proposals for a mandatory private sector retirement scheme, five per cent of salaries would be paid to the Government.

That would immediately reduce employees' disposable income by five per cent.

A further five per cent contribution would have to come from employers, increasing their employment costs and ultimately affecting profitability and, possibly, employment.

Based on the present annual payroll level of the local community and using conservative calculations, such a scheme would result in $20 billion a year going to the Government for the CPF.

Within six years, probably five, the Government would have more than $120 billion in the CPF kitty - as big as its present annual Budget and one-third more than its present fiscal reserves.

These funds would have to be managed, invested and protected to produce a return sufficient to ultimately provide for all employees in their retirement.

To be fair, the same figures would apply if a mandatory private sector retirement scheme, as presently proposed by the Government, were introduced.

The difference between the CPF and the private sector scheme, however, is that the private sector scheme would not have the centralised control that is involved in a CPF.

Under a private sector scheme, employers and employees would continue to have some measure of control over their retirement contributions and how they were invested.

They would be able to hire and fire fund managers according to their performance and give some measure of direction to how their funds were invested.

A private sector scheme would also mean many individual funds of a more manageable size and probably as greater variety of investments, offering better returns and less risk than a CPF.

There is also no guarantee under a CPF that the Government would not increase the required contribution at some future date to cover any shortfall in the fund, or any investment losses.

It is for these reasons that the Hongkong General Chamber of Commerce has described the latest move for the creation of a CPF as a backward step for the Hongkong economy and employees.

The CPF issue has been extensively debated previously in Hongkong (the last one being in 1986) and has been found wanting. Nothing has changed in the intervening period.

The Hongkong Government has rightly resisted calls for a CPF in the past for many good reasons that remain valid today.

It has been the traditional role of the Hongkong Government to act as a regulator rather than a provider of services.

To do otherwise runs counter to the free enterprise nature of the territory.

The Singapore CPF scheme, which is the model most often looked at by those in favour of a scheme in Hongkong, was introduced way back in 1955.

But it had aims other than merely providing retirement funding, including the provision of funds for economic development, and for housing and health.

Run totally by the Government, the Singapore CPF has produced only modest returns on the capital invested and contribution levels are among the highest in the world.

At one stage, contributions were as high as 40 per cent of salaries, when employees contributed a 22.5 per cent share and employers a 17.5 per cent share.

This would be completely unacceptable in Hongkong.

Hongkong has progressed and developed far beyond the stage where such a scheme is necessary, even if it were limited to the provision of funds for retirement.

A CPF for Hongkong is a long way from being the most effective way to provide a retirement fund for the majority of the working population in Hongkong.

It would put the Government in the position of having huge sums of money to invest with much less accountability and control than would be involved in a private sector scheme.

It would have massive implications for government administration, for financial markets and for the future direction of the whole economy.

It would centralise huge funds for investment in government hands and have the potential to disrupt domestic financial markets.

Put simply, the introduction of a CPF would require government administration on a massive scale and lead to the creation of a huge and costly bureaucracy to manage it.

Ian Perkin is chief economist with the Hongkong General Chamber of Commerce.