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A leading United States publisher says Hong Kong should stick to the US dollar peg in order to safeguard its currency.

With the United States Federal Reserve imposing measures to help the US economy, the situation in Hong Kong will improve, according to Steve Forbes, chairman and the editor-in-chief of business magazine Forbes.

Speaking in Hong Kong yesterday, Mr Forbes also said the SAR should be more closely integrated with the Pearl River Delta.

Meanwhile, pursuing investment immigrants and improving education standards would help to create a 'value-added' business environment, he said.

'A step that Hong Kong can take is to pursue investment immigrants in order to avoid competing with neighbouring countries on low-cost labour. Brain power is important,' Mr Forbes told an American Chamber of Commerce luncheon.

'It should focus on education, immigration and better integration with the Pearl River Delta.'

He said the decision to keep the US dollar peg was made years ago and Hong Kong should stick to it. '[The peg] is defending the Hong Kong currency from being assaulted like the South East Asian currencies in the late 1990s,' he said.

Figures showed the US and the global economies were not recovering at full speed in recent months. Mr Forbes attributed the slow pace to uncertainty over a possible war against Iraq and errors in US policy making.

'The fundamentals [of the US economy] are strong but we put up artificial barriers,' he said.

Apart from the many commercial law suits which had a negative impact on the stock markets, Mr Forbes blamed the Bush administration for not bringing in a strong enough tax cut to stimulate the economy.

He also said the Federal Reserve had failed to launch appropriate measures to increase liquidity in the economy, although it was correcting its mistakes.

'The Fed made the same mistake as Japan made in the past 12 years. It decreased the interest rates but it didn't pump money into the economy. Money is cheaper in terms of interest rates but it is not available in the banking system,' he said.

'But it is correcting its mistakes.'

Mr Forbes also said the International Monetary Fund had failed to provide the right help to countries in financial trouble.

The Forbes Global CEO Conference will be held this month from the 24th to the 26th at the Grand Hyatt Hotel. About 300 executives will attend the forum.

Chief Executive Tung Chee-hwa and Financial Secretary Antony Leung Kam-chung are also expected to attend.



Cherish dollar peg, says Forbes