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Following is a speech by the Secretary for Economic Services, Mr Stephen Ip Shu-kwan, delivered at the Tax Free Asia Pacific Conference today (Monday):

Mr Cerruti, Mr Martin, Ladies and Gentlemen,

Good Morning,

I am delighted to have been invited by Tax Free Asia Pacific to officiate at its annual conference today. On behalf of the Government of the Hong Kong Special Administrative Region, let me extend a warm welcome to you all.

The international duty and tax free industry is dynamic. The industry enables consumers travelling between different countries and territories to purchase high quality luxury merchandise at attractive prices. In 1997, the sales of tax free commodities in Hong Kong took up some 10 per cent of the total market share in the Asia Pacific region. It goes without saying that even in such a low tax city as Hong Kong, the tax free business has its unique market niche and appeal.

Last year when the exhibition was first held in Hong Kong, it recorded an overwhelming success featuring more than 300 international brands from over 20 countries. It also attracted over 2 000 quality trade buyers from the Asia Pacific region notwithstanding the region-wide financial turmoil and economic downturn. This testifies to the importance attached to this industry-wide event. I am sure that this year's exhibition is going to break new ground.

Superficially, people might assume an economic downturn means poor trade exhibition attendance. The widely attended tax-free exhibition last year demonstrated otherwise. It also signified the resilience of Hong Kong. Our city remains vibrant and dynamic amid the doldrums of the region-wide downturn. Moreover, there have recently been signs of recovery. The Hang Seng Index is rebounding, property sales are picking up and inbound tourism figures are improving.

Visitor arrivals to Hong Kong in the first four months of 1999 were some 3.4 million, about 13 per cent up compared with the same time last year. Hotel occupancy levels have ranged between 74 per cent and 81 per cent, all showing growth over the respective months in 1998. This is particularly encouraging when most of our major neighbouring competitors are still suffering from a downturn in visitor arrivals.

When it comes to tourism, I think there is no need for me to elaborate upon its intimate and mutually beneficial relationship with the tax-free business. Our statistics show that out of $53 billion spent by tourists in Hong Kong in 1998, almost half was used to foot shopping bills.

In Hong Kong, we are committed to maintaining Hong Kong's position as a leading travel and tourist destination in Asia. We have put in place a three-pronged strategy to sustain the long-term development of tourism by promoting Hong Kong to overseas tourists, enhancing our attractiveness as well as facilitating the entry of visitors into Hong Kong. We have also recently appointed a Commissioner for Tourism to spearhead our efforts on tourism promotion.

We have launched a worldwide New Destination Campaign entitled "We are Hong Kong - City of Life" as well as a "Discover Hong Kong" Campaign to press home the message that Hong Kong is a unique international metropolis where East meets West. Hong Kong offers to visitors diversified shopping, dining and sightseeing experiences. I trust you will experience this for yourselves during your stay in Hong Kong.

People in the industry know of our many ongoing efforts to enhance Hong Kong's attraction. We are planning a series of new attractions such as a cable car system on Lantau, an international wetland park near the world-famous Mai Po Marshes, and a fisherman's wharf in Aberdeen etc. And of course there are the negotiations with Walt Disney over a possible theme park. We hope, by providing a wider range of facilities, we will enrich the experience of our visitors.

Apart from working on improving our hardware, we are also mindful of developing our software. Our efforts include new tourist products and facilities as well as attractive international events. We are also working proactively to promote heritage tourism in Hong Kong.

In addition, we are working to make Hong Kong one of the most eventful and festive cities in the world. We have set up a $100 million - International Events Fund to support the staging of some 50 international events in Hong Kong over the next 5 years. We are also planning for a world-class, state-of-the-art new performance venue at West Kowloon Reclamation. Our vision is to make Hong Kong the Events Capital of Asia.

Another important element is the quality of service. To promote good services to visitors, we are running a "Be a Good Host" campaign. We will also launch a "Quality Tourism Services" scheme to ensure the quality of service at participating shops and restaurants.

Our third area of action is to facilitate the entry of visitors. Hong Kong has a liberal visa regime which enables visitors from over 170 countries and territories to enter Hong Kong visa-free. We will continue to take measures to facilitate the immigration clearance of visitors to Hong Kong.

The above sets out our tourism promotion blueprint. Added to this visionary blueprint is the "trump-card" of Mainland China. Our geographical proximity to and intimate connection with this vast fast developing market is the unique strength of Hong Kong.

Our unequalled gateway position makes us the natural springboard for companies and businesses to explore this promising and resourceful market. We would also be among the first to reap the economic gains when China joins the World Trade Organisation.

Ladies and gentlemen, I think I have pointed out the crux of today's theme "Planting the Seeds of Recovery". The economic pie is indeed very large and we would like you to share it with us. We have sown the seeds for a full-fledged recovery. Join with us in enjoying the harvest.

With this I shall end here. Thank you for giving me the chance to speak to you today and may I take this opportunity to wish you all a most successful conference and an enjoyable stay in Hong Kong. Enjoy Duty Free Shopping here in Hong Kong. Thank you.

End/Monday, May 24, 1999

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