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Following is a speech by the Secretary for Economic Services, Ms Sandra Lee, in the Legislative Council (LegCo). An abridged version was delivered in the LegCo yesterday (October 17):

Madam President,

I wish to thank all the Members who have spoken on Hong Kong's economic situation and in particular on the topics of logistics and tourism. I have listened carefully and with interest. I will consider Members' views and suggestions carefully. I am just as concerned as Members are, about the economic situation in Hong Kong. And that reminds me of an article I read last night entitled "The uses of adversity : how to survive the downturn". And let me quote a line. It says "Downturns provide opportunities as well as hazards. Recessions do not last forever ... It is in the early stages of an upturn that fortunes are most easily made. This is the time when companies should be preparing themselves to grasp the upturn when it comes." At this difficult time, let us not lose sight of our fundamental economic strength, and let us work together to prepare for the moment of upturn, to regain, or indeed, multiply our fortune.

As we all know, the movement of people and goods are pillars to our economic development. And, the cornerstones for these pillars are, first, our extensive network of air services which together with our world class airport, connects Hong Kong with some 130 cities and secondly, our vibrant maritime community and our efficient container port which has shipping links to over 500 destinations around the world.

We are firmly committed to building on these strong fundamentals and our achievements and more importantly, to add value to them without delay. On air services, we shall continue with bold and progressive steps to liberalise the market : we shall extend our service network and provide more rights for airlines to expand services for passengers and cargo, and cargo in particular. In parallel, the Hong Kong Airport Authority has identified and will embark on development plans that will take our airport well into the next two decades. On shipping services, our maritime community and container operators will take steps to enhance the productivity of our port, which, with a capability of handling 28 to 40 moves per crane per hour, is the most efficient in the world.

Let us remind ourselves, that through years of hard work and with enterprising spirit, we have made Hong Kong a major hub port in the global supply chain, served by over 80 international shipping lines with 380 container line services per week and as I said earlier, to over 500 destinations in the world. There are some 2,700 freight forwarding companies in Hong Kong servicing shippers/consignees on different routings. Over 216,000 vessels visited our port in 2000. As a major international shipping centre, Hong Kong based shipowners manager over 6% of the world fleet creating a major focal point for world maritime commerce. By the end of this year, the Hong Kong Shipping Register is expected to reach 13 million gross registered tonnes.

Added to these are our efficient and reliable financial, insurance and other related services. We will capitalise on these strengths and develop Hong Kong into an international and regional transportation and logistics hub, to add value to our port and airport and all their related services.

Logistics

At the last motion debate before this Council's summer recess, on 12 July, Honourable Members called upon the Administration to "speed up the development of our logistics industries". In my response then, I said the Administration shared this common objective with Honourable Members. In the past three months, my colleagues and I have worked hard on what we call the "Logistics Hong Kong" initiatives. Let me outline these initiatives which are characterised as the "4 Ls" -

(i) P-logistics : we are committed to strengthening the infrastructural and inter-modal transportation links under the demand and supply chain that operates through Hong Kong. We will consider taking forward the other physical infrastructure recommended in the "Study to Strength the Hong Kong's Role as the Preferred International and Regional Transportation and Logistics Hub" (IRTLH), which includes the creation of value-added logistics park, the establishment of an intra-Asia integrator hub and the establishment of "logistics pipelines". We will also examine how the development of these facilities could be co-ordinated with those infrastructure projects which are being implemented/under consideration to enhance the connectivity of cargo flow between Mainland China, particular the Pearl River Delta and Hong Kong. These projects include, on land transport, the Route 9 which will connect CT8 with CT9 through the Stonecutter Bridge and the Shenzhen Western Corridor, which will be our fourth land boundary crossing. On the marine side, the Marine Cargo Terminal at the Hong Kong International Airport will provide an alternative and efficient means of transport of air cargo between the Pearl River Delta and Hong Kong International Airport using river trade vessels thus enhancing the inter-model connectivity of the port. On the railway side, the Kowloon Canton Railway Corporation is studying the Port Rail Line jointly with its Mainland business counterparts. The concept of a port rail line is to provide a direct rail connection to the port.

(ii) E-logistics : The consultant of the IRTLH study has pointed out that "digital divide" amongst service providers hinders the development of Hong Kong's role as a coordination and integration of service providers under the demand and supply chain that operates through or from Hong Kong. To this end, we plan to work with the private sector to develop a common information technology (IT) architecture within which all parties can develop systems components linking through defined interfaces. This will facilitate extension of the catchment area of "virtual logistics".

(iii)H-logistics : Our current human resource base was developed under a "modal approach". We need to develop programmes to encourage our logistics community to embrace modern concepts of logistics, demand supply chain and e-commerce. Economic Services Bureau (ESB) and Education and Manpower Bureau will collaborate with stakeholders to develop a more integrated manpower development programme to support "Logistics Hong Kong". We will organise a forum in November this year to facilitate discussion amongst stakeholders to develop a human resources development plan for the industry.

(iv) M-logistics : we will continue our effort to develop marketing synergies amongst the promotional programmes of the Airport Authority Hong Kong, Hong Kong Port and Maritime Board, Hong Kong Trade Development Council and Invest Hong Kong so as to create a more effective promotional campaign for "Logistics Hong Kong". Next year, we plan to support a number of international conferences to promote "Logistics Hong Kong". An overseas roadshow for "Logistics Hong Kong" is also being planned.

Regulatory Infrastructure : the Administration will spearhead the initiatives to improve and expedite customs and immigration clearance. A number of projects are being planned/developed by the Customs and Excise Department (C&ED) aiming at paperless customs procedures, for the lodgement of trade declarations and application for customs documents. Our target is to provide speedy customs clearing services to all modes of cross-boundary cargo flows through the inter-linking of electronic systems. In order to enhance customs clearance efficiency in road boundary control points, C&ED is studying an Electronic Data Interchange (EDI) System for Road Manifest (ROMAN). To pave way for the implementation of the ROMAN system, C&ED has already launched the Land Cargo Advance Clearance Scheme last year and will implement the Automatic Vehicle Recognition System in March next year so as to reduce the time involved in customs clearance and to increase the capacity of boundary control points. We will also examine ways to enhance the efficiency and to streamline the customs clearance procedures between Hong Kong and the Mainland under the one country two systems principle.

Support for SMEs (small and medium enterprises): ESB and Commerce and Industry Bureau will collaborate to review how assistance to SMEs can be strengthened so as to encourage them to embrace the concepts and practices of 4 "L"s. We will organise a forum in December this year to facilitate discussion amongst stakeholders to develop initiatives to assist SMEs to participate in the logistics business.

To spearhead these initiatives, the Financial Secretary will chair the "Steering Committee on Logistics Development" (LOGSCOM) and he will appoint official and non-official members to a new "Logistic Development Board" (LDB).

Tourism

Now let me turn to another important economic activity involving the movement and service of people. The Tourism industry is one of Hong Kong's most important economic sectors: one which has the potential for further growth.

Hong Kong is the most popular city destination in Asia and one of the top tourist destinations in the World. Arrivals in 2000 exceeded 13 million for the first time. Up until the tragic 911 events in the US, the figures for 2001 were expected to be even higher. However, the Hong Kong Tourism Board has had to adjust its forecast and now expects the same number of visitors as last year. Tourism receipts in 2000 amounted to HK$61.56 billion representing some 5% of our GDP. It is also relevant to note that over 300,000 people are employed in the tourism sector : some 10% of the workforce.

We are firmly committed to supporting and developing our tourism industry and to positioning Hong Kong as a world class tourist destination. We see it as essential for the Government and the trade to work together to fulfill this goal.

The Government has embarked on an ambitious programme to support this sector. This is in the form of infrastructural developments, facilitating access for our visitors, improving the quality of services and, of course, actively promoting Hong Kong in new and existing markets. These initiatives are intended to improve both our software and hardware.

On Software

China

On the software front, the key undoubtedly is to facilitate the entry of both leisure and business visitors into Hong Kong. Hong Kong has a very liberal visa regime but we recognise more can be done. We see tremendous potential in the Mainland market which is already by far our largest source market for tourism some 30% of our visitors are from the Mainland. The measures to facilitate entry of Mainland visitors announced in the Policy Address will allow us to develop this potential further. The abolition of the quota system under the Hong Kong Group Tour Scheme and the increase in designated travel agents from January 2002 onwards will bring in more leisure travellers. The extension of the validity period for multiple business endorsements from the present six months to a maximum of three years, and the extension of duration of stay to 14 days will make business travelling much more convenient. The results of these new measures are expected to be significant: in the first year of implementation, we estimate an increase of some 300,000 mainland visitors, bringing in additional tourism receipts of $1.5 billion.

Taiwan

We are also committed to reducing the time required to process permit applications and provide additional application channels to visitors from Taiwan. The Immigration Department has pledged to speed up the processing time of one year and three year multiple Taiwan Visit Permits so that this can be completed within two working days, instead of five days as at present. They will also introduce the i-Permit Scheme in April 2002 to further facilitate the entry of Taiwan residents.

Tourism is a "people business", we invite members of our community to take ownership of tourism. We will work with the industry and the community to inculcate a hospitality culture, to further develop the Quality Tourism Service Scheme to assure quality at retail shops and restaurants for our visitors and protect their interests as consumers.

On Hardware

On the 'hardware' side, the Chief Executive announced a number of major initiatives in August of this year. We will expedite work to enhance our existing tourist attractions and to develop new tourist nodes. Developments are spread throughout Hong Kong on Lantau Island, in Sai Kung, Central, West Kowloon and Aberdeen. These initiatives will include a wide variety of attractions from Disneyland to Ocean Park, from the Wetland Park to heritage trails, from the redevelopment of the former Marine Police Headquarters to the renovation of the Tsim Sha Tsui promenade. Within 5 years Hong Kong will have a new range of world-class attractions to add to those we already have. These include :

- The Hong Kong Disney

- Improvement of Existing Tourist Attractions

- New Tourism Attractions

- Heritage Tourism

- Hotel Developments

Conclusions

The first eight months of this year showed a satisfactory growth in the number of visitor arrivals. Unfortunately, the terrorist attacks in the United States on 11 September 2001 have had an adverse impact on the global economy, and on Hong Kong. The tourism industry is sensitive to international events such as these. We hope the increase in visitor arrivals from the Mainland and Taiwan which will result from the measures I have described will help to minimise the impact of the tragic event. To complement this, the Hong Kong Tourism Board has already modified its marketing strategy by refocusing its efforts on the short haul markets. I am pleased to see the industry is cooperating and also working to develop new market.

While we, the Government, strive to do our part to attract visitors and improve the infrastructure at large, the industry as a whole must seize the opportunity to build on these measures to develop their business. The measures I describe will not themselves remove the difficulties faced by the industry but I am confident that by working hand in hand with all parties concerned, the tourism sector will continue to grow and become an even more important part of our economy.

The work in this area must be taken forward jointly by the Private Sector, the HKTB and the Government. To this end, the Tourism Commission and the HKTB are co-sponsoring a symposium at the beginning of November to provide an opportunity for all parties to come together to consider the current situation, to exchange views, to develop new ideas and solutions to promote the development of tourism in Hong Kong, and hopefully to reach consensus on actions to boost the Tourist Industry. This will be the first in what I hope will be a regular series of exchanges amongst all parties in this important sector of the economy.

Thank you.

End/Thursday, October 18, 2001

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