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Following is the speech (English only) by the Financial Secretary, Mr Antony Leung, at the Opening of the HKUST "Forum on the Future Development of Hong Kong" today (May 29):

Professor Chu, Vincent, distinguished guests, ladies and gentlemen,

Thank you very much for the invitation to officiate at the opening of this very important forum on the future development of Hong Kong. And congratulations to the University of Science and Technology for its continuing efforts in providing avenues to assist in our social and economic development. Events such as this allow us to focus on the bigger picture and the strategies that will help take forward our plans for Asia's world city.

I have always placed great importance on the closer cooperation with the Mainland especially with the Pearl River Delta. As a matter of fact, upon taking up this office, I place it as one of my top five priorities, and I hope that people in Hong Kong have noticed the increased efforts of the Hong Kong Government in working more closely with the Mainland.

In recent months, development of closer cooperation with the rest of the PRD has been a very hot topic. It is talked so much that some people expressed concern to me about the possible loss of identity of Hong Kong as an international city. Let me assure you that this Government is fully aware of the importance of maintaining Hong Kong as a unique cosmospolis. Some of the biggest strengths of Hong Kong are our differences with other Mainland cities, and not our similarities with them.

But globalization has pushed competition among economies to a new level. It is no longer a race between cities. To become a leader in this globalized environment, one has to leverage on the aggregate strengths of a region in terms of manpower, the breadth and depth of economic activities, production capacity, size of market, expertise, technology, infrastructure and telecommunication and transportation network.

Hong Kong has been a financial, business, logistics and tourist hub of the region. There is no question about it. On the other hand, our hinterland in Guangdong, and in particular the PRD, is already the biggest production powerhouse in the world. It also has much more natural and manpower resources than Hong Kong, and a very large consumer market.

Taking Hong Kong and the PRD together, we have a total population of about 50 million, which is close to that of a medium sized European country such as the United Kingdom. With the sizeable landmass across the boundary, both the room for further development and potential market are huge.

The private sector has been doing a lot to exploit the unparalleled complementary strengths in Hong Kong and the rest of PRD. The fact that Hong Kong businessmen are employing millions of workers in the PRD speaks for itself. But on the part of the Government we have a very important role in ensuring that while maintaining the "One Country, Two Systems", the boundary between Hong Kong and the Mainland does not become an impediment to more effective cooperation between the two places. We have to ensure that the flows of people, cargo, funds, information and services are as smooth as possible while maintaining Hong Kong's status as separate custom and monetary territory.

I can imagine that the attractiveness of the PRD including Hong Kong would be greatly enhanced:

* If businessmen and ordinary people with the necessary permits on either side could cross the boundary much easier, maybe just like what we do when traveling on the MTR with an Octopus card;

* If traveling were made much more convenient, so that people could freely choose to live in Shenzhen or Zhuhai and work in Hong Kong, or vice versa; or people on both sides would cross the boundary even more regularly to shop, visit friends or even just have a meal.

* If container trucks from all over the Pearl River Delta could access the excellent intermodal logistics facilities in Hong Kong without the hassles of queuing for hours at the boundary checkpoints.

* If investors or companies in the PRD could more readily participate in our financial markets for investment or fund raising.

* If companies in PRD could have even better access to the professional and business services of both sides of the boundaries, irrespective of their location.

Some of these visions may seem remote, but I can assure you that we are heading in the right direction: we are expanding our existing boundary crossings, and building new ones with the Shenzhen Western Corridor and KCR Spur Line projects; we are examining an even more convenient Regional Express Rail Link that shortens travelling to Guangzhou to within an hour; we may also explore a more direct link with the west bank of the Pearl River Estuary; the Mainland authorities have relaxed some travel restrictions on Mainland residents; both the Mainland and SAR are working to upgrade our travel documents to ensure more speedy processing; we are studying the possibility of co-locating checkpoints at the boundaries; we are discussing with the Mainland authorities possible options for further cooperation of the financial markets; and we are discussing a Closer Economic Partnership Arrangement with the MOFTEC (Ministry of Foreign Trade and Economic Cooperation) which covers trade in goods, trade in services and trade facilitation.

Some of these measures may take time to realize. But the overall direction is clearly towards closer collaboration, more convenience and enhanced synergy. Going forward, we should also investigate promoting the region together to attract foreign investment into the region. Maybe we can also have a single window of customer service to provide all kinds of services that investors need.

Some people like to compare Hong Kong with Shanghai and PRD with Yangtze River Delta. As I see it, the two places serve two different hinterlands. If there is any competition, I would say PRD has already had a head start with the more developed services industries and international network in Hong Kong, not to mention our unique advantages under "One country, Two Systems".

But to ensure that Hong Kong and the rest of the PRD would further develop our potential to the fullest, both the public and private sector on the two sides should work closer together.

Apart from pursuing the various measures I have just outlined, we have established a number of institutional arrangements for discussion of cross boundary issues, such as the Guangdong/Hong Kong Cooperation Joint Conference and the Mainland/HKSAR Conference on the Coordination of Major Infrastructural Projects. But I would like to see even closer personal networking with officials at all levels.

It's only through interaction and discussion could we generate new ideas for closer cooperation.

For the private sector, the shrewd businessmen are already working in the PRD as a region. There are more and more businessmen and professionals looking at the opportunities across our boundary. The media is increasing the reporting of news in the Mainland. I hope to see that the coverage of news in the PRD be increased. This will help Hong Kong people to somehow look at the Delta as our region, not a foreign territory. I would also encourage more discussions like what we have today. Academics and think tanks are well poised to examine both the macro and sectoral partnership in the PRD without the hindrance of operational and regulatory considerations as in the case of the Government. In other words, they are better placed to think out of the box and offer ideas that enable us to achieve quantum jump in the overall competitiveness of the region.

I wish the Forum success and I look forward to hearing the summary of deliberations and recommendations on how Hong Kong should develop, particularly on how we should collaborate further with the PRD. Thank you very much.

End/Wednesday, May 29, 2002

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