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Following is the speech (English only) by the Chief Executive, Mr Tung Chee Hwa, at the opening ceremony of the 2002 Forbes Forum tonight (September 24):
Caspar, Friends, Ladies and Gentlemen. Before you get rewarded that to a really nice dinner, you are going to get punished by me through, perhaps, 10 minutes probably a rather dull speech.
I am delighted to be invited here at this very distinguished gathering. You are all CEOs and you know a CEO's job is most challenging and is really managing changes. I am a CEO of Hong Kong, I am the Chief Executive of Hong Kong, and my job is about managing changes.
On July 1, 1997, I assumed the formal responsibility as Chief Executive of Hong Kong. What was my challenge? My challenge was managing a change. How to keep this stability, the confidence and prosperity as Hong Kong moved from being a British Colony for 156 years to becoming part of China under 'One Country Two Systems'.
There were a great deal of anxieties before July 1, 1997. It was understandable, but how could we instil that confidence. How could we move ahead and continue with the prosperity? How did we manage that change? That was my responsibility and the responsibility of my colleagues around me.
I am not going into details of what we did except to tell you that I thought we managed the change really well, and throughout these five years the fact 'One Country Two Systems' was very successfully implemented. It tells easily how well we had managed this particular change.
As I now begin my second term, we are once again faced with enormous challenges, and the challenge again is about managing change. What is that change? Our economy is somewhat stagnant. Unemployment is at a very high level. We are facing huge budget deficits, and our economy has been suffering from four-and-a-half-years total accumulated deflation of about 12%. These are real challenges.
How as a SAR Government, how I myself and my senior colleagues are going to manage this very difficult situation. In fact, Hong Kong is faced with a need for a massive restructuring of our economy, and the question is how do we manage the restructuring? How do we manage this change? This is our challenge today.
Why is it happening to us in Hong Kong? After all these years of prosperity, how did it happen? Well, first of all, of course is globalisation and the very rapid development of IT. And then, on top of that, the success of the development on the Mainland of China. The success which you all know about has given us enormous new opportunities, but at the same time many new challenges also.
Just across the border, services can be provided at the fraction of the cost of Hong Kong. Products can be manufactured at the fraction of the cost of Hong Kong. Yes, we are migrating across the border. Understandably so. What is our response to this? What you see is a higher degree of unemployment. What you see is inflation. Then, on top of that, there was a bubble in our economy before 1997, particularly the property bubble which bursted with the Asian financial turmoil and our property prices have fallen over 60%. And that itself is very deflationary in nature. So we are faced with a situation which I don't think we have ever faced before. That is our challenge. Am I worried? Of course, I am worried. Am I worried to the extent of losing confidence in Hong Kong? Definitely not, let me tell you why.
Hong Kong actually really has many competitive advantages. Where are the Hong Kong competitive advantages? First, we have the clustering of talents in Hong Kong. They are here from all over the world, whether they be lawyers, accountants, specialists and professionals of every kind. They are here in Hong Kong, doing business in Hong Kong, and providing services for the Mainland and all over Asia.
Who has a better geographic location than Hong Kong? In the hub of Asia, right on the doorstep here in southern China. Infrastructure, roads, railways, airport, the port facilities and telecommunications. Some are really the best. We have an honest, open and uncorrupt government. Where else in Asia? I think we are equal to some of the best here in Asia.
We are facing all the problems, but we have enormous fiscal reserves. We have no debt. These fiscal reserves and the fact that we have no debt give us the opportunity to do the restructuring that is necessary for us to move forward. Actually, the list goes on and on.
We have the support from the Central Government. At some very specific issues, we think the Central Government can help with the restructuring of our economy. So we have enormous competitive advantages, and what we are doing now is really to take advantage as much as we can of these competitive advantages in moving forward.
Let me say one more thing. Before 1978, China was closed and Hong Kong was the conduit bridge. We created a lot of wealth for ourselves but at the same time contributed to the success in China. After 1978, China became partially opening up, and manufacturing moved across the border. We became a very successful service centre. Out of 900,000 jobs we had in the manufacturing sector, 700,000 jobs were lost. We now today only have 200,000 jobs in the manufacturing sector but we become the most successful financial centre and service centre in Asia.
Now is the 21st Century and China is now totally open. There is not just one "bridge" - Hong Kong. Shanghai, Beijing, Tienjin, Guangzhou, Xiamen, where I had been to recently. They are all bridges now. So what is our positioning ? We know what our competitive advantages are. We are positioning Hong Kong as a world city of Asia, a very important international city. We are one of the most important cities of China, providing value added service to the mainland of China, to the rest of Asia, through acquiring new knowledge, through moving forward in innovation and technology to move up the value chain. This is the way we are positioning ourselves.
What we are doing is really trying to add value, to continue to strengthen in the areas where we are already having a very successful and dominant position, for instance, as a premier international financial centre, as a centre for logistics and trade. We already have wonderful airport facilities and also very efficient port facilities. A clustering of thousands and thousands of big and small international companies. More and more are coming. The other day, I was talking with the Japanese Consul-General. He was telling me there are now 4,000 Japanese companies here in Hong Kong.
So, Mike Rowse, I don't know where you are. You always tell me we have 3,200 foreign companies here. But out of Japan alone, he was talking about 4,000 companies.
We are a centre for tourism. Last year, 13.7 million tourists arrived and visited Hong Kong. This year, it could well reached 15 million. And it is growing very strong with the support of the Central Government of China. On top of that, we are a centre for logistics. One of the things which I want to spend two minutes talking about is our relationship with the Pearl River Delta. Today, Pearl River Delta and Hong Kong together have a population of about 47 million people. It is a good-sized population with a combined GDP of about US$250 billion. I think if it were "One Country, One Region", it would rank 18th in the world. The Pearl River Delta is growing very fast. Wealth is being created at a very quick pace. We believe that in 10 years' time from now, the combined GDP of Hong Kong and Pearl River Delta will be about US$500 billion.
It is a huge economy. It is a developing economy and a dynamic economy. Wealth is being created as a huge market in itself. Hong Kong's role in the Pearl River Delta - a dynamic force in moving ahead in the Pearl River Delta as being a very important service provider for the whole of China and also a provider of some services for the rest of Asia.
So, we know which way we are going. We know a whole lot needs to be done. For instance, in the longer term, we are investing a lot in education. Over the past five years, our education budget has increased by over 50 per cent. It is a lot of investment for the future. We know it is long-term. It would take some time but I am looking forward to the day when the quality of our people will increase by leaps and bounds.
In the meantime, we are revising our population policy. We are already very liberal for the importation of talents from all over the world. Restriction has been placed on Mainland China. We are going to liberalize this to welcome the best talents from Mainland China and from anywhere else in the world to come live and work here in Hong Kong.
We are spending a lot of efforts to move ahead with environmental protection, better housing, better cultural facilities, to make sure the quality of life here in Hong Kong, where it is for local citizens or for visitors - all those people who have chosen to make Hong Kong their home - they may be coming from the United States or anywhere else in the world to feel that this is really an attractive place to live. We are making investments in these areas. So a lot needs to be done. But we are doing all these things. And I have Henry Tang sitting there who looks after for me in the areas of industry and commerce. And one of the things we are sure to do to improve further on is to make Hong Kong more pro-business, and to make Hong Kong more business-friendly. So, I am confident of what we will achieve in the future. It is going to take time. We are going through a difficult time. We are going through a difficult period right now. It is easy for me standing up here making a speech to this elite, but to the 7.7 per cent who are unemployed, and in Hong Kong, we are unaccustomed to such high unemployment rate, it is really a tough time.
Of course, we have a safety net for everyone. We need to do more in areas of training and re-training those who are affected to the extent we can help, to the extent we need to do better. We will do that. But let me say this to you that we are going to go through a difficult period. It may take a number of years before the restructuring is successful. But I would say this, by 2007, when I leave this office, I am confident that we will succeed in having laid a very good foundation in the successful restructuring of our economy.
Steve, I am standing here like a salesman for Hong Kong. I am sorry about that. No, it was my intention to be the salesman. Thank you very much for giving me this opportunity and I look forward to chatting with Steve and Caspar.
End/Tuesday, September 24, 2002
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Webcast of Press Conference on 2002 Forbes Global CEO Conference Floor/
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