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The Chief Executive, Mr Tung Chee Hwa, today outlined initiatives setting the direction for Hong Kong's future development and measures to eliminate the fiscal deficit.
"The common goal of our community is to achieve long-term prosperity and stability," Mr Tung said in the first Policy Address of his second term, 'Capitalising on Our Advantages : Revitalising Our Economy'.
The address focuses on the major issues of public concern, including the background and causes of the present economic difficulties, plans to boost economic recovery and strengthen economic integration with the Mainland.
"The most important task of the Administration is to lead Hong Kong out of the present economic difficulties and restore people's confidence in their future. This is our greatest challenge", Mr Tung told members of the Legislative Council.
And he urged people to put the community's common interests first and to care for one another as Hong Kong proceeded on its course of development.
"Our traditional advantages and newly opened up opportunities already provide the basic elements we need to overcome our problems and revitalise our economy," he said.
Outlining the government's plans to boost economic growth, Mr Tung said Hong Kong would build on its existing strengths and capitalise on the rapid development of the Mainland to speed up Hong Kong's economic restructuring.
"We must seize these opportunities to elevate Hong Kong from its traditional role as an intermediary to become a major hub connecting China and the international markets. At the same time, we will enhance our position as the financial and commercial centre of China," he said.
In forging closer economic co-operation with the Mainland, Mr Tung announced that the Central Government had agreed to accelerate discussions on Hong Kong entering into a Closer Economic Partnership Arrangement. It was hoped that an arrangement could be reached on the main parts by June this year.
Other measures to boost co-operation with the Mainland and economic integration with the Pearl River Delta include:
* Accelerating the construction of the Shenzhen Western Corridor for target completion in the latter half of 2005
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* Implementing 24-hour cross-boundary passenger clearance at Lok Ma Chau/Huanggang from 27 January 2003
* Aim to complete cross-boundary clearance on both sides within 30 minutes for passengers and 60 minutes for goods vehicles
* Complete as soon as possible the Sheung Shui to Lok Ma Chau Spur Line to link up with the Huanggang Underground Railway
* Study with the Central Government further relaxation of restrictions to facilitate Mainland residents visiting Hong Kong, including allowing Guangdong residents to visit in their personal capacity
* Facilitate a study by the State Development Planning Commission into the feasibility of a bridge linking Hong Kong to Macau and the western part of the PRD
* Encourage enterprises from the PRD and overseas to set up offices in Hong Kong and jointly promote the economic potential of Hong Kong and the PRD in the international arena
Mr Tung said Hong Kong still enjoyed enormous advantages as a world city and its position was not easily replaceable.
However, there was an urgent need to reinforce and enhance the main pillars of the economy - financial services, logistics, tourism and producer services. This included improving the business environment by attracting foreign investment, retaining domestic investment and boosting local economic activities to broaden Hong Kong's production capacity, create employment and expand the tax base.
Mr Tung announced that a high-level task force would be established to examine and advise on further measures to reduce business costs by cutting red tape, de-regulation, streamlining procedures and enhancing administrative efficiency.
The government would also:
- strengthen Hong Kong's role as a major international financial and trading centre and the premier capital formation centre of China. Further promote re-exports and the development of Hong Kong as a multi-modal trade management and operations center
- improve market structure and corporate governance to meet international standards, promote the development of the bond market and fund management businesses and facilitate the development of new financial products
- build a modern logistics park on North Lantau Island, smooth the development of Hong Kong International Airport's logistics centre and express cargo terminal, and start the feasibility study for Container Terminal 10 as soon as possible
- enhance Hong Kong's role as a regional centre for business operations by attracting more foreign and Mainland enterprises to set up in Hong Kong; continue to attract talented people from around the world and the Mainland to live, work and invest in the city; consolidate Hong Kong's position as a business operations centre and as a premier tourist destination.
Mr Tung gave a commitment that spending on education would remain his priority despite the need to immediately tackle the fiscal deficit.
"Our people are our most valuable resource and the key to the development of a knowledge-based economy," he said.
The government would continue to invest in education; develop local human resources and provide opportunities for continuing education for people of all walks of life.
Mr Tung said there was an urgent need to eliminate the fiscal deficit, which was estimated to hit a record high of over $70 billion by the end of this financial year.
"If the problem is not solved as soon as possible, Hong Kong risks being exposed to heightened speculation, which may trigger outflows of capital, rising interest rates, turmoil in the financial markets leading ultimately to possible attacks on our linked exchange rate system," he said.
Mr Tung said a three-pronged approach would be adopted to eliminate the deficit over the next few years - boosting economic growth, cutting public expenditure and raising revenue. The full details would be announced in the Financial Secretary's budget speech in March.
He said the administration would also use the opportunity to reduce the size of government. This included cutting the civil service establishment by 10% to some 160,000 by 2006-07, freezing recruitment across the board, launching a second voluntary retirement scheme, and redefining government's responsibilities to reduce unnecessary intervention, streamline work procedures and departmental structures.
"Our moves to tackle the deficit problem will expedite the return to a small, lean government, which is more energetic, more sharply focused on its priorities, more efficient and better able to make optimum use of resources," said Mr Tung.
Mr Tung said he believed the policies being followed by Hong Kong were on the right track and were beginning to take effect.
"We see a significant drop in business costs, increasing market competition, growing acceptance of innovation and technology, and a public sector delivering better services," he said.
Increasing numbers of multinational corporations were setting up their regional headquarters, foreign companies were actively seeking listings, the pillar industries continued to do well and jobs were being created as a result of closer economic integration with the PRD.
"All this is compelling evidence that our economy is proceeding vigorously under the new role envisaged for Hong Kong," he said
"We do not underestimate the challenges in pushing for restructuring and revitalising our economy. But we need to look beyond the immediate problems to see the bright future that lies ahead. The SAR Government and I are confident...we will create a more prosperous Hong Kong under 'One Country, Two Systems'," Mr Tung said.
End/Wednesday, January 8, 2003
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