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Following is the speech by the Chief Executive, Mr Tung Chee Hwa, at the 2003 SME Market Day Opening Ceremony at the Hong Kong Convention and Exhibition Centre this (June 5) morning:
Mr Woo, Consul-generals, distinguished delegates and guests, ladies and gentlemen,
It is my pleasure to officiate at the opening of the 2003 SME Market Day. This is the first large-scale exhibition held in Hong Kong after the WHO lifted the travel advisory against Hong Kong last month. I am glad to see the very enthusiastic response. It is a strong sign that business is getting back to normal in Hong Kong. Let me first extend a very warm welcome to all of you and particularly to those participants who have come from overseas and from the Mainland, your participation is a strong support for Hong Kong.
Small and medium enterprises play a very important role in all economies, and in Hong Kong in particular. The 300,000 SMEs in Hong Kong make up 98% of our business community. They are the main source of employment, providing jobs for 1.3 million people. The Hong Kong SMEs are well known for their agility, vitality and acute business sense. The economic miracle of Hong Kong over the past several decades has been, to a large extent, driven by our SMEs. Many of the big Hong Kong corporate names today started off as SMEs many years ago, and we are seeing more and more Hong Kong SMEs growing bigger and bigger and many of them have developed their own brand names and ventured overseas or into the Mainland. The Hong Kong Special Administrative Region Government is committed to supporting the SMEs. The support of SMEs come through the creation of four funding schemes, with a total provision of HK$1.9 billion, including loan guarantees, to assist SMEs to upgrade equipment, improve human resources, explore new markets and generally increase competitiveness. By nurturing SMEs today, we are sowing the seeds for a bumper harvest for our economy in the future.
Over the past several years, because of the Asian financial turmoil, the bursting of the asset bubble in Hong Kong, and the rapid rise of the Mainland China's economy, our own economy has to go through painful restructuring and adjustment. The task often appears to be daunting. But we do have some unique competitive advantages. We have the hardware and software required of a world-class city, including our keen business acumen, a well-developed infrastructure, a versatile financial system, robust legal institutions, policies conducive to a free and open society, a clean and efficient civil service, simple and low taxation, a large pool of talent and a very cosmopolitan community. As long as we move with the times, play to our strengths, I believe the strategic position and unique role of Hong Kong cannot be replaced. We will consolidate and further develop the four pillars of our economy; namely, an international financial centre, a centre for logistics, a premier tourist destination, and trade and trade-related support services. In all of these areas, and particularly in trade, logistics and tourism, SMEs play a pivotal role and they stand to benefit most from our successful promotion in all these sectors.
In the 3rd quarter of last year, our GDP grew by 3.4 % in real terms, and in the 4th quarter by 5.1%. In the 1st quarter of this year, before the SARS epidemic took its toll, our GDP continued to grow by a robust 4.5%. The strong growth of our economy in the last three quarters shows that our economic policy is in the right direction, that our economy is on the road to recovery, and that the painful economic restructuring that we have been going through is slowly but surely beginning to bear fruit.
The SARS outbreak has unfortunately dealt a devastating blow to the recovery. And indeed, it has knocked our economy off course. The full impact of SARS will be reflected in the 2nd and 3rd quarters and we expect a sharp drop in the GDP growth figures. The damage SARS has done to our economy is across the board, and the hardest hit are the tourism, hotel, restaurant and retail sectors. To help reduce the short- term impact of the SARS outbreak on our economy, the Government announced in April a package of measures involving a total of HK$11.8 billion to provide support for the various affected sectors. With the epidemic coming under control and the lifting of the travel advisory by the WHO, we are beginning to see the recovery of business in many sectors, and it is expected to gather further momentum following the lifting of travel advisory by the US CDC this morning.
With the general improvement of the external environment and the foundation work we have done, I am confident the SARS impact on our economic recovery, though severe, would be temporary. I am confident because the direction adopted by the Government in the past several years to reposition and restructure Hong Kong's economy is beginning to work. I am confident because Hong Kong continues to enjoy many competitive advantages. The rapid growth and expansion of the Mainland economy, particularly the Pearl River Delta, continues to benefit Hong Kong's trade and businesses. The Central People's Government has pledged strong support for Hong Kong: the discussion on a Closer Economic Partnership Arrangement (CEPA) between Hong Kong and the Mainland is in the final stage and the signing of the arrangement will open up many new and exciting opportunities for Hong Kong. At the same time, deflation and price adjustment that we have been going through in recent years, though very painful, have made us a lot more competitive today. The weakening of the US dollars will benefit our export and re-export, and help lower the cost of doing business in Hong Kong by all foreign companies.
Of course, a lot more additional work needs to be done, particularly as a result of the SARS epidemic. With the cooperation and support of the community and firm actions taken by Government, we have brought the SARS epidemic under control. Our immediate task now is to eradicate any new SARS cases so that we can remove Hong Kong from the WHO's SARS infected areas list as soon as possible. The SARS Experts Committee led by the Secretary for Health, Welfare and Food, Dr E K Yeoh, and consisted of top international experts in epidemiology, hospital management and public health will undertake a thorough review of the SARS epidemic to see what lessons we can learn from the experience, and to make recommendations as quickly as possible so that we are better prepared next time for any epidemic attack. Let us hope there will not be a next time. Let us hope this Winter and Spring will not see a recurrence of the epidemic. But we have to be prepared. We have to be ready just in case. In the meantime, we are making preparation to rebuild Hong Kong after the SARS crisis. Last week, the "Team Clean" headed by the Chief Secretary for Administration announced a wide range of firm and decisive measures to promote good personal and public hygiene, tackle the environmental hygiene black spots, and give Hong Kong a complete face-lift. And it is not just an one-off effort. This is going to be an effort that will go on and on and on and all the time. The Economic Relaunch Strategy Group headed by the Financial Secretary will announce shortly a package of proposals to promote Hong Kong internationally and revitalise our economy after the SARS attack.
The SARS epidemic has wrecked havoc to our society. But while we are tackling the aftermath of the SARS outbreak, we must not let it distract from our focus of work. To bring our economic growth back on track, we have to continue with what we had been doing before the SARS interruption. We have to continue to reinforce and enhance the four pillars of our economy: finance, logistics, tourism and trade and trade-related support services. After China's entering WTO and the signing of CEPA between Hong Kong and the Mainland, the role of Hong Kong as an international trade and business centre and a gateway to the Mainland will only be further strengthened. The large multinational companies like General Motors, Sony, Coca-cola and IBM have the resources and clout to go into China direct. But for the thousands and thousands SMEs around the world who wish to enter the vast market of the Mainland or to source products from the Mainland, finding a right SME partner in Hong Kong or on the Mainland, will help reduce uncertainties, spread the risk, and speed up and enhance the chance of success in doing business on the Mainland. The Hong Kong SMEs have a wealth of experience and knowledge of doing business on the Mainland. Together with Hong Kong's distinctive advantage of being at the heart of Asia and a strategic location in the Pearl River Delta, our SMEs are well placed to play this key role. Additionally our SMEs can also help Mainland SMEs expand into the world market.
The SME Market Day exhibition opened today provides a timely opportunity for SMEs from all sectors to exchange information, build contact and take advantage of the professional services that can help them grow their business. I am encouraged that the exhibition has obtained the support from over 60 consulates, foreign chambers, trade promotion organisations and associations from different parts of the world. Their presence underlines the importance continued to be attached by the international business community to Hong Kong's role as an international business and trade centre, and the opportunities offered by Hong Kong.
Ladies and gentlemen, in the last three months, Hong Kong has taken on the enormous challenge of fighting SARS. With effective measures taken by the Government and thanks to the concerted efforts of the whole community, we have successfully contained the disease. Businesses hardest hit by the epidemic are beginning to pick up again. Once again, Hong Kong has bounced back with its trade-mark self-reliance, resilience and vigour. We will emerge stronger, healthier and more dynamic than before. This is the success of the Hong Kong spirit. And this is the success of the Hong Kong SMEs.
Before closing, I would like to thank Peter and the Hong Kong Trade Development Council for their effort in supporting SMEs and for organising this excellent event.
Thank you.
End/Thursday, June 5, 2003
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