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Following is the speech by the Chief Executive, Mr Tung Chee Hwa, at the BusinessWeek CEO Forum at the Hong Kong Convention and Exhibition Centre this morning (November 5):
Good morning, Vice-Premier Zeng Peiyan, Charles, Mr Clifford, ladies and gentlemen,
I am delighted to be able to welcome all of you and the BusinessWeek CEO Forum back to Hong Kong. It is also my great pleasure to welcome Vice-Premier Zeng Peiyan whom we are privileged to have with us to deliver the keynote address.
Before I formally introduce the Vice-Premier, I would like to take a few minutes to update you on developments in Hong Kong since this Forum last met here. Much has happened since then. Indeed, this has been a time of immense challenges for us in Hong Kong.
The slowing of the global economic growth affects a trade-dependent territory like Hong Kong disproportionately. In addition, we had to face the ravages of SARS, which extracted a heavy human, as well as economic, cost.
And all of this comes at a time of increasing globalisation. Hong Kong's economy has been facing and is still facing the pressure that all mature economies face from the migration of jobs in both the manufacturing sector and service sector to lower cost areas.
The bursting of the asset bubble from the onset of the Asian financial crisis in the second half of 1997 has seen a fall in property prices of 70% to date, which in turn has led to a fall in consumption.
We have seen rising unemployment, falling household income and persistent deflation as our economy begins the process of restructuring. The process of reducing our costs to a level more in line with present-day reality has been painful and indeed may still take some time.
Furthermore, historically, Hong Kong's prosperity was built on being the world's premier gateway to the rest of China, and China's gateway to the whole world. Today, there are other gateways: Shanghai, Guangzhou, Beijing, Shenzhen - all great cities of China. They are open for business. Our unique role is under challenge. So we have had to reinvent and reposition ourselves in order to retain our edge.
The key challenge for us in Hong Kong has been to try and leverage on our biggest strength: our proximity to, and our familiarity with, one of the fastest growing economies in the world. Our strategy has been to leverage on our competitive advantages - our world-class business services, our logistics and financial services, legal system, and the quality of our financial markets. There will be many gateways into China, but it is our intention to be the most sophisticated and efficient platform for the world to do business with China, and for China to do business with the rest of the world.
We have been greatly helped and supported by the Central Government in achieving our vision. In June this year, we signed a Closer Economic Partnership Arrangement (CEPA) with the Central Government under which from January 1 next year a range of goods manufactured in Hong Kong will enter into China's Mainland on a duty-free basis. Eighteen service industries will also be able to enter the Mainland market ahead of China's market opening timetable under WTO. And the list of goods and services with privileged entry will grow in the next few years. This gives Hong Kong companies an immense advantage in entering the Mainland market. I would like to put it to you that it gives global companies that do business in Hong Kong a great advantage as well.
Also enhancing our role and value as a business platform is the growing integration with the Pearl River Delta, our economic hinterland, which as you know is one of the fastest growing manufacturing regions in the whole world. We have recently reached agreement with our colleagues in the Guangdong provincial government on efforts to work more closely together as a regional economy that would include Hong Kong, Macau and the cities of the Pearl River Delta. This is a huge economy. Today, it has a population of just under 60 million with a GDP of about US$270 billion. In 10 years' time, we believe it will have a GDP well in excess of US$500 billion. If it were a country, it would be the 11th or 12th largest economy in the world.
We have also recently strengthened our links with Shanghai and the Yangtze River Delta region. The Mayor of Shanghai and I have agreed to build a closer link between our cities and have identified eight areas of co-operation including transport, airports and ports, logistics, investment, trade and financial services. This I believe can only increase our value as a business platform.
Hong Kong is a resilient, flexible society, quick to adapt to change and quick to seek new opportunities. Our job in the Government is to open doors and create conditions for business to remain competitive and drive the economy forward. Since the signing of the CEPA agreement, the arrangements of closer collaboration with both Guangdong and Shanghai, our growth figures have recently been revised upwards, and we now forecast a 3% growth in GDP in real terms this year. We have double-digit real growth in exports and there has been a sharp upturn in growth in the services sector. Unemployment is trending downwards, while our stock market is trending upwards. The slump in property prices that has had a huge deflationary effect on the economy appears to be bottoming out. Most importantly, confidence is returning. Much more still needs to be done but I think we are seeing the proverbial light at the end of the tunnel.
I want to assure you that we will continue to protect the basic tenets that underpin our development as a society - the rule of law upheld by an independent judiciary; the level playing field for business; a clean and efficient administration; enhancement of corporate governance which already is amongst the best in the world and maintenance of all forms of freedom as enshrined by the Basic Law. Furthermore, we will continue to invest heavily in education to ensure we have the human capital required to serve Hong Kong's needs. We will continue to do more to improve our environment and to generally enhance the quality of life of our people. As a place where East meets West, we will continue to encourage cultural diversity. We will also upgrade our physical infrastructure to ensure that we remain the major transport, logistics and communications hub.
It is now my privilege to introduce Vice-Premier Zeng Peiyan. Vice-Premier Zeng is a member of the Political Bureau of the CPC Central Committee. His current responsibilities include macroeconomic policy, environmental protection, urban development, development planning and natural resources, and has direct responsibility for the National Development and Reform Commission. Vice-Premier Zeng has had a long and distinguished career and has made enormous contributions to the country's rapid, orderly and successful development over the past two decades. It is indeed our privilege to have him with us and I now invite him to deliver his keynote address.
Ends/Wednesday, November 5, 2003
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