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Following is a speech (translation) by the Chief Secretary for Administration, Mr Donald Tsang, at the "Guangdong, Hong Kong and Macau Investment and Promotion Fair", organised under the auspices of the World Economic Development Declaration Conference, in Zhuhai today (November 6):

Ladies and gentlemen,

It is my great pleasure to speak at the "Guangdong, Hong Kong and Macau Investment and Promotion Fair", one of the events to mark the issuance of the World Economic Development Declaration. I cannot think of a better platform than this for discussing issues of regional cooperation under the theme "Equality, Trust, Cooperation and Development". "Equality and Trust" denotes the ideal mode of communication among world economies while "Cooperation and Development" is the approach adopted by many to cope with challenges arising from globalisation. Indeed, under the umbrella of the WTO policy of multilateral trade, "regional economic cooperation" is a pragmatic approach to bring about genuine and sustainable economic growth.

Guangdong Province, particularly the Pearl River Delta (PRD) region, has long been a strategic trading partner of Hong Kong. Being dedicated believers in regional cooperation, Hong Kong, Macau and the PRD region have emerged as a strong tripartite economic entity.

Hong Kong itself is limited in geographical size and natural resources. Our economic development in recent decades has benefited much from the open market reforms of the Mainland. The liberalisation of the Mainland economy has offered us an adequate land supply and labour force for Hong Kong's manufacturing industries, enhanced the competitiveness of our products and provided flexibility for the deployment of resources. All these have helped bolster our manufacturing industries and provided impetus for Hong Kong's transformation into a service-oriented economy.

On the other side of the equation, with the investments of Hong Kong enterprises, manufacturing industries in the PRD have been flourishing, and the PRD has now become the fastest growing production base with the world's finest production chain. It has rightly earned its name as the "world's factory". Since 1979, Hong Kong enterprises have invested up to US$85.9 billion in the province, constituting 70% of Guangdong's foreign investment. According to an earlier survey conducted by the Federation of Hong Kong Industries, Hong Kong's entrepreneurs had set up over 50,000 manufacturing enterprises in the PRD employing 11 million workers. They also created 1.5 million posts in the services industries in Hong Kong.

Exercising their good business sense, Hong Kong entrepreneurs have leveraged on the competitive edge of both Hong Kong and the PRD, created a favourable environment for the symbiotic cooperation between the two places and put in place a highly efficient production and supply chain in the PRD.

Within this supply chain, Hong Kong has been giving full play to its position as an international financial and commercial centre. As an open economy and the Mainland's major trading partner, Hong Kong is endowed with well-developed legal and monetary systems, networks which enable unhampered flow of information, and a freely convertible currency. Also, our professionals and business personnel possess unrivalled expertise and sound knowledge of the commercial operations in global and Mainland markets.

And the story does not end here. The living standards of some 40 million residents in the PRD region have substantially improved over the years. Their per capita income is over US$2,700, which is one of the highest among Mainland provinces. We see here a burgeoning consumer market. Hong Kong, as a trendsetter and fashion capital, has lived up to its reputation of being a global stronghold for foreign consumer products to expand into the vast Mainland market.

The various factors mentioned above have made Hong Kong the ideal place for business and investment. The international community recognises this. According to the World Investment Report 2003 published by the United Nations Conference on Trade and Development, among all Asian economies, Hong Kong is the best performer in attracting foreign direct investment (FDI), with the second largest FDI in the region. The findings of the 2003 Annual Survey of Regional Offices Representing Overseas Companies in Hong Kong recently released by the HKSAR Government show that the number of regional headquarters and regional offices of overseas companies in Hong Kong is on the increase. As of June, 966 companies registered overseas had set up their regional headquarters in Hong Kong and 2,241 had set up their regional offices here. This remarkable achievement is in fact attributable to the development of the Mainland - in particular the PRD.

Looking ahead, with the signing of the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and the Mainland, the development of the Greater PRD is expected to scale new heights. Since CEPA is in full compliance with the guidelines of the World Trade Organisation (WTO), the Mainland and Hong Kong can establish free trade areas for mutual benefit without impairing the interests of other WTO members.

Under CEPA, 273 types of goods of Hong Kong origin can be exported to the Mainland with zero tariffs with effect from January 1, 2004. In addition, 18 service industries, including telecommunications, legal, accounting, construction, medical, advertising, banking, insurance, warehousing, logistics, retailing and wholesaling services, can also take their own share of the market in the Mainland. To secure a close economic partnership between Hong Kong and Guangdong, CEPA has also made special arrangements in the retailing and legal services fields. This include, as far as the retailing services is concerned, allowing Hong Kong permanent residents with Chinese citizenship to set up individually owned stores in Guangdong to provide retailing services, without being subject to the procedures applicable to foreign investments. Furthermore, the minimum residency requirement is waived for representatives of Hong Kong law firms located in Shenzhen and Guangzhou. With the implementation of CEPA, there will certainly be further integration of the economy of the Greater PRD area.

The regional cooperation within the Greater PRD is not limited to economic affairs and trade. It also encompasses areas of education, environmental protection, infrastructure as well as culture and sports, which is in line with the areas of cooperation promulgated in the World Economic Development Declaration. We believe that in the context of sustainability, no city can pursue development on its own. It is only through regional cooperation can we achieve an overall enhancement of the people's quality, facilitate free flow of people and goods, resolve environmental issues on all fronts, and promote cultural exchanges.

To sum up, regional cooperation, the major ingredient for the success of the Greater PRD, embodies "interdependence, efficient use of resources, sustainability and education and skill development for all people". This is the very spirit highlighted in the World Economic Development Declaration. The economic growth and betterment of all countries and regions ultimately rely on the concerted efforts of their public and private sectors. On this front, the HKSAR Government, our private enterprises and our people will continue to embrace the fine tradition of mutual benefit and progress with the Greater PRD as well as other countries in the direction of the common good for all.

Thank you.

Ends/Thursday, November 6, 2003

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